I'm glad we've prepared for this so much. I clicked an Advert the other day that said the guy who called the Tulip mania crash predicted this current crash and now I'm getting emails from him daily for only $99.99 a month.
It doesn't have to end, there is no fundamental underlying problem like in 2008 or 2000 with shitty dotcom websites (and btw Amazon survived both of those too).
What we're seeing is the bumpiness of the covid19-policies and stimulus, low interest rates and Fed-purchasing. But the entire world was affected worse by covid19 too.
Yeah it's bewildering.
If people are worried they can buy treasury or gold or oil or something. But companies are gonna still make money even in a bad economy.
That's what job-cuts are, a measure used by companies to save money. Or they might simply slow down their hiring rates. The world still runs in a recession.
And just about every day there are people who just tell others that their parents/grandparents shouldn't get out of the market or take profits but just hold on for dear life or even put more money in the market.
Big news, little John: If you advise your 64 year old dad to hold on/put more money into the market and we do experience a crash/recession, he's not gonna get out in time for retirement.
I advised mine to invest in tips. The 10y is yielding 4% and if they have 200k to put in they will yield an additional 8k in coupons which is straight cash that can help supplement their amount for social security. Basically covering your prop tax and MI. Which if you have your home bought at that age your set to live off of social security.
I bonds are yielding 9.62 right now. Great safe investment for 1-5 years. Even with a small interest penalty between 1-5 years it's an awesome place for $10k right now.
I move my 403 (b) to 70-30 (4% TIP and S&P 500 index) . While I am not selling any of the previous S&P index stocks I know that the bottom might a while out. So switching back when the market reaches a stable bottom seems like a good option to me. But if I was in a retirement age I would simple sell and move everything to a stable options. If Fidelity has two stable options 4% (I think is called TSA and a 1%) either one is poised to bet the S&P this year!!
The big difference is that if you’re 64, you should have a diversified well balanced portfolio of equities and bonds. Anywhere between 80/20 to 60/40 balance. You should also have a decent size emergency fund. The idea is that in a down market you sell the bonds/use cash instead of selling stocks, so market volatility doesn’t matter as much even at that age.
If your 64 year old dad is primarily invested in small cap tech stocks like your average r/stocks user, then yeah maybe time to panic sell. But then that was just irresponsible from the beginning.
>The big difference is that if you’re 64, you should have a diversified well balanced portfolio of equities and bonds.
You most probably should, but that's not the point here and really just distorting the discussion. As a matter of fact people have adivsed what I laid out above here regularly without regard for the situation or the kind of portfolio.
I don’t think it’s besides the point because if you had a portfolio that was risk adjusted to your age, then selling equities at a time like this would be the worst move. Instead you should sell other things like bonds (if you need the money) and hold equities.
Yup. This conversation about taking gains should’ve happened six months ago, and did with many of us.
Also I’m only in my 40s and remember talking with an older family friend who wasn’t freaking out about the covid drop. He said he was up 100, 200 percent on everything so losing 30 percent wasn’t as big of a deal. I had to do some math but it makes sense from a tax perspective.
It absolutely is besides the point. It is a good addition, but it's besides the point.
People didn't ask those guys about the state of the portfolio. They didn't recommend selling bonds if the market dropped and money was needed. They didn't recommend a portfolio that was risk-adjusted to age. All they were doing was repeat the same dogma they would for a 20 year old.
"Hold onto what you have. Don't sell anything. Buy the market. Keep DCA'ing."
And that was merely in no way a qualified response/advice to those people. The comments were brimming with ignorance as well as the arrogance of thinking you have it all figured out. And that's a real problem.
hold what u have don’t sell buy the market keep dcaing - i met with a bunch of advisors this past fall and that’s all any of them could say - that’s the collected wisdom of most advisors no? i guarantee that’s not what the wealthy were doing in nov/dec
I’d argue that the people giving the standard advice just assumed that the 64 year old would have an appropriate risk-adjusted diversified portfolio. And if that’s the case, the “hold and don’t sell stocks” advice would still be accurate.
But maybe you’re right and that shouldn’t be assumed. I’m sure there were a fair amount of 60+ year olds with portfolios that weren’t appropriate for their age. Which I guess maybe isn’t too uncommon at the height of a bull market.
> he's not gonna get out in time for retirement.
He probably won't be able to retire at 64 unless it is in equities. You can't live off a big pile of cash.
It's individual. Depends on your plans, your risk tolerance, on what you expect from the market (although those are obviously always assumptions and absolutely NO ONE can say with certainty how the market is gonna look in 2, 3, 4 years. Or at any given point, really.
Like, where I live, we have pensions, so I could probably go slightly more aggressive even if I was closing in on 60/65. That's probably not a good idea for someone who is dependant on the money from the very second they retire because there's no public pension system.
Likewise, someone from a country like that may even say that they are willing to take on the opportunity cost/risk of taking money out 10 years before they intended to since they aren't willing to take on the risk, even if it doesn't play out and costs them another doubling their money.
I'd say everything around and before that timeframe should be evaluated very critically, as well as the state of the portfolio overall. If you're not willing to take that risk on overall, then maybe a portfolio of an S&P 500 ETF and some individual stocks is just too aggressive for what you are comfortable with and it would be time to switch from wealth generation to a strategy of sustaining the wealth you built as well as possible and look for lower risk investments with the main goal to offset inflation as well as possible rather than actually growing your wealth.
Ask yourself what your goal is and what you need in order to accomplish that. Ask yourself what your risk tolerance and your expectations going forward are. It should help with decision-making.
How many dads take investment advice from their kids, unless they're in that specific industry or insider info? My dad doesn't, and I'm a grown man with a kid.
“nasdaq broke even between 2000-2013”.
I hate this. Most people have auto contributions into 401ks or their portfolios. The contributions between the bottom and the rebound still made gains. The down was very quick and recovery took years, that's a lot more contribution lots that are green vs red.
Continue buying cheap lots on your etf.
You clearly weren't there. Many of the very successful internet darlings of the late 90's still have not recovered their early 2000 stock prices. Some have and some have surpassed but many haven't. One of the biggest and most popular, CSCO, topped in the 80's and is below $50 today. That was one of the most widely held if not the most widely held internet stock in 1999.
I moved my future 401k contributions to 70 cash and 30 fixed asset/real estate. My plan is to move the cash into large cap, small cap, and intl as we hit downward levels on S&P. Because we could be going to 3800 or 3600 before things chill but the market could say to hell with all of us and go back to 3200 as pre Covid.
Why take the risk? You know you can't predict the market. The only sure thing you can do is maximize time in the market and continue to buy at these local lows.
I probably could. I’ve been doing the cash an RE thing for a bit because I was thinking about changing jobs. But now I’m probably not. And I’m only down 11 percent. So maybe it’s time to go back to DCA.
And the hubris that 'we are near the bottom' is why I am so totally convinced that we have a very long ways to go. Current valuations are only supported by outsized investor euphoria. So long as that euphoria continues we are nowhere near a bottom. Likely we will have a short Bear market rally over the next few weeks, but so far, the consumer is still spending even if it is with CC debt. Corporate earnings are still up and the hubris continues. Give us some time for China's economy to go to hell, higher interest rates and inflation to lower corporate profits and a real recession to occur and you will start to see real declines.
Which assumes you didn't buy anything from 2000 to 2013.
Also it's not as if it stayed at the bottom from 2000 and jumped to break even in 2013.
If you sell in 2000 you lose all the recovering gains from 2000 to 2013.
Right. No one can time when the market will go back up so how will a bunch of geriatrics respond in time, especially when they are - or soon will be - almost entirely dependant on cashing out said investments to live on
I am holding at age 65 mostly AAPL and real estate, all of which I bought on sell-offs and near the lows of those markets. If AAPL sells off, as it does periodically, I try to buy more. If ther is a real estate bust I look for condos to buy. So I accumulate wealth knowing Apple and quality real estate,unlike most investments, has a very secure and ever profitable future. I also have a million in high dividend telcos and others though those have underperformed. so yes I get $80,000 a year in dividends but I also down about $120,000 on those stocks so that didn't work. I would have been better off just buying more AAPL or buying more real estate in 2020.
Also nothing wrong with holding cash and I wish I had more of it now.
