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Post by Chahta on Feb 3, 2021 15:46:50 GMT
Seeing so many types of investors here, at times I wonder how their portfolios will work if something tragic happens. By tragic I mean not only death but debilitating illness too. We have traders that may be in the market 99% then out in cash at some point. There are accumulators with complicated strategies and fully retired investors enjoying the income generated.
For me I have no one but me relying on my decisions. But I am not so typical. I think my portfolio could be left alone as-is and come back in 10 years to find it has grown (as long as that point is not in the middle of a bear downturn). Mine doesn't have the best nor the worst holdings. But all good holdings I am sure. How would your portfolios work if you could not touch them starting today, for 10 years? How much confidence do you have in that?
I wanted to post something like this on another thread, but decided to not take that thread off topic. Plan for the worst and hope for the best!
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Post by anitya on Feb 3, 2021 18:22:28 GMT
Excellent post, Chahta.
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Post by yogibearbull on Feb 3, 2021 18:38:19 GMT
There have times when on extended foreign travel [with limited Internet access] or anticipating a medical procedure, I have drastically changed portfolio to status where it won't matter if unattended for weeks. Later, I restored it to original status. But otherwise, my wife is not interested and my daughter is generally familiar.
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Post by steadyeddy on Feb 3, 2021 22:01:57 GMT
Chahta , - A very important topic you raise in this OP that we all need to ponder about. It is more typically true than not that one of the spouses (for married folks) is the one that tends to the investments and the other not so much interested. I have been simplifying my portfolio for a couple of years now - and there is more room for further improvement. My wife has no interest at all, and the kids I keep telling them where our stuff is. Simplification & broad market funds is the answer. Alternatively, hire an FA and hand over the keys to them which is unlikely for this crowd in this board.
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Post by nromsted on Feb 3, 2021 22:22:02 GMT
I agree an interesting and important post.
I have tried to make our portfolio able to run well on auto-pilot, for 10 years and longer. Yes, I think it will do that. Around half of the portfolio is in balanced funds. Now I probably pay too much attention to the portfolio, working around the edges, and making small sector bets. But then I'm interested in the subject. I don't expect my wife or daughter to be that interested - they'd be just fine with auto-pilot.
In planning for the worst, here's where I've gone.. 1) I've tried to keep the number of different financial institutions (banks, brokerages, credit cards, insurance, etc) to a minimum. That greatly simplifies account management and tax reporting. 2) I keep up-to-date records and current account histories in a single file. 3) I have written instructions to guide my wife and/or daughter in figuring out what this all is. Every two years I update these instructions to reflect any changes. 4) My wife and I have each created revocable trusts and titled our assets in those trusts as appropriate. 5) We've had the same CPA do our taxes for 14 years, and I think they make it relatively painless (and worth their price).
My planning can always be better.. 1) I keep looking to see how to make the instructions more functional, more useful. 2) Although the portfolio does generate a good amount of income, and with RMDs coming a really good amount, we are not yet on auto-pilot for getting that income into the checking account. So that needs some attention. 3) We have most household bills being paid automatically (thru EFTs or credit cards). That needs to be documented and explained. Getting a good understanding of household bills and expenses is usually the first concern (along with understanding where the money is coming from) of the survivors.
Still, hoping for the best.
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Post by steadyeddy on Feb 4, 2021 1:04:58 GMT
I agree an interesting and important post. ...... 2) Although the portfolio does generate a good amount of income, and with RMDs coming a really good amount, we are not yet on auto-pilot for getting that income into the checking account. So that needs some attention. .... nromsted - I removed a bunch of stuff from your post (sorry) to address #2 you raise. I have been thinking about it not necessarily for the eventuality but even when I am around. One thought is to plan to use "Intelligent Income" feature from Schwab that sends a check every month to your checking account. The catch is that the investments need to be in the Schwab Intelligent Portfolio of ETFs. Do other brokerages have such features?
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Post by nromsted on Feb 4, 2021 15:55:12 GMT
I agree an interesting and important post. ...... 2) Although the portfolio does generate a good amount of income, and with RMDs coming a really good amount, we are not yet on auto-pilot for getting that income into the checking account. So that needs some attention. .... nromsted - I removed a bunch of stuff from your post (sorry) to address #2 you raise. I have been thinking about it not necessarily for the eventuality but even when I am around. One thought is to plan to use "Intelligent Income" feature from Schwab that sends a check every month to your checking account. The catch is that the investments need to be in the Schwab Intelligent Portfolio of ETFs. Do other brokerages have such features?
steadyeddy. re: "Intelligent Income" feature. Thanks for the suggestion, I really haven't investigated. Since most of our investments are contained within 4 separate (but linked) accounts at Vanguard, I'll plan to ask them what they offer. I'm sure I'm not the first of their customers to have this issue.
The two retirement accounts I expect will be no problem (except in the instances where we choose to execute Qualified Charitable Contributions rather than taking income). For the two taxable accounts it might be more complicated. If I find something that works for me, I'll post it back here.
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Post by FD1000 on Feb 4, 2021 17:06:24 GMT
There is no need for me to do that. In the event of death I left my wife the 3 funds she should invest in. I only trust index funds and Wellington funds for B&H for at least 10 years. The 3 funds are: 40% VWINX...30% VWEHX...30% VSMGX. It's about a 1/3 in each...HY bonds, IG bonds, Stocks (2/3 US + 1/3 international). 2/3 bonds + 1/3 stocks. KISS If we both gone at the same time, who cares. This is how you eat the cake and still have it all too.
Attachments:
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Post by acksurf on Feb 5, 2021 2:16:30 GMT
Mine would be fine except that I have way too much cash and munis for a 10 year period. My current investments are all long term holds (e.g. VWINX, VTI, BALFX, etc.)
