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Post by FD1000 on Aug 4, 2021 16:18:25 GMT
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Post by Chahta on Aug 4, 2021 16:41:32 GMT
I agree. I have more than met what I need this year with less than 50% equities. But multi-sector and HY muni funds have risk too. ST bond funds have risk but it is opportunity risk and inflation risk.
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Post by steelpony10 on Aug 4, 2021 18:28:50 GMT
FD1000 , Chahta , Using present facts back in 1978 we graphed backwards from our answer 35 years hence giving us what we needed to have as a balance each year (unless Mr. Market was to blame) and just followed that line. I semi retired at 59.5 running and helping our parents close a business and sell assets along with my wife who was about 51. We ended up with double the goal at the point of full retirement. So 1% buy and hold for years with risk we could live with and 99% luck. We started in the stagflation era remember. We had Depression and WWII era parents. My experience with our parents retirement was be too conservative and not taking enough risk can impoverish a surviving spouse eventually unless you can live with severe cut backs. Pass before 85 or so with no sudden income requirements everything works depending on the three unknowns. The biggest mistake leading years up to retirement and maybe the first 10 years I think is being too conservative leaving a couple without any disaster plan or set aside whatsoever. You can’t skinflint yourself out of home care, assisted living, memory care, LTC or loss of a spouse. We took higher risk for years from which I’m backtracking now to make a huge portion of our portfolio available as a secondary income. Risk is one four letter word that didn’t have a bad connotation to us.
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Post by retiredat48 on Aug 4, 2021 19:06:14 GMT
Funny, isn't it...In my investing days of 1070s and 80's, we did not have words like:
--risk
--asset allocation
--Safe Withdrawal Rates.
--IRAs
--computers (200 day Moving averages were high tech new era, yet calculations done on the backs of envelopes)
--nobody had "goals"...it was simply to accumulate wealth.
--Bonds were for sissy's.
--we did have corporate pensions, the investing done by other pro managers. WE had compound interest curves...that was enough to illustrate the outcomes of saving.
Funny how many made it anyway.
To me, retiring at age 48 in a one-earner family, is now a far away dream for most. Those age 40 now maybe can do it with both spouses working fulltime. The younger set, retire age 48 only if use FIRE (Finan. Indep. Ret. Early) techniques of grand savings and frugal living. It is why so many are YOLO--forget about retirement; you only live once, spend, gvt will care for you anyway!
Do you know how many thousands of speakers at graduation ceremonies, or winning gold medals stated: "follow your dreams and you will get what you want." I really don't buy the touchy/feely stuff. Need more concrete guidance/ways for the multitude to succeed.
Good day.
R48
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Post by steelpony10 on Aug 4, 2021 20:46:31 GMT
FD1000 , FD, +.51% yesterday, +.14% today. After 40 years (about 14600 days) you have a pyramid (not exactly) to get buried in. Lol. You build wealth a brick at a time buy and hold solid companies. What risk? Dropped or broken bricks?
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Post by FD1000 on Aug 4, 2021 23:27:25 GMT
FD1000 , FD, +.51% yesterday, +.14% today. After 40 years (about 14600 days) you have a pyramid (not exactly) to get buried in. Lol. You build wealth a brick at a time buy and hold solid companies. What risk? Dropped or broken bricks? 0.5% is too much volatility  I want to make 0.5% average monthly which is over 6% annually with the lowest volatility. More seriously: when you are young take all the risk. When you reach your retirement goals, take only the risk you need, which is what most retiree want. Buy and hold, especially the SP500, is a very good, easy option for most investors. Weaknesses: Over the years I tried many things, I started investing with a small % and when it didn't work I stopped. |
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Post by win1177 on Aug 5, 2021 0:49:20 GMT
In my humble opinion, here are some of the “mistakes” the average investor makes: 1) Not being aggressive enough (higher equity percentage) early in their investment career. 2) Not starting saving at a very early age. 3) Not saving enough (at least 10-15% annual income). 4) Not diversifying adequately. 5) “Panic selling” when the markets sell off (probably the BIGGEST mistake). 6) Not having a basic investment plan/ goals, not understanding ones risk “capacity” and risk “tolerance”. 7) Buying investments they don’t understand. Win |
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bf22
Commander
Posts: 135
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Post by bf22 on Aug 5, 2021 4:37:56 GMT
There are no average investors on this forum...
