Retirement - Managing your money

[sailorboy1]

Originally Posted by dannc

If they had just left the money alone....

Later,
Dan

But you only know that in hindsight.

If I had sold before the downturn 2 years ago, then rebought stocks a few months I would be up 50% at least from 2020

[Captain Graham]

Originally Posted by sailorboy1

But you only know that in hindsight.

If I had sold before the downturn 2 years ago, then rebought stocks a few months I would be up 50% at least from 2020

But you only know that in hindsight.

We know for a fact (not hindsight) that the stock market will come back.

[dannc]

Originally Posted by sailorboy1

But you only know that in hindsight.

If I had sold before the downturn 2 years ago, then rebought stocks a few months I would be up 50% at least from 2020

No. The market will come back unless we have some world wide disaster worse than the depression, WWI, WWII, etc. The one certainty is that if one sells and the market is down, one is loosing money. The only question is if one waits to sell in a downturn is will they loose more or less money. Flip side is to not sell and one does not loose money except on paper.

Timing the market either at the top or bottom is difficult to say the least. The "experts" can't do it that is for sure.

A coworker and I were discussing the market conditions in 2007/2008. It was obvious the market was going to crash and he cashed out while I let it ride. I am sure I would have more money today, if I had cashed out AND figured out when to get back in. I knew that the market was going to crash, i.e., we were at the top of the market, but I sure did not know when the market would bottom out and it was time to buy, so I let it ride.

Around 2018/2019 I thought about cashing out but did not. I sure thought a correction was about to happen but I did not think it was as bad as 2007/2008. I REALLY did not have the certainty I had in 2007/2008. In hindsight I was right, it was not that bad, but I did not see the pandemic that was about to hit in 2020. Soo, if I had cashed out in 2018/2019, I would have timed the market by dumb luck not because I was correct about why a correction was going to happen. On the other hand, I was seeing what was happening in China, and then Italy, so in hindsight, I should have cashed out. I just did not think the world governments would shutdown the economy.

For all of the above, I am happy with my choices. The only choice I sorta regret was NOT buying one company's stock that was way undervalued, and I knew I would not loose money, but I paid off some debt instead.

The "expert's" can't reliably time the market, and my record is iffy at best, so selling is not something I have done since it likely to loose money.

Later,
Dan

[wsmurdoch]

Originally Posted by Captain Graham

We know for a fact (not hindsight) that the stock market will come back.

Let's say you were Japanese in 1990 when they were the envy of the world. There has been no war, no depression, no disaster. You can die waiting.

https://www.macrotrends.net/2593/nik...cal-chart-data

I could not find inflation adjusted data.

[apoc]

If I were Japanese, I would invest in a variety of low cost index funds that give me international exposure, rather than just focus on a mid sized island.

[MicHughV]

At the end of the day investing is a throw of the dice.....you win some...you lose some...the trick is to win a few more than you lose...

[Captain Graham]

Here is another video explaining the bucket system and how he will use it in both a bull and bear market.

https://www.youtube.com/watch?v=2o72xcZ72Fk

[Captain Graham]

Originally Posted by MicHughV

At the end of the day investing is a throw of the dice.....you win some...you lose some...the trick is to win a few more than you lose...

This is only true if you invest in individual stocks or get in and out of the market because you are trying to time the market.

The way to win in investing is to invest in index mutual funds because the S&P has always increased in value over time (about 10% per year) even with bear markets and do not try to time the market.

[gonesail]

money? what is this money that you say i should be managing?

[Captain Graham]

Originally Posted by gonesail

money? what is this money that you say i should be managing?

Not all of us can live off our good looks, you must be blessed.

[Hhew]

Went down the rabbit hole and read this entire thread last night and I noticed that while there is great content, a few things that were not mentioned, so here’s my $.02.

The risk of a sudden market drop sometime in the future is very real and it’s certainly on everyone’s mind. You can ride it out because you have a long view, or you can panic sell when you realize what is happening, which is going to be very late. I’d suggest that you consider setting automated stop-loss functions for all of your investments that trigger at a share price that you decide is all the loss risk you can tolerate. Think of this as a circuit breaker or a rock climber’s fall protection. Remember that if you are not in a tax protected account like an IRA, this could be a taxable event. If your financial services provider does not offer automatic trading, perhaps shop for a new one.