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Post by Mustang on Feb 21, 2021 21:47:08 GMT
I have written a succession plan for my wife to follow. The key to making it work is simplification. We are still transitioning from the accumulation phase to the withdrawal phase and are not quite there yet but the plan is to have 3 funds in 2 fund families. ABALX in our traditional IRAs with VWENX and VWINX in our taxable accounts. Because of the different withdrawal strategies one fund is sufficient for the IRAs but two funds are needed for the taxable accounts. I estimate the proportion will be somewhere around 50%, 25% and 25%.
My wife will be using two totally different withdrawal strategies. A dynamic withdrawal strategy(MRDs)from our traditional IRAs. Dynamic withdrawal strategies are designed to protect the portfolio's value. The problem is they do not provide a stable income. Approximately half the time withdrawals will be less than planned. American Funds calculates the amount, takes out the taxes, and automatically deposits the difference monthly in our checking account. It is completely automatic and hands off.
The second withdrawal strategy is a modification of Bengen's 4% Rule. This is a fixed withdrawal strategy. They are designed to provide a stable inflation adjusted income but can fail to protect the portfolio's value(meaning it is possible to run out of money). The 4% rule says that a 50/50 stock/bonds portfolio was successful for every 30-year retirement period from 1926. Wellington and Wellesley balance each other out making the overall asset allocation approximately 50/50. They balance each other in other ways as well. Wellington has more growth. With its greater stock position it typically earns 1-2 percentage points more than Wellesley but Wellesley is less volatile. In 2008 Wellington lost 22.3%, Wellesley lost 9.8%.
The information will be available in February. Using the checklist I have prepared she will calculate the annual withdrawal, take it from the fund (either Wellington or Wellesley) with the highest End of Year balance and deposit the money in our savings account. A once a year withdrawal minimizes the amount of management needed and taking the withdrawal from the highest EOY fund automatically re-balances the portfolio.
The savings account will contain approximately two years of withdrawals. On years where MRDs fall short the difference can be made up out of savings. On years where they are larger than expected the extra is moved to savings for future use. If the savings account gets to be more than two years withdrawals then she can skip that year's Vanguard withdrawal. (You cannot skip MRDs.)
If any of you see any major flaws in this plan please let me know. It is simple and mostly automated. It does require the ability to mostly stick to a budget but my wife is better at that than I am.
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stats
Lieutenant
Posts: 53
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Post by stats on Feb 22, 2021 16:13:16 GMT
Our portfolio consists of 22 dividend growth stocks, 1 mutual fund - Wellesley Income, and TIAA Traditional annuity. I too, like Chahta (original poster), believe we can leave the portfolio alone for ten years and find it has grown. For the last 10 years, the portfolio when ignoring TIAA Traditional Annuity, has performed very much like the S&P index so why should that change?
This topic is one I have spent much time thinking about, as I have Pancreatic cancer (for which there is no cure). I have been the one who buys and sells stocks over the years, but have I discussed the portfolio with her. We watch CNBC almost everyday, which gives us an opportunity to talk about our stocks if they are in the news. I was surprised she knows all the stocks we own and their ticker symbols.
Our (her) major difficulty going forward is minimizing her Required Minimum Distributions (RMD). We live on our dividends, but to minimize RMDs we have been converting out TIRAs to ROTHs.
Stats
pS. I too have written a Dear Wife letter, which resides on the computer desktop. It contains phone numbers and addresses of institutions and the like that will need a death certificate. It also includes two advisors. Both are free - TIAA financial advisor and a Fidelity financial planner. I have also have asked her to post here and at other online venues my demise when it happens.
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Post by retiredat48 on Feb 22, 2021 17:09:37 GMT
Our portfolio consists of 22 dividend growth stocks, 1 mutual fund - Wellesley Income, and TIAA Traditional annuity. I too, like Chahta (original poster), believe we can leave the portfolio alone for ten years and find it has grown. For the last 10 years, the portfolio when ignoring TIAA Traditional Annuity, has performed very much like the S&P index so why should that change? This topic is one I have spent much time thinking about, as I have Pancreatic cancer (for which there is no cure). I have been the one who buys and sells stocks over the years, but have I discussed the portfolio with her. We watch CNBC almost everyday, which gives us an opportunity to talk about our stocks if they are in the news. I was surprised she knows all the stocks we own and their ticker symbols. Our (her) major difficulty going forward is minimizing her Required Minimum Distributions (RMD). We live on our dividends, but to minimize RMDs we have been converting out TIRAs to ROTHs. Stats pS. I too have written a Dear Wife letter, which resides on the computer desktop. It contains phone numbers and addresses of institutions and the like that will need a death certificate. It also includes two advisors. Both are free - TIAA financial advisor and a Fidelity financial planner. I have also have asked her to post here and at other online venues my demise when it happens. Hi Stats...my blue added above. Good idea...I and others would be glad to help your wife in any way. If she posts, can she adopt a name such as statswife, which would let us know it is her? Since I have followed your posts and investing style for over a decade, perhaps I could help. I could also give her a name of another lady(s) in a similar situation, to perhaps contact for guidance and support. Best wishes... R48
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stats
Lieutenant
Posts: 53
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Post by stats on Feb 23, 2021 1:20:31 GMT
Stats might be her name, I will add this to Dear Wife file.
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Post by johntaylor on Mar 21, 2021 14:54:54 GMT
My portfolio could be left alone, but I keep a word processing document (now 21 pages) which explains where things are and why.
Every now and then, I edit the document and print a new hard copy.
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hondo
Commander
Posts: 145
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Post by hondo on Mar 22, 2021 22:34:10 GMT
Deleted
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