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Old 08-28-2010, 06:45 PM
 
Location: Ponte Vedra Beach FL
14,617 posts, read 19,181,192 times
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Quote:
Originally Posted by mathjak107 View Post
heres a site that tracks the portfolio year by year as well as gives you the compounded average annual returns .

Permanent Portfolio Historical Returns | Crawling Road
Yes - I've seen that website. But I think your real life returns (which take fund expenses - trading costs - etc. - etc. into account) are more realistic. Robyn
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Old 08-29-2010, 03:38 AM
 
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Quote:
Originally Posted by Robyn55 View Post
I have a friend about your age - somewhat younger than I am - and she is always talking about "buckets". I don't have buckets. I have 2 portfolios. One that is in taxable accounts - one that is in tax-deferred or tax-free (ROTH) retirement accounts.

And - IMO - people aren't (and never should be) spectators in any aspect of life. They should think for themselves - and not follow any "guru(s)". Who's the guy with Fidelity Insights - Eric Kobren? He's been around for decades. If he's so smart - why isn't he worth $25 million+ now - retired - and scooting around on his yacht? I used to try to find "gurus" 20-30 years ago. Gave up a long time ago - and started learning stuff on my own. I am not a financial/investing genius - but I control what I do - and I know why I'm doing it. Doesn't mean I always sleep soundly at night - because there are things that happen in peoples' lives (financial or otherwise) that aren't entirely pleasant. But I feel better being in control than following blindly some stranger who writes a newsletter for a living.

FWIW - about people who write newsletters. I do a fair amount of technical analysis - and have accumulated some rare data series over the decades (some inputs were manual for a very long time - still are). Perhaps 15 years ago - I offered a data series to a particular newsletter writer who was interested in it - in return for a free subscription to his newsletter for a year. And he went off on a tear. How he couldn't afford to give the newsletter to me for free - and how I should give him the data for free because I could afford to - etc. - etc. Last time I had *anything* to do with someone who wrote a newsletter.

I know that doing financial analysis before one invests is about as much fun as getting dental work (maybe less). But - unless a person is dumb or has zero time - it's an important personal investment IMO. Robyn

P.S. I have a complete set of Fidelity Select Fund data for all funds going back to their dates of inception - all distribution adjusted (used to trade them and needed the data). Doubt many people - even Eric Kobren - have that.

actually eric kobren retired last year..

i consider myself a pretty knowledgable investor but heres why i stuck with fidelity insight for decades.

their picks are just okay as far as funds,no magic there. in fact i think fidelity monitor surpassed them in gains although with a bit more risk .

the newsletter serves as proof that you can have middle of the road funds, a good plan and sticking with it will make you lots of money.

the model portfolios are well thought and balanced . on your own you can pick 3 different fidelity funds and end up with the same holdings. the newsletters info is more current than the holdings we get on morningstar.

their risk and goals of their model portfolios have always fit within my own. they have a few different model portfolios of risk and growth so its easy to find one that fits your goals.

i started life in their growth portfolio and a few years ago before the down turn prepared for early retirement and slid down to their income and capital preservation portfolio.



i have seen folks on their own put together such ill fitted portfolios like a conservative portfolio with a hot fund like leverage co. as the stock portion. its one of their riskiest funds...

but heres the secreat: i like the handholding when things get rough and the responsibility for having to decide what to do falls on a 3rd party.

like everyone else my gut reaction to 2008 was bail and run but by having them call the shuts it kind of felt better and forced us to stick it out and do the right thing.

this happened every time markets were up nicely and i wanted to take the money and run or when things dropped and i wanted to bail and run thinking i knew what was next.

we recovered nicely,bought more and are just shy of even with the high as well as 100k in 1987 is still worth almost 1.2 million..

that hand holding was worth the subscription price for us.

making money long term is all about having a diversified mix, sticking to your plan, and doing the right thing by not bailing when you should be buying .... it may take 15 years or more but sticking to the plan and letting cycles do their thing have always paid off.

lets hope it continues because otherwise we will all be broke anyway in retirement without the growth letting us take our safe withdrawls.