There is a number of investments that can offer passive dividend income beyond “dividend stocks” or bonds. These include ETFs and CEFs that focus on higher risk loans, covered options calls, REITs, and business development companies. 10-12% annual yields paid in quarterly or monthly dividends with fairly stable capital is not hard to find. If you are looking for passive income, these might be a good fit. Of course, understand your risks and do your DD.

Finally, there was some discussion about being semi retired. My plan is that if someone says “wow beautiful weather today, we should be sailing” and your response is “ah, I can’t, I have to work”, that’s not retired!

[Captain Graham]

Originally Posted by Hhew

Went down the rabbit hole and read this entire thread last night and I noticed that while there is great content, a few things that were not mentioned, so here’s my $.02.

The risk of a sudden market drop sometime in the future is very real and it’s certainly on everyone’s mind. You can ride it out because you have a long view, or you can panic sell when you realize what is happening, which is going to be very late. I’d suggest that you consider setting automated stop-loss functions for all of your investments that trigger at a share price that you decide is all the loss risk you can tolerate. Think of this as a circuit breaker or a rock climber’s fall protection. Remember that if you are not in a tax protected account like an IRA, this could be a taxable event. If your financial services provider does not offer automatic trading, perhaps shop for a new one.

There is a number of investments that can offer passive dividend income beyond “dividend stocks” or bonds. These include ETFs and CEFs that focus on higher risk loans, covered options calls, REITs, and business development companies. 10-12% annual yields paid in quarterly or monthly dividends with fairly stable capital is not hard to find. If you are looking for passive income, these might be a good fit. Of course, understand your risks and do your DD.

Finally, there was some discussion about being semi retired. My plan is that if someone says “wow beautiful weather today, we should be sailing” and your response is “ah, I can’t, I have to work”, that’s not retired!

Thanks for the info.

I will be working in retirement about 30% of the time.
Winter Job - USCG Captain's Class - 4 classes - 10 days per class - 40 days total
Summer Job - teaching people how to dock power boats - 3 days a week for 5 months - 60 days

They will be scheduled ahead of time so I can not just go sailing any day I want.

Good thing I like night sailing.

[JBP]

Originally Posted by Kinkircating

I've been retired early for a decade now, and what I learned the most from these past 2 years is don't freaking wait and life is short. I've lost 8 people in my life from age 54-70 all who had great plans for what they'd do when they had more time. People dissect/debate safe withdrawal rates projecting out until they are 100 years old with a zero percent chance of failure, when they should really consider that when you hit 55 you have a 20% probability of being dead in 20 years.

A life well lived isn't that expensive, so get busy enjoying it!

"Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming "Wow! What a Ride!"

Hunter S. Thompson

[Captain Graham]

I just started moving 3 years of withdrawals into a money market fund.
I am retiring in June 2024 so I am moving 1 years worth at a time.
Some details
In Dec I moved 1 years worth on money and will repeat it each month for 3 months.
It took 1 day to sell the mutual fund and then 1 day to put it into the MM fund, 2 days total.
My IRA allows me to setup monthly automatic withdrawals but only from cash not from investments including MM Funds.
So in late May I will put 1 years worth of money into cash and setup an automatic Monthly withdrawal.
My bucket1 I will have 1 year in cash 2 years in MM funds.
Once a quarter I will do the following
1. If the market is doing OK I will sell some of my ETFs and rebuild the cash
Because I am only doing this quarterly the cash may drop down it almost zero making bucket1 only 2 3/4 years worth of money.
2. If the market is dropping I will keep spending down the cash and when it gets very low I will sell 1 years worth of MM funds rebuilding the cash.

The big question in my mind is what do I consider the Market is doing OK vs dropping?
I think the Market doing OK would not down more then 10% from last high.
So if the market is down 5% I would be selling my ETFs and filling the cash.

The purpose of Bucket1 (Cash and MM Funds) is to handle a 3 year bear market and I want to keep it full even during small down markets.

[sailorboy1]

There comes a time to consider it is more important to have a life than it is to maintain money that you never get to use/enjoy.