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Never as no one cares about your money like you do ….I would never let anyone make my money decisions..there are enough do it yourself portfolios out there for anyone to do it .
The only time I recommend a third party to handle your money is when you are prone to poor investor behavior mentally
...This economist has a perspective that I found worth sharing. Read it if you like, ignore if you don’t. I don’t care one way or the other…
The rationale for such “conventional wisdom” is the assumption that either one seeks to withdraw and to spend annually a sizeable portion of one’s assets (often cited as 4%), or that one’s ratio of portfolio-size to pre-retirement income isn’t all that large. In either case, one’s investment strategy has to sustain one’s consumption, and that may mean foregoing potential gains in favor of avoiding some disaster that crimps said consumption.
But what if one’s withdrawals are small, and ratio of portfolio to income is large? Then the emphasis becomes an abstract goal of build wealth for wealth’s sake, whereupon, the conventional wisdom need not apply.
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Originally Posted by HB2HSV
Unfortunately for the majority of us, we were trained to be an employees. We went to school to learn a skills (accounting, engineering, law, medicine, etc.) and we spent the rest of our life time practicing that trade, to earn money for living and savings. ...
What one thing schools didn't teach us was on how to create wealth. Instead we traded our productive time with money (often in the form of $/hour). ...
This is because a stable society is one where the vast majority of people devote themselves to a skill, a trade, an art, a practice…. while the outright pursuit of wealth is limited to a very few. If we were all entrepreneurs, then who would wash the dishes, sweep the streets, raise the children or do research on fusion-reactors? And if we all got wealthy, prices would compensatorily rise, and nobody would be ultimately wealthy. I would rather live in a society where most people were pretty clueless about investing, and not particularly good at saving money in the first place.
The first question is always who are you investing for ?
If all your bills are covered with other funds and it is just fun money and legacy money for heirs then invest any way you see fit .
There are no bounds or rules .
On the other hand trying to develop a safe secure consistent pensionized income from your own money , that holds up in good and bad times and lasts as long as you do is another story
why do people give links to "important" articles that are behind a paywall? Why don't you give us all a subscription to the NY Times and we'll all have a read??
You can read up to 10 NY Times articles per month before being asked to pay.
Or you can just copy and paste the headline into Google for free and easy access. Google will give you links to several sources including the NY Times. If you had exceeded the free limit at NY Times, just click on one of the other links such as this one
I read this article on NY Times but found it too simplistic and not to useful.
The gist of it (from my quick read) is that the young can afford to own stock because human capital is their wealth
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if their stocks are poor, young people have time to make up for it by stepping up their work effort and earning more money.
The argument for old people is that they spend less on assets with aging and more of the remaining wealth is in 'secure' social security payment. Therefore, they can afford to take more risk in owning stocks.
The article seems to based on Kotlikoff's book ” Money Magic: An Economist’s Secrets to More Money, Less Risk, and a Better Life."
Quote:
For most people, Kotlikoff argues, the ideal equity allocation trajectory is high when they are young, low in the years just before and after retirement, and then again higher during the last stage of retirement.
I have not read Kotlikoff's book. IMO, it does not make sense to get heavily into stocks in one's later life stage when health expenses can be quite high unless one has secured LTC. We were glad that our PILs had a nice bucket of cash to pay for their nursing home cost in the last few years of their life. If their savings were mainly in stocks, we would have to sell them to pay for their care as needed even when the stock values were at low points.
I would disagree … stocks are always good to use through life and in fact a safe withdrawal requires it because inflation never stops .
So unless you are taking an inefficient draw of less than 4% you need equities or the risk of failure is a given .
Using only fixed income can result in about 25% less available as a pay check ….
For some that is a big pay cut not using equities.
A typical retiree range ,who lives off their portfolio and wants at least a 4% inflation adjusted draw is 35% to 60% equities….
While a decade or so in if things are not worst case you can take more , but you can’t plan around it until you see how the earlier years go with little in equities
You can read up to 10 NY Times articles per month before being asked to pay.