Last edited by mathjak107; 08-29-2010 at 04:16 AM..
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Old 08-29-2010, 04:01 AM
 
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as far as the bucket systems i use ray lucias format,nice and simple.

unlike having a big hodge podge of a portfolio with no easy way of seeing whats what when it comes to your withdrawls.

the buckets i use give me a nice clear picture years of safe money for spending in the next few years as well as a timeline.
i got to tell you it was a warm fuzzy feeling looking at how things were structured back in 2008 and seeing we had 15 years of safe and relatively safe spending money before we had to sell our first equity fund.

the other nice thing is you rebalance not on market performance but on years of money..

if your buckets 1 and 2 still have many years of money and markets are soaring then let your bucket 3 just run for a bit without rebalancing..

you have a choice with the bucket system of when to re-fill , wait until buckets are empty and refill, that will give you maximum gains in an up market or re-fill buckets whenever markets are up. that will keep the volatility down but reduce gain potential.

it just makes planning so much simpler for most people to use the buckets as everything is clearly layed out right down to what kind of assets to buy when adding money..

if you want less risk just increase buckets 1 or 2...

Last edited by mathjak107; 08-29-2010 at 04:19 AM..
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Old 08-29-2010, 07:18 AM
 
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found a little video on rays buckets

dont go by the numbers though, those are quite old and based on much higher stock and cd and money market returns then currently but it gives you the idea of the flow of things....

http://www.rjlwm.com/content/buckets.swf (broken link)
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Old 08-30-2010, 05:43 PM
 
Location: Ponte Vedra Beach FL
14,617 posts, read 19,181,192 times
Reputation: 6743
Quote:
Originally Posted by mathjak107 View Post
found a little video on rays buckets

dont go by the numbers though, those are quite old and based on much higher stock and cd and money market returns then currently but it gives you the idea of the flow of things....

http://www.rjlwm.com/content/buckets.swf (broken link)
You're right - the assumptions on returns there are totally unrealistic. 4% on cash in bucket 1 when the true return today is 0-1.4%. More on the other buckets. You know what I assume in terms of returns these days projecting forward another 20 years - zero. And anything I get above that is gravy. Robyn
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Old 08-30-2010, 06:28 PM
 
Location: Ponte Vedra Beach FL
14,617 posts, read 19,181,192 times
Reputation: 6743
Quote:
Originally Posted by mathjak107 View Post
...

but heres the secreat: i like the handholding when things get rough and the responsibility for having to decide what to do falls on a 3rd party.

like everyone else my gut reaction to 2008 was bail and run but by having them call the shuts it kind of felt better and forced us to stick it out and do the right thing.

this happened every time markets were up nicely and i wanted to take the money and run or when things dropped and i wanted to bail and run thinking i knew what was next.

we recovered nicely,bought more and are just shy of even with the high as well as 100k in 1987 is still worth almost 1.2 million..

that hand holding was worth the subscription price for us.

making money long term is all about having a diversified mix, sticking to your plan, and doing the right thing by not bailing when you should be buying .... it may take 15 years or more but sticking to the plan and letting cycles do their thing have always paid off.

lets hope it continues because otherwise we will all be broke anyway in retirement without the growth letting us take our safe withdrawls...
I admire your willingness to confess your human shortcomings. I have mine as well. But I can tell you that since you're approaching retirement (I think you mentioned 2 years from now) - you're entering treacherous waters where relying on others may allow you to sleep better at night - but may or may not leave you with more money. On my part - I sleep better at night knowing I'm not relying on anyone except me and my husband - but there are nights I don't sleep very well at all these days. Such is life.

Anyway - the waters are treacherous for a couple of reasons. First - you'll be giving up your life raft - your job - your paycheck. My husband and I retired early - very early - and not from a steady paycheck either. And we were lucky. We had the investment market winds behind our backs - not in our faces. Even though we were doing mainly fixed income (there were very high yields). Today - I am not sure that we won't become another Japan for the next 20 years - where investment returns in any market will be hard to come by. So perhaps it is better to work longer - and save more out of a steady paycheck - just in case. OTOH - you never know what's going to happen in terms of health. If you or your wife get sick - disabled - die early - like when you're 70 - you'll have missed the opportunity to do things you could only do when you were younger and healthier and retired. My husband has MS - and there are things we could do in our 50's that we can't do now (although we can still play lousy golf together ). In retrospect - our decision was perfect for us. But hindsight is 20/20.

