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While you didn’t have a 500k house you also don’t have a 550-650k annual income either. If we are talking about things we don’t have, I don’t have any expenses and haven’t for children so one might argue my fancy cars are essentially children. All of this is irrelevant to the topic of returns though as I save 40-50% of my pretax income when I was making 150k and that number has faded as tax burdens have gone up but I save a lot of my 550-650k and invest in mostly index ETFs and leave them alone. The results speak for themselves and I’m about to replace one of my BMWs with a newer one but my investment performance allows that along with my savings rate
this year ended for us a few hundred thousand higher then last year ended . but that is after buying a new car for 80k and the years living expenses so investing wise it was a very good year
poor investor behavior is why most americans shouldn’t be handling their own money.
those who retired in 1966 or 1965 thought they had more then enough saved …little did they know inflation would soar in just a few short years and markets would move sideways for many years while fixed income was crushed .
so building up that cushion beyond what we think is enough when we can is very important
In the years after 1965, the perfect storm of retirement killing conditions took place.
Inflation grew rapidly over the following decade, exceeding 10% in several years in the 1970’s and averaging 6% a year from 1965 to 1985.
Interest rates rose rapidly, from ~4% in 1965 to ~8% in 1970, up to 15% in 1982, causing bonds prices to plummet.
The combo of fast rising high inflation and rising interest rates destroyed bonds and fixed income.
Stocks also performed horribly. Adjusted for inflation, the stock market moved sideways over 2 decades
The most insidious retirement killer was inflation.
Retirees were pulling out way more dollars to live then they ever imagined .
By the time. The smoke cleared the fact the greatest bull market in history was in their time frame did not help as they already spent down to far for markets to help
Few even gave it a thought prior since inflation was low to moderate and something like this was not even on the radar..
so it is a good idea to build those reserves higher then you think and not sit back and go i don’t need equities anymore ..we never know how much is enough until well after it is to late to do much about falling short .
so unless one has enough coming in from sources other then their own pile of money it is never a great idea to think one has enough and doesn’t need decent compounding at any point in retirement when potentially they still have decades left of life.
i would love to give up on the volatility of equities but i know doing so would be the riskiest move one could make with potentially two decades or more of life and the unknown left for either one of us.
the fact a 50/50 or 60/40-has a 96% success rate over the 118 30 year cycles we already had at a 4% inflation adjusted draw , and fixed income , with no equities has failed 65% of those cycles already , tells us which is the real risk and it ain’t using equities.
yep , trying to use fixed income alone has resulted in a 65% failure rate and ran out of money before a 30 year period was hit.
greater then a 10% failure rate is considered too risky and is not considered a safe withdrawal rate
here is a success rate vs allocation chart
Last edited by mathjak107; 12-30-2023 at 03:49 AM..
for 2023 the final numbers for the models i use just posted
the fidelity insight conservative income model , which is 75% less volatile than the s&p , up just under 10%
so it returned more then 2x what hiding in cash instruments did for 2023 .
we typically keep about 5 -6 years of spending in this model along with 2 years of cash instruments .
the insight growth and income model up 18.26 % , that is 58% equities , our largest position with 10- 15 years spending , maybe even more
our 100% equities combo of
vti total market fund up 26%
berkshire class b up 15.4% , 25% less volatile then the s&p and holds all the rest of what isn’t in the other models ,we may never get to this
not enough history on the leveraged carolina reaper portfolio yet but it was up a bit since i bought it, only in play a few weeks.
so a very good year up multiple 6 figures over last year …let’s see what 2024 brings
Last edited by mathjak107; 12-30-2023 at 04:17 AM..
for 2023 the final numbers for the models i use just posted
the fidelity insight conservative income model , which is 75% less volatile than the s&p , up just under 10%
so it returned more then 2x what hiding in cash instruments did for 2023 .
we typically keep about 5 -6 years of spending in this model along with 2 years of cash
the insight growth and income model up 18.26 % , that is 58% equities , our largest position with 10- 15 years spending , maybe even more
our 100% equities combo of
vti total market fund up 26%
berkshire class b up 15.4% , 25% less volatile then the s&p and holds all the rest of what isn’t in the other models ,we may never get to this
not enough history on the leveraged carolina reaper portfolio yet but it was up a bit since i bought it, only in play a few weeks
The NASDAQ was the star performer. It increased 43%.
Best performance since 2003.
my fidelity blue chip growth fund was up 56.50% , just insane.
it took a beating though in 2022 but still , what a come back.
i don’t own it but arkk was up almost 68%.
this was a year where if you sat it out by bailing to cash last year or mostly cash , it has a profound effect on future growth because the high returns so far outsized the average market returns we get .
over time it’s the big up years that average out the down years …
if one bailed out before the fall in 2022 then they are not to far behind.
but that isn’t human nature for most , to bail at highs …rather they wait for the fall and then throw in the towel so the morningstar small investors show as a group they really blew it bailing out during the drop then missing the recovery
Last edited by mathjak107; 12-30-2023 at 04:51 AM..
poor investor behavior is why most americans shouldn’t be handling their own money.
It’s why most would benefit from an advisor. A lot of people are against paying someone else but that stats show it’s absolutely worth it for most people. It’s also entertaining to hear people expecting an advisor to beat the market missing that’s not what the job is, it’s to help beat what a person would do on their own. This thread is littered with examples as is Morningstar’s data
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