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Post by steelpony10 on Aug 5, 2021 12:53:44 GMT
FD1000 , FD, +.51% yesterday, +.14% today. After 40 years (about 14600 days) you have a pyramid (not exactly) to get buried in. Lol. You build wealth a brick at a time buy and hold solid companies. What risk? Dropped or broken bricks? 0.5% is too much volatility I want to make 0.5% average monthly which is over 6% annually with the lowest volatility. More seriously: when you are young take all the risk. When you reach your retirement goals, take only the risk you need, which is what most retiree want. Buy and hold, especially the SP500, is a very good, easy option for most investors. Weaknesses: Over the years I tried many things, I started investing with a small % and when it didn't work I stopped. I look at risk (volatility) in the context of a whole portfolio not as individual parts. Everyone should know you invest to stay ahead of your lifestyles personal inflation rate. Since cash can’t do that you have to add risk to achieve that goal. In my view individual U.S. equities depending on type have the highest risk after all foreign equities and the same for mutual funds. Bonds follow the same pattern but won’t be as lucrative. So if my portfolio was divided 50% in a muni fund and 50% utility stocks and dividend Aristocrats which my parents was compared to mine at this time, 40% growth core indexes and 4 individual FAANG stocks, 40% CEF’s and 20% munis, which is more risky and rewarding? So what if a 5 grand monthly expense became an 8 grand then 12 grand expense in a years time? Added to the original 5 grand? The key difference is no reserve fund with the first one or no choice but to add risk and ride the spiral down with your hastily constructed hand break. I guess my point is everyone can build up a lower risk fund to buffer a higher risk profile. Our overall portfolio went down, not lost, 25% or thereabouts, in 2020. Equities showed most risk, CEF’s about 10% less and our muni fund went down about 10%. So my experience led me to believe I shouldn’t have a 100% high risk portfolio. I didn’t have to have a zillion parts. You couldn’t be too conservative but I needed a less risky reserve fund as a Plan B to buffer our higher risk holdings. That’s how we manage risk similar to what your post stated. Just don’t add to much risk by not addressing a worse case scenario which takes a big safe reserve, CD ladder or like us a large muni fund on reinvestment. |
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Post by FD1000 on Aug 5, 2021 13:04:34 GMT
steelpony10 , I was talking about my whole portfolio too. It moves daily at +-0.2 at over 80-85% of the times.
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Post by paulr888 on Aug 5, 2021 14:03:06 GMT
I think one of the biggest mistakes the average RETIRED investor makes is taking too little risk. I can see if you are worth $5M or more and extremely conservative and risk averse you might avoid stocks. Otherwise, min 20% stock by my thinking. And then there is the question of who are you investing for, Paul Merriman and his wife are 50:50 and just for them 30:70 would be OK. But he is not investing just for them. He is investing for his kids and grand-kids.
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Deleted
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Post by Deleted on Aug 5, 2021 14:27:44 GMT
A mistake for me - not necessarily big - has been to wait to deploy funds thinking I will get a better price. Now, if I think it is a fair price and I have the funds, I buy. Will let you know in 10 years how that works out, but I suspect fine. Once I was panicked (by my father) to sell Au Bon Pain. That was a big mistake. I didn't even look at anything - just sold - try not to think about it! Was very young.
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Post by win1177 on Aug 5, 2021 14:31:07 GMT
I think one of the biggest mistakes the average RETIRED investor makes is taking too little risk. I can see if you are worth $5M or more and extremely conservative and risk averse you might avoid stocks. Otherwise, min 20% stock by my thinking. And then there is the question of who are you investing for, Paul Merriman and his wife are 50:50 and just for them 30:70 would be OK. But he is not investing just for them. He is investing for his kids and grand-kids. Agree! You actually lower your risk by adding a small percentage (say 20%) of stocks as compared to a 100% bonds/ fixed income portfolio. IMHO, nearly all portfolios, including retirees, should hold “some” percentage of equity, say 20%. Equity provides the potential for growth, which every retiree needs. We are on track to retire at the end of this year, and will have about 85% equity, the rest will be bonds/ cash. BUT, we are probably very different from the “average retiree”. We have a very large portfolio (several million), a pension which will cover ~40% costs, two SS checks, plus periodic income from our tree farm (selling timber). Our 15% in bonds/cash will be over 1 million. So we are probably very different than many other retirees. Win |
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Post by paulr888 on Aug 5, 2021 14:56:12 GMT
I think one of the biggest mistakes the average RETIRED investor makes is taking too little risk. I can see if you are worth $5M or more and extremely conservative and risk averse you might avoid stocks. Otherwise, min 20% stock by my thinking. And then there is the question of who are you investing for, Paul Merriman and his wife are 50:50 and just for them 30:70 would be OK. But he is not investing just for them. He is investing for his kids and grand-kids. Agree! You actually lower your risk by adding a small percentage (say 20%) of stocks as compared to a 100% bonds/ fixed income portfolio. IMHO, nearly all portfolios, including retirees, should hold “some” percentage of equity, say 20%. Equity provides the potential for growth, which every retiree needs. We are on track to retire at the end of this year, and will have about 85% equity, the rest will be bonds/ cash. BUT, we are probably very different from the “average retiree”. We have a very large portfolio (several million), a pension which will cover ~40% costs, two SS checks, plus periodic income from our tree farm (selling timber). Our 15% in bonds/cash will be over 1 million. So we are probably very different than many other retirees. Win Hi win ... You can safely remove "probably" from your post above. lol Good for you. Glad to hear you are finally going to retire. You are in a fabulous position and will have nice retirement job managing your money assuming you are going to do it yourself. |
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Post by shipwreckedandalone on Aug 5, 2021 15:59:51 GMT
1. Choosing a risk tolerance too aggressive that forces the investor from buy and hold (good) to market timer (bad). Sell down until you can sleep at night. Everybody is different.
