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Participant ○○○

Your Portfolio Insecurities

What parts of your retirement portfolio make you feel insecure or not satisfied? Where do you feel most vulnerable? I'll start.

1, Asset Allocation. With investment grade bond yields so low reason and logic tell me to go 80/20. My natural tendency is to step on the (equity) gas. I don't like bonds. Never will. With 80/20 we'd use one ITT ETF and we're DONE with bonds. I'd rather ride the equity rollercoaster vs worrying about our bond mix. Wife and chief kid rather cruise at 40/60. I push for 60/40. We're at 50/50. I'm OK with this. But not happy. Less equities means more insecurity and dissatisfaction on the FI side.

2. 100% USD FI allocation. Again the very low yields on investment grade bonds along with an average duration = 6.3 years makes me very insecure. Our FI allocation has a nominal yield = 1.1% That's because of a 30% position of corporate bonds. Without the corps the yield drops to 0.4%. I feel that our FI allocation is horribly vulnerable to a rise in interest rates and or a USD devaluation. 30% TIPS means 70% of our FI allocation is very vulnerable to USD inflation. 

3. Equity Allocation. A much smaller issue than 1 and 2 but still a concern. We've been tilting toward non-USA and smaller since 2006. Hindsight says 100% USA equities was a better choice. For us when the Bogleheads say "own the whole hay stack" to us that means the global equity haystack. Logic and reason say that non-USA equities should out perform. We've been waiting for 14+ years for that to happen.

That's basically it. What bothers you about your retirement portfolio?

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Frequent Contributor

Re: Your Portfolio Insecurities

Back on the old M* board, perhaps 10 years ago or more, dawgie (where did he go?) wrote that your stock allocation is probably right if you feel that you own too much when the market pulls back, and too little when the market surges ahead. I always remembered that. I think he hit the nail on the head.

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Explorer ○

Re: Your Portfolio Insecurities

chang: wise words indeed!

g_man: how old are you again?  i'd guess that's some pretty important info for us to know, when considering your words.

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Participant ○

Re: Your Portfolio Insecurities

Hi.

One response suggested age may play a part. I agree. I am 82 and soon to be 83. So, my time horizon is not the same as one younger and that is huge. Therefore, no bonds, just cash (CD's) and stock. My insecurity is whether to switch a traditional IRA to a ROTH. Much if the traditional would incur a large capital gain and I do not want to pay it out of my cash. Mind you, ROTH's were not around when I started all this and the "spin" was that I would pay a lower tax rate now that I am retired. The truth is those RMD"s are making my retirement income triple what I was making when working, hence a higher tax rate.  There is a lot of articles that say if one were to convert, now is the time. I don't know. Another kick in the groin is that my kids will only have 10 years to close out these inherited accounts. Another new rule to get same hands on that money. A ROTH? If the economy recovers fairly quickly, what I would have payed in gains is adding to the account? My warning to the young beware of governments promises. When I started, SS was "sacred" and would never be taxed. Wrong. Now that I am "rich", I can afford to have it taxed. With all the debt that is being created, will A ROTH fall into the SS category? Soon after the RMD money is depleted on traditional IRA's. Taxes will have to be increased, So, who do you tax? The "rich"? Or is that spelled roth? 

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Frequent Contributor

Re: Your Portfolio Insecurities

I like mine just fine. It fits like a glove at age 78.

And, yes, it's changed as I have aged, but guaranteed income has always been the floor.

It's never been a competition for me, and I surely don't have portfolio envy.

I wish everyone similar comfort.

Bob

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Frequent Contributor

Re: Your Portfolio Insecurities

"That's basically it. What bothers you about your retirement portfolio?"

1)  I'm 75 this year and retired 17 years ago, at age 58.  I never paid much attention to my asset allocation, and certainly never made any decisions based upon same.  I've never owned a market index fund.  My ONLY consideration was, and still is, how much divey/interest/distribution cash is thrown off each quarter by whatever I invested in.  I take my retirement withdrawals monthly, given that my whole working life was based upon personal monthly accounting.  Finally, I have never sold anything in order to cover a withdrawal.

2)  Until this year, I have always remained fully invested, meaning I never set aside any cash for rainy days, bottom fishing, or portfolio ballast.  Each month, after I took my monthly withdraw, I always reinvested whatever portfolio distribution cash that wasn't withdrawn.  My portfolio cash flow took a major hit in March (roughly a 50% cut).  What I now do is to accumulate whatever excess portfolio cash flow that isn't withdrawn.  So each month, this cash bucket grows larger and larger.  Although I haven't done anything with this cash bucket, I'm thinking of investing the cash into individual TIPS, which should keep pace with inflation and be a ready source of cash should an emergency arise going down the road.