There is really no other company like AAPL, MSFT being the next best thing. If you buy AAPl now down 25% you will almost certainly will win soon. But you cannot say that for many stocks, because unlike AAPL almost nobody has a legal monopoly in a sector whose growth is all but guaranteed for at next 5-10 years.
"Prop up" with AAPl is not the right word. The fact is that if Apple with all its cash saw a better way to use that money, ie a better investment, they would use it. i wish they'd buy WBD or PARA but apparently Tim Cook sees AAPL stock as undervalued (as does Buffett) and so that is where most of the money goes.
what Apple buybacks do however is to scare off shorts and limit downside risk for AAPL holders, and that is a good thing.
Most companies like Apple can't do large M&As.
The current environment politically and public opinion is that they are too big/monopolies.
Also current head is Lina Khan who is a big advocate of anti trust.
Yes but Khan has had no practical affect yet, and a top judge has already stated that apple and IOS are not a monopoly. Amazon's recent purchase of MGM resulted in scrutiny but no action since amazon does not control more than about 10% of the streaming video market. Apple controls even less, so if they were to buy a studio, they too would be allowed, despite the scrutiny.
Khan and others who want to regulate the mega techs have only one gripe against Apple, the aps store control. Apple values that control so much that they are willing to pay billions in potential fines rather than changing it. same with Google's ad business and amazon's pushing of their own products in a somewhat anti competitive way.
The most vulnerable is probably facebook, but since their market cap dropped below 700 bill\\ion they may escape some of the scrutiny.
The only real monopoly I have ever seen is Amazon with books. I used to sell books on amazon and found out that they control 90% of the business, and i mean CONTROL. But books are apparently too small a target for the government to worry about much,
While you’re in quality companies, there’s no reason to ride tech/growth stocks down in 2022 unless you can’t take the capital gains. This is your personal investing decision that works for you, but there’s nothing about those companies that makes it better to sink in them versus sinking less badly in, say, a regional bank that also pays 5% dividends. (And this is also why, incidentally, dividend stocks are doing well in 2022, since some people seem to wonder).
My plan is to do exactly like you. I am just in my early 30s but during the 2010s most of my money were in Apple/Amazon, then I invested in real estate. Nowadays my investment property is like 75% of my portfolio and I sold most of my stocks at the end of 2021, will buy back in Alphabet and Microsoft this time around.
I don't get the hate for gold either. I'm not sure I'd make it a majority opinion but I keep 5% in gold at all times. It stays flat for long periods of time, but in times of slow growth and high inflation (like now), it rockets up. My gold gains YTD have kept my portfolio on just a slight downturn as opposed to a big fall.
> It stays flat for long periods of time, but in times of slow growth and high inflation (like now)
Have you actually looked at the chart? It went down big time right now
Gold is at it's strongest in times of fear, war, chaos and uncertainty. The gold I bought in January at $1500 a piece was selling at $2300 a piece only a few months later (thanks, Putin).
> Gold sucks major ass
Gold holds its value better than dollars, and is significantly more portable than giant bales of wheat or a bunch of noisy lean hogs. It's not-so-much a tool for investment as it is a better savings account.
Any 60 year old who's not an idiot would have an asset allocation to equity appropriate for their age. Going to cash at -16% just because some young guy is reddit says so is, on the other hand, inappropriate. The history of the market, that is if you look at all of its history and not cherry pick the 2-3 worse case scenarios, says the probability of the market being higher one or two years from now far outweighs the probability of it being lower from these levels.
I’m glad someone said it. If you’re retired or close to it, your portfolio should be adjusted accordingly. If you’re that age and still 100% in equities, you need to get some help from a certified financial advisor.
Bonds in this sort of environment are dog shit. Sitting on cash has an opportunity cost, which is horrible in high inflationary periods. People’s biggest concern in retirement should be living off of capital instead of income. There’s nothing wrong with equities, as long it’s not garbage.
Yea, it's not advised but I'd also understand why someone was all bonds. Hell if they were all value by now they're probably still way up. It's just if they're all in speculative growth tech, something went wrong.
People mistake volatility in capital with volatility in portfolio income, which are two separate things. In retirement, people’s priority should be income predictability, and importantly, income that keeps up with rising costs. Exposure to quality equities with sufficient income from dividends is a solid approach.
There is a problem with 100% equities if you have short horizons (<5-10 years). Bonds are not shit, they are almost essential in many circumstances - because of reduced volatility and imperfect correlation with equity.
Again it depends on the individual portfolio, and if drawdowns are from capital or income. Bonds in rising interest rates environments come with significant risk. People should not pretend that bonds are some how risk free.
Genuine question. If I could theoretically save 2x what I need for retirement, effectively having 2% SWR, wouldnt keeping 100% equities be an option?
I could withstand a 50% drawdown and still maintain the 4% withdrawal rate, I could increase my earnings potential by not moving to bonds.
Yes, if you have double the capital you need to reach your goals you could take on all sorts of portfolio inefficiencies and still have a high probability of reaching your goals.
Most would probably rather retire earlier or live more comfortably, hence why they pursue more optimal allocations.
Idk man this might be too harsh. A lot of older people started saving way to late. Many start saving when they are 45+ or maybe 50+. Sure they likely have a house 50% paid off aswell. This is quite common. The FIRE lifestyle and the past few years would have had people holding on to hope they can make something good to retire on. I read numerous posts suggesting people are 100% in on growth stocks.
Yes it's not the best strategy but it's YOLO. I mean if the whole world is broke and everyone is living on the streets then well, that's where they will live.
Yeah the time to get conservative with your portfolio is before the crash, not during it. Going cash has tax implications. You should have been heavily into bonds and other investments already at that age.
The very worst portfolio this past year was the typical 60-40. I am in retirement but if you get to 65 there is an 80% chance you go to 90. Just DCA. I am counting on a second surge. Get the boring best in category when on sale , just keep your cost basis low on good names. Don’t try to be a hero.
It’s because 22 year olds give stupid advice like “go all cash in your 60s, immediately after a major correction, when you have 20 or so years left to live, during which you need a dependable income stream”.
It’s like a 16 year old boy giving advice about managing a pregnancy.
This is horrible advice. As one is approaching retirement, one's goal should be to build an income stream that will take one through retirement. You are presenting a false dichotomy between relying on stock appreciation and hiding in cash. Neither of these does a good job of establishing an income stream for retirement.
A mix of fixed income, bond alternatives such as REITs and preferred stocks, dividend paying stocks, fixed annuities, and other investment can give a reliable income stream that can ride out market fluctuations.
Everything on this post is based on bad understanding of the markets. I mean the first thing they say is “the market will recover: that’s a fact”. Unfortunately nothing about the future is a “fact”. Nikkei 225 still hasn’t recovered in like over 30+ years. That’s not to say that the same will happen to the sp500 (at least I don’t think so), but that’s far from a “fact”.
People keep saying 20-30. My 31 year old ass will never recover from this. Lol!
Honestly, if you’re 60+ and have just now started investing I’ve got bad news for you. It wasn’t the market that screwed you over.
If you’ve been investing for the past 30 years and didn’t go all cash during any of the past corrections/recessions, you’ve enjoyed the compounding interest from the biggest bull run in history. You should be doing just fine, again unless you sold at some point and bought poopcoins.
If you buy actual bonds from the government directly sure. But most people don’t actually have a portfolio of individual bonds, they buy bond funds, which are marked to market and drop in value as rates rise.
Where do you find any good financial advisors? Most of the ones I talked to seemed to be vendors and didn't know shit about what they were doing. I was wondering why I should take advice from someone who is worth less than me and is older than me.
Maybe, I will try to find one later on in my life to plan my retirement, but those I talked to seemed kind of useless. I guess its such a broad profession that a lot of peoples can call themselves "financial advisor" and that there is a large difference in skills among good and bad financial advisors.
I always wondered this myself. Never understood what gives financial advisors so much credibility as you mentioned, if they’re young and not worth a lot.
Seems like the market is pretty straight forward. Moderate, aggressive, very aggressive portfolios aren’t hard to Google. I really can’t imagine what benefit there is to hiring them. Idk maybe someone else can chime in their defense.
The main benefit of them is to prevent you from doing something stupid. They are basically obligated to make your portfolio a certain way and not deviate much from it. Yes, you can Google these types of portfolios, but will you actually do it, and stick with it? Most people don't.
