Stock Market is the bottom in?

[yoderjac]

Rich sure helps. Probably won’t make it to rich but to retire with no worries is the goal.

The closer I get to retirement, the more evident it becomes how much difference one year more of working can make. First, it is one more year of savings (at what every rate you are saving at), but more importantly, it is one less year you are eating out of your nest egg. For those with pensions and social security, it likely increases your top 3 or 5, however it is calculated. From a financial-only perspective, working one more year almost always makes sense.

Of course the big argument against it is health. Presuming you have your basic needs covered, any additional financial resources increase your lifestyle and/or ability to pass on wealth. Having more financial resources to enjoy our retirement has to be modulated with our declining health as we age. If we work one more year, we have one less year to enjoy retirement, the year we lose is likely our most healthy.

As far as Bitcoin or any currency goes, they are only backed by trust. What value does gold have to your? You can't eat it or do much with it beyond many other rare metals. The only thing that makes it valuable is that others think it is . Money is just an accounting system that allows us to trade real goods more easily.

I find Bitcoin one of the most risky currencies in the long run. Block chain is truly a great technology du jour. But, because it is a technology based currency, fundamental changes in technology could break it. There are lots of countries investing in quantum computing these days. Depending on how that goes, it could disrupt technology based currencies significantly.

Thanks,

Jack

 

[jsasker007]

Should have invested in toilet paper and mask makers.
HAPPY NEW YEAR

 

[Buckly]

if you retired 10-12 years ago and invested wisely you would have at least doubled your retirement funds. Can’t beat that Jack. Something to think about. Your money might grow in retirement and you’ve enjoyed all those years. I’m loving the retired life. LOL.

 

[yoderjac]

if you retired 10-12 years ago and invested wisely you would have at least doubled your retirement funds. Can’t beat that Jack. Something to think about. Your money might grow in retirement and you’ve enjoyed all those years. I’m loving the retired life. LOL.

And if you retire today, your retirement funds could be worth half or less in 10 to 12 years. You just never know. The way I'm calculating mine is this. I first determined how much money per year on average I want to spend to maintain my lifestyle. That is the biggest risk for me, the cost of boredom. That is, is my current spending limited by how much time I spend at work. If I was retired would I spend more to keep myself engaged? Who knows.

My next step was to subtract off our fixed income sources (pensions, social security, etc.) I then figured out what kind of return I need fill the gap. If the return needed to keep the principle intact is below inflation adjusted market averages, I feel pretty comfortable.

The problem is that if you retire right before a big dip you take a big hit eating a lot early. If you retire before a rebound you are in fat city.

Oh, and by the way, if you kept working 10-12 years ago and invested wisely, you would have dwarfed anything you would have done retiring and eating out of the nest egg for the last 10-12 years.

Thanks,

Jack

 

[bwoods11]

Most of my assets are real estate (income producing land) crop, CRP. They also just happen to be good hunting farms as well!

 

[homerj1]

Oh, and by the way, if you kept working 10-12 years ago and invested wisely, you would have dwarfed anything you would have done retiring and eating out of the nest egg for the last 10-12 years.

Ya, except you would have been retired and you wouldn't really give a shit

 

[Tree Spud]

And if you retire today, your retirement funds could be worth half or less in 10 to 12 years. You just never know.

Thanks,

Jack

Not really, you would only lose that type of value if you were foolish and stayed in the wrong type of investments. According to Fidelity, the worst 20 year annualized return in a conservative portfolio mix is about 2.9% the best is about 10.9%.

Wealth accumulation and wealth preservation are two different things. As you move towards retirement, your portfolio mix needs to change and start to move away from stocks and more into fixed income. It's a sliding scale based on age, risk tolerance, etc. But as you approach retirement, you start looking at a 50:50 mix and at retirement you want to be less than 30-40% stocks.

The bottom line is that there is a time to push back from the table and protect your winnings. At some point you move past trying to hit home runs and move your portfolio to a more conservative mix. Hopefully you have a large enough principle that you can live off the earnings along with SS, etc.

The last 4 years have fooled many to think they are financial genius's, very hard to have not made money. The next 4 years I think are going to be different.

 

[yoderjac]

Not really, you would only lose that type of value if you were foolish and stayed in the wrong type of investments. According to Fidelity, the worst 20 year annualized return in a conservative portfolio mix is about 2.9% the best is about 10.9%.

Wealth accumulation and wealth preservation are two different things. As you move towards retirement, your portfolio mix needs to change and start to move away from stocks and more into fixed income. It's a sliding scale based on age, risk tolerance, etc. But as you approach retirement, you start looking at a 50:50 mix and at retirement you want to be less than 30-40% stocks.