The investors who claim to be great market timers refuse to publish their trades.
2. Place 90% of retirement portfolio allocation in mutual funds with great managers or index methodologies.
3. A SWR % too high mixed with sequence risk.
4. Never own more than 4% of portfolio in one stock. Many retirees are guilty of an emotional attachment to excessive amounts of former employee stock.
5. Re balance were appropriate.
6. Be smart enough to know if you do not know what you are doing and have no plans to spend time learning. Use a target date approach which includes international meeting your risk tolerance.
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Post by Chahta on Aug 5, 2021 16:12:32 GMT
A mistake for me - not necessarily big - has been to wait to deploy funds thinking I will get a better price. Now, if I think it is a fair price and I have the funds, I buy. Will let you know in 10 years how that works out, but I suspect fine. Once I was panicked (by my father) to sell Au Bon Pain. That was a big mistake. I didn't even look at anything - just sold - try not to think about it! Was very young. I agree. Some call chasing prices up "Pyramid Up". But it is prudent to watch your entry points. |
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Post by steelpony10 on Aug 5, 2021 18:07:49 GMT
steelpony10 , I was talking about my whole portfolio too. It moves daily at +-0.2 at over 80-85% of the times. Ok. But that’s at the price of higher income correct? Volatility and risk takes precedence over higher income? I think that’s how most interpret your posts. That’s about where I was with our parents. Sent their portfolio into a death spiral in the end. Lol. I hope that 8k a month (for LTC if I remember correctly or if that’s for assisted living it’s in the ballpark maybe) is an accurate figure. Seems to be on the low side. * * Up +.39 today so far. Oh heart be still! One brick at a time … |
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Post by rhythmmethod on Aug 5, 2021 18:52:14 GMT
I think two of the worst mistakes "normal" investors make are A. Not having an investment plan. B. Changing their plan due to postings on investing forums/talking heads, etc, unless fully thought through.
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Post by ignatz on Aug 5, 2021 19:23:58 GMT
B. Changing their plan due to postings on investing forums/talking heads, etc, unless fully thought through.
Hmmm.............."thought through".
Quite a concept.
Does that mean "arriving at the correct conclusion with the benefit of hindsight"?
Does thinking something through give me a better chance than a monkey throwing darts?
What would be the evidence of that?
If I have better results than the monkey, am I skilled?
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Post by steelpony10 on Aug 5, 2021 19:56:18 GMT
B. Changing their plan due to postings on investing forums/talking heads, etc, unless fully thought through.
Hmmm.............."thought through".
Quite a concept.
Does that mean "arriving at the correct conclusion with the benefit of hindsight"?
Does thinking something through give me a better chance than a monkey throwing darts?
What would be the evidence of that?
If I have better results than the monkey, am I skilled?