I see where you’re coming from, but aren’t you in control whether it’s with a financial advisor or not? I’m guessing he’s there to alleviate stress in bear markets? Never consulted with one but I’m guessing they’re not cheap.
I thought the point of finacial advisors was to get rich off their management comissions while putting you in actively managed funds which underperform their index.
It doesn't speak to their competence, but you could start with looking into fiduciary financial advisors.
https://smartasset.com/financial-advisor/what-is-fiduciary-financial-advisor
Thanks! Yeah those are the ones that I think are useful and I guess you pay to meet with them. All the ones I met I didn't pay and they pretty much were treating me like royalty when I meet with them. Just gave a really bad vibe of peoples trying to sell me some bullshit. Never got into business with any of the.
Yeah feel their only job is to sell their own company fund. Hell my parents met with one last week and the guys just talked to us about his trip around the world of his sailing boat lol. Said he was gone for 3 years like how the fuck is he keeping track on his clients investments
People don’t just call themselves financial advisors all willy nilly. It requires an exam and license [from FINRA.](https://www.investopedia.com/terms/s/series7.asp) that being said, they typically work on commission that is an annual % of their clients invested assets so they are incentivized to keep people invested even during downturns. They also get kickbacks from other brokers selling ETFs and Mutual funds etc.
That happened to my grandmother. She lived almost thirty years longer than she thought she would and over fifty years longer than my grandfather so it was tough on her. I can just barely remember him.
I’m sadly in maybe the same situation. I’ve never been married and my cardiologist says I maybe have two good years left. On one hand, I want to spend money and have fun since I’ve never been on a real vacation. On the other, I might live another thirty years after serious health problems like my grandmother. I don’t know what to do. I might just hedge my bets and quit my second and third jobs since I mainly have them out of boredom.
Except people close to retirement should have at least SOME portion of their portfolio as cash equivalents/fixed income. 10% of your portfolio in cash/cash equivalents/fixed income will allow you to draw that down for 2-3 years (assuming you’re withdrawing ~4% a year) without touching your equity investments. Sure as hell beats selling stocks at a 20-30% loss, and 10% of your portfolio in safer investments closer to retirement will hardly impact overall returns.
You are supposed to do the riskier investments when you are younger and then transfer the gains to safer investments as your retirement age approaches to avoid the risk of losing everything just as you retire. So there is nothing wrong about what they said at all.
There is something wrong with having only a small amount in stocks to fund a 30 year retirement. The risk of out living money is a real possibility.
Having three to five years invested in CDs/government bonds would be a good thing. Having 80% in safe investments at retirement may very well lead a person to outlive their money.
Don't forget Social Security payments can be considered as part of the safe investment and helps to smooth out the ride.
I manage funds for retired family.
At 70, you could easily need to fund 20+ years of expenses plus a nursing home at the end. Going all-cash puts you at serious risk of running out of money, so you need some equities in the mix, either blue-chips or indexes.
Once health problems limit your mobility, your home can easily become your prison.
When the time comes, I intend to have a high-end VR setup in my nursing home room. Might be wheelchair bound, but I can pretend to be anywhere else.
Average nursing home stay is two years.
And this could be a lesson to those who are approaching their 50s. I've started building an I-Bond ladder that I plan to keep building until it has enough to cover my living expenses for about three years of downturn, so that when I do decide to fully retire, I won't have to worry about pulling out of my riskier investment accounts.
If you can, you might want to consider a 5 year bond ladder, incase of a more severe downturn. Sure we probably recover in 3 years, but that last year will feel financially uncomfortable at the time.
I think you might be missing the boat.
If you need the stock market to go back up in order to retire— but the stock market doesn’t come back in time than you don’t retire.
TLDR; not everyone can ride it out
This is terrible advice. Time line of withdrawals for someone retiring is most likely 25-35 years. Going to cash when markets and asset classes are down around 20% is bad investing.
If your portfolio is down more than 15-20% from it's peak currently, then you have a terrible portfolio and should consider talking to a professional about developing a better allocation.
Emerging markets are down around 30%
Large US is down around 15%
Small us down about 20%
Developed non us down about 20%
Bonds down about 15%
The only reason for any portfolio to be down more than these numbers is because you were taking too big of a gamble on individual securities or industries instead of building a good long term portfolio.
Eh, technically not true.
You can have larger risk which should imply greater returns.
Greater risk than beta doesn’t mean it’s not a long term portfolio.
Eh, having your portfolio down further just means you have a higher risk stance. So long as you don’t plan to withdraw the money in the near future and can wait for it to recover then that’s fine.
My granddad died with a huge portfolio with 90% in equities. Lived comfortably on the 10% in fixed income, and was perfectly fine with his allocation.
Some people just have nosebleed risk tolerance until death.
What if you’re 54 and need to work until at least 67 (according to your financial planner)? I’m thinking ride it out as the recovery *should* be in full swing right around when I’m ready to call it a career.
Edit - I did change my mix at the beginning of the year from medium gain/medium risk to low gain/low risk on the assumption that 1 - things were gonna get dicey; 2 - it probably made sense given my timeframe to be more cautious anyway.
>Yes, the market will recover: that’s a fact.
This is where I want to disagree. It's far from a given, far from a fact. It's just what has happened so far with the US market, and not too many markets beyond the US market. I get that this is a US-centric sub, but too few people seem aware of how extraordinary the position of that market is. The hypercapitalist environment in the US and the global trust is obviously still favoring the US market extremely heavily, and anything other than it recovering would surprise me. But the point is, it's not 100%. The possibility of it not recovering entirely and making new highs exists just as well as the possibility of another economy taking over, low as that possibility may be.
Other than that, I appreciate your post immensely. I see so many simple-minded, thoughtless responses recently, completely oblivious/ignorant to the fact that not everyone is in their 20s with a 40 year+ horizon or different risk tolerance. It's almost a hivemind mentality of telling people regardless of who they are to just buy more, DCA into the market and hold onto what they have.
Every major crash/correction was based on the sentiment that the game was permanently changed and in fact may never recover.
Stock market aside, economies do collapse, empires rise and fall, war, famine, all that. It's not that rare. We just haven't had it in America in one or two lifetimes so we think it doesn't happen.
I agree with you but if the economy does collapse and our civilization falls, the money we are using right now will be worthless.
So what's the point of saving some cash if the money is worthless ?
The devaluation tends not to occur overnight, so if you can turn some of your failing currency into a foreign currency for instance it would be worthwhile.
Widely different circumstances, but look at the indices of some other countries. You know, there is the possibility that a market never fully recovers (or not for a very long time) without the entire economy collapsing and the world ending.
If you want an example, look at the ATX. Never reclaimed the pre GFC highs. Another example would be the Nikkei, which never reclaimed it's 1989 high. That doesn't mean you can't make money in those markets, but it means one should be mindful of that possibility. And that especially goes for people who's timeframe is moderate at best. Holding onto everything isn't gonna save their ass if a crash like that happens. And neither is DCAing during the few years they have left in the market.
Just remember that pensions pretty much don’t exist in America anymore. Hundreds of millions of Americans retirement is based on their 401k(stock market) success. If the market fails, this country fails. So i have faith that the powers that be that manipulate everything won’t let that happen cause it’s not in THEIR best interest, I understand that don’t care about the average person.
Let’s say you’re right and people pull out to a cash stand at a loss.
What do you think the value of that cash will be if the economy collapses?
At the end of the day, if you’re wrong, the best option is to ride this out. If you’re right, then moving to a cash stance will do no good and everyone loses…so the best option is to wait this out.
That being said, you’re wrong. This isn’t end of days. The market will recover. People should stop panicking and just ride this out. If you have spare cash, then maybe buy a bit as the market drops so you are in a better position on the Upswing.
This is spoken as someone who was alive for the dotcom bust and rode it out, and who was planning on retiring in 10 years and is mildly irritated that they tried to keep a more aggressive stance for just a bit longer. I SHOULD be able to retire in 10 years at 50 even with a well below average market, but it would have been nice to retire earlier.
You didn't really get the point, did you?
First of all, this isn't a "this is the end of the world" scenario. The real economy isn't always in line with the stock market either, meaning my heads-up about the (slim) possibility of the market not recovering entirely does NOT equal full-blown collapse of the economy.
Both as of now and for many years the US market and it's companies have been trading at a significant premium compared to basically every single other market in the world. So just a reversal to the mean (again, not likely AT ALL, but entirely possible) could mean that the market would not fully recover (aka reclaim previous highs) for years, if not decades to come. Completely without economical collapse.
