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Post by steelpony10 on Sept 6, 2023 13:33:09 GMT
We’ve reached another goal of our 40+ year investment plan because income has been so cheap in the present market. We have enough cash flow from CEF’s to last 24 years at a 3% personal inflation rate. That just means even less monitoring as I start to subtract the years before any spend down.
In reality that’s under normal income requirements in a straight line which is a fantasy. That is balanced by another 24 years tacked onto my life span which is another fantasy. So two fantasies = reality? Using fewer dollars for CEF’s (or for income only) let us build up a reserve bigger the our CEF investments as a Plan B. My old school mentors showed me the basics, about a 60% reserve/40% income split.
Anyone want to share a long held plan they’ve stuck with with a brief synopsis?
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Post by retiredat48 on Sept 6, 2023 15:21:53 GMT
Here's a tidbit: --I have owned Vanguard's Wellington Fund (VWELX) since 1953. Now that's "long". --Have owned certain sector funds since fund inception decades ago. These include Fidelity and Vanguard Funds. One fund in Healthcare; one in Energy; one in Southeast Asia; and one in High Tech (FSEAX). I reduced the Energy holding significantly as it became my largest, starting a decade ago. Energy was weak during that decade, so a good move. I have never sold any FSPTX high tech, and it has grown to become my largest holding. Strong AI positioning, I don't see me selling any, anytime soon. BTW @ steelpony10 , how does one get a 3% personal inflation rate projected for next 24 years? Yes, perhaps you have a zero, or low mortgage rate, but what if we have 10-15% inflation annually, next decade? Why guess? invest for this possibility. That is, rather than locking in a bunch of "safe assets" that may badly lag in real returns (but you do not run out of money), why not STRATEGICALLY INVEST to account for either very low or very high periods of inflation. You do not want to lose, either outcome. An anecdote...my 103 y/o mother-in-law recently passed away. During her age eighties, she sold many stocks/funds, going to CDs and MM funds to be "safe", thinking she would be sending assets to beneficiaries in the not too distant future. A disaster. MMs and CDs eventually paid zero percent yields for over a decade; stocks flourished. Her assisted living monthly nut kept rising greatly. In the end, she left very little to heirs; but she did not run out of money!...although almost did. R48
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Post by Deleted on Sept 6, 2023 16:40:11 GMT
R48 - how did you manage to hold fsptx through 2000 -2008?
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Post by win1177 on Sept 6, 2023 16:47:20 GMT
We’ve reached another goal of our 40+ year investment plan because income has been so cheap in the present market. We have enough cash flow from CEF’s to last 24 years at a 3% personal inflation rate. That just means even less monitoring as I start to subtract the years before any spend down. In reality that’s under normal income requirements in a straight line which is a fantasy. That is balanced by another 24 years tacked onto my life span which is another fantasy. So two fantasies = reality? Using fewer dollars for CEF’s (or for income only) let us build up a reserve bigger the our CEF investments as a Plan B. My old school mentors showed me the basics, about a 60% reserve/40% income split. Anyone want to share a long held plan they’ve stuck with with a brief synopsis? Steelpony 10, My “long term plan” was always to get much more than we would need, before I could retire. I saved/ invested at very high percentages for many decades, probably saving at least 30-40% of income (sometimes more), each year. This went on for several decades, and wound up accumulating much more than we will ever need. My family history is not real great for longevity (early 70’s for men), but my wife has some longevity in her genes, so we should be fine going forward. I also stayed very “aggressive” in my allocation, sticking with 90%+ allocations to stocks for decades. Even now, we’re above 80% to equities, but slowly building out fixed income. Retired last year, and we have way more than we’ll need, barring some financial calamity. I had seen other high earners who never save, always living at (or above) their incomes, and then getting into their 60’s- 70’s and being unable to retire. Have a friend who’s a neuroradiologist, probably has always made 500k to maybe a million/ year, but always laments that he “can’t retire” in his late 60’s. From my perspective, it’s his own damn fault (but I don’t say that to him). Also saw my father live like that, never saving, spending way above his income, divorcing wives, etc. He wound up dying essentially penny less, and I had to pay to bury him, as he had no money. Swore I would never be like that. Now, if I can just “relax enough” to be able to spend the money in retirement, that’s a different story! Win
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Post by steelpony10 on Sept 6, 2023 17:04:42 GMT
retiredat48 , I’ve been through 2 retirements and am aware of the worse case scenarios, 2 LTC’s. We just reached 100% excess income to our present needs with 40% of our present assets mostly in CEF’s. 72/3 = 24 years. Including our other assets, not counting SS, we’re living on >40% of the total. Of course it’s all a fantasy. Mainly I won’t live 24 more years. I have to go by the SS actuarial life table. Longevity is a bell curve. Your correct just like investing my future is completely unknown. Our plan came from how Stagflation (7.25% on average) was handled for 14 years. Plan C is all CEF’s. I’d rather get the 8-10%+ bird in hand then “think”. Like your late mother-in-law I have no concerns at all. Maybe my wife and her next boy toy might.