I think it means basing a plan on accepted as universal truths not what you think. 1. Amateur investors have poor results over time due to what rhythmmethod posted. Market timers being the worst of the lot. That’s probably what that pertains to. 2. Investment professionals generally out perform #1 which seems logical. It’s their full time paying job with vast research tools. 3. Most professionals can’t beat their index over time. 4. As far as equities are concerned that logically led me to invest in Indexes. So there’s no reason to change a plan ever just modify it as income goals or life circumstances change. * *yes you’d be more skilled then a monkey if you outperform over time. So you move up to the AA level and see how you do. If you research game theory there’s no such thing as a never ending hot streak. The reason behind sports, gambling corrections, recessions and black swans. ✌️ |
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Post by FD1000 on Aug 5, 2021 20:37:44 GMT
steelpony10 , I was talking about my whole portfolio too. It moves daily at +-0.2 at over 80-85% of the times. Ok. But that’s at the price of higher income correct? Volatility and risk takes precedence over higher income? I think that’s how most interpret your posts. That’s about where I was with our parents. Sent their portfolio into a death spiral in the end. Lol. I hope that 8k a month (for LTC if I remember correctly or if that’s for assisted living it’s in the ballpark maybe) is an accurate figure. Seems to be on the low side. * * Up +.39 today so far. Oh heart be still! One brick at a time … Not really, performance and volatility has been my top criteria from the start to today. Income is always a minor one. Happen to be that I invest mostly in bonds OEFs, and they pay distribution, but if these funds paid zero distributions, I would still own them. I prefer that my funds would never have paid any distributions. Just for reference, typical bond funds such as BND(US tot index), DODIX (very good core plus fund) have higher volatility and much higher loss from any last top. Just in 2021 they both lost over 4%. MOST bond funds lost 4-6% at a certain time since 01/2020 and the ones that performed better YTD lost a lot more in March 2020. The $500K which I started in 2018 is all invested and easily made already over 35%. Compounding is a very powerful force. BTW, LTC in GA is still about $6-7K per month. As usual, I always build an extra cushion |
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Post by steelpony10 on Aug 5, 2021 20:54:42 GMT
FD1000 , So that was LTC. Your set aside is doing great then. I wonder who else has a set aside on here? I guess I did it the opposite way. Went safer with the set aside. I know in my area, my info is 4 years old now, the annual raise was about 3%. That was my reasoning.
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Post by FD1000 on Aug 5, 2021 21:08:27 GMT
FD1000 , So that was LTC. Your set aside is doing great then. I wonder who else has a set aside? I guess I did it the opposite way. Went safer with the set aside. I don't look at this as set aside, just as I don't think in buckets and/or money per goals. It's all one portfolio managed for performance and risk/SD to meet our goals. Before I retired, I did a lot of what ifs scenarios. I even went to a financial advisor and used his pro software for free because he wanted to "help" me managed my money. We entered all the data and he played dozens scenarios and stress tests. Our portfolio passed them all. He just verified what I knew and tested already. But since 2018 our portfolio performance exceeded our needs by more than triple. |
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Post by steelpony10 on Aug 5, 2021 21:40:21 GMT
FD1000, I ran a whole bunch of different fake portfolio types with fake money and “promoted” philosophies and positions similar to you I suppose. Tech, indexes and a muni fund made the top for various reasons. I isolated income, growth and safety into separate areas. Since we may very well live on CEF income until the end that‘s why I refer to the rest as a set aside. Never ventured off U.S. shores.
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Post by rhythmmethod on Aug 5, 2021 22:33:09 GMT
B. Changing their plan due to postings on investing forums/talking heads, etc, unless fully thought through.
Hmmm.............."thought through".
Quite a concept.
Does that mean "arriving at the correct conclusion with the benefit of hindsight"?
Does thinking something through give me a better chance than a monkey throwing darts?
What would be the evidence of that?
If I have better results than the monkey, am I skilled?
gave a good answer but I would add; "thought through" to me means a plan that fits one's circumstances and is not based chasing one's tail via political leanings, financial news headlines, and especially smarter than thou posters on investment forums. I'll also add my lack of enthusiasm for charts, graphs and other forms of astrological predictions. They may work for others, however. An example is my 'plan' is to keep 55-60% in core investments. These are balanced, multi-sector, and various bound funds. I may exchange (based on risk tolerance) within my core but I don't sell. My core support are US LC equity indexes, APPL, MSFT, AMZN and managed equity OEFs. My explore ~ 20% is devoted to small caps, foreign and frequently going the opposite of said news headlines, hair on fire politics, etc. For example when it was all over the news, and forums about China crackdowns I took a flyer on BABA. I just read in Barron's that BABA is now a good value. I may sell soon as a result. My plan is based on my circumstances, skill and lack of and comfort level. You milage may vary. |
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Post by FD1000 on Aug 5, 2021 23:29:10 GMT
rhythmmethod, steelpony10, I like both of your responses. I have been telling others to know their goals, select asset allocation to back it up, diversify, don't trade much and if you do use no more than 20-30%. I don't follow the above. I use the following: 1) Only semi diversification 2) I select up to 5 best risk/reward (or risk-adjusted) funds, regardless of where they invest. These are usually flexible managers that know how to take advantage of market conditions and find hidden nuggets. 3) I never predict anything, I follow, current markets, momentum, charts, and switching lagging funds. All funds must be at their top category, no matter what is it, from stocks to bonds to allocation. 4) The Fed is the most important for me. The Fed chair speaks very clearly. I tune out most others. 5) Flexibility to change my plan at crucial times in the market. I started the above in 2000. I have a written plan that I follow, but I tweaked it over the years according to market conditions, age and goals. As long as this plan works, I will continue using it. I can always use what I said in the first sentence.
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