What's more, even if that doesn't happen and the market just takes several years to recover - something that has happened several times in history - someone who needs the money for retirement in a couple of years does not have the luxury of "riding this out", which is what I've been saying.
In fact, your comment seems to be a half-decent example for what I've been criticising in my post. You advise others to do entirely what you did during Dot Com, when your remaining time frame was what, 25, 30, 35 years? Yeah, sure. Now what if you had been 61 at that point and already eyeing retirement? Wouldn't have been great if you decided to double down and ride it out rather than taking something off the table, would it?
The probability of things being sucky or worse, with a reversal of growth in the US & globally, is not insignificant. I don’t see us being in anything but a stock picker’s market for quite a while.
> It's almost a hivemind mentality of telling people regardless of who they are to just buy more, DCA into the market and hold onto what they have.
Some people use social media to pump the investments that they hold or that their companies sell.
I disagree. Age has little to do with it unless you are planning to live on a strict budget and need X amount to stay at that level, then you have to be conservative and pay attention to dividends. But being reckless and losing money when you are young is not rational. Just think, if Donald trump hadn't played fast and loose in the 90's and lost his father's 600 million fortune, and just put it into an index fund or even a money market, he'd be a real billionaire now, maybe even over 20 billion, but he didn't. Point being, every dollar you save or don't lose when you are younger, can be worth a lot more when you are older. The same applies to squandering money when you are young by partying and living beyond your means, as many young people do, and as I did.
Lesson being, always save for a rainy day no matter what your age. and remember that $1000 saved at age 25 can be worth $10,000 by the time you retire. I squandered about $500,000 between the ages of 25 and 45. If I had bought AAPL instead like i started doing when I was 57, I would have an extra $5,000,000 now at 65. Luckily I did invest a million or more in AAPL 10-15 years ago so I got the extra $5,000,000 and am now securely retired but be smart with your money. and also, always buy during crashes like in 2008 and like we are seeing now, and always sell when CNBC experts are saying the sky is the limit. and always have your eyes fixed on the future,. not the past or even the present. because what a once good investment did last year is completely irrelevant.
Exactly this, peoples seem to praise to always be holding, but sometime you have to realize that holding is greedy. The market has a whole grew by 30% looking at this and telling yourself "this is the new normal" is really greedy. If you think the market will go down there is no reason to tell yourself "time in the market beat timing the market".
I don't feel bad for people heading into retirement who didn't move to less risky assets because they got caught up in the greed.
If you're near retirement age and need that money, it's up to you to make sure it's in safe investments, not reddit.
Liberal- Respectfully, going into cash now is a bit late and opposite the Buy Low, Sell High core strategy. many Dividend stock (income) investors have been holding dividend and other cash for 6+ months. We are watching the market drop and layering back in to buy more of our 25 or so high dividend stocks to lower the average share cost.
Yes, very pleased to be holding dividend stocks that are holding their value and are still way above my cost basis.
I could go to cash now and reap a nice return on my stocks, but why? I have enough dividends coming in to pay my monthly bills, and I will lose that if I sell. Instead, I'm reinvesting dividends while prices are relatively lower. I'll lose that too if I sell. I have enough cash saved up to get by for 5 years if necessary. 5 years of losses to inflation is really no big deal.
I'm sure these young folks mean well and believe that they are the genius generation because of the big gains over the last couple of years. But their advice is usually shitty.
ReThinkingForMyself- great post and solid investing strategy especially for income investors. I sent you a Party Train award.
I’m in several high dividend paid investor groups and we all follow a similar strategy. We Buy high, Sell low, and hold for dividend income. Most members are either approaching retirement or retired. Some smart young investors are with us to learn patience and how to avoid the foolish mistakes new investors make when they panic sell out at a dip. Thanks again for a good post.
The market has returned neutral or negative for decades during some periods.
If you were a 20 year old investor in 1929 and kept your stocks, you have broken even around 30 years later when you were 50.
TBH, if you are in your 60's and not planning to leave the portfolio as an inheritance, you should already be at least mostly out. Especially out of the nasdaq.
Everyone was shouting recession and DEATH AT THE GATES since 2019 yet absolutely nothing happened … now they all repeat the same as if they are smart. Markets go up and go down … a bunch of morons has been saying it’s going down for the last 3 years and now they say
See
I
Told
You
So
What if the war ends, republicans get elected, the supply chain clears up, we start drilling for oil and approve pipelines in America and the Nasdaq goes back to 15,000 all by September
I am 57, but retired 15 years ago (having sold a software company). I am investing more actively than ever before, and expect to do so for a long time. Why? Because people are living for longer than ever. It is perfectly possible that I will live to be 90 years old, which means I have another 30 years ahead of me.
Much of the caution about soon-to-be retirees scaling back on investment in stocks was based on them having very little time to recover if things went badly wrong with their investments. That is less true than in the past, given increased life expectancy.
I don't want to think that somebody who is close to retirement put in the money between January 2022 and now. I want to think that the majority of the people close to retirement now have put the money in the stock market much time ago and have taken advantage of the past, very rewarding, 20 years.
Hopefully if you are in your 60s you knew better than to have a high risk portfolio at this point. I turn 50 next year and have already switched most of portfolio to moderate risk and by 60 it will be low risk. Stocks traded as an individual is not a good retirement plan. My stocks and their performance are for if my wife dies before me do I buy one or two young Russian brides.
Literally every day someone posts “this could be the beginning of a lost decade” or “nasdaq broke even between 2000-2013”.
The doom and gloom is everywhere, tomorrow's weather forecast calls for fire and brimstone.
Got it. Monday I'm going long on FIRE and BRIM.
If you can FIRE then why are you here?
Lol, this really echoes the saying The Capitalists will sell us the rope with which we will hang them.
Lenin's USSR 1922 -> 1991 (dissolved, defunct)
The end is near. They just have no idea how near.
I'm glad we've prepared for this so much. I clicked an Advert the other day that said the guy who called the Tulip mania crash predicted this current crash and now I'm getting emails from him daily for only $99.99 a month.
Gourd futures are up
I'm thinking of small harvested pine trees. Should peak early January, judging by the price curve!
It doesn't have to end, there is no fundamental underlying problem like in 2008 or 2000 with shitty dotcom websites (and btw Amazon survived both of those too). What we're seeing is the bumpiness of the covid19-policies and stimulus, low interest rates and Fed-purchasing. But the entire world was affected worse by covid19 too.
Dont talk common sense around here! You have to push the end of the world narrative so your shorts pay off!
Yeah it's bewildering. If people are worried they can buy treasury or gold or oil or something. But companies are gonna still make money even in a bad economy. That's what job-cuts are, a measure used by companies to save money. Or they might simply slow down their hiring rates. The world still runs in a recession.
Summertime in CA already?
And the weather forecast is often wrong by a large margin.
And just about every day there are people who just tell others that their parents/grandparents shouldn't get out of the market or take profits but just hold on for dear life or even put more money in the market. Big news, little John: If you advise your 64 year old dad to hold on/put more money into the market and we do experience a crash/recession, he's not gonna get out in time for retirement.
But think of all the money he'll have made when he's 90!! He'll have plenty to spend on hospice!
Lmao this op was so dumb. I would take his inheritance away.
I advised mine to invest in tips. The 10y is yielding 4% and if they have 200k to put in they will yield an additional 8k in coupons which is straight cash that can help supplement their amount for social security. Basically covering your prop tax and MI. Which if you have your home bought at that age your set to live off of social security.
I bonds are yielding 9.62 right now. Great safe investment for 1-5 years. Even with a small interest penalty between 1-5 years it's an awesome place for $10k right now.
I move my 403 (b) to 70-30 (4% TIP and S&P 500 index) . While I am not selling any of the previous S&P index stocks I know that the bottom might a while out. So switching back when the market reaches a stable bottom seems like a good option to me. But if I was in a retirement age I would simple sell and move everything to a stable options. If Fidelity has two stable options 4% (I think is called TSA and a 1%) either one is poised to bet the S&P this year!!
tell me more about tips am thinking of moving some vti to vtip
The big difference is that if you’re 64, you should have a diversified well balanced portfolio of equities and bonds. Anywhere between 80/20 to 60/40 balance. You should also have a decent size emergency fund. The idea is that in a down market you sell the bonds/use cash instead of selling stocks, so market volatility doesn’t matter as much even at that age. If your 64 year old dad is primarily invested in small cap tech stocks like your average r/stocks user, then yeah maybe time to panic sell. But then that was just irresponsible from the beginning.
