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Do I still want to be 70% equities at age 70 pouring new money in? If 70% equities how beta do I want them to be? Am I still willing to chase Alpha at all?
In some sense, the answer depends on the size of your portfolio. If you have enough 0s to the left of the decimal, your willingness to be 70% equity at age 70 is different from what it might be with a much smaller nestegg.
Most of my investment decisions today won't have a substantive impact on my retirement at all. They will, however, have an impact on the beneficiaries listed in my will.
it is not really the size of the portfolio that matters . it is whether or not you have other sources of income or not as well as who you are investing for .
tuborg has a nice pension . in effect the pay check never stopped so he has the luxury of just letting that money ride .
other folks have other sources of income so they are investing for heirs . so it is not the size of the portfolio but the purpose .
many retirees don't have huge portfolio's but they do have a higher risk tolerance and 70/30 is not that uncommon . it gains so much more in up markets that act as a cushion in down markets that 70/30 has a very high success rate if you can stand the volatility.
in fact the longer your retirement time frame the more 70/30 may be a necessity
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Quote:
Originally Posted by mathjak107
i know we don't want any investments in retirement that are not both totally passive , liquid and require no dependency on any individual for the outcome .
we got involved with a supposedly benign tax lien certificate sale where we were supposed to get 18% interest until the lien was paid off . what a horror that turned out to be when we were awarded the house and the old owners refused to move out .
the pitfalls you only find out afterwards can be a horror .
we didn't really expect to get the property . we really were doing it for the 18% interest . the owners always come up with the money at the last minute .
well this time they didn't . so with the people still living in the house we had to start the eviction process .
so now we are in to this for 2 years back taxes at 12k a year , and now legal fees .
they used every tactic to stall the court so they were finally evicted almost one year later and 3 years taxes later at almost 9k a year
but now they left their stuff behind . it was basically junk but nj law says we have to store it for months and if not claimed and paid for it is ours .
so now a moving company moved everything out to storage . now we had storage fees for 6 months and moving expenses .
at the end of the time frame we had to pay again to have the stuff removed .
while the house was empty , we can't prove it but we are pretty sure the ex owners went back inside and vandalized the house ripping out all plumbing and wiring .
basically the house was trashed . my partner luckily was a builder so we ended up gutting it and starting over inside .
by the time we sold it the money we made and the aggravation was hardly worth it .
i would never get involved with these tax liens ever again . nothing to stop the same outcome when someone you sold to defaults on their payments to you.
it is bad enough when this happens during your working and aggressive investing years . do you really want to chance this crap in retirement where it is your source of income ? i would sooner just invest through prosper if i want to take the risk .
Wow that really sucks. But you are a very analytical person. It seems you research your stock investing carefully looking at all scenarios and worse case scenarios. Did you not not take the same care in doing so for the tax lien? Based on what you said these people seemed like a high risk and that there wasn't much value in the home to begin with to cover all of this.
In the case of a tax lien I'm going to assume that you didn't get to run a credit check on the people nor did you do any other checking on them like verification of income but just took the value of the tax lien and it's return.
If you're doing hard money lending you can pull out credit report on the lenders to check their worthiness and you can also check on the property to see if there's enough value in it should things go south.
That being said I always thought tax liens were pretty risky to invest in because you can't get a full read on the situation.
when dealing with tax liens you are dealing with the the local laws and state laws not individuals .
the individuals likely are dead beats or broke and have poor credit and quite frankly does not matter .
when it comes to these sales very few go to actual foreclosure . many times people just run ad's in papers for investors to bail them out and take a stake .
but like buying any investment there can be bumps in the road and things that come up or happen only after you buy it .
you can't be prepared for everything nor even know about all the ramifications until something happens and unfolds .
it is not really the size of the portfolio that matters . it is whether or not you have other sources of income or not as well as who you are investing for .
tuborg has a nice pension . in effect the pay check never stopped so he has the luxury of just letting that money ride .
other folks have other sources of income so they are investing for heirs . so it is not the size of the portfolio but the purpose .
many retirees don't have huge portfolio's but they do have a higher risk tolerance and 70/30 is not that uncommon . it gains so much more in up markets that act as a cushion in down markets that 70/30 has a very high success rate if you can stand the volatility.
in fact the longer your retirement time frame the more 70/30 may be a necessity
Yup, MathJak is aware of our overall situation. Not sure who we are investing for. Not sure I really care. It is as a backup, family/heirs and just the warm fuzzy glow of having. The operative goal for us moving forward is creating more and more redundancy to cover future needs.
One must remember the objective is not always to earn as much as possible from investments. While it sounds silly, the reality is while one is IN the game, one is often not confident enough to wait out the timing, regardless of what history tells us..
Just as SportandMisty said, if you have a large enough portfolio that a more modest rate of return means you still hqve way more income than you realistically need, then the risk and aggravation and worry to earn more only benefits the heirs. I hope I am on track to be in that boat, because beyond a certain age, I don't think you can always be a good investment strategist. Warren Buffet is an exception, not a rule.
income tends to be like water . it seeks it's own level for most of us . whether you have a few million or a few hundred thousand the draw percentage wise tends to work out the same .
if you look at the polls on most retirement draws , those with out pensions tend to pull in the 3-3-1/2% range so regardless of balance the math and success rate is the same for big balances and smaller balances.
in both cases there can usually be to much month at the end of the money , lol .
bigger balances tend to lead to just more expensive lifestyles unless you are one of the frugal few , but even then unexpected spending and emergencies eventually get you in either case .
...whether you have a few million or a few hundred thousand the draw percentage wise tends to work out the same .
........
Is that really the case?
Now that a higher percentage of my expenses are discretionary, I feel more comfortable with a higher withdrawal rate. I have helped my kids with college and other expenses and don't feel much interest in passing on a large inheritance.
that is the point i made earlier . it is not the balance that matters it is the ratio of discretionary to non discretionary income that matters.
if markets are worse thn planned around or your expenses take a large unexpected hit you may need room to cut back . if everything is a need and not a want you may not have much room to cut back .
we could have taken our same budget and lived in manhattan and had a poor ratio of discretionary vs non discretionary income or we can spend the same amount living in queens but having a better ratio with more discretionary spending for wants . that gives us a wide margin for any downward adjusting if it ever came to it .
my feeling is that people who have budgets of mostly or all non discretionary spending should not be much in equities since they can be in worse shape if things take a hit and they can't cut back and they do not have other sources of income covering things ..
people with pensions that cover most or all of their non discretionary expenses are not in the same boat .
Last edited by mathjak107; 05-03-2017 at 05:27 AM..
that is the point i made earlier . it is not the balance that matters it is the ratio of discretionary to non discretionary income that matters.
people with pensions that cover most or all of their non discretionary expenses are not in the same boat .
I agree. One of the nice things is that we get a fixed income deposit three different times a month. It just started at 3 since I am now on my own SS. It makes a major difference in a lot of ways mostly psychological.
As your point about discretionary v non discretionary spending.
I would love to see a study on the percentage of investment portfolio's that are being added to in retirement v being a draw down vehicle. That might change how we look at retirement income if some of the published studies included that.
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