quote:

Originally posted by Skins2881:


Name me any ten year period that the S&P has been down. Doesn't happen, very little risk.

Sure it does. Ten year period ending February 2009
S&P 500 return was -3% per year average.

Easy to forget such facts living during a period of en extended bull market run.

The tech bubble crash that brought on the almost 3 year long bear market with negative returns for 2000,2001,and 2002 was particularly harrowing.

While the US stock market does have a history of recovering from bear markets within about 15 years that does not mean that will always be the case. Japan stock market is still well below its all time high of 28 years ago. At one time is was 40K and currently around 22K.

I am not trying to talk anyone out of owning stocks but clarifying the risks involved.

Our economy is doing very well currently but IMO at some point the national debt will become a real issue now that it is over 22 trillion and trillion dollar a year deficits are the new norm. Rising interest rates are going to further accelerate more debt due to interest payments on the 22 trillion dollar debt.

https://www.thebalance.com/rol...973-mid-2009-4061795

quote:

Originally posted by grumpy1:

quote:

Originally posted by Skins2881:


Name me any ten year period that the S&P has been down. Doesn't happen, very little risk.

Sure it does. Ten year period ending February 2009
S&P 500 return was -3% per year average.

Easy to forget such facts living during a period of en extended bull market run.

The tech bubble crash that brought on the almost 3 year long bear market with negative returns for 2000,2001,and 2002 was particularly harrowing.

While the US stock market does have a history of recovering from bear markets within about 15 years that does not mean that will always be the case. Japan stock market is still well below its all time high of 28 years ago. At one time is was 40K and currently around 22K.

I am not trying to talk anyone out of owning stocks but clarifying the risks involved.

Our economy is doing very well currently but IMO at some point the national debt will become a real issue now that it is over 22 trillion and trillion dollar a year deficits are the new norm. Rising interest rates are going to further accelerate more debt due to interest payments on the 22 trillion dollar debt.

https://www.thebalance.com/rol...973-mid-2009-4061795

OK, 11 year period. Look at 2009 and 2010. 26.8% then 15% returns.

The second part about bonds and us debt is an argument against bonds. Raising bond rates makes currently held ones worth less.

My point was you need to plan for longer draw from retirement accounts than you did when a lot of these strategies were put forth. Also that over longer periods you are risking a lot in returns for minimal reduction in risk. By going all or heavy into bonds.

Been many years since I was a financial planner and am not providing any advice for members to take, more so a point to consider when talking with your advisors.

quote:

Originally posted by Skins2881:

quote:

Originally posted by grumpy1:

quote:

Originally posted by Skins2881:


Name me any ten year period that the S&P has been down. Doesn't happen, very little risk.

Sure it does. Ten year period ending February 2009
S&P 500 return was -3% per year average.

Easy to forget such facts living during a period of en extended bull market run.

The tech bubble crash that brought on the almost 3 year long bear market with negative returns for 2000,2001,and 2002 was particularly harrowing.

While the US stock market does have a history of recovering from bear markets within about 15 years that does not mean that will always be the case. Japan stock market is still well below its all time high of 28 years ago. At one time is was 40K and currently around 22K.

I am not trying to talk anyone out of owning stocks but clarifying the risks involved.

Our economy is doing very well currently but IMO at some point the national debt will become a real issue now that it is over 22 trillion and trillion dollar a year deficits are the new norm. Rising interest rates are going to further accelerate more debt due to interest payments on the 22 trillion dollar debt.

https://www.thebalance.com/rol...973-mid-2009-4061795

OK, 11 year period. Look at 2009 and 2010. 26.8% then 15% returns.

The second part about bonds and us debt is an argument against bonds. Raising bond rates makes currently held ones worth less.

My point was you need to plan for longer draw from retirement accounts than you did when a lot of these strategies were put forth. Also that over longer periods you are risking a lot in returns for minimal reduction in risk. By going all or heavy into bonds.

Been many years since I was a financial planner and am not providing any advice for members to take, more so a point to consider when talking with your advisors.

Bonds can certainly be an important part of a person's portfolio depending on their siutation. Sure bonds carry risk but the downside of stocks is much higher and at this point in my life I would rather take a 5 percent loss on a short term bond fund/ETF than 40 percent loss on a stock fund during a severe bear market and there will certainly be more of them.

My concern about debt is not so much interest rates but how it could eventually crush the whole economy and devastate the markets .

quote:

Originally posted by Skins2881:
Name me any ten year period that the S&P has been down. Doesn't happen, and if it does we probably have some other serious issues going on. If you have 30 years in retirement, you can weather ups and downs just the same as you did in working years. If you exit equities or go really bond heavy you sacrificing earnings you may need in your eighties or nineties for very little risk.

A few things:
A) I can tell you have no industry knowledge because making those kinds of statements would lead to a disclosure, and likely a loss of licensure.
B) Retirement is not an exact science, and it all depends on the facts as presented.
C) Reducing risk is the best way to preserve capital when you are DEPENDENT on that income stream.
D) IF you need $12k/ year in supplemental income after you retire, and you expect to earn 12%, and maintain a lifestyle with a balance of $68,000 (US national average of retirement savings accounts BTW), you won't get there.
E) There is nothing saying you can't have equities, but if you plan on living off them it will burn you.
F) There has never been a 10 year period where equities have grown like they have in the past 10 years, and expecting growth to continue is kidding yourself.

quote:

Originally posted by Skins2881:

OK, 11 year period. Look at 2009 and 2010. 26.8% then 15% returns.

