End goal / How much do you need?

[Pablos Tunnel]

No, no one is saying that. In my Mothers case she is pretty well off due to returns from investments that were based on bonds(my Dad's IRA, 401K, Pension fund and more CD's and individual bonds than one could shake a stick at). Her concerns lie with losing anything at all when in fact she is losing returns by being WAY too conservative....

In my case I have my retirement based in R.E.,both residential and commercial, and of course traditional means such as PSP, IRA and on my own with index funds, retirement CD's......Funny thing is my index funds out perform my actively managed funds, PSP & IRA, on a pretty consistent basis....

I understand. As for you managed accounts not performing as well that could be attributed to several factors. It’s a difficult comparison.

 

[no1g8r]

Index funds (stock and bond) are far from being relatively safe. They are appropriate for investors with a long a term horizon and a stomach for volatility. They are static (unmanaged) investments. Most have forgotten 2001 and 2008 because of the bull run equities have made. You should test your portfolio versus your lifestyle income with a 10 year run of zero or negative returns. DO NOT put all your eggs in an equity basket for retirement.

Interesting. I agree with most of your post, but that 10-year tear of zero or negative returns is slightly worse than the 1930s, during the Great Depression. Isn’t that a bit overly pessimistic?

 

[Pablos Tunnel]

Interesting. I agree with most of your post, but that 10-year tear of zero or negative returns is slightly worse than the 1930s, during the Great Depression. Isn’t that a bit overly pessimistic?

What about the 1970s? Having a back up parachute when you jump out of an airplane is also pessimistic. With the manipulation of world currency’s and increasing govt. debt it’s only a matter of time before the equity markets take a big hit. Its all about the timing.

 

[no1g8r]

What about the 1970s? Having a back up parachute when you jump out of an airplane is also pessimistic. With the manipulation of world currency’s and increasing govt. debt it’s only a matter of time before the equity markets take a big hit. Its all about the timing.

The 70's were up and down, but from Jan 1 1970 to Jan 1 1980, the net increase in the stock market was a 22.7% gain over the 10 year period (as measured by the S&P 500). That works out to around 2.1% annualized gain, which isn't very good, but that's taking the "bad" that allows you the opportunity to get the "good",

Jan 1, 1980 110.90
Jan 1, 1979 99.71
Jan 1, 1978 90.25
Jan 1, 1977 103.80
Jan 1, 1976 96.86
Jan 1, 1975 72.56
Jan 1, 1974 96.11
Jan 1, 1973 118.40
Jan 1, 1972 103.30
Jan 1, 1971 93.3
Jan 1, 1970 90.31


The next 10 year period, the 80's, featured the S&P starting on Jan 1, 1980 at 110.90 and ending on Jan 1 1990 at 339.97, a 206% net gain, or 11.9% annualized. Better than sitting on the sidelines worrying about volatility.

Jan 1, 1990 339.97
Jan 1, 1989 285.40
Jan 1, 1988 250.50
Jan 1, 1987 264.50
Jan 1, 1986 208.20
Jan 1, 1985 171.60
Jan 1, 1984 166.40
Jan 1, 1983 144.30
Jan 1, 1982 117.30
Jan 1, 1981 133.00
Jan 1, 1980 110.90

I'm not saying anyone should go "all in" on equities, but there is no question that over time, being overly conservative will cost your portfolio greatly.

Then again, I embrace volatility, as I trade options for income as a profitable hobby. My risk tolerance is probably greater than that of most people, and probably a little more than it should be.

 

[Pablos Tunnel]

The 70's were up and down, but from Jan 1 1970 to Jan 1 1980, the net increase in the stock market was a 22.7% gain over the 10 year period (as measured by the S&P 500). That works out to around 2.1% annualized gain, which isn't very good, but that's taking the "bad" that allows you the opportunity to get the "good",

Jan 1, 1980 110.90
Jan 1, 1979 99.71
Jan 1, 1978 90.25
Jan 1, 1977 103.80
Jan 1, 1976 96.86
Jan 1, 1975 72.56
Jan 1, 1974 96.11
Jan 1, 1973 118.40
Jan 1, 1972 103.30
Jan 1, 1971 93.3
Jan 1, 1970 90.31


The next 10 year period, the 80's, featured the S&P starting on Jan 1, 1980 at 110.90 and ending on Jan 1 1990 at 339.97, a 206% net gain, or 11.9% annualized. Better than sitting on the sidelines worrying about volatility.

Jan 1, 1990 339.97
Jan 1, 1989 285.40
Jan 1, 1988 250.50
Jan 1, 1987 264.50
Jan 1, 1986 208.20
Jan 1, 1985 171.60
Jan 1, 1984 166.40
Jan 1, 1983 144.30
Jan 1, 1982 117.30
Jan 1, 1981 133.00
Jan 1, 1980 110.90

I'm not saying anyone should go "all in" on equities, but there is no question that over time, being overly conservative will cost your portfolio greatly.

Then again, I embrace volatility, as I trade options for income as a profitable hobby. My risk tolerance is probably greater than that of most people, and probably a little more than it should be.

All the while we suffered through serious inflation and very high interest rates. Testing your portfolio is just prudent. MOST people (not you) are drunk on last ten year numbers. So I suppose we can agree that retirees should have multiple buckets for income. Yes?