The 2015 Market Crash

[Jeff Lebowski]

I used the word "significant" in that it's fine to have money in the stock market, I wouldn't have a significant portion of my savings in there. Plus, there are a lot of better investment vehicles open to people that have a lot of money, but I'm sure PAC knows this.

The point still stands. Unless PAC needs to cash out the bulk of his fund in the next 5-10 years (not likely), he is wise to keep a significant part of his portfolio in stocks.

[byu71]

The point still stands. Unless PAC needs to cash out the bulk of his fund in the next 5-10 years (not likely), he is wise to keep a significant part of his portfolio in stocks.

I would tend to agree with you. Hope that doesn't hurt your rep.

I have this rule, which I break now and then. Look at the alternatives I can be comfortable with. Right now it is just Cash, Fixed Income and Equities. I have enough real estate for me.

Cash yields 0%, fixed income depending on the investment and maturity could be 1%-8%. Of course the higher the yield the higher the risk. Since I think rates are going up any allocation I would have to fixed income I have in cash. Values could drop more than the income flow over the next few years.

Me personally, I am guessing over a 3 year period in equities I will come out 0% or better. So better than cash.

Because of my age I do keep 3 years worth of estimated yearly expenses in cash. However, one allocation does not fit all. You have to take in the "can't sleep" factor.

If someone averages 10% over 5 years that's great unless they stressed out getting there.

Of course I am just sharing my opinion in general here because it seems today I like to hear myself talk.

[All-American]

You can eat that marshmallow on the table in front of you right now, or if you wait five minutes, you'll get two marshmallows.

Perhaps they don't like marshmallows. Or money. I dunno.

[Jeff Lebowski]

I would tend to agree with you. Hope that doesn't hurt your rep.

I have this rule, which I break now and then. Look at the alternatives I can be comfortable with. Right now it is just Cash, Fixed Income and Equities. I have enough real estate for me.

Cash yields 0%, fixed income depending on the investment and maturity could be 1%-8%. Of course the higher the yield the higher the risk. Since I think rates are going up any allocation I would have to fixed income I have in cash. Values could drop more than the income flow over the next few years.

Me personally, I am guessing over a 3 year period in equities I will come out 0% or better. So better than cash.

Because of my age I do keep 3 years worth of estimated yearly expenses in cash. However, one allocation does not fit all. You have to take in the "can't sleep" factor.

If someone averages 10% over 5 years that's great unless they stressed out getting there.

Of course I am just sharing my opinion in general here because it seems today I like to hear myself talk.

[PaloAltoCougar]

Just to confirm people's assumptions, or to put others at ease, I've got a pretty balanced portfolio, modest though it is, that currently is around 40% fixed income and cash, and 60% in equities (and spread across the spectrum of stocks). At 64, I understand I should be moving increasingly away from stocks and toward fixed income, but I'm happy to keep a bit more in stocks than might be typical. I don't want to miss out on the market rise as America becomes great again...

[Northwestcoug]

I'm at least 15 years away from retirement, which I assume should lead me to consider a different portfolio than I have. It has about 48% equity. It's called 'moderate' though it is the 3rd most conservative model portfolio available to me. I'm pretty risk averse, but I am considering gambling and bumping up my portfolio a growth notch!

[Jeff Lebowski]

I'm at least 15 years away from retirement, which I assume should lead me to consider a different portfolio than I have. It has about 48% equity. It's called 'moderate' though it is the 3rd most conservative model portfolio available to me. I'm pretty risk averse, but I am considering gambling and bumping up my portfolio a growth notch!

With 15 years before retirement, you will likely withdraw your money over a period stretching from 15-40 years from now. That is long term by every definition.

That being said, you need to be comfortable with your plan.

[creekster]

Just to confirm people's assumptions, or to put others at ease, I've got a pretty balanced portfolio, modest though it is, that currently is around 40% fixed income and cash, and 60% in equities (and spread across the spectrum of stocks). At 64, I understand I should be moving increasingly away from stocks and toward fixed income, but I'm happy to keep a bit more in stocks than might be typical. I don't want to miss out on the market rise as America becomes great again...

I am very relieved. I know I speak for many others when I say that this discussion had me very worried about your financial well-being.