The bottom line is that there is a time to push back from the table and protect your winnings. At some point you move past trying to hit home runs and move your portfolio to a more conservative mix. Hopefully you have a large enough principle that you can live off the earnings along with SS, etc.

The last 4 years have fooled many to think they are financial genius's, very hard to have not made money. The next 4 years I think are going to be different.

If "investing wisely" can result in a doubling in 10-12 years, the same level of aggressively can result in an equivalent loss. Keep in mind while working I'm feeding the nest-egg. Once retired, I'm eating from it. Long term market average is about 6% or 3% inflation adjusted. When I look at the market over time, I see market drops lasting 3-4 years before the market recovers to the average. I plan to have two buckets. I can see no case for bonds at all. One bucket will be cash and the other S&P. When my total value is below my initial balance, I will eat from the cash bucket. As soon as the market recovers and my balance exceeds my initial balance, I will refill the cash bucket and eat from the S&P bucket. My goal is to need less than a 6% (or 3% inflation adjusted) return in the long run to meet my average withdraw needs.

I'm with ya on the market prediction. I luckily moved a big chunk into cash at the beginning of 2020 and then moved 100% into stocks near the bottom. This offset big losses in my only single company stock left. It was the company I worked for and I had lots of their stock in my 401K that had greatly appreciated over my career. I had hoped to take advantage of NUA when I retired so I was risking the large overweighting in a single company. There was a merger and the resulting company took a huge hit with COVID and has not, and likely won't recover anytime soon. Since the market recovered completely, I've moved significant money back into cash.

I sat down with a number of financial planners. None could make a valid case for a mix of stocks/bonds and cash except for folks who will sleep better at night. None of them could shoot any holes in my approach. Most of them just said that "most of our clients can't do this".

I'm no financial genius by any stretch of the imagination, but I'm good with math and running numbers. I tried all kinds of investment strategies when I was young and foolish and lost my share of money. I've come to the conclusion that investing in the broad market for the long run is the best I can do.


Thanks,

Jack

 

[SD51555]

I think if anyone under 40 wants to retire ever, they’re gonna have to break some rules and figure things out. Saving $6-10 million to pull 1% income off it in 25 years ain’t gonna happen. That’s old world stuff.

The gift of easy money has come to the end of the line. Gonna take new rules to stay ahead. It’s all relative anyway. Wealth is simply a measure of our purchasing power vs other people.

Save more money
Generate higher income
Pay less taxes
Need less money
Hedge against inflation

Saving is only one of those five tactics.


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[S.T.Fanatic]

My parents divorced 32 years ago. At that time my father had 70K in his retirement. Mom chose to leave her 35K in the fund. There was never a single contribution made after that day.

She pulled it all out last year. $510K not to bad considering most would have bought a new vehicle, a set of good sized bolt ons, and went on vacation with it.

It’s just to bad she didn’t let it ride another year.


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[Buckly]

The problem is that if you retire right before a big dip you take a big hit eating a lot early. If you retire before a rebound you are in fat city.

I saw some statistics once that showed if a big crash. (50-60)% happens in the first five years of retirement there’s a good chance you won’t fully recover over your average retirement life. If you make it 6-10 years before a big crash you will probably recover. Over 10 your good.

 

[Buckly]

If "investing wisely" can result in a doubling in 10-12 years, the same level of aggressively can result in an equivalent loss. Keep in mind while working I'm feeding the nest-egg. Once retired, I'm eating from it. Long term market average is about 6% or 3% inflation adjusted. When I look at the market over time, I see market drops lasting 3-4 years before the market recovers to the average. I plan to have two buckets. I can see no case for bonds at all. One bucket will be cash and the other S&P. When my total value is below my initial balance, I will eat from the cash bucket. As soon as the market recovers and my balance exceeds my initial balance, I will refill the cash bucket and eat from the S&P bucket. My goal is to need less than a 6% (or 3% inflation adjusted) return in the long run to meet my average withdraw needs.

I'm with ya on the market prediction. I luckily moved a big chunk into cash at the beginning of 2020 and move 100% into stocks near the bottom. This offset big losses in my only single company stock left. It was the company I worked for and I had lots of their stock in my 401K that had greatly appreciated over my career. I had hoped to take advantage of NUA when I retired so I was risking the large overweighting in a single company. There was a merger and the resulting company took a huge hit with COVID and has not, and likely won't recover anytime soon. Since the market recovered completely, I've moved significant money back into cash.

