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Post by Mustang on Aug 23, 2022 20:40:39 GMT
The answer is don't buy shitty active funds. Returns are very easy to find, mozart522 . Paraphrasing old Will " Don't gamble; take all your savings and buy some good active funds and hold it till they go up, then sell them. If they don't go up, don't buy them. Sound about right, Chahta? Tell me, would don't buy shitty active funds advice you would give to your wife for when you are gone. Mine doesn't know a small cap from a baseball cap. Mine doesn't either which is why I have picked three balanced funds for her with known long-term performance. (Wellington was established in 1929 and Wellesley in 1971). Those two have been through both strong bull markets and the stagflation years of the 70s and 80s. I tested both for a 30-year retirement. During bull markets (i.e., 1990-2019) Wellington outperformed Wellesley. But during the stagflation years (1971-2000) Wellesley outperformed Wellington. There are newer funds that preform a little better but they are funds that have only seen a prolonged bull market. I don't trust them to do well during the worst of times. I also look at 2008 performance and calculate how many shares would have to be sold to put food on the table. No fund will repeat historic performance exactly as before but history gives the investor a little insight to the effectiveness of the fund management team's investment philosophy and its a lot better than just throwing darts in the dark.
For retirees I have always thought that the funds picked depend entirely on the investor's withdrawal strategy. An income withdrawal strategy requires funds that pay dividends and interest. Those of more modest means might have to use a strategy that spends a little principal as well like the 4% Rule. They would pick funds that also had growth potential. Another popular withdrawal strategy is using the RMD formula but that does not provide a stable income. Income varies with market performance. And there are worse variable income strategies out there. Using historical performance some have been shown to provide only half the planned income for an entire decade during the stagflation years. That is hard to live on without other sources of stable income.
I am a big believer in simplicity not only for my wife but also for myself as I grow older. Research and thought needs to go into your succession plan. Mine would never include anything as volatile as small cap. I won't even include a 100% stock funds but they are good choices if paired with something more stable and the withdrawal method allows them time to recover. You don't want to force your wife to sell during a crash.
I have almost gotten our portfolio to a point where my wife can follow a one page checklist for determining how much to withdraw and which fund to take it.
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Post by mozart522 on Aug 23, 2022 23:12:26 GMT
Paraphrasing old Will " Don't gamble; take all your savings and buy some good active funds and hold it till they go up, then sell them. If they don't go up, don't buy them. Sound about right, Chahta? Tell me, would don't buy shitty active funds advice you would give to your wife for when you are gone. Mine doesn't know a small cap from a baseball cap. Mine doesn't either which is why I have picked three balanced funds for her with known long-term performance. (Wellington was established in 1929 and Wellesley in 1971). Those two have been through both strong bull markets and the stagflation years of the 70s and 80s. I tested both for a 30-year retirement. During bull markets (i.e., 1990-2019) Wellington outperformed Wellesley. But during the stagflation years (1971-2000) Wellesley outperformed Wellington. There are newer funds that preform a little better but they are funds that have only seen a prolonged bull market. I don't trust them to do well during the worst of times. I also look at 2008 performance and calculate how many shares would have to be sold to put food on the table. No fund will repeat historic performance exactly as before but history gives the investor a little insight to the effectiveness of the fund management team's investment philosophy and its a lot better than just throwing darts in the dark.
For retirees I have always thought that the funds picked depend entirely on the investor's withdrawal strategy. An income withdrawal strategy requires funds that pay dividends and interest. Those of more modest means might have to use a strategy that spends a little principal as well like the 4% Rule. They would pick funds that also had growth potential. Another popular withdrawal strategy is using the RMD formula but that does not provide a stable income. Income varies with market performance. And there are worse variable income strategies out there. Using historical performance some have been shown to provide only half the planned income for an entire decade during the stagflation years. That is hard to live on without other sources of stable income.
I am a big believer in simplicity not only for my wife but also for myself as I grow older. Research and thought needs to go into your succession plan. Mine would never include anything as volatile as small cap. I won't even include a 100% stock funds but they are good choices if paired with something more stable and the withdrawal method allows them time to recover. You don't want to force your wife to sell during a crash.
I have almost gotten our portfolio to a point where my wife can follow a one page checklist for determining how much to withdraw and which fund to take it.
Actually, in my position I will probably suggest my wife make it even simpler than that: Wellesley only.
