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Thread: She took all her money out of market

  1. #1
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    She took all her money out of market

    This article showed up on Money magazine today, by Roz Warren, "I Took All My Money out of the Stock Market":

    https://www.msn.com/en-us/money/pers...cid=spartandhp

    Wonder if anyone else saw this and what you thought of it?

    It's a bit coy with how much she actually has--she says, "high six figures but not a millionaire". I wonder how much would be enough--it sounds kind of freeing.
    Anyway, did anyone else read this and what is your take on it?

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    Senior Member bae's Avatar
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    I think it’s a fine strategy if you have “enough” - time is valuable, and not having to spend time investing, doing taxes, and incurring stress related to that is priceless.

    I keep an almost-completely-invested stance, but I also keep enough “cash” investments to pay the bills for the next 20+ years or so, which is relaxing.

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    Senior Member bae's Avatar
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    As to “how much is enough” - ”Your Money Or Your Life” offered some guidelines for figuring this out, and determining what sort of investment strategy would be low-risk and lazy.

    I’m not trying to spend my assets down to zero as I age, I’m trying to maintain-and-grow, so that I will have funds to help others. So I figure on taking 4% or so out of my portfolio every year, which gives it a decent statistical likelihood of longevity. I usually don’t end up even taking this though, we try to live “reasonably” frugally.

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    Senior Member razz's Avatar
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    There is actually wise strategy at work. She has a steady modest ongoing income, has met her life goals, has enough of whatever is a priority and is protecting it.
    Is moving out of the stock market much different than deciding to quit a paid occupation because one has earned 'enough'?
    Gandhi: Happiness is when what you think, what you say and what you do are in harmony .

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    Senior Member Rogar's Avatar
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    I have an old friend whose finances and life situation are similar to the article and did almost exactly the same thing. He had been 100% stocks for many years and bailed completely into laddered CDs around election time. Some of his logic was around Trump, but mostly just that he had enough and no longer wanted the risk. I don't think it's a bad strategy as long as you can keep ahead of inflation. Inflation for people in the retired or early retired age groups is likely high than whatever government figures float around. I don't think 5 year laddered CDs will keep up at present interest rates.

    I also would wonder if the often recommended a 3% or 4% withdrawal from savings would have good odds of money lasting an actuarial lifetime for an average person in their early 60's. I've sort of lost track of the retirement calculators, but I might want to run a few simulations just for basic ideas. I took early retirement in my 50's in the midst of the financial meltdown. I pretty much decided at the time that traditional investment advice was a bit of hoodoo and I would not ever want to be needing money from a stock portfolio in the midst of being beat up in a stock market crisis and facing a long (if ever) recovery.

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    Senior Member bae's Avatar
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    Quote Originally Posted by Rogar View Post
    I also would wonder if the often recommended a 3% or 4% withdrawal from savings would have good odds of money lasting an actuarial lifetime for an average person in their early 60's. I've sort of lost track of the retirement calculators, but I might want to run a few simulations just for basic ideas.
    I "retired" when I was 36, ~20 years ago. The math seems to work.

    http://www.madfientist.com/safe-withdrawal-rate/

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    Senior Member Williamsmith's Avatar
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    I saw the figures that the state has invested in me and if I reach 68 years of age...I’ll have exhausted those funds. The actuaries predict I’ll be gone if not by then shortly thereafter. So if I’m an actuarial outlier, I’ll continue withdrawing on the funds made available by retirees who check out earlier. It’s all a morbid game to me.

    I squirreled away some investment money by saving sick and annual leave and contributing to a deferred compensation plan. So when I retired I got a lump sum and a “good luck with that” from the state. I put it in the market with a financial advisor for 7 years and then split it into a Charlie Schwab account and a Transamerica suck the life out of your earnings with fees variable annuity insurance chocolate sundae policy.

    I also got a year guaranteed term term life insurance policy which will pay the wife off just enough for her not to want to put strychnine in my coffee and provide enough money to pay for some sort of health insurance supplement.

    I went through the phase of trying to nickpick about the best the best way to invest this or that and is the market going to crash and should I just get out.......I finally just committed to a plan and went golfing.

    Life is good. I’m happy for the librarian. I would tell her to enjoy today as deeply as she can.

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    The Roz in the article is a fascinating individual. I got a hearty laugh from the title of her book of library humor: Our Bodies and Our Shelves

    In my view, today's investor sentiment is powerfully bullish about the stock market, maybe even complacent about the risk of loss. For every investor like Roz, I believe there could be thousands who had been "out of the market" since the 2008-2009 melt-down, and who have capitulated, buying equity funds in a fear of missing out on the marvelous stock market gains.

    From my sexagenarian perspective, my life went through stages of preparation, accumulation (& saving & equity investment), and then around age 50 I reached a "crossover point", where I believed the income on my investments would be adequate to live on (simply)... I call the present stage "Steady State". Asset allocation in my portfolio is presently 72% Fixed Income and 28% Risk Assets (Risk Assets include a few stocks and 3 funds which have negative beta in the -1.13 to -1.33 range ... you could say I am hedged for a 50-62% drop in in the SP500.) In my plan for the future, when I am age 73-75 I anticipate a stage of dissipation, when I intend to liquidate long-term investments (except for Treasury I Bonds I have stashed away) and buy Single Premium Immediate Annuities. (I have no interest in leaving an estate: I prefer to give with the living hand, and in our household the second to die is intended to die broke.)

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    When I first read YMOYL, I invested in treasury bonds and they did very well, so I sold them over the years and bought other things. If I had enough, I would do what she did, I think. I think Bae and Razz are correct, it is figuring out what is enough, and thanks for the reminder that YMOYL should help a lot with that. I am working on figuring that out and figuring out where to go post retirement, as I seemed to have semi-retired during a blood bath at work, and now have a part time income that may or may not stay.

    Unlike Roz, I want to leave money to my kids and a little nest egg for my grandchildren. I am not comfortable with spending down to zero, at all, as that assumes when I will die,and I can't do that.

    I have done one real estate for money deal, and found it pretty stressful but exhilarating. I have no pension from work. At 61, with some disability, my ability to go out and get another job seems to be pretty low. Roz has done better for herself than I have done for myself, and I guess if I had about twice what I have now, I would probably do what she has done.

    I am also following the 4% withdrawal rule as of this summer, but it is not enough to live on, by any means.

    Of course if all the baby boomers did what she has done, it would certainly impact the market. I think?

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    In The Ages of the Investor, William Bernstein asks the question "why keep playing if you've won the game?" If you can live the way you want invested in less-volatile assets, why not? For myself, I'm going for a strategy of covering the basic lifestyle plus a bit extra with guaranteed sources, and using riskier assets for some inessential extras.

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