Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I am referring to investing in retirement. Planning on retiring this year. Both my wife and I will have pensions. I will be a couple of years away from social security. Looking at investing my 401k which is in equities right now. I will need some income from the 401k.
Will you still need the income after you start SS? If you reach a point where pension/SS income exceeds expenses you will be investing new money.
Not all equity funds have the same volatility. Buying high Beta funds may require more bonds to match your overall portfolio volatility goals. That's what makes some newsletters nice. They do it for you.
Not all equity funds have the same volatility. Buying high Beta funds may require more bonds to match your overall portfolio volatility goals. That's what makes some newsletters nice. They do it for you.
many folks are still thinking with their accumulation stage hat on. that is where every penny only serves one purpose , to make more pennies. if you have a decent pension then the pay check never really stops so you may always be in that stage.
the retirement hat is different , no longer is it about growing richers for many of us. now all our strategies revolve around not getting poorer or freaking out when downturns come.
there are strategies and ways of seeing to that but you really need to switch hats to grasp a lot of it.
while we may still increase wealth that really isn't the first goal in this stage.
an accumulation stage hat would never buy bonds knowing they are going down.
a decumulation hat has an entirely different use for them in controlling your new enemy ,volatility.
many folks are still thinking with their accumulation stage hat on. that is where every penny only serves one purpose , to make more pennies. if you have a decent pension then the pay check never really stops so you may always be in that stage.
the retirement hat is different , no longer is it about growing richers for many of us. now all our strategies revolve around not getting poorer or freaking out when downturns come.
there are strategies and ways of seeing to that but you really need to switch hats to grasp a lot of it.
while we may still increase wealth that really isn't the first goal in this stage.
an accumulation stage hat would never buy bonds knowing they are going down.
a decumulation hat has an entirely different use for them in controlling your new enemy ,volatility.
Most discussions here and there involve folks in your situation. Folks in mine don't participate as much as they did when I was learning from them. I really miss the old Money magazine types.
many folks are still thinking with their accumulation stage hat on. that is where every penny only serves one purpose , to make more pennies. if you have a decent pension then the pay check never really stops so you may always be in that stage.
the retirement hat is different , no longer is it about growing richers for many of us. now all our strategies revolve around not getting poorer or freaking out when downturns come.
there are strategies and ways of seeing to that but you really need to switch hats to grasp a lot of it.
while we may still increase wealth that really isn't the first goal in this stage.
an accumulation stage hat would never buy bonds knowing they are going down.
a decumulation hat has an entirely different use for them in controlling your new enemy ,volatility.
If you plan on living in retirement for 20 to 30 years or longer, you need to consider growing your assets. There are very few people with decent pensions which will increase to reflect COL. "Conservative" investments are way too risky for the long haul. You need your money to earn in order to be somewhat inflation proof.
Usually 40-60% equities does the trick.don't confuse controlling volatility with being to conservative. Not the same thing.
as an example the permanent portfolio i used to use had the volatility of watching paint dry. it was boring as heck. but it still averaged over 9% for 35 years.
markets are big peaks and deep valleys , the averages are somewhere in between. by controlling volatility you can drive from point A TO POINT B in a straighter line to get to that middle point as opposed to following the peaks and valleys..
Last edited by mathjak107; 03-22-2014 at 02:09 PM..
Why would 40-60% do the trick? That is just giving away a huge part of the potential earnings. Consider 80% in equities. That leaves 20% available without worrying about the ups and downs of the stock market. If the stock market takes a dive, at 4%, the investor can pull funds for 5 years without the need to pull from equities.
the answer is when spending down results are different than just leaving it untouched growing. when you are thinking with your accumulation hat higher equity allocations = higher performance.
but that is not what happens when spending down.
50/50 seems the optimal balance of performance and volatility/risk.
you can go more if that is what you want and have the pucker factor. but if you are not just letting it grow but spending down more equities does not equate to better performance.
for a 4-5% swr additional equities did not improve things much more after 50%. in fact most of the time 100% equities did worse than a 50/50 mix. the valleys just took that much more work to come back from. a 50% fall takes a 100% gain just to get back.
most retirees do not want to invest like they did in their accumulation stage , self included. now i want to draw the income i need at the lowest volatility level i can do it at.
when it comes to spending down things work differently ,actually a 50/50 mix survived more time frames without failing than 100% equities did. look at 50/50 at 4%
you would have had to sleep through some wild swings and really gained next to nothing for that trouble. you reach a point where additional equities when spending down took on more risk and volatility but not much gain to match.
Last edited by mathjak107; 03-22-2014 at 02:49 PM..
Why would 40-60% do the trick? That is just giving away a huge part of the potential earnings. Consider 80% in equities. That leaves 20% available without worrying about the ups and downs of the stock market. If the stock market takes a dive, at 4%, the investor can pull funds for 5 years without the need to pull from equities.
There are multiple ways to skin multiple cats if you don't need your nest egg for retirement. One way is dedicated portfolios for different purposes or pools within portfolios for different uses. You know the needed dollar amounts recommended for health care overage. Have that in a fund and having multiples of your annual income identified to grow your annual Pay yourself a COLA amount etc etc. different ways depending on. If you are saving/investing enough each year you are creating funds for identified future needs or adding to. We never talk resources so how we do it will make sense to us if not others.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