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Post by steelpony10 on Sept 6, 2023 17:30:55 GMT
win1177 , I understand once you’ve worked, saved and sacrificed for so long it’s tough to buy those $5 mocha’s. Really tough to break lifetime habits. Ramen, space age Tang and impound cars were my early staples. My non college friend made 15k a year and invested 5k a year in the market and had 300k after 20 years. Enough of those fond memories. I saved for the future and am living it now. I’ve convinced myself spending in moderation is ok. My wife will never change her frugal habits. Up to now anyway I feel confident what I spend will be replaced each month with the excess income “saved” and compounded letting me spend more over time just like a paycheck with raises. That’s how it’s worked so far.
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Post by Mustang on Sept 6, 2023 18:00:21 GMT
retiredat48 , I have not owned Vanguard Wellington that long but I have held it since the late 70s. It was the first mutual fund that I bought and I have been very happy with it. My long term plans were heavily influenced by the research completed by William Bengen, the Trinity Study, Wade Pfau, and many others. I am not a trader. I don't want to be a trader and my wife doesn't want to deal with it either. We were heavy into stock funds (80/20) until 2010. I then started transitioning to a more conservative portfolio with a target of approximately 60/40 overall. Research by Bengen, Trinity Study and Pfau's update to the Trinity Study show that a long term portfolio having a 30 year payout period needs to be between 50-75% stock for the highest probability of success. Other research concerning early retirees looking for longer payout periods indicated that a portfolio 80% stocks was needed. I'm planning on a 30 year payout but if I were to be more realistic it will probably be closer to 20 years. My goals are a stable, inflation adjusted income with a second goal of simplicity. Because of this I have focused on three balanced funds: American Funds Balanced Fund, Vanguard Wellington and Vanguard Wellesley Income. I also believe that the fund selected should align with the withdrawal strategy. AF Balanced Fund is in our traditional IRAs. The withdrawal method is RMDs. Because RMDs, a variable withdrawal method, protect against longevity risk (the risk of running out of money) only one balanced fund is necessary. Withdrawals go up when the fund does well and down when it doesn't. Research by Vanguard and others have shown that variable withdrawal methods will provide less than desired income, sometimes significantly less, almost half the time. While that reduces longevity risk it in no way achieves the goal of a stable, inflation adjusted income. Pensions and social security provide stable income. But having a significant portion of the income bounce up and down makes budgeting for the future difficult so we are going to use the 4% Rule to add to the stable income side. That is where the Vanguard investments come in. They are separate from our IRAs. Our plan is to have 50% of retirement investments in AF Balanced Fund, 25% in Wellington and 25% in Wellesley Income (W-W). We are not there yet but still migrating that way. I have personally tested W-W for the worst retirement date in history (1968) and one of the best (1990). Using the 4% Rule Wellington by itself failed to make 30 yrs for the 1968 retirement. It ran out of money after 25 years. It had a big sequence of return failure with losses in 1968-1969, and 1972-1973. That coupled with sometimes double digit inflation more than doubled withdrawals and drained the fund. Wellesley didn't start until 1971. Moving the start date to 1971 Wellington missed first set of losses and was successful at lasting 30 years. But Wellesley with the same start date out shined Wellington. Using a 1990 start date everything was reversed. Wellington out shined Wellesley. I cannot see the future especially one that is 30 years long. I chose equal portions of W-W because Wellesley was proven best during bad times and Wellington was proven best during good time. Research also found that how you sell makes a big difference on longevity so we are going to take withdrawals from the fund that is doing the best (sell high). By taking the withdrawal from the fund that does best W-W automatically re-balanced every two to three years for both the 1971 and 1990 start dates. That is one less thing to worry about. RMDs are automated. American Funds takes out the taxes and deposits the balance in our checking account. When we start taking W-W withdrawals that can be automated as well but the amount will have to be adjusted for the previous year's inflation every January. We are going to use social security's adjustment. And, the fund selected selected for withdrawal will be from the fund with the highest previous year's ending balance. Stable inflation adjusted income from pensions, social security and W-W. Variable income from RMDs. All automated. That is about as simple as I can make it. P.S. I don't strive for the best returns but for good returns. Better is the enemy of good enough. We have other funds for other purposes but our retirement funds are making 7.3% this year and that is with Wellesley doing terribly. But that is only part of one year. As history has shown, that will not always be the case. I take the long term view which is why I'm a buy and hold investor.