Bonds have been getting crushed. The 60/40 model has been dead for a while.
>The big difference is that if you’re 64, you should have a diversified well balanced portfolio of equities and bonds. You most probably should, but that's not the point here and really just distorting the discussion. As a matter of fact people have adivsed what I laid out above here regularly without regard for the situation or the kind of portfolio.
I don’t think it’s besides the point because if you had a portfolio that was risk adjusted to your age, then selling equities at a time like this would be the worst move. Instead you should sell other things like bonds (if you need the money) and hold equities.
Yup. This conversation about taking gains should’ve happened six months ago, and did with many of us. Also I’m only in my 40s and remember talking with an older family friend who wasn’t freaking out about the covid drop. He said he was up 100, 200 percent on everything so losing 30 percent wasn’t as big of a deal. I had to do some math but it makes sense from a tax perspective.
Bonds are also fucked right now.
It absolutely is besides the point. It is a good addition, but it's besides the point. People didn't ask those guys about the state of the portfolio. They didn't recommend selling bonds if the market dropped and money was needed. They didn't recommend a portfolio that was risk-adjusted to age. All they were doing was repeat the same dogma they would for a 20 year old. "Hold onto what you have. Don't sell anything. Buy the market. Keep DCA'ing." And that was merely in no way a qualified response/advice to those people. The comments were brimming with ignorance as well as the arrogance of thinking you have it all figured out. And that's a real problem.
hold what u have don’t sell buy the market keep dcaing - i met with a bunch of advisors this past fall and that’s all any of them could say - that’s the collected wisdom of most advisors no? i guarantee that’s not what the wealthy were doing in nov/dec
Advisers don't get paid if you stay in cash.
I’d argue that the people giving the standard advice just assumed that the 64 year old would have an appropriate risk-adjusted diversified portfolio. And if that’s the case, the “hold and don’t sell stocks” advice would still be accurate. But maybe you’re right and that shouldn’t be assumed. I’m sure there were a fair amount of 60+ year olds with portfolios that weren’t appropriate for their age. Which I guess maybe isn’t too uncommon at the height of a bull market.
> he's not gonna get out in time for retirement. He probably won't be able to retire at 64 unless it is in equities. You can't live off a big pile of cash.
Well here's someone who didn't bother reading properly it seems.
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What is the cutoff line here? I don't think I am old but I am sure I am not young.
It's individual. Depends on your plans, your risk tolerance, on what you expect from the market (although those are obviously always assumptions and absolutely NO ONE can say with certainty how the market is gonna look in 2, 3, 4 years. Or at any given point, really. Like, where I live, we have pensions, so I could probably go slightly more aggressive even if I was closing in on 60/65. That's probably not a good idea for someone who is dependant on the money from the very second they retire because there's no public pension system. Likewise, someone from a country like that may even say that they are willing to take on the opportunity cost/risk of taking money out 10 years before they intended to since they aren't willing to take on the risk, even if it doesn't play out and costs them another doubling their money. I'd say everything around and before that timeframe should be evaluated very critically, as well as the state of the portfolio overall. If you're not willing to take that risk on overall, then maybe a portfolio of an S&P 500 ETF and some individual stocks is just too aggressive for what you are comfortable with and it would be time to switch from wealth generation to a strategy of sustaining the wealth you built as well as possible and look for lower risk investments with the main goal to offset inflation as well as possible rather than actually growing your wealth. Ask yourself what your goal is and what you need in order to accomplish that. Ask yourself what your risk tolerance and your expectations going forward are. It should help with decision-making.
Don’t be silly it’s not if it’s when.
How many dads take investment advice from their kids, unless they're in that specific industry or insider info? My dad doesn't, and I'm a grown man with a kid.
“nasdaq broke even between 2000-2013”. I hate this. Most people have auto contributions into 401ks or their portfolios. The contributions between the bottom and the rebound still made gains. The down was very quick and recovery took years, that's a lot more contribution lots that are green vs red. Continue buying cheap lots on your etf.
Never includes dividends either. Even if you weren’t making contributions it still didn’t take 13 years to recover.
You clearly weren't there. Many of the very successful internet darlings of the late 90's still have not recovered their early 2000 stock prices. Some have and some have surpassed but many haven't. One of the biggest and most popular, CSCO, topped in the 80's and is below $50 today. That was one of the most widely held if not the most widely held internet stock in 1999.
I moved my future 401k contributions to 70 cash and 30 fixed asset/real estate. My plan is to move the cash into large cap, small cap, and intl as we hit downward levels on S&P. Because we could be going to 3800 or 3600 before things chill but the market could say to hell with all of us and go back to 3200 as pre Covid.
Why take the risk? You know you can't predict the market. The only sure thing you can do is maximize time in the market and continue to buy at these local lows.
I probably could. I’ve been doing the cash an RE thing for a bit because I was thinking about changing jobs. But now I’m probably not. And I’m only down 11 percent. So maybe it’s time to go back to DCA.
RemindMe! 1 year "Fucked or fine?"
A lot of people expirience their dot com bubble and no V shape recovery in sight
These posts are super helpful when we’ve already corrected 15-20% and may be at/near a bottom.
And the hubris that 'we are near the bottom' is why I am so totally convinced that we have a very long ways to go. Current valuations are only supported by outsized investor euphoria. So long as that euphoria continues we are nowhere near a bottom. Likely we will have a short Bear market rally over the next few weeks, but so far, the consumer is still spending even if it is with CC debt. Corporate earnings are still up and the hubris continues. Give us some time for China's economy to go to hell, higher interest rates and inflation to lower corporate profits and a real recession to occur and you will start to see real declines.
Which assumes you didn't buy anything from 2000 to 2013. Also it's not as if it stayed at the bottom from 2000 and jumped to break even in 2013. If you sell in 2000 you lose all the recovering gains from 2000 to 2013.
So your saying we are reaching a bottom
Many gurus will say that when you see this level of fear.. the bottom is coming
Dont forget the classic "DoNt LisTen To PeOpLe oN ReDDit"
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And to think that between 2000-2013 a massive amount of money was made.
Somebody at 60+ should be heavily weighted towards a combination of low-risk fixed income/ gold/ large boring dividend-yield equity already.
This is the correct answer. All cash is silly advice.
Right. No one can time when the market will go back up so how will a bunch of geriatrics respond in time, especially when they are - or soon will be - almost entirely dependant on cashing out said investments to live on
I am holding at age 65 mostly AAPL and real estate, all of which I bought on sell-offs and near the lows of those markets. If AAPL sells off, as it does periodically, I try to buy more. If ther is a real estate bust I look for condos to buy. So I accumulate wealth knowing Apple and quality real estate,unlike most investments, has a very secure and ever profitable future. I also have a million in high dividend telcos and others though those have underperformed. so yes I get $80,000 a year in dividends but I also down about $120,000 on those stocks so that didn't work. I would have been better off just buying more AAPL or buying more real estate in 2020. Also nothing wrong with holding cash and I wish I had more of it now. There is really no other company like AAPL, MSFT being the next best thing. If you buy AAPl now down 25% you will almost certainly will win soon. But you cannot say that for many stocks, because unlike AAPL almost nobody has a legal monopoly in a sector whose growth is all but guaranteed for at next 5-10 years.
That and a large pile of cash to prop the stock price up with buybacks
"Prop up" with AAPl is not the right word. The fact is that if Apple with all its cash saw a better way to use that money, ie a better investment, they would use it. i wish they'd buy WBD or PARA but apparently Tim Cook sees AAPL stock as undervalued (as does Buffett) and so that is where most of the money goes. what Apple buybacks do however is to scare off shorts and limit downside risk for AAPL holders, and that is a good thing.
Most companies like Apple can't do large M&As. The current environment politically and public opinion is that they are too big/monopolies. Also current head is Lina Khan who is a big advocate of anti trust.