I sat down with a number of financial planners. None could make a valid case for a mix of stocks/bonds and cash except for folks who will sleep better at night. None of them could shoot any holes in my approach. Most of them just said that "most of our clients can't do this".

I'm no financial genius by any stretch of the imagination, but I'm good with math and running numbers. I tried all kinds of investment strategies when I was young and foolish and lost my share of money. I've come to the conclusion that investing in the broad market for the long run is the best I can do.


Thanks,

Jack

There‘s nothing wrong at all with that plan. Myself I put 5 years of cash aside to draw from, the rest is diversified investments. The thought being you never have to sell any stocks to live on and over the 5 years you can recover any losses. Whenever the investments have a rally then refill the cash. It could be in any year to refill If you can make it continuous that’s good if not just fill up when you can. How much cash you put aside just depends if you want to spend down your balance over time or have the same amount or more than you started with when your retirement ends.
I think you can average better than 6% Probably 7%. And when have we had 3% inflation lately? It’s almost non existent. I can see it creep up but just my opinion it would take 10 years or more at least to get anywhere significant. Anyways. Retirement is so variable for everybody. Get your money straight but remember it’s more about happiness and relaxation. Lol.

 

[Telemark]

while working I'm feeding the nest-egg. Once retired, I'm eating from it.

It is completely reasonable to expect to grow your assets after retirement. You should retire with enough diversification that you can continue to grow your portfolio after retirement. Taking advantage of the economic situation can be a huge help. Interest rates are incredibly low, and stocks were incredibly cheap. If you had borrowed on your HELOC and invested in a dividend stock you could pay back the loan and keep the passive income asset, for example. Or you could buy a rental property and pay back the loan with rental income. Even moving money around inside a 401k according to shifts in the market will grow your portfolio. I would say if you need to eat into your nest egg then you are probably not ready to retire.

 

[jsasker007]

People will find out just how incompetent biden is when they lose their retirement due to his determined mind set to "help" china and follow obama's plan of spending our way out of debt. jmho.
Thinking this country will turn things around is a pipe dream and nothing more.

 

[bwoods11]

I saw a poll that said 2/3 of Americans think the stock market will correct under Biden. Consumer confidence is already slowing. We will see.

No way Biden actually WON the election. It’s too bad the election heist will probably work for him and Kamala.

 

[jsasker007]

I could see 66.6% but not 2/3. Should be a heck of ride with president harris.

 

[yoderjac]

It is completely reasonable to expect to grow your assets after retirement. You should retire with enough diversification that you can continue to grow your portfolio after retirement. Taking advantage of the economic situation can be a huge help. Interest rates are incredibly low, and stocks were incredibly cheap. If you had borrowed on your HELOC and invested in a dividend stock you could pay back the loan and keep the passive income asset, for example. Or you could buy a rental property and pay back the loan with rental income. Even moving money around inside a 401k according to shifts in the market will grow your portfolio. I would say if you need to eat into your nest egg then you are probably not ready to retire.

There is a big difference between what I expect and what I'm willing to count on. I expect my investments to grow in retirement much more than I'm counting on. I'm counting on the stock market to earn 3% above inflation over the long haul. I expect to out perform that, but I'm not counting on it.

 

[jsasker007]

Social security is now an oxymoron.

 

[Telemark]

There is a big difference between what I expect and what I'm willing to count on. I expect my investments to grow in retirement much more than I'm counting on. I'm counting on the stock market to earn 3% above inflation over the long haul. I expect to out perform that, but I'm not counting on it.

You have your entire portfolio in the stock market?

 

[yoderjac]

You have your entire portfolio in the stock market?

Nope. The land and real estate I own does not produce enough income to consider it as part of my portfolio. It certainly has long term value. but short of an emergency, I never plan to liquidate it. For most of my career I was fully invested in stocks except for emergency funds. That changed last winter as I began to look to retirement when I moved significant money into cash equivalents. When COVID hit and the markets reacted, I went back to 100% stocks. Since the market recovered, I moved significant amounts back into cash. I though we over-corrected when COVID hit and I think we have over-recovered. The next few years looks bleak to me from a market perspective. Even If the most optimistic COVID recovery scenario occurs, the damage done to small business and the economy will take a long time to repair. The money spent to keep the economy from crashing either will increase long-term debt or, with the Dems in office, be dealt with through tax increases. The wealth gap has significantly widened as a result of COVID.

I don't plan to hold any bonds. I can't see any case where they are needed in my portfolio. I outlined my strategy in a previous post, broad market stocks and cash only from an investment perspective.