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93195 t1_jab0dr2 wrote

Foreseeable future, fine. Once you’re closing in on your retirement, not fine.

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_YouAreTheWorstBurr_ t1_jacno2o wrote

OP has a state pension, I'd think staying 100% VTSAX would be fine with that safety net in place.

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2wheeloffroad t1_jadsfr7 wrote

Interesting. My parents do that. Live off SS and leave the rest in the market so they can earn. They said bonds never did much for them and they have SS to cover the monthly expenses.

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FD_4LYFE69 t1_jab3dr3 wrote

This is a myth. 100% VTSAX is fine

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WhatRUsernamesUsed4 t1_jad6mc9 wrote

Retirement age people 100% in VTSAX would've lost 19.53% last year. That's... not ideal with the amount of capital they should have saved by that point. They may no longer be in a position to just 'wait it out'. Holding the position at that age without guaranteed income is pretty risky.

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FD_4LYFE69 t1_jad7ft1 wrote

A lot of people live until 90. They can do 3-4% withdrawal in full stocks and not touch the principle. Bonds is an old theory and one that I just disagree with.

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WhatRUsernamesUsed4 t1_jada8sh wrote

How do you 'not touch the principle' when the investment falls almost 20%? There are no gains to sell off. There's nothing but a fraction of the principle you had a year ago.

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FD_4LYFE69 t1_jadamvb wrote

I’m assuming this is someone who has been investing for many years. Not someone who is 64 and just started investing

Someone whose been investing since 1990 (or many many years) need not go into bonds in my opinion. The 20% pull back doesn’t affect them.

I’m in my early 30’s and I’m heavily investing - by the time I’m at retirement age I plan on doing full stocks for the 11.5% or so average return. My family has longevity so I’m assuming I’ll live into my 90s especially with advances in healthcare in the next 30 years.

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WhatRUsernamesUsed4 t1_jadd7yw wrote

  1. The average return of VTSAX since it's inception is 7.15%, idk where you got 11.5 from.

  2. I'm about the same age and you are assuming we will be lucky enough to match the greatest bull runs of human history. It's far more likely our parents just had better investment opportunities than we will ever have access to.

  3. The needs of a 64 yo who started investing a while ago and a 64 yo who started investing last year will still be the same. A 20% hit would affect both the exact same. Monetary needs are forward moving.

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2wheeloffroad t1_jadu3ms wrote

The second chart on this page is interesting

https://www.longtermtrends.net/stocks-vs-bonds/

Shows how crazy the market is compared to so an early 40 year window - so ya, good chance we won't repeat this as much if it was due to deficit spending. It also shows how much worse bonds have performed.

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FD_4LYFE69 t1_jado23x wrote

Sorry bro your post makes zero sense. I wish you luck in your wealth building FYI VTSAX closely mirrors s&p 500 which has a non inflation adjusted return of 11.58%. Lets touch base in 30 years and see who has more money :)

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2wheeloffroad t1_jadt4jv wrote

I think the idea is that the returns are so much better and for people who have enough, the well is deep enough to survive the down turns and on the long run, come out on top. Seems like it all depends on the ratios of expenses, wealth, and timing.

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joshcandoit4 t1_jadjzbs wrote

Those same people would be up 44% over the last 5 years still

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TugboatCrypto t1_jadbpq4 wrote

depends on how reliant you are on the dividends, if its the only source of income then probably not ideal for the reasons you mentioned. If you're well diversified (outside of securities) and have a12 month emergency fund, then I don't see an issue with being 100% in a broad index fund, but to that end- it applies to such a small amount of people that those in the position to hear it, probably don't need it.

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pickymeek t1_jae92fj wrote

I'm not sure. (PDF warning)

Under "Why not 100% stocks?"

> In short, although a strategy that fully invests a retirement portfolio in stocks can be perceived as riskier than most alternatives, is that really the case? Is a strategy that has the lowest probability of failure, provides the same or better downside protection, and higher upside potential really riskier than other strategies simply because a retiree is more uncertain about (how much higher will be) his bequest? If not, then having a retirement portfolio fully invested in stocks is a strategy that should be seriously considered by retirees.

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3pbc t1_jab0j6n wrote

What to go for when ~10 years from retirement?

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93195 t1_jab14ki wrote

Not 100% stocks. You can’t afford to risk a possible 30% portfolio hit when you’re within a few years of retirement.

A target date fund would probably be a prudent move in a few more years. If you don’t want to risk 100% stocks (and you shouldn’t), let the pros worry about asset allocation.

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91ge t1_jab1wdl wrote

What are the mechanics of moving to something like a target date fund, if I had been fully invested in equities for the previous ~30 or so years? Sell the equities and simply buy into a target date fund?

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TheBestNarcissist t1_jab9myv wrote

From my understanding, yes, and since it's in an IRA you don't owe capital gains taxes.

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93195 t1_jabai6h wrote

Yup. No tax implications of anything done within an IRA. Sell VTSAX, buy VFFVX.

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splendid_zebra t1_jaccyn7 wrote

I just want to point out that some people MAY be able to ride the ride IF their retirement account is plenty large enough. It also is dependent on risk tolerance.

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whisky_in_your_water t1_jactbhw wrote

Another option is a bond tent. Basically, shift your portfolio to 40% bonds as you get closer to retirement (say, over 5-10 years), and then glide back down to 100% stocks over 10 years or so. This is more useful for early retirees expecting a long retirement, but it can certainly work for anyone retiring at any age.

The intuition is that the biggest risk is sequence of returns risk, i.e. taking a big hit (your 30%) in the first few years of retirement, so the plan is to just protect the first 10 years or so of retirement. Invested money approximately doubles every 10 years, so your 60% stocks should be 120% of their original value after 10 years, which is enough buffer to ride out another hit without needing bonds.

This strategy obviously takes some effort, so it's only really valuable if you expect to have a long time horizon.

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PhigNewtenz t1_jac5qjh wrote

That may depend on how flexible you are regarding your retirement date and how long you are preparing to live post-retirement. If you're going to retire in you're 30s by giving a surprise two-week notice whenever you hit "you number," I think staying all-in on equities isn't too suboptimal. But in most cases (including mind) there'll be some diversification as I near the big day.

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