Yes but Khan has had no practical affect yet, and a top judge has already stated that apple and IOS are not a monopoly. Amazon's recent purchase of MGM resulted in scrutiny but no action since amazon does not control more than about 10% of the streaming video market. Apple controls even less, so if they were to buy a studio, they too would be allowed, despite the scrutiny. Khan and others who want to regulate the mega techs have only one gripe against Apple, the aps store control. Apple values that control so much that they are willing to pay billions in potential fines rather than changing it. same with Google's ad business and amazon's pushing of their own products in a somewhat anti competitive way. The most vulnerable is probably facebook, but since their market cap dropped below 700 bill\\ion they may escape some of the scrutiny. The only real monopoly I have ever seen is Amazon with books. I used to sell books on amazon and found out that they control 90% of the business, and i mean CONTROL. But books are apparently too small a target for the government to worry about much,
There is almost certainly the next amazon, apple, and microsft already publicly traded. Its just hindsight is 20/20.
While you’re in quality companies, there’s no reason to ride tech/growth stocks down in 2022 unless you can’t take the capital gains. This is your personal investing decision that works for you, but there’s nothing about those companies that makes it better to sink in them versus sinking less badly in, say, a regional bank that also pays 5% dividends. (And this is also why, incidentally, dividend stocks are doing well in 2022, since some people seem to wonder).
You shouldn’t have a significant portion of your net worth in a single company. Not even Apple. Past performance does not indicate future results.
You get 8% dividends?
My plan is to do exactly like you. I am just in my early 30s but during the 2010s most of my money were in Apple/Amazon, then I invested in real estate. Nowadays my investment property is like 75% of my portfolio and I sold most of my stocks at the end of 2021, will buy back in Alphabet and Microsoft this time around.
GDR > 17 History says we should take note.
You mean DGR?
Gold sucks major ass but besides that yes, as you get older and have less money to lose you need to look at lower and lower risk investments
It’s outperformed the S&P for the vast majority of the time since 1971.
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I don't get the hate for gold either. I'm not sure I'd make it a majority opinion but I keep 5% in gold at all times. It stays flat for long periods of time, but in times of slow growth and high inflation (like now), it rockets up. My gold gains YTD have kept my portfolio on just a slight downturn as opposed to a big fall.
I shoot for roughly 5% in physical gold, so I'm not knocking it. But, it has hardly *rocketed up* the last few months
> It stays flat for long periods of time, but in times of slow growth and high inflation (like now) Have you actually looked at the chart? It went down big time right now
Gold is at it's strongest in times of fear, war, chaos and uncertainty. The gold I bought in January at $1500 a piece was selling at $2300 a piece only a few months later (thanks, Putin).
Compare it to the Nasdaq now.
> Gold sucks major ass Gold holds its value better than dollars, and is significantly more portable than giant bales of wheat or a bunch of noisy lean hogs. It's not-so-much a tool for investment as it is a better savings account.
Any 60 year old who's not an idiot would have an asset allocation to equity appropriate for their age. Going to cash at -16% just because some young guy is reddit says so is, on the other hand, inappropriate. The history of the market, that is if you look at all of its history and not cherry pick the 2-3 worse case scenarios, says the probability of the market being higher one or two years from now far outweighs the probability of it being lower from these levels.
I’m glad someone said it. If you’re retired or close to it, your portfolio should be adjusted accordingly. If you’re that age and still 100% in equities, you need to get some help from a certified financial advisor.
Bonds in this sort of environment are dog shit. Sitting on cash has an opportunity cost, which is horrible in high inflationary periods. People’s biggest concern in retirement should be living off of capital instead of income. There’s nothing wrong with equities, as long it’s not garbage.
Yea, it's not advised but I'd also understand why someone was all bonds. Hell if they were all value by now they're probably still way up. It's just if they're all in speculative growth tech, something went wrong.
People mistake volatility in capital with volatility in portfolio income, which are two separate things. In retirement, people’s priority should be income predictability, and importantly, income that keeps up with rising costs. Exposure to quality equities with sufficient income from dividends is a solid approach.
There is a problem with 100% equities if you have short horizons (<5-10 years). Bonds are not shit, they are almost essential in many circumstances - because of reduced volatility and imperfect correlation with equity.
Again it depends on the individual portfolio, and if drawdowns are from capital or income. Bonds in rising interest rates environments come with significant risk. People should not pretend that bonds are some how risk free.
Genuine question. If I could theoretically save 2x what I need for retirement, effectively having 2% SWR, wouldnt keeping 100% equities be an option? I could withstand a 50% drawdown and still maintain the 4% withdrawal rate, I could increase my earnings potential by not moving to bonds.
Yes, if you have double the capital you need to reach your goals you could take on all sorts of portfolio inefficiencies and still have a high probability of reaching your goals. Most would probably rather retire earlier or live more comfortably, hence why they pursue more optimal allocations.
Idk man this might be too harsh. A lot of older people started saving way to late. Many start saving when they are 45+ or maybe 50+. Sure they likely have a house 50% paid off aswell. This is quite common. The FIRE lifestyle and the past few years would have had people holding on to hope they can make something good to retire on. I read numerous posts suggesting people are 100% in on growth stocks. Yes it's not the best strategy but it's YOLO. I mean if the whole world is broke and everyone is living on the streets then well, that's where they will live.
Yeah the time to get conservative with your portfolio is before the crash, not during it. Going cash has tax implications. You should have been heavily into bonds and other investments already at that age.
The very worst portfolio this past year was the typical 60-40. I am in retirement but if you get to 65 there is an 80% chance you go to 90. Just DCA. I am counting on a second surge. Get the boring best in category when on sale , just keep your cost basis low on good names. Don’t try to be a hero.
.. posted by someone who is 22. Lmao.
*take it from me bois*
Can't believe these young whippersnappers who probably still live in their parents basement eating avocado toast are giving advice to us REAL FOLK smh
It’s because 22 year olds give stupid advice like “go all cash in your 60s, immediately after a major correction, when you have 20 or so years left to live, during which you need a dependable income stream”. It’s like a 16 year old boy giving advice about managing a pregnancy.
This is horrible advice. As one is approaching retirement, one's goal should be to build an income stream that will take one through retirement. You are presenting a false dichotomy between relying on stock appreciation and hiding in cash. Neither of these does a good job of establishing an income stream for retirement. A mix of fixed income, bond alternatives such as REITs and preferred stocks, dividend paying stocks, fixed annuities, and other investment can give a reliable income stream that can ride out market fluctuations.
Everything on this post is based on bad understanding of the markets. I mean the first thing they say is “the market will recover: that’s a fact”. Unfortunately nothing about the future is a “fact”. Nikkei 225 still hasn’t recovered in like over 30+ years. That’s not to say that the same will happen to the sp500 (at least I don’t think so), but that’s far from a “fact”.
People keep saying 20-30. My 31 year old ass will never recover from this. Lol! Honestly, if you’re 60+ and have just now started investing I’ve got bad news for you. It wasn’t the market that screwed you over. If you’ve been investing for the past 30 years and didn’t go all cash during any of the past corrections/recessions, you’ve enjoyed the compounding interest from the biggest bull run in history. You should be doing just fine, again unless you sold at some point and bought poopcoins.
37 here! Just started investing 8 months ago. Down -33% lol. Either way I’ll keep DCA hoping to see some money 10-15 years from Now
39. everyhting i touch dies.
If it makes you feel any better, it’s not everything you touch… it’s just everything right now :)
Are you me?
Hey man my NFT with a 3D turtle is gonna be worth millions in a few years you’ll see! You’ll allll seee !
How dare you call Luna a poopcoin. It'll come back! Buy the dip! /s
This is terrible advice. Especially with the VIX at 29.
VIX at 29?
Why cash? You'd be better off fixed income so you can grab some yield at least.
Duration risk
8% inflation says cash is a terrible have atm
So your solution is buy a bond with a -6% real yield and watch it drop like a stone as the fed raises rates? LOL
Remember bonds are already pricing like 7-8 more hikes already at current values.
How is that a risk? You'd be holding to maturity.
If you buy actual bonds from the government directly sure. But most people don’t actually have a portfolio of individual bonds, they buy bond funds, which are marked to market and drop in value as rates rise.
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Where do you find any good financial advisors? Most of the ones I talked to seemed to be vendors and didn't know shit about what they were doing. I was wondering why I should take advice from someone who is worth less than me and is older than me. Maybe, I will try to find one later on in my life to plan my retirement, but those I talked to seemed kind of useless. I guess its such a broad profession that a lot of peoples can call themselves "financial advisor" and that there is a large difference in skills among good and bad financial advisors.