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Post by retiredat48 on Sept 6, 2023 19:28:31 GMT
R48 - how did you manage to hold fsptx through 2000 -2008? Well, I didn't think there was any fundamental reason high tech would not do well in the long run. Yes, a strong shakeout, but the survivors grew very strongly thereafter. I also have this dilemma with my daughter. Her Trad IRA is now 85% FSPTX, due primarily to fund price performance. At end of last year I suspected high tech may have a goodly decline. It did. However we decided it is too difficult to time an in and out excursions from FSPTX. So we kept holding, and now the fund has recovered quite well. My daughter (age 50) agrees with holding FSPTX until her financial independence year...targeted for age 58. Then she may reallocate to other types of funds...a retirement account type focus. And the recent developments in Artificial Intelligence, mostly highlighted at start of this year, suggest this holding will continue to payoff long term. r48
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Post by bigseal on Sept 7, 2023 12:57:09 GMT
We’ve been retired for quite awhile and still are 90% equities. Will probably increase that percentage if stock prices dip more, Through our entire working career we were probably 99% stocks. Have never been less than 90% stocks and never owned bonds other than US treasuries 3 to 6 months duration. As Charlie Munger says, just because the price wiggles doesn’t mean it is more risky.
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Post by mnfish on Sept 7, 2023 13:21:37 GMT
I'm going to say that my long term plan is to continue to be invested in mostly stocks because believe it or not you can spend capital gains.
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Post by Chahta on Sept 7, 2023 14:08:32 GMT
Just sitting and watching my core 50% equities and 50% FI (MM to CEF range of investments) kick off close to 4% income, that is all being reinvested other than some MM interest each month. I suppose when RMDs start in 2 years things may change a little. Or maybe if the missus and I split up and the need to buy a solo house pops up, I could spend RMDs earlier that projected.
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Post by anitya on Sept 7, 2023 19:23:32 GMT
bigseal, I am trying to solve my own mental frictions and it seems you are a good person to ask questions. What percentage of your equity portfolio is individual stocks vs active funds vs passive funds? Funds = ETFs, OEFs, etc. Please feel free to send me a PM if that is more convenient. Thanks.
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Post by retiredat48 on Sept 7, 2023 20:11:46 GMT
@ @waffle2 ,...I re-read your (longer) post re your retirement plan, and consider it is a good one for you. (And I was familiar with the plan as you have posted about it before) You know I am not thrilled with "balanced funds" anymore, and suggest younger investors simply invest separately for the stock and bond sides. But you grew up with W and W, have studied them thoroughly, and should be just fine.
And I don't have one negative comment about your plan. Darn.
Good day waffle.
R48
edit to add: Now let's hope Vanguard does not get hacked/cyber hit hard, shutting down for a couple weeks. Do you keep a hard-copy of your portfolios? Anything elsewhere such as in Fido, as backup?
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Post by steelpony10 on Sept 7, 2023 21:19:50 GMT
I also saw the same flaw with balanced funds around 1988. That’s when I started to separate our portfolio into growth, income and safe funds., 3 sections. Money flows year round in all markets and also lowers dependence on Mr Market to provide steady income for you year round instead.
That’s what I would recommend to all investors. Unfortunately lottery thinking seeped into portfolio management once trading fees were eliminated.
