Investment BS Thread - Stocks/Futures/Mutual Funds/Bonds/Commodities/Options/ETFs/401ks/Etc

Down almost 500 points in the last two hours!

 

This is true, and pretty much the end of the thread for most people. Just fill up your retirement account and be patient.

However, some people want to retire at 55, or maybe 45. I think as long as you know your strategy, and follow it, you'll do fine. That's probably where people get screwed, they don't even know why they're in the market to begin with, panic on corrections and sell instead of buy, etc.

 

I'm 41 right now, I hope to retire at 55. I am 40% in bonds and automatically re-balance every quarter, so if there is a big sell off in stocks, I'll be stacking them deep. I may even cut back to 30% bonds if stocks get stupid cheap.

 

Any ideas on how you will pay yourself when you decide to retire? There are a lot of ways, dividends, fixed income, the 4% withdrawal rule, etc. I just like to see what others have planned.

 

I figure I can retire when I can comfortably live on 4% of my savings. I’m flexible on how I get that 4%. Probably a mix of interest and dividends.

The biggest bummer is paying health insurance. I may even continue to work until SS kicks in, but doing something I actually like and that is low stress.

 

That's a good plan. I have built a dividend portfolio early that makes a little over 4%. I just don't trust the market enough for the true withdrawal of 4% every year. You could get into some trouble if you're withdrawing 4% during a sustained bear market where it's down 40%+ for years at a time. I don't know if/when that will happen, but you'd deplete your portfolio fast. It just doesn't seem like a "safe" retirement, I'd always be thinking about it.

 

Considering -40%+ for years at a time would be a massively historic bear market that's never been seen before, I think any portfolio would have difficulty sustaining that comfortably. Because who knows what companies would do in that case.

There's tons of good simulation programs you can use to model how your portfolio would have held up throughout the past 100 years if you want to actually look at previous market behavior. Typically you give them what your nest egg is starting at, length of retirement, how its invested, how you intend to withdraw from it, and what your projected expenses/benefits are and it will run projections using past market data to see how you'd end up depending on which day you actually retired. It's harder for people further away from retirement because you have to be able to accurately predict your future expenses in retirement which can have a huge impact on outcome, but still good to see.

 

Well the last recession took a few years to recover, maybe 3 or so (from pre-dip prices to recovery)? That's what I mean, I wouldn't want to sell shares in that environment. Maybe the up years make up for that though, and that's why it works. Either way, not for me.

 

It did, but look what it's done since then. Even with some withdrawls you'd likely be far ahead of where you started. But there's also no requirement to sell shares with the 4% rule. It's just a guideline for how much to be spending based on portfolio size. You could get that 4% from bond yields, dividends from stocks you own, selling the shares themselves, or any other number of ways to get paid from your portfolio.

 

I know, I am getting around 4.5% from dividends. I was just commenting on how I prefer dividends or fixed income to any strategy that involves selling shares (even if it works).

 

What's your plan for keeping your monthly income in retirement consistent while dealing with inflation if you don't intend to sell the shares themselves? I'm sure you're just reinvesting dividends right now to grow your portfolio until retirement, but once you stop contributing won't that lock in what you're going to be paid? Or are you expecting that as share price increases, the companies will also increase dividends enough to match/exceed the rate of inflation?

 

Editing this just to answer the questions.

The average annual dividend growth on my portfolio is 9.47% (5-year average), so I do expect a slight increase every year. That goes along with share price of course, so I would expect stagnant dividends if the market isn't doing well.

Yes, I am reinvesting all dividends now, I haven't taken any money from there yet. I guess I will if I ever decide to stop working.

My goal is to get the dividends to exceed what I need, so hopefully even in retirement I can keep investing (just not as much).

 

Tariffs just increased, it’s going to get a lot worse next week!

 

Can’t wait to BUY!!!

 

You got a shopping list?

 

I’m always up for cheap Amazon, I’ll have to see what else goes on sale.

Nice that my bond funds were up today!

 

Who thinks we'll be at 2700 by friday?

 

If so, I’ll be a rich man in 10 years!!

 

I would have thought so. Looks like Trump slid a put under the market this morning though. Something about China coming to the table.

 

Ok investment pros.

I may be looking into knee surgery next year so I’m trying to get my ducks in a row just in case.

I just got new health insurance and am on a family plan. My employer contributes $1,200 per year in a lump sum to my HSA Jan 1 then $46.00 a pay period after that to total $2,400 worth of contributions.

The $7,000 yearly limit is both what I put in PLUS my employer correct?

If this ends up being the appropriate medical move I’ll probably get care in February when I can take paid leave. I was going to try to max my contributions out in January/Feb but I have to be mindful of what my employer is putting in throughout the remainder of 2020 right?