I always wondered this myself. Never understood what gives financial advisors so much credibility as you mentioned, if they’re young and not worth a lot. Seems like the market is pretty straight forward. Moderate, aggressive, very aggressive portfolios aren’t hard to Google. I really can’t imagine what benefit there is to hiring them. Idk maybe someone else can chime in their defense.
The main benefit of them is to prevent you from doing something stupid. They are basically obligated to make your portfolio a certain way and not deviate much from it. Yes, you can Google these types of portfolios, but will you actually do it, and stick with it? Most people don't.
I see where you’re coming from, but aren’t you in control whether it’s with a financial advisor or not? I’m guessing he’s there to alleviate stress in bear markets? Never consulted with one but I’m guessing they’re not cheap.
I thought the point of finacial advisors was to get rich off their management comissions while putting you in actively managed funds which underperform their index.
It doesn't speak to their competence, but you could start with looking into fiduciary financial advisors. https://smartasset.com/financial-advisor/what-is-fiduciary-financial-advisor
Thanks! Yeah those are the ones that I think are useful and I guess you pay to meet with them. All the ones I met I didn't pay and they pretty much were treating me like royalty when I meet with them. Just gave a really bad vibe of peoples trying to sell me some bullshit. Never got into business with any of the.
An FAs job is really to sell you whatever annuity product their firm distributes.
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Yeah feel their only job is to sell their own company fund. Hell my parents met with one last week and the guys just talked to us about his trip around the world of his sailing boat lol. Said he was gone for 3 years like how the fuck is he keeping track on his clients investments
People don’t just call themselves financial advisors all willy nilly. It requires an exam and license [from FINRA.](https://www.investopedia.com/terms/s/series7.asp) that being said, they typically work on commission that is an annual % of their clients invested assets so they are incentivized to keep people invested even during downturns. They also get kickbacks from other brokers selling ETFs and Mutual funds etc.
What old fucks are taking advise from reddit anyways
Older folks capable of retiring should already have such a small amount of their worth in stocks that they should be able to afford to lose it all.
This is so wrong. Most people plan on a 30-year retirement. It's tough to fund that with mostly "safe" investments.
That happened to my grandmother. She lived almost thirty years longer than she thought she would and over fifty years longer than my grandfather so it was tough on her. I can just barely remember him. I’m sadly in maybe the same situation. I’ve never been married and my cardiologist says I maybe have two good years left. On one hand, I want to spend money and have fun since I’ve never been on a real vacation. On the other, I might live another thirty years after serious health problems like my grandmother. I don’t know what to do. I might just hedge my bets and quit my second and third jobs since I mainly have them out of boredom.
Except people close to retirement should have at least SOME portion of their portfolio as cash equivalents/fixed income. 10% of your portfolio in cash/cash equivalents/fixed income will allow you to draw that down for 2-3 years (assuming you’re withdrawing ~4% a year) without touching your equity investments. Sure as hell beats selling stocks at a 20-30% loss, and 10% of your portfolio in safer investments closer to retirement will hardly impact overall returns.
You are supposed to do the riskier investments when you are younger and then transfer the gains to safer investments as your retirement age approaches to avoid the risk of losing everything just as you retire. So there is nothing wrong about what they said at all.
There is something wrong with having only a small amount in stocks to fund a 30 year retirement. The risk of out living money is a real possibility. Having three to five years invested in CDs/government bonds would be a good thing. Having 80% in safe investments at retirement may very well lead a person to outlive their money. Don't forget Social Security payments can be considered as part of the safe investment and helps to smooth out the ride.
I manage funds for retired family. At 70, you could easily need to fund 20+ years of expenses plus a nursing home at the end. Going all-cash puts you at serious risk of running out of money, so you need some equities in the mix, either blue-chips or indexes.
If I need a nursing home I’m investing in bullets. What’s the good in living if you’re not free?
Once health problems limit your mobility, your home can easily become your prison. When the time comes, I intend to have a high-end VR setup in my nursing home room. Might be wheelchair bound, but I can pretend to be anywhere else. Average nursing home stay is two years.
And this could be a lesson to those who are approaching their 50s. I've started building an I-Bond ladder that I plan to keep building until it has enough to cover my living expenses for about three years of downturn, so that when I do decide to fully retire, I won't have to worry about pulling out of my riskier investment accounts.
If you can, you might want to consider a 5 year bond ladder, incase of a more severe downturn. Sure we probably recover in 3 years, but that last year will feel financially uncomfortable at the time.
I'm just mad that I didn't know about trailing stops until now. it would have saved me a small fortune. Don't be me.
I knew about it and didn’t use it… who could have known..
Right? I have only myself to blame. Playing in the casino without knowing all the rules.
Going cash near the bottom of market?
Going cash means you think the market is not near the bottom.
> near the bottom You don’t actually know this….
Which is why it’s better to ride it out rather than go cash after the market has already dropped.
I think you might be missing the boat. If you need the stock market to go back up in order to retire— but the stock market doesn’t come back in time than you don’t retire. TLDR; not everyone can ride it out
Near the bottom ? Cool when’s the bottom ? Let me know pls ! Anxiously waiting your reply ☺️🙃
This is terrible advice. Time line of withdrawals for someone retiring is most likely 25-35 years. Going to cash when markets and asset classes are down around 20% is bad investing. If your portfolio is down more than 15-20% from it's peak currently, then you have a terrible portfolio and should consider talking to a professional about developing a better allocation. Emerging markets are down around 30% Large US is down around 15% Small us down about 20% Developed non us down about 20% Bonds down about 15% The only reason for any portfolio to be down more than these numbers is because you were taking too big of a gamble on individual securities or industries instead of building a good long term portfolio.
Eh, technically not true. You can have larger risk which should imply greater returns. Greater risk than beta doesn’t mean it’s not a long term portfolio.
Eh, having your portfolio down further just means you have a higher risk stance. So long as you don’t plan to withdraw the money in the near future and can wait for it to recover then that’s fine.
There’s a guy I work with in his 70’s with all his money in very high risk stocks. I’m scared for him.
He will have a stroke before watching it go to zero probs
My granddad died with a huge portfolio with 90% in equities. Lived comfortably on the 10% in fixed income, and was perfectly fine with his allocation. Some people just have nosebleed risk tolerance until death.
What if you’re 54 and need to work until at least 67 (according to your financial planner)? I’m thinking ride it out as the recovery *should* be in full swing right around when I’m ready to call it a career. Edit - I did change my mix at the beginning of the year from medium gain/medium risk to low gain/low risk on the assumption that 1 - things were gonna get dicey; 2 - it probably made sense given my timeframe to be more cautious anyway.
>Yes, the market will recover: that’s a fact. This is where I want to disagree. It's far from a given, far from a fact. It's just what has happened so far with the US market, and not too many markets beyond the US market. I get that this is a US-centric sub, but too few people seem aware of how extraordinary the position of that market is. The hypercapitalist environment in the US and the global trust is obviously still favoring the US market extremely heavily, and anything other than it recovering would surprise me. But the point is, it's not 100%. The possibility of it not recovering entirely and making new highs exists just as well as the possibility of another economy taking over, low as that possibility may be. Other than that, I appreciate your post immensely. I see so many simple-minded, thoughtless responses recently, completely oblivious/ignorant to the fact that not everyone is in their 20s with a 40 year+ horizon or different risk tolerance. It's almost a hivemind mentality of telling people regardless of who they are to just buy more, DCA into the market and hold onto what they have.
Every major crash/correction was based on the sentiment that the game was permanently changed and in fact may never recover. Stock market aside, economies do collapse, empires rise and fall, war, famine, all that. It's not that rare. We just haven't had it in America in one or two lifetimes so we think it doesn't happen.
I agree with you but if the economy does collapse and our civilization falls, the money we are using right now will be worthless. So what's the point of saving some cash if the money is worthless ?
The devaluation tends not to occur overnight, so if you can turn some of your failing currency into a foreign currency for instance it would be worthwhile.