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Post by saratoga on Sept 7, 2023 23:41:24 GMT
I invest over 60% of TIRA in PRWCX. The rest are invested in TIAA Traditional (almost 6% yield) and FDGRX, etc. RMD from TIRA plus pension plus SS is my budget. I try to live within the budget. I expect this budget to be steady and increase moderately over time after inflation despite a pathetic COLA for my pension. Taxable account and Roth IRA are invested in stock/stock fund nearly 100%. Due to my steady budget, it is easier for me to tolerate the volatility of these accounts. These accounts are invested for Dependents.
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Post by retiredat48 on Sept 8, 2023 15:00:28 GMT
saratoga ,...Hi a comment...You have a concentrated holding in PRWCX. I am a big fan of D. Giroux/PRWCX; but I was surprised to see the six theme investing areas he has earmarked for the future. Investments, such as directions supporting climate change; or utilities, etc. I have posted I would not invest in utilities now...for at least the next decade. Of course, I could be wrong and Giroux hits a home run...but recent trend in Utilities has not been good performance. My suggestion, with a concentrated holding, is to follow PRWCX closely and make sure investment returns are good relative to similar type funds/cap growth funds. If not good, feel free to switch to other funds; don't get married to PRWCX. Six month running returns should suffice to indicate if trend is poor, or not. R48
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Post by Mustang on Sept 8, 2023 15:17:21 GMT
Now let's hope Vanguard does not get hacked/cyber hit hard, shutting down for a couple weeks. Do you keep a hard-copy of your portfolios? Anything elsewhere such as in Fido, as backup? I do. I reconcile bank and credit card statements every month (its easy using Quicken). I reconcile investments every quarter after dividends are paid and I have two or three years of statements in my filing cabinets. (Probably more. I really need to clean them out.)
Question: As big as Vanguard is and as important as their record keeping is, do you think they don't keep backups?
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Post by saratoga on Sept 8, 2023 15:34:45 GMT
R48, thanks for your comments. I will keep them in mind although I would normally give Giroux more than 6 months of under-performance.
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Post by retiredat48 on Sept 8, 2023 17:17:08 GMT
R48, thanks for your comments. I will keep them in mind although I would normally give Giroux more than 6 months of under-performance.
Cherry pick the starting point for comparisons. Such as, a previous market low point from a correction or downturn. Then comparisons for six months give adequate heads-up as to relative performance; and good projections for going forward. That is, the winning funds will keep winning for up to 9 months. This "momentum advantage" came from infamous Fama-French stock market studies, since 1920's. Put another way, top decile (10%) of funds keep performing as tops; the bottom decile stays as dogs, going no-where. R48
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Post by retiredat48 on Sept 8, 2023 17:21:52 GMT
Now let's hope Vanguard does not get hacked/cyber hit hard, shutting down for a couple weeks. Do you keep a hard-copy of your portfolios? Anything elsewhere such as in Fido, as backup? I do. I reconcile bank and credit card statements every month (its easy using Quicken). I reconcile investments every quarter after dividends are paid and I have two or three years of statements in my filing cabinets. (Probably more. I really need to clean them out.)
Question: As big as Vanguard is and as important as their record keeping is, do you think they don't keep backups?
Yes, Vanguard will have backups. But it may take them two weeks to sort things out. Meantime, closed for business. I wouldn't want anyone to go a couple weeks without being able to feed "the mustangs." BTW I keep my monthly Vang'd and Fido statements, but for past years, only keep the December 30 ones. And I keep all transaction records. R48
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Post by gman57 on Sept 8, 2023 18:11:31 GMT
I do. I reconcile bank and credit card statements every month (its easy using Quicken). I reconcile investments every quarter after dividends are paid and I have two or three years of statements in my filing cabinets. (Probably more. I really need to clean them out.)
Question: As big as Vanguard is and as important as their record keeping is, do you think they don't keep backups?
Yes, Vanguard will have backups. But it may take them two weeks to sort things out. Meantime, closed for business. I wouldn't want anyone to go a couple weeks without being able to feed "the mustangs." BTW I keep my monthly Vang'd and Fido statements, but for past years, only keep the December 30 ones. And I keep all transaction records. R48 I lived in that world for a little while and most large financial institutions, heck most large corporations have backup disaster sites that can take over rather quickly. I seriously doubt any of them would be down for a week or even a day or two. They do that to guard against disasters like fires, earthquakes etc... etc... The backup disaster sites are almost always in another part of the country entirely so even a regional calamity like a hurricane won't shut them down.