Second - it is very hard to recover from a big portfolio hit in your early retirement years if you're withdrawing money (from any bucket). If I had $1.2 million these days (I'm older than you - and I have more) - I'd ask myself what the relatively risk free rate of return is. I put it at about 4% tax free - and - curiously - taxable as well - because yields are very screwed up these days. So can you live on say $40k a year max? - saving perhaps $8k (or using it for rainy day stuff like a root canal not paid for by health insurance or new tires). You will get early SS when you're 62 - I'd add at least a chunk of that to savings too (even if you're retired - you have to keep on saving to compensate for potentially lower investment returns or a higher cost of living).

And what's the deal on health insurance from now until age 65 on your end (health coverage is a big PITA when you're older and not yet on Medicare). Is it available - what does it cost - what does it cover - and is it guaranteed until age 65? What are your possible out-of-pocket expenses? I'm not on Medicare yet - and my total possible out-of-pocket any given year for medical (not including dental) is $13k. My husband is covered pretty much 100% - but his Medigap policy costs almost $2k/year - Medicare Parts B and D about $1800/year. People who aren't on Medicare kind of think that it's "free" - but it isn't.

Finally - any possible windfalls on the horizon - like an inheritance from parents? Winning the lottery doesn't count . Robyn
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Old 08-30-2010, 06:40 PM
 
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well the 1.2 million is only part of our portfolio.. we have alot more then that as well as a family real estate business we are liquidating the last few years which is mostly co-op apartments over looking central park in nyc in a archecthectural landmark building next to lincoln center. marilyn has a small pension and until the apartments are sold we have a nice income stream. the apartments have been sold at anywhere between 1 and 2.4 million each. we had 9 and are down to 2 left...of course there is next to no cost basis anymore so the taxes here in nyc are a biiggie on them. other family members are partners too so its a 4 way split..,

your right about scarey, our origional plan was to retire in june of this year. im not ready in my mind yet and the thought of nooooo paychecks is freaking me out......

we decided to hold off a few more years but we are prepared to go at anytime if work gets to be to much.

for medical our plan is to go HSA assuming they still exist... .

im trying to cover as many bases as i can in advance but i got a feeling most of this will all be done real time.

sorry to hear about the ms, that can be a real problem when it flares up.

Last edited by mathjak107; 08-30-2010 at 06:49 PM..
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Old 08-30-2010, 07:16 PM
 
Location: Ponte Vedra Beach FL
14,617 posts, read 19,181,192 times
Reputation: 6743
So do what feels comfy. Unless you're forced into something.

I don't know much about HSAs - except you can't put a lot of money in them. I'm a pretty healthy person - and this year I had a MOHs skin cancer surgery on my face (too much tennis and golf in Florida!) - and a minor GYN op (out-patient - less than 23 hours in hospital) - both at MAYO JAX - and "poof" - that was $23k in bills. Don't even want to think what this might cost in NYC.

The MS thing is kind of a cautionary tale. My husband was diagnosed when he was in his 30's - but ran hundreds of miles - including marathons - until the disease caught up with him when he was about 60. So we're glad that we retired early. Couldn't have done the things we did when we were younger now. OTOH - like I said - we had the investment winds at our backs then. The same isn't true today IMO.

I think all of these decisions are personal and dependent on prevailing/future personal situations and economic conditions. And unless you're diagnosed with terminal cancer or something like that - there's nothing wrong with taking your time deciding what to do.

Have to laugh regarding your comment about sleeping at night. I recall 2008. Now I'm a fixed income investor. And hedge funds were throwing munis out the window then at various times during the year. I was buying - but had serious headaches and nausea just about every day. I'm glad I have a friend who's a portfolio manager (he handles a ton more money than I do). He was feeling the same way. But he took the time to hold my hand once every few days for 10 minutes or so over the phone - after talking to him I managed to keep lunch down. FWIW - he's now in Hawaii on a 2 week vacation. Totally burnt out after dealing with portfolios/clients to date this year. It is a *very* difficult investment environment.

Anyway - you'll know when the time is right - and when you're comfy. No reason to set arbitrary and certain goals - deadlines - time frames in an uncertain world. You take care, Robyn
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Old 08-30-2010, 07:56 PM
 
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we have an hsa now..we can put 7200.00 a year in it... insurance is about 4000.00 a year for both of us with a 5200 deductable max.

still far cheaper then the 10k for regular insurance.

after the 5200 everything is covered and no co-pays.
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Old 08-30-2010, 08:43 PM
 
1,465 posts, read 4,778,419 times
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Robyn, mathjak, just wanted to let you know I enjoyed reading this thread with comments from both sides. Reps to both
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