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Old 05-03-2015, 06:51 AM
 
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"I'm debt-freeeeeeeeeeeeee!"
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Old 05-03-2015, 07:08 AM
 
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Quote:
Originally Posted by otterhere View Post
"I'm debt-freeeeeeeeeeeeee!"
and because of my mortgage I am $30,000 ahead in two years. Wheeeeeeeeee.
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Old 05-03-2015, 07:11 AM
 
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Isn't personal preference and the ability to exercise it wonderful!
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Old 05-03-2015, 07:22 AM
 
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it is when you are the one doing it. however for most americans that choice is made for you through target funds and the fact wall street tells you what to do by age..

when you just follow their plan you can end up being anything but comfortable.

most of the youngins bailed out of their 401k's at work being far to aggressive because that is what they were either put in by a target fund or told to do because of their age.

big mistake.
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Old 05-03-2015, 07:38 AM
 
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There is a lot of bad advice, some outdated, some just myths.

Paying off a mortgage made sense in the old days but that is no longer the case for many of us.

Changing from stocks to bond investments as we grow older might have made sense years ago when bonds were safer and paid more and people died at a much younger age. Now many of us look at a more balanced allocation so our investments grow and last for 30 years in retirement.

People pay more attention to losses than to gains. The 2008 recession still haunts some people. Others of us are so far ahead we view that recession as a good thing at least for our investments.

Many people live in a box but cannot see what is on the outside. I guess that is fine because they always talk about how comfortable they are in the box and how it makes them feel good.
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Old 05-03-2015, 07:43 AM
 
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depends on the stage of life and financial position .. for those who are counting on just portfolio's for income paying attention to downside can be more important than upside.

no one ever had trouble maintaining an income level because they gave up some gains assuming at least 40% in equities . . they may have decreased some legacy money but that was about it.

on the other hand without adjustments downward in spending we had quite a few failure periods already because of poor markets.

the y2k retiree with a 60/40 70/30 mix would be one of them.

without spending adjustments downward they would have blown through 3/4's of the money in only 15 years time. both equities and bonds yielded less than 2% real returns which mathematically can't stand up to 4% inflation adjusted spending in that sequence order.

so yes for many not growing poorer becomes more important than growing richer. there are times the carrot always on the stick can do damage.

i know my portfolio can go as low as 35-40% equities and meet income goals.

i also know i have no interest in 70% equities just to try to get richer. so my sweet spot is about 50% .

but others may want to go less , in fact i will make a statement i feel strongly about .

the less your discretionary income the less you should be in equities. with no where to cut back if things go wrong the downside risk is greater than the upside benefit.

Last edited by mathjak107; 05-03-2015 at 07:59 AM..
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Old 05-03-2015, 08:14 AM
 
Location: RVA
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Thats a very reasonable statement. The more you can afford to risk, the more chance you can afford to take in equities. Just like the younger you are the more you can be in equities.
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Old 05-03-2015, 08:43 AM
 
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Quote:
Originally Posted by mathjak107 View Post
.....

the less your discretionary income the less you should be in equities. with no where to cut back if things go wrong the downside risk is greater than the upside benefit.
and the poor get poorer and the rich get richer.
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Old 05-03-2015, 09:49 AM
 
Location: Pennsylvania
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Quote:
Originally Posted by jrkliny View Post
No, nothing is guaranteed.

But all I need to do to come out ahead is to make about a 5% return on my investments over the long haul; i.e. for the 30 year span of the mortgage. Historically that has been easy to do. Perhaps if I was living on a very tight budget, I would need to worry. It is generally true that those who live on a tight budget have difficulty with investing because they cannot afford to handle the bad times. Without the ability to invest, the poor just stay poor. In my case, I have already won the "gamble". I have started out with a couple of good years of investment returns and like a snowball rolling down hill my portfolio just keeps growing and picking up speed.

As a retiree, I have no salaried income but depend on investments and social security. Over the long haul my lifestyle will suffer unless I can maintain investment returns of about 2% more than inflation. That gamble has also worked out very well. I have been retired 4 years and started planning my retirement about 6 years ago. Since then my assets have doubled....again like a snowball rolling downhill. Now it would take being blindsided by something as massive as the Great Depression to set me back those 6 years.

My illiterate, emigrant, peasant grandfather was smart enough to tell all the family members to put their money to work for them. Some smart, educated people just don't get it. They "feel" good if their money is in a safe place but not working for them.
And if the stock market tanks (which admittedly, it looks like it's never going to), then you'll be very sorry that you were using leverage.
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Old 05-03-2015, 11:56 AM
 
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Quote:
Originally Posted by jrkliny View Post
and the poor get poorer and the rich get richer.
not in this case at all.

the updated trinity study shows that no more than 40% in equities has ever been needed to maintain a safe ,secure ,consistent 4% inflation adjusted income stream , .through even the worst of times.

what has changed is the amount left in the legacy bucket leftover.

ideally 50/50 had the best results. 70/30 and higher actually ran out of money and hit zero more times than 50/50 did. not by alot , but by enough that shows more equities does not always mean more money.

50/50 at 4% achieved a 98% success rate at 30 years . 75% equities was only 93% . the updated trinity showed little difference between 40 and 50%
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