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Ok, when you said "put money in mostly conservative funds" I was thinking along the lines of, for example, 45% in broad equity index funds and the rest in bond funds and cash/equivalents; I already assumed only using index funds and mutual funds. But 80% equity allocation in index and MFs is not what *I* consider "conservative," so color me surprised.
This is why it's important to get on the same page in terms of semantics and dial-in on what you're actually saying. As an industry professional you're at the 3D chess table and some of us are playing checkers.
I agree 100%, for me a 45% broad equity index fund is on the fairly conservative side, I would worry that with 20 (maybe more years) life expectancy you would outlive your money. If we were working together I would for sure give you some calculations and figures to show how withdrawal rates & life expectancy would work under different scenarios. Now if you're working with a LARGE dollar amount ($5-15M minimum), sure 45 ~50% in broad market growth funds & needed cash in CD's are you're off.
Again, I would feel very bad if we undershot and you're having to be a Walmart greeter at 80 b/c the portfolio didn't grow enough to keep pace. But I would find a way to make the numbers work as best we could with your perspective on risk, not mine.
Do you agree with the inverse equity glide path touted by Kitces and Plau?
They suggest starting retirement with a conservative equity allocation (generally around 40 to 45%, but no less than 35% equities in year 1 and ramping up, adding a % or 2 each year until the maximum desired equity allocation is achieved in about 10 to 15 years. This is done to minimize the effect of poor or negative returns early in retirement, while still allowing the portfolio to grow more aggressively when the early risk years have passed.
Do you agree with the inverse equity glide path touted by Kitces and Plau?
They suggest starting retirement with a conservative equity allocation (generally around 40 to 45%, but no less than 35% equities in year 1 and ramping up, adding a % or 2 each year until the maximum desired equity allocation is achieved in about 10 to 15 years. This is done to minimize the effect of poor or negative returns early in retirement, while still allowing the portfolio to grow more aggressively when the early risk years have passed.
For certain investors and circumstances it can be a beneficial tool. I like a lot of Kitces stuff, there is some that I just don't think every investor will fit into. But it can for sure under certain circumstances be very beneficial, such as in new estates, inheritances that are obtained just before or just into retirement. However I am of the mind-set that a well allocated and risk managed portfolio that has been able to be planned 10+ years before retirement will take care of most of that.
Is options trading meant to be confusing AF? I've been reading and studying them for a month and I'm starting to get it in theory and it makes sense when I watch the videos but I still have no idea how to place my first paper trade. Am I watching/reading the wrong things or is it normal to take a while before theory and application clicks into place? Not saying the stock market or Forex is easier by any means, but it sure felt like placing the trade part was at least straightforward.
I wouldn't sell puts here, they won't get you enough premium to really go anywhere b/c of the volatility. Think of it this way. If you're gaining premium for selling the put, you're being "pre-paid" upfront and are likely going to only go as high as your strike. You'll need to calculate your break-even so you can go at the right strike price.
*MOST* will not have enough premium to make it worth it. But with that said, if you can find something out there that you're getting 15-20% on, on top of the premium then absolutely. But good luck with that valuation.
This type of market is best to have had long puts, and put the underlying to people. I had the AMZN June 1440 strike puts, paid 98, sold to close at 150. Had the DIA 255 puts. Actually put those to someone Tuesday, paid 9, sold to close at 14.50, both were 100 contracts.
Best way to look at it is, check the spread between Bid/Ask. if it's more than 2% out, you're not going to make money on it. The market maker will book it himself, and turn around and sell it in the market.
I wouldn't sell puts here, they won't get you enough premium to really go anywhere b/c of the volatility. Think of it this way. If you're gaining premium for selling the put, you're being "pre-paid" upfront and are likely going to only go as high as your strike. You'll need to calculate your break-even so you can go at the right strike price.
*MOST* will not have enough premium to make it worth it. But with that said, if you can find something out there that you're getting 15-20% on, on top of the premium then absolutely. But good luck with that valuation.
This type of market is best to have had long puts, and put the underlying to people. I had the AMZN June 1440 strike puts, paid 98, sold to close at 150. Had the DIA 255 puts. Actually put those to someone Tuesday, paid 9, sold to close at 14.50, both were 100 contracts.
Best way to look at it is, check the spread between Bid/Ask. if it's more than 2% out, you're not going to make money on it. The market maker will book it himself, and turn around and sell it in the market.
But GREAT question.
So help me understand this, because there's a part of selling Puts I don't think I am understanding.
If you had sold a Put for Amazon June 1440, you are currently in the money (1351). How did you sell to close and make a profit on that? Isn't it the other way around where Amazon would have to be trading above your strike price in order to close for profit?
So help me understand this, because there's a part of selling Puts I don't think I am understanding.
If you had sold a Put for Amazon June 1440, you are currently in the money (1351). How did you sell to close and make a profit on that? Isn't it the other way around where Amazon would have to be trading above your strike price in order to close for profit?
My night comprehension from taking care of a newborn seems lacking.
Got it.
No worries. A newborn will for sure take it out of you! Congrats on that by the way!
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