The second part about bonds and us debt is an argument against bonds. Raising bond rates makes currently held ones worth less.

My point was you need to plan for longer draw from retirement accounts than you did when a lot of these strategies were put forth. Also that over longer periods you are risking a lot in returns for minimal reduction in risk. By going all or heavy into bonds.

Been many years since I was a financial planner and am not providing any advice for members to take, more so a point to consider when talking with your advisors.

There have been four 20% corrections in the last 20 years, and six of at least 10%. Take away the last 12 years from the previous fall. DO you know what the annual rate of return for the S&P 500 was for that 20 year period (1987-2007)? IT was 8.01%. Do you know what the RoR for a high grade bond fund was for that same time? 6.31%. The S&P 500 earned just 1.7% per annum more than a high grade bond fund during the same period.

From October 1997 to October 2007 (the previous all time high before the 2013 eclipse), the 10 year average RoR for the S&P 500 was 3.3%, and high yield bond funds yielded 3.82%, so it is all a matter of perspective.

If you are the type of person that thought bitcoin was a buy at $20,000 (currently $6400) in December 2017, or Gold was a must have in August 2012 at $1831/ ounce (currently $1197) that is your prerogative. I would not have encouraged anyone to buy either if they were over 60, but it is ultimately up to the buyer.

Furthermore, when you retire and start drawing has a major effect on your long term welfare if you are heavily into an equity index. A person who retired in August 2000 with $200,000 and drew $1,000 a month and was 100% in the S&P 500 would have run out of money by 2011. The same person, paying the same tax rate, drawing the same amount who retired with $200,000 in August 2002 would have $114,000 left because he was not exposed to a 47.5% decrease in the S&P 500 between those two points.

Lastly, I would hope that you knew that one does not buy and sell bonds. It is an imperfect market for semi-liquid assets. Bonds should be thought of in yield. If you buy and the current yield is 5%, and yields rise, your current yield is still 5% until you sell. It is called FIXED INCOME for a reason - you know what you will receive until maturity.

For anybody casually reading this, please know that the last 10 years have been a spectacular growth period, from a time where the market was already depressed. Over that time, the S&P 500 has increased from 1287 in September 2008 to 2878 today, a 223% growth. That equates to a 8.4% average rate of return. If you take away one thing from this exchange, please let that be to invest, be in the market, and put money toward your retirement.

quote:

Originally posted by 280nosler:

quote:

Originally posted by Skins2881:
Name me any ten year period that the S&P has been down. Doesn't happen, and if it does we probably have some other serious issues going on. If you have 30 years in retirement, you can weather ups and downs just the same as you did in working years. If you exit equities or go really bond heavy you sacrificing earnings you may need in your eighties or nineties for very little risk.

A few things:
A) I can tell you have no industry knowledge because making those kinds of statements would lead to a disclosure, and likely a loss of licensure.

Not correct. Spent five years as financial planner. Series 66 as well as life and health agent.

B) Retirement is not an exact science, and it all depends on the facts as presented.

Obviously

C) Reducing risk is the best way to preserve capital when you are DEPENDENT on that income stream.

If we are talking about someone counting on SS as part of their retirement, then yes heavy bonds would be better since they've only planned for the minimum in retirement.

D) IF you need $12k/ year in supplemental income after you retire, and you expect to earn 12%, and maintain a lifestyle with a balance of $68,000 (US national average of retirement savings accounts BTW), you won't get there.

If you are using 12% in retirement calculations, your nuts. If you only have $68,000, you're not ready to retire. I'll would be scared with $680,000, $68,000, might as well buy a SPIA and pray you never have a emergency

E) There is nothing saying you can't have equities, but if you plan on living off them it will burn you.

I agree, but there is no reason to be heavily in bonds unless you can't afford to weather any drops in the market.

F) There has never been a 10 year period where equities have grown like they have in the past 10 years, and expecting growth to continue is kidding yourself.

That would be silly to think that the recent returns say anything about what will happen going forward. We are recovering from housing crisis and prolonged recession and are likely hitting a high from technical point of view and probably due for a correction at some point. It can't go up forever.

My point is that someone retiring at 60 has 30+ years to plan for, some equity exposure in retirement is OK, especially if you've saved properly. If you have the tolerance AND the money than there's nothing wrong with starting retirement 50% in equities. That is why I specifically stated I was not providing any advice, just something to consider and discuss with your financial adviser/planner.

We are probably only off by 10% in asset allocation, but if you have long time horizon and saved well than being 90%+ in bonds may not be wise. If I was still in the business and we both saw the same client, we'd likely come up with very similar recommendations that would be client specific to their risk tolerance, age, assets, and life expectancy. I would however never say every person must have X percentage in equities and Y percentage in bonds at any given age, blanket statements are never correct.

This message has been edited. Last edited by: Skins2881,

I'm retired, living off my pension, and 5 years from required minimum withdrawals, so don't need to touch my investment accounts.

I went to 100% cash about 3 weeks ago and missed some of the additional rise. I broke even since when I bought, but am ahead counting the dividends.

International has sucked.

When the market corrects I'll get back in - 50% Vanguard VTI Total Stock Market Index, 50% bonds via Thrift Savings Plan G Fund.

I'll have to think about and research whether I want to allocate a small % to international. John Bogle says don't bother.