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Post by retiredat48 on Aug 24, 2022 3:28:54 GMT
Paraphrasing old Will " Don't gamble; take all your savings and buy some good active funds and hold it till they go up, then sell them. If they don't go up, don't buy them. Sound about right, Chahta? Chata replied: "Yup. Worked for VGSH didn't it?" first, the Will Rogers quote referred to buying stocks. Not sure what is meant by reference to VGSH? VGSH is a treasury bond fund. Bonds are not growth instruments; they are contractual loans. You loan out a principal amount of money, for a set interest rate, for a set time period. At maturity, barring default, the loan face value is repaid. No "growth."...and no loss. R48
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Post by mozart522 on Aug 24, 2022 12:01:09 GMT
retiredat48, Yes, but funds are just a collection of stocks, so the meaning of "buy SOME good stocks" is the same. That is why I said paraphrasing. And yes, his comment was about buying active funds, while VGSH is an index fund. However, your bond description above doesn't apply to a constant duration bond fund like VGSH, which has no maturity and can have a loss depending on when it is bought and sold. I know as I took a very small loss to go to T-Bills for what I consider a better opportunity.
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Post by Chahta on Aug 25, 2022 13:17:39 GMT
Paraphrasing old Will " Don't gamble; take all your savings and buy some good active funds and hold it till they go up, then sell them. If they don't go up, don't buy them. Sound about right, Chahta? Tell me, would don't buy shitty active funds advice you would give to your wife for when you are gone. Mine doesn't know a small cap from a baseball cap. Mine doesn't either which is why I have picked three balanced funds for her with known long-term performance. (Wellington was established in 1929 and Wellesley in 1971). Those two have been through both strong bull markets and the stagflation years of the 70s and 80s. I tested both for a 30-year retirement. During bull markets (i.e., 1990-2019) Wellington outperformed Wellesley. But during the stagflation years (1971-2000) Wellesley outperformed Wellington. There are newer funds that preform a little better but they are funds that have only seen a prolonged bull market. I don't trust them to do well during the worst of times. I also look at 2008 performance and calculate how many shares would have to be sold to put food on the table. No fund will repeat historic performance exactly as before but history gives the investor a little insight to the effectiveness of the fund management team's investment philosophy and its a lot better than just throwing darts in the dark.
For retirees I have always thought that the funds picked depend entirely on the investor's withdrawal strategy. An income withdrawal strategy requires funds that pay dividends and interest. Those of more modest means might have to use a strategy that spends a little principal as well like the 4% Rule. They would pick funds that also had growth potential. Another popular withdrawal strategy is using the RMD formula but that does not provide a stable income. Income varies with market performance. And there are worse variable income strategies out there. Using historical performance some have been shown to provide only half the planned income for an entire decade during the stagflation years. That is hard to live on without other sources of stable income.
I am a big believer in simplicity not only for my wife but also for myself as I grow older. Research and thought needs to go into your succession plan. Mine would never include anything as volatile as small cap. I won't even include a 100% stock funds but they are good choices if paired with something more stable and the withdrawal method allows them time to recover. You don't want to force your wife to sell during a crash.
I have almost gotten our portfolio to a point where my wife can follow a one page checklist for determining how much to withdraw and which fund to take it.
It is out of your hands when you die. If she is not a seasoned investor set it up to go to Schwab, Fido etc. and get advice. Or just have it moved into Wellsley/Wellngton 50/50. While you (we) are alive and posting on forums it is a bit of a game trying to beat the market or our own personal index. In reality it is about producing money to live on.
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Post by Chahta on Aug 29, 2022 13:39:09 GMT
Paraphrasing old Will " Don't gamble; take all your savings and buy some good active funds and hold it till they go up, then sell them. If they don't go up, don't buy them. Sound about right, Chahta? Chata replied: "Yup. Worked for VGSH didn't it?" first, the Will Rogers quote referred to buying stocks. Not sure what is meant by reference to VGSH? VGSH is a treasury bond fund. Bonds are not growth instruments; they are contractual loans. You loan out a principal amount of money, for a set interest rate, for a set time period. At maturity, barring default, the loan face value is repaid. No "growth."...and no loss. R48 Sorry, just caught up to this thread. My answer was flippant so should have been ignored. On the other hand applying WR's quote to managed funds was good.
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Post by retiredat48 on Aug 29, 2022 16:18:10 GMT
Chahta,(Chahta)...who posted: "Sorry, just caught up to this thread. My answer was flippant so should have been ignored." ------------------------------------------ Got it... R48
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