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Interesting discussion. Is it possible anyone can be that ignorant and have such difficulty understanding basic concepts? That is why I think you are just dealing with a blatant troll.
i am just about done trying to educate them on the subject . i don't care what they do , i really do it for the benefit of the others
when people believe their own bull so strongly it can hurt them ...
they get a stance in their head based on what they hear from other mis-informed people and it hurts them financially because they end up actually believing this mis-information .
i have spent a life time weeding out the smartest people on the planet in everything i do . if i am going to get a stance in my head i at least want it to come from a credible source
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most retirement advisors say to have most in bonds if you are already retired. And CDs can do better than bonds, and are insured.
Many advisors do say this about bonds, especially the Bogleheads. I don't use CD's because the returns are so low, basically zero, and funds are locked in with penalties. Bonds aren't much better, but some people consider them better than cash to hold funds, as there might be a meager return. Others prefer cash as the holding place, which loses value to inflation. For growth, my favorite place is real estate, followed by equities.
Post #85 is a good example of how incorrect information spreads, gets embellished and lives on.
Most advisors would recommend a diversified retirement portfolio with an allocation of stocks and fixed assets. There are exceptions..someone with very poor health might qualify...but almost anyone retiring about age 65 would try to plan for covering expenses for about 30 years to age 95 or so. Mathjak already posted the results for that. The failure rate for 100% bonds is very high. A minimum of 30% bonds is recommended. CDs are also going to fall short. Historically the return has been barely more than 1%, inflation adjusted. A 2% return is needed to cover the usual safe withdrawal rate of 4%.
Most of us work long and hard to build our retirement portfolios. It can be disappointing to realize that if we accumulate a million dollar portfolio we can only safely withdraw $40K per year. And that only works with a portfolio that is wisely invested, including a substantial allocation of stocks.
in practice that 4% is only the starting point until you get an up cycle under your belt . once you develop a cushion from your equities you can take raises along the way if things are better than worst case .
90% of the time if you just draw 4% inflation you ended up dying with more than you started . to me that would be an awful mis-use of money you could have enjoyed .
67% of the time you would have died with 2x what you started at only a 4% draw and 50% of the time more than 3x what you started .
kitces recommends taking a 10% raise every three years on top of any inflation adjusting anytime the balance is more than 50% above where you started .
remember it is the good times that pay for the bad times so when you have these giant above average run ups like we had you can't assume you can spend like a drunken sailor .
as i remind everyone we always revert at some point back to the mean -always .
if the time frame starts out crappy , we usually have the 2nd half going like gang busters . we saw that over and over happen . if we start out like gang busters then later things ends up going below average .
somehow each 30 year cycle ends up within 2% of each other as an average .
Last edited by mathjak107; 02-16-2018 at 02:11 AM..
Many advisors do say this about bonds, especially the Bogleheads. I don't use CD's because the returns are so low, basically zero, and funds are locked in with penalties. Bonds aren't much better, but some people consider them better than cash to hold funds, as there might be a meager return. Others prefer cash as the holding place, which loses value to inflation. For growth, my favorite place is real estate, followed by equities.
again , blanket statements about allocations are flat out wrong and if advisers say that you need to have a higher percentage of bonds than stocks just because you are retired and not because an individual situation dictates that run from that adviser . he is a loser for sure
Many advisors do say this about bonds, especially the Bogleheads. I don't use CD's because the returns are so low, basically zero, and funds are locked in with penalties. Bonds aren't much better, but some people consider them better than cash to hold funds, as there might be a meager return. Others prefer cash as the holding place, which loses value to inflation. For growth, my favorite place is real estate, followed by equities.
better than just cd's or bonds would be some kind of comprehensive income oriented portfolio . a mix of assorted bond funds that generate more than cd's and a hint of a position in a dividend equity fund would likely do much better than just cd's or bonds while having only a smidgen of volatility .
a 25% stake in that dividend equity fund would have that model 75% less volatile than the s&p 500 .
also markets in the long term are volatile they are not risky . buying individual stocks or betting on sectors can be risky . riding the normal cycles of the markets is volatility . long term there has been no risk . the biggest risk to a retiree with 40-60% equities has generally been dying with tooooooo much money unspent.
but markets have always been up over a typical 30 year retirement .
50/50 has never had a losing 10 or 20 year period .
it does not mean it can't , but it sure means odds are pretty low . not like the odds of using fixed income only , and trying to support 30 years in retirement at anything but a tiny draw rate which already failed more than 50% of every existing time frame . .
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