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I know you didn't create this "guideline" , but this might top the list ( and there are many!) of absolutely awful investment narratives.
So a healthy 50 year old that could easily have a 30+ year time horizon should weigh down his portfolio with 50% fixed income
For sure. And I hear many so-called "experts" talk about being totally out of stocks at retirement, almost like the day after they retire they drop dead. People are living into their 80s and 90s nowadays thanks to modern medicine, no reason to sit on a fixed income portfolio for what could be 15-30 more years.
I know you didn't create this "guideline" , but this might top the list ( and there are many!) of absolutely awful investment narratives.
So a healthy 50 year old that could easily have a 30+ year time horizon should weigh down his portfolio with 50% fixed income
One guideline I hear of is percentage of stock vs. bonds should be 100 minus your age. So at 38 years old that should be 62% stocks and 38% bonds. At 60 years old it's 40/60. I don't necessarily agree with it (I think it's too conservative even for me), but it's one rough rule of thumb.
I left age 60 in the dust several years ago, but over the last couple of years I've pared stock (mostly via ETFs with a few individuals) down to about 45%. At this point, I don't know if I will go any any lower.
One guideline I hear of is percentage of stock vs. bonds should be 100 minus your age. So at 38 years old that should be 62% stocks and 38% bonds. At 60 years old it's 40/60. I don't necessarily agree with it (I think it's too conservative even for me), but it's one rough rule of thumb.
With people living longer the % in bonds can be adjusted. When you get to 60 maybe still have 30 years to live. So maybe keep 60% in stock & 40% in bonds. Could go 60% stock, 30% bonds, 10% cash. With the 10% cash these days @ 5% maybe ride out dips in the stock market. Need a stable fund for the 30% bonds.
For the 38 year old maybe 85% stock, 10% bond, 5% cash. Here the cash includes your emergency fund & a rainy day put & take fund.
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Originally Posted by organic_donna
It’s definitely not for everyone, ... I started investing in individual stocks in 2011 when I bought Apple. ... I don’t recommend this for most people. But if you do invest in stocks, try to hold for the long term.
Don't hold LT if you happen to choose the WRONG stock
Your scenerio worked really well for my college aged kids. (They were already trained in investing and valuing companies). In the early 2000's they bought NFLIX, GOOG, MSFT, AMZN, META, AAPL. By 2020, they had harvested their profits, preserved their capital and currently into broad market ETFs. with 80%, and 20% is still play / speculation. Cost basis for their NVIDIA is <$2. They bought and held what made sense, but currently don't have the time (or interest) to follow individual issues, which they did while in school.
I stuck my appreciated shares into my DAF while offsetting earnings during my accumulation yrs.
DAF will fund others for perpetuity. Which is a good thing, because I live very inexpensively, so my gifting would be peanuts during retirement, but instead... it is at and above the levels I gifted while I had earned income.
With people living longer the % in bonds can be adjusted. When you get to 60 maybe still have 30 years to live. So maybe keep 60% in stock & 40% in bonds. Could go 60% stock, 30% bonds, 10% cash. With the 10% cash these days @ 5% maybe ride out dips in the stock market. Need a stable fund for the 30% bonds.
For the 38 year old maybe 85% stock, 10% bond, 5% cash. Here the cash includes your emergency fund & a rainy day put & take fund.
using someone’s age to determine bonds has been proven to be quite wrong .
first off who you are investing for is the biggest factor .
someone who is going to be drawing very little from their investments because they have pensions or other income sources is very different from someone who is taking on sequence risk spending down to live .
for all purposes the first person never had their pay check stop .
the second person situation has a lot of different factors to be concerned about .
there is no actual glide path that is correct for everyone..
newer research shows that those living off that money should maintain high equity levels right up to what is called the red zone , which is 5-8 years pre retirement when portfolios are highest and drops can be big dollar hits .
the equities should be reduced down as the V shaped chart shows , then as the red zone gets cleared about 5 to 8 years in to retirement equities should head back up again .
we just cleared our red zone after 8 years in retirement and increased back up .
including ALL CASH , 52% equities , 37% bonds , 11% cash which is two years spending , but reduces down as the year progresses as it’s spent .that has equities actually rising higher in percentage as cash gets spent down
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