ElLobo, de la casa de la toro caca grande
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Frequent Contributor

Re: Your Portfolio Insecurities

Even when one designs an "optimum" portfolio in asset allocation and  diversification (if there were ever one), fitting to one's time horizon and risk tolerance , it is no longer felt as optimum when the market goes up or down (especially by a lot).  It is just the factor of human behavior science with greed and fear; or it can be coined as "portfolio insecurities."  

Thus I design a simple conservative portfolio and promise myself (for good times and bad times) to mainly stay the course and only do very minor tweaking (defined rigidly by dollar amount; or re-balancing to put it more nicely) at such itchy times with greed and fear.

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Participant ○○○

Re: Your Portfolio Insecurities

My wife and I have both been retired since 2018 (she in 2016) with a portfolio of 35% equities/65% Stable value fund, Bond funds and cash.  I set about increasing the bond fund yield and associated risk, thinking with a low percentage in equities, I could handle the volatility in PIMIX, PIGIX, & JMUTX.  Then March 2020 happened and those higher yielding funds took a double digit nosedive.  I’ve since sold JMUTX and invested it in VTI and VIG.  Buying a market dip, something I’d never Intentionally done while working, has eased my anxiety over what was really not a significant loss.  But having an asset allocation set up for total return is where my comfort zone lies.  If the market goes sideways then at least I know I’ve done what I can to minimize potential loss’ while I earn what John Bogle called, “enough.”

Portfolio management during retirement is very different from accumulating/saving during your working life.  So I’m slowly transitioning out of most higher yielding/risk bond funds and returning to a ballast focus.  Scared straight (LOL).

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Contributor ○○○

Re: Your Portfolio Insecurities

I'm like a couple of posters in that I basically feel OK about my retirement income.  Getting (and keeping) a federal civil service job after eight years of active duty Air Force time has secured a small but very reliable retirement income at an early age.  It also covered up for a lot of mistakes along the way.  I was able to buy back my military time and combine it with my civilian time, and that way I qualified for a full immediate retirement at age 56.  Which I ended up needing, as my health took a turn for the worse, and my last year of working I had five operations.  So I packed it in.  

Along with the full immediate retirement I also qualified for a FERS Supplemental Annuity, which went away at age 62, regardless of what I did as far as taking social security.  Since even frugal ol' me couldn't live on the basic annuity alone, I filed for early SS benefits when I did turn 62.  Which turned out to be a raise, my SS money was about twice as much as the supplemental annuity that went away.  

So I have two small but very stable income checks coming in each month, for which I am extremely grateful.  Not sure I would call this an insecurity, but I would like a third income stream, which is essentially what I'm trying for with my investment portfolio.  I'm not at the point where I need another income stream, and I may never need it, but I sure would feel better if I had something I could start drawing on if I needed to.  Thus, my retirement portfolio, such as it is.  

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Re: Your Portfolio Insecurities


  • @galeno wrote:

    What parts of your retirement portfolio make you feel insecure or not satisfied? Where do you feel most vulnerable? I'll start.

    1, Asset Allocation. With investment grade bond yields so low reason and logic tell me to go 80/20. My natural tendency is to step on the (equity) gas. I don't like bonds. Never will. With 80/20 we'd use one ITT ETF and we're DONE with bonds. I'd rather ride the equity rollercoaster vs worrying about our bond mix. Wife and chief kid rather cruise at 40/60. I push for 60/40. We're at 50/50. I'm OK with this. But not happy. Less equities means more insecurity and dissatisfaction on the FI side.

    2. 100% USD FI allocation. Again the very low yields on investment grade bonds along with an average duration = 6.3 years makes me very insecure. Our FI allocation has a nominal yield = 1.1% That's because of a 30% position of corporate bonds. Without the corps the yield drops to 0.4%. I feel that our FI allocation is horribly vulnerable to a rise in interest rates and or a USD devaluation. 30% TIPS means 70% of our FI allocation is very vulnerable to USD inflation. 

    3. Equity Allocation. A much smaller issue than 1 and 2 but still a concern. We've been tilting toward non-USA and smaller since 2006. Hindsight says 100% USA equities was a better choice. For us when the Bogleheads say "own the whole hay stack" to us that means the global equity haystack. Logic and reason say that non-USA equities should out perform. We've been waiting for 14+ years for that to happen.

    That's basically it. What bothers you about your retirement portfolio?


          Nothing bothers me. We realized long ago because of the three unknowns we’re all flying blind forever. Constant juggling to me seems like an addiction or a fruitless attempt to control an uncontrollable. Posters can argue all they want but there is no best path.

           We have no rules, allocations, don’t rely on studies, don’t market time or rely on financial gypsies etc. All we have is a 40 year old+ roadmap, a plan, experience, patience, a risk tolerance and confidence we can get it done, which we did. At that point we stopped. Now we can spend with confidence or just continue to add cash during sales if we want with complete freedom.

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