Or you can just copy and paste the headline into Google for free and easy access. Google will give you links to several sources including the NY Times. If you had exceeded the free limit at NY Times, just click on one of the other links such as this one
I read this article on NY Times but found it too simplistic and not to useful.
The gist of it (from my quick read) is that the young can afford to own stock because human capital is their wealth
The argument for old people is that they spend less on assets with aging and more of the remaining wealth is in 'secure' social security payment. Therefore, they can afford to take more risk in owning stocks.
The article seems to based on Kotlikoff's book ” Money Magic: An Economist’s Secrets to More Money, Less Risk, and a Better Life."
I have not read Kotlikoff's book. IMO, it does not make sense to get heavily into stocks in one's later life stage when health expenses can be quite high unless one has secured LTC. We were glad that our PILs had a nice bucket of cash to pay for their nursing home cost in the last few years of their life. If their savings were mainly in stocks, we would have to sell them to pay for their care as needed even when the stock values were at low points.
Anyone self insuring their own long term care needs to treat that money as an insurer would …
That money has to be separate from the pool of money generating your income from a typical balanced portfolio and invested like an insurer in safe low yielding investments .
The pool of money supporting you is designed to be spent down if outcomes are worse or inflation is higher .
So to self insure requires more than just saying I am self insuring and then using the money committed to sustaining you and a spouse .
A retiree in 1965 or 1966 would have had little left to fund long term care since inflation ate it by requiring draws 3x greater just to pay the bills along the way to getting in to that sweet spot for care .
We have a state partnership plan for long term care because just by being able to keep that money invested in our normal income generating pool , for just a small piece of the gain we can have a policy to cover things .
Our attorney says the self insurers are his best clients ….once the stay at home spouse realizes they can be impoverished the reality hits them that they only planned to self insure in words and not actions.
So self insuring long term care means pulling out a large chunk of dough invested very very conservatively and that can hurt.
Trying to fund long term care out of the income generation pool is a crap shoot if under invested as far as having enough or timing is off if you are invested and markets take a hit.
That is a poor idea
Last edited by mathjak107; 01-08-2022 at 12:16 PM..
"Conventional investing wisdom says that the older you get, the less of your financial assets should be in the stock market. One frequently heard justification is that stocks rise reliably in the long run but can fluctuate a lot in the short run and that if you’re old, you don’t have time to recover from a bear market.
Both parts of that formula are problematic. For most retirees, it actually makes sense to increase their exposure to the stock market as they age and spend down their assets.
I feel that this OP is based on the idea foremost that all retirees are spending 'down' their assets.
I have never understood why people want to do that.
Last Spring I passed the landmark in my life where I have been on pension for 20 years. My Net Worth took a huge dip in 2008/9 but it has since recovered.
A 4% inflation adjusted draw over 30 years with a 50/50 to 60/40 portfolio left you with more than you started 90% of the rolling 121 30 year retirement periods we had to date .
67% of the time it left you with more than 2x what you started with
I have not read Kotlikoff's book. IMO, it does not make sense to get heavily into stocks in one's later life stage when health expenses can be quite high unless one has secured LTC. We were glad that our PILs had a nice bucket of cash to pay for their nursing home cost in the last few years of their life. If their savings were mainly in stocks, we would have to sell them to pay for their care as needed even when the stock values were at low points.
That is the thing that gives me pause. While I said that none of these "beginner investing" sites I've been looking addresses any situation resembling mine, I do have to think about what my "goals" are, and it's not that easy. I guess I'd like to have a few bucks to toss my daughter toward a down payment when she buys a first home, but LTC came to mind. In our family, the two grandmothers who ended in LTC facilities signed their home over, and that's how it was paid for. My siblings and I fully expected my mother would be doing the same, but she died in her own house. Getting a bit of an inheritance was therefore a surprise. Being out of debt as fast as I was also was a surprise. My goal was to kill all debt except the mortgage before I was 62, and I beat it by almost three years.
I only have one kid, and I don't want her stuck worrying about my care when and if the day comes that I can no longer care for myself. Unless I have a medical event within the next three or four years, my own mortgage should be paid off, so there's that.
Anyway, not quite there yet. I'm working my way through the TD Ameritrade idiot course online.
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