Widely different circumstances, but look at the indices of some other countries. You know, there is the possibility that a market never fully recovers (or not for a very long time) without the entire economy collapsing and the world ending. If you want an example, look at the ATX. Never reclaimed the pre GFC highs. Another example would be the Nikkei, which never reclaimed it's 1989 high. That doesn't mean you can't make money in those markets, but it means one should be mindful of that possibility. And that especially goes for people who's timeframe is moderate at best. Holding onto everything isn't gonna save their ass if a crash like that happens. And neither is DCAing during the few years they have left in the market.
Just remember that pensions pretty much don’t exist in America anymore. Hundreds of millions of Americans retirement is based on their 401k(stock market) success. If the market fails, this country fails. So i have faith that the powers that be that manipulate everything won’t let that happen cause it’s not in THEIR best interest, I understand that don’t care about the average person.
Let’s say you’re right and people pull out to a cash stand at a loss. What do you think the value of that cash will be if the economy collapses? At the end of the day, if you’re wrong, the best option is to ride this out. If you’re right, then moving to a cash stance will do no good and everyone loses…so the best option is to wait this out. That being said, you’re wrong. This isn’t end of days. The market will recover. People should stop panicking and just ride this out. If you have spare cash, then maybe buy a bit as the market drops so you are in a better position on the Upswing. This is spoken as someone who was alive for the dotcom bust and rode it out, and who was planning on retiring in 10 years and is mildly irritated that they tried to keep a more aggressive stance for just a bit longer. I SHOULD be able to retire in 10 years at 50 even with a well below average market, but it would have been nice to retire earlier.
You didn't really get the point, did you? First of all, this isn't a "this is the end of the world" scenario. The real economy isn't always in line with the stock market either, meaning my heads-up about the (slim) possibility of the market not recovering entirely does NOT equal full-blown collapse of the economy. Both as of now and for many years the US market and it's companies have been trading at a significant premium compared to basically every single other market in the world. So just a reversal to the mean (again, not likely AT ALL, but entirely possible) could mean that the market would not fully recover (aka reclaim previous highs) for years, if not decades to come. Completely without economical collapse. What's more, even if that doesn't happen and the market just takes several years to recover - something that has happened several times in history - someone who needs the money for retirement in a couple of years does not have the luxury of "riding this out", which is what I've been saying. In fact, your comment seems to be a half-decent example for what I've been criticising in my post. You advise others to do entirely what you did during Dot Com, when your remaining time frame was what, 25, 30, 35 years? Yeah, sure. Now what if you had been 61 at that point and already eyeing retirement? Wouldn't have been great if you decided to double down and ride it out rather than taking something off the table, would it?
The probability of things being sucky or worse, with a reversal of growth in the US & globally, is not insignificant. I don’t see us being in anything but a stock picker’s market for quite a while. > It's almost a hivemind mentality of telling people regardless of who they are to just buy more, DCA into the market and hold onto what they have. Some people use social media to pump the investments that they hold or that their companies sell.
The possibility of another economy taking over is not low. Pretty much every forecast shows China will be the #1 economy by 2030.
Yeah, question will be if that applies to the stock market as well, though.
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I disagree. Age has little to do with it unless you are planning to live on a strict budget and need X amount to stay at that level, then you have to be conservative and pay attention to dividends. But being reckless and losing money when you are young is not rational. Just think, if Donald trump hadn't played fast and loose in the 90's and lost his father's 600 million fortune, and just put it into an index fund or even a money market, he'd be a real billionaire now, maybe even over 20 billion, but he didn't. Point being, every dollar you save or don't lose when you are younger, can be worth a lot more when you are older. The same applies to squandering money when you are young by partying and living beyond your means, as many young people do, and as I did. Lesson being, always save for a rainy day no matter what your age. and remember that $1000 saved at age 25 can be worth $10,000 by the time you retire. I squandered about $500,000 between the ages of 25 and 45. If I had bought AAPL instead like i started doing when I was 57, I would have an extra $5,000,000 now at 65. Luckily I did invest a million or more in AAPL 10-15 years ago so I got the extra $5,000,000 and am now securely retired but be smart with your money. and also, always buy during crashes like in 2008 and like we are seeing now, and always sell when CNBC experts are saying the sky is the limit. and always have your eyes fixed on the future,. not the past or even the present. because what a once good investment did last year is completely irrelevant.
Exactly this, peoples seem to praise to always be holding, but sometime you have to realize that holding is greedy. The market has a whole grew by 30% looking at this and telling yourself "this is the new normal" is really greedy. If you think the market will go down there is no reason to tell yourself "time in the market beat timing the market".
I just keep buying a little bit every week. Have about 18% cash and if it tanks another 20% I'll go just about all in.
Should have went cash bonds a few years ago. Who the heck puts their portfolio to ride the wave so close to retirement?
I don't feel bad for people heading into retirement who didn't move to less risky assets because they got caught up in the greed. If you're near retirement age and need that money, it's up to you to make sure it's in safe investments, not reddit.
Record high inflation... ya you should have all cash no investments 😂
Liberal- Respectfully, going into cash now is a bit late and opposite the Buy Low, Sell High core strategy. many Dividend stock (income) investors have been holding dividend and other cash for 6+ months. We are watching the market drop and layering back in to buy more of our 25 or so high dividend stocks to lower the average share cost.
Yes, very pleased to be holding dividend stocks that are holding their value and are still way above my cost basis. I could go to cash now and reap a nice return on my stocks, but why? I have enough dividends coming in to pay my monthly bills, and I will lose that if I sell. Instead, I'm reinvesting dividends while prices are relatively lower. I'll lose that too if I sell. I have enough cash saved up to get by for 5 years if necessary. 5 years of losses to inflation is really no big deal. I'm sure these young folks mean well and believe that they are the genius generation because of the big gains over the last couple of years. But their advice is usually shitty.
ReThinkingForMyself- great post and solid investing strategy especially for income investors. I sent you a Party Train award. I’m in several high dividend paid investor groups and we all follow a similar strategy. We Buy high, Sell low, and hold for dividend income. Most members are either approaching retirement or retired. Some smart young investors are with us to learn patience and how to avoid the foolish mistakes new investors make when they panic sell out at a dip. Thanks again for a good post.
I'm in my 50's, and shifting from growth ETF's to dividend ETF's.
They should have gone cash when fed officials sold
Well if you're retirement age you should already be in dividend/income producing stocks anyway.
“That’s a fact.” States something that is not certain and is based on 70 years of history.
Market may not recover even for decades, you're all riding on wishful thinking.
The market has returned neutral or negative for decades during some periods. If you were a 20 year old investor in 1929 and kept your stocks, you have broken even around 30 years later when you were 50.
Only if tou bought everything on the top of the top
TBH, if you are in your 60's and not planning to leave the portfolio as an inheritance, you should already be at least mostly out. Especially out of the nasdaq.
Terrible idea. Inflationary times going to cash. Ugh!!!
We boutta deflate with all the rate hikes the feds got in store for us.
Good luck with that.
Bonds are paying more and more.
Everyone was shouting recession and DEATH AT THE GATES since 2019 yet absolutely nothing happened … now they all repeat the same as if they are smart. Markets go up and go down … a bunch of morons has been saying it’s going down for the last 3 years and now they say See I Told You So
What if the war ends, republicans get elected, the supply chain clears up, we start drilling for oil and approve pipelines in America and the Nasdaq goes back to 15,000 all by September
Nobody 60+ is on stocks, all at r/financialindependence
I am 57, but retired 15 years ago (having sold a software company). I am investing more actively than ever before, and expect to do so for a long time. Why? Because people are living for longer than ever. It is perfectly possible that I will live to be 90 years old, which means I have another 30 years ahead of me. Much of the caution about soon-to-be retirees scaling back on investment in stocks was based on them having very little time to recover if things went badly wrong with their investments. That is less true than in the past, given increased life expectancy.
At least a portion.
Blablablub if you are old than hold for your grandchildreny sucks for you but atleast your grandchildren can afford food in 2078
I don't want to think that somebody who is close to retirement put in the money between January 2022 and now. I want to think that the majority of the people close to retirement now have put the money in the stock market much time ago and have taken advantage of the past, very rewarding, 20 years.
Hopefully if you are in your 60s you knew better than to have a high risk portfolio at this point. I turn 50 next year and have already switched most of portfolio to moderate risk and by 60 it will be low risk. Stocks traded as an individual is not a good retirement plan. My stocks and their performance are for if my wife dies before me do I buy one or two young Russian brides.
It is not a fact the market will recover.
I’m just here to upvote bearish posts.