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Post by retiredat48 on Sept 8, 2023 18:23:44 GMT
gman57,...gman57? Sure. But we shall see, as most of this backup stuff is untested. Individual investors also face a risk of hacking in their own accounts. Can be from their not protecting passwords, etc. Hacker simply sells everything. A fido poster says it happened to him, and took weeks of effort to straighten out. (Initially detected/reported by a bank, when hacker tried to withdraw funds by wire.) R48
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Post by johntaylor on Sept 10, 2023 15:27:34 GMT
Re long-term investing and D Giroux, some of the recent "big think' at T Rowe (and elsewhere) has been that global attempts to reduce carbon emissions may deliver a Sustainability Wave which could rival the Industrial Revolution and the Tech Revolution.
Hyperbole or prescience?
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Post by steelpony10 on Sept 10, 2023 16:13:18 GMT
johntaylor , “May” becomes a big word sometimes. My experience with people is no one takes on any job, does or pre plans anything unless forced to or are without options So with this one add in a multi cultural and ethnically diverse world. I’ll stick with politically correct (hyperbole) at the moment. It’s time to publicize this disaster in the regular rotation of disasters, seeking more clicks while the world waits for the big event (T trials).
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Post by kathiel on Sept 19, 2023 0:39:24 GMT
steelpony10, I responded to this thread 10 days ago or so, but my post seems to have disappeared. Anyway, I just wanted to say congratulations.
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Post by Chahta on Sept 19, 2023 12:38:55 GMT
steelpony10 : "Anyone want to share a long held plan they’ve stuck with with a brief synopsis?" I am still here not worried about my future or having enough; except I worry of other people's future. I don't think that I overthink things. If I have to spend it all on a breathing machine or feeding tube so be it. Hopefully I never have to click and have my keyboard find the absurd (T trials) .
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Post by yakers on Sept 21, 2023 15:33:48 GMT
No big plan, saved as much as I could in tax favored and some taxable, now retired 15 years, manage spending, the AA target is 60/40 and I just keep it between 50/50 and 70/30 so never really need to change much, just have to decide where to take RMDs/QCDs and occasional purcheses like cars & big travel.
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Post by retiredat48 on Sept 21, 2023 19:31:43 GMT
On my comments re "hacking"concern, a poster asked: "Question: As big as Vanguard is and as important as their record keeping is, do you think they don't keep backups?"
Reply...well I think those huge Las Vegas gambling casino'considered they were well-protected...until the weren't. Hacked. Some recently paid tens of millions in ransom to reestablish data. One CEO said it was a "sobering experience."
BTW an interesting question. At Vanguard, the investors therein own the company; does this mean if Vang'd pays a ransom, is the cost spread across the investor base having holdings at Vanguard?? (That would include me).
R48
R48
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Post by roi2020 on Sept 21, 2023 19:50:42 GMT
On my comments re "hacking"concern, a poster asked: "Question: As big as Vanguard is and as important as their record keeping is, do you think they don't keep backups?" Reply...well I think those huge Las Vegas gambling casino'considered they were well-protected...until the weren't. Hacked. Some recently paid tens of millions in ransom to reestablish data. One CEO said it was a "sobering experience." BTW an interesting question. At Vanguard, the investors therein own the company; does this mean if Vang'd pays a ransom, is the cost spread across the investor base having holdings at Vanguard?? (That would include me). R48 R48 There is a much higher likelihood that individual Vanguard investors gets "hacked" rather than Vanguard itself. Individuals may use weak passwords (sometimes used for multiple accounts) and they're also susceptible to various social engineering tricks. That's not to say that Vanguard (or any other broker) can't get hacked...
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Post by steelpony10 on Sept 21, 2023 23:46:08 GMT
steelpony10 , I responded to this thread 10 days ago or so, but my post seems to have disappeared. Anyway, I just wanted to say congratulations. Is Camille tech savvy enough to understand how to delete a post? Thanks though. It’s nice to think you’re King for a day anyway. Any statement of what “I think” about my future is of course fantasy and subject to change.
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