[Paperback Writer]

The point still stands. Unless PAC needs to cash out the bulk of his fund in the next 5-10 years (not likely), he is wise to keep a significant part of his portfolio in stocks.

I would tend to agree with you. Hope that doesn't hurt your rep.

I have this rule, which I break now and then. Look at the alternatives I can be comfortable with. Right now it is just Cash, Fixed Income and Equities. I have enough real estate for me.

Cash yields 0%, fixed income depending on the investment and maturity could be 1%-8%. Of course the higher the yield the higher the risk. Since I think rates are going up any allocation I would have to fixed income I have in cash. Values could drop more than the income flow over the next few years.

Me personally, I am guessing over a 3 year period in equities I will come out 0% or better. So better than cash.

Because of my age I do keep 3 years worth of estimated yearly expenses in cash. However, one allocation does not fit all. You have to take in the "can't sleep" factor.

If someone averages 10% over 5 years that's great unless they stressed out getting there.

Of course I am just sharing my opinion in general here because it seems today I like to hear myself talk.

My thinking is that as one approaches retirement or is in retirement, to leave 3-5 years of living income out of the stock market. Most market corrections take that amount of time. That way one doesn't have to sell stocks/funds to pay the bills while the market is down. The trade off is that one has to accept a lower return on that 3-5 years of living income.

[Moliere]

I'm at least 15 years away from retirement, which I assume should lead me to consider a different portfolio than I have. It has about 48% equity. It's called 'moderate' though it is the 3rd most conservative model portfolio available to me. I'm pretty risk averse, but I am considering gambling and bumping up my portfolio a growth notch!

I've got some of mine in low price stocks, which are riskier but yield a very heathy rate of return over a long time horizon. I'm 25+ years from the typical retirement age so I'm fine with my portfolio bouncing around.

Keep in mind though that the average life expectancy is below 80 years (76 for US males). Granted no one person is the statistical average, but the septuagenarians I know in my ward are not the epitome of someone living a healthy, active lifestyle.


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[Northwestcoug]

With 15 years before retirement, you will likely withdraw your money over a period stretching from 15-40 years from now. That is long term by every definition.

That being said, you need to be comfortable with your plan.

Yeah, I know. I am meeting with my advisor this spring. He may finally persuade me...

[byu71]

A lot of good thoughts. I like this thread.

[Jeff Lebowski]

I've got some of mine in low price stocks, which are riskier but yield a very heathy rate of return over a long time horizon. I'm 25+ years from the typical retirement age so I'm fine with my portfolio bouncing around.

Keep in mind though that the average life expectancy is below 80 years (76 for US males). Granted no one person is the statistical average, but the septuagenarians I know in my ward are not the epitome of someone living a healthy, active lifestyle.

Dude, you are killing me today.

The older you get, the higher your expected age at death. Actuary 101. Someone approaching age 65 can expect to live to 84 on average.

https://www.ssa.gov/planners/lifeexpectancy.html

Either way, it would be crazy to spend down your savings based on the AVERAGE age of death. 50% of folks live longer than that. You need to plan on living well into your 90's, just in case.

[Paperback Writer]

Dude, you are killing me today.

The older you get, the higher your expected age at death. Actuary 101. Someone approaching age 65 can expect to live to 84 on average.

https://www.ssa.gov/planners/lifeexpectancy.html

Either way, it would be crazy to spend down your savings based on the AVERAGE age of death. 50% of folks live longer than that. You need to plan on living well into your 90's, just in case.

Or build up a portfolio large enough so that annual returns pay the bills and the principle is not reduced. One way to reach that goal is to invest early and have a high allocation of equities.

[Moliere]

Dude, you are killing me today.

The older you get, the higher your expected age at death. Actuary 101. Someone approaching age 65 can expect to live to 84 on average.

https://www.ssa.gov/planners/lifeexpectancy.html

Either way, it would be crazy to spend down your savings based on the AVERAGE age of death. 50% of folks live longer than that. You need to plan on living well into your 90's, just in case.

I'm not sure where I said or even implied this.

I'm just making the case for a less risky investment portfolio as you age. PAC is 64, so his portfolio should look different than mine.


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