No. of Recommendations: 7
In my POV, with respect to In Paradise and others similar to her, the people on these kinds of forums who proclaim loudly and confidently that they are "100% stocks forever!" are engaging in psychological or cognitive bias. They may give intellectual lip service to the notion that in theory the market could crash 50% or 60% or even more, and stay down for many years, longer than their projected life times, thus preventing a recovery in their portfolio. But they don't really believe it. They don't believe it could actually happen to themselves. They don't believe that a huge economic shock, and market crash, could ever coincide with other issues going on in their lives where they might have to withdraw large sums at the worst possible time and thus all the monte carlo simulations go out the window.
Sorry Marco, but didn't intend to imply that we were 100% stock, just low to no bonds beyond the I bonds we bought a zillion years ago when they had a great fixed rate plus adjustable. They will need to be redeemed in a few years, never having been used to pay for our kids college costs, and represent more than a year of expenditures, many of which are discretionary. I feel that bonds for the most part don't provide enough of a premium over money markets to compensate for the potential lost opportunity cost of immediate investment. We are actually pretty heavily in cash right now, having expected a down market for some time. Looking at investing at least some of it shortly in direct indexing with tax loss harvesting. Some of that cash will also probably be used to buy more real estate, which has always been my bond proxy, though frankly right now, am also uncertain about the direction of the real estate market and like the flexibility of traveling to other places and doing mid term furnished rentals. We have seen and benefitted from multiple downdrafts in the stock market, and looking to do so again with our large cash position.
We are retired and have been since our mid to late 50-s, with the occasional contracting by DH as cool projects come up from his past employer. Even if our net worth dropped by 50%, the RMDs we have to take in 6 years and the SS we have to take in 3 will more than cover our annual expenses. It's the beauty of LBYM. We spend what we want to spend, we just don't feel the need to spend a lot, and that brings a certain freedom.
... but she herself said there were times along the way where they were very concerned about their job security. The way she sees it, not actually losing their jobs at those points doesn't mean she got lucky. It means the risk wasn't a real risk.
No, the risk was ever present, but the ability to cope with that job loss was always there too, since over the years we banked our bonuses and pay raises rather than raise our standard of living. Through LBYM we self-insured that we would be OK even with a job loss.
My point of view is I want my portfolio, and lifestyle, to survive EVEN IF the shit hits the fan. Because it will. We just don't know when or how.
Absolutely. And since we are no longer making a paycheck, and could frankly do well simply having all our assets in money market, we are less than 100% in stock. But during the paycheck years, we were just about 100% in stock, other than the emergency fund which was our I-bonds, and the kids' college funds. Always plan for survivability in a down draft of the market. Sorry to hear that you interpreted it otherwise. Just be careful in thinking that bonds have an inverse correlation to bonds. No longer seems to be the case and hasn't been for a while. I much prefer money market or rental properties over bonds. Real estate has been very good to me, but it is work and it takes more thought than most put into it.
FWIW,
IP
