I'll keep an eye on this thread. A few months ago I was at 0% fixed income and have been piling into AGG (just a bond index fund).
I'm struggling with putting too much into that. Right now I'm ok with the trade off of higher volatility for higher potential upside that comes with a higher equity percentage.
I'll keep an eye on this thread. A few months ago I was at 0% fixed income and have been piling into AGG (just a bond index fund).
I'm struggling with putting too much into that. Right now I'm ok with the trade off of higher volatility for higher potential upside that comes with a higher equity percentage.
Similar situation
I've been adding to my 401K broad market bond fund over the last year but I'm still at just 15% bonds. The rest is S&P, Russell and total world equities
And while I get bonds offers more stability and diversification I keep thinking.....
If the S&P really takes a crap and doesn't recover. Does it really matter where our money is? Will anything preserve wealth under such a catastrophic situation? Same goes for international stocks
I've also added about 1.8% of my total portfolio into bitcoin via IBIT
I'll keep an eye on this thread. A few months ago I was at 0% fixed income and have been piling into AGG (just a bond index fund).
I'm struggling with putting too much into that. Right now I'm ok with the trade off of higher volatility for higher potential upside that comes with a higher equity percentage.
Similar situation
I've been adding to my 401K broad market bond fund over the last year but I'm still at just 15% bonds. The rest is S&P, Russell and total world equities
And while I get bonds offers more stability and diversification I keep thinking.....
If the S&P really takes a crap and doesn't recover. Does it really matter where our money is? Will anything preserve wealth under such a catastrophic situation? Same goes for international stocks
I've also added about 1.8% of my total portfolio into bitcoin via IBIT
About all you can do is diversify as much as you can. When this thing takes a dump, we will all be impacted.
At that point, it will be a situation where one-eyed men will be kings of the blind.
I'll keep an eye on this thread. A few months ago I was at 0% fixed income and have been piling into AGG (just a bond index fund).
I'm struggling with putting too much into that. Right now I'm ok with the trade off of higher volatility for higher potential upside that comes with a higher equity percentage.
Similar situation
I've been adding to my 401K broad market bond fund over the last year but I'm still at just 15% bonds. The rest is S&P, Russell and total world equities
And while I get bonds offers more stability and diversification I keep thinking.....
If the S&P really takes a crap and doesn't recover. Does it really matter where our money is? Will anything preserve wealth under such a catastrophic situation? Same goes for international stocks
I've also added about 1.8% of my total portfolio into bitcoin via IBIT
Agree. I plan to retire in 5 years at 55. I've run all sorts of simulations, and big picture, staying aggressive always seems to be the best odds. If the S&P500 takes a dump, you aren't gonna have enough in bonds to save your ass. And if you have so much in bonds that it would save your ass, you're already running a much higher risk of eventually running out of $$$ because your long-term return sucks - inflation of your cost to live is gonna kill you. Big picture, stay aggressive and just make sure you have enough put away to ride out extended downturns.
If you keep 2 years in cash (hysa/mm/CD/t-bills) in retirement you could survive most stock market crashes without selling at the bottom. Most corrections rebound in less than 2 years.
But I've also built my own in excel which I've run all sorts of combinations of returns, inflation assumptions, etc. I also have Right Capital's software, which is really cool because not only does it help you understand outcomes (with confidence levels) of various combinations of portfolio aggressiveness, it also provides sensitivity analysis as well as tax strategy - particularly to support Roth conversions. Again, you can run all sorts of simulations, but everything I do keeps coming back to keeping a diversified equity based portfolio (ie very heavy S&P 500) offering the most likely odds of success in not running out as well as having the most at the end. A lot of advisors use the same software to manage their clients. I got lifetime access to it for like $200 thru an advisor
To the point above, there is a near term spend subset that being conservative makes sense (I'd say <5 years of expenses), anything beyond that and I keep coming up with staying equity aggressive wins
That's similar to a few aggressive allocations from firms. The caveat being a lot of firms are introducing more "alternatives" to their allocation tables depending on your liquidity requirements (Diversified hedge funds, long/short, event driven, private equity/credit, etc.)
What do you call aggressive in equities. I'm 55 and was thinking about taking my 15% bonds to 20%
The rest
60% S&P 10% Small and Mid Cap 15% International 15% Bonds currently
That would fit the aggressive mold. That said, instead of looking at a rule of thumb mix on allocations, the best way to look at it is with a 5 year outlook, and specifically, what net distributions from your investments do you expect to take in the next 5 years. You don't need all of that amount in bonds, but having a large part in bonds/fixed is a good way to mitigate sequence of returns risk. Then keep the rest in equities.
The logic is that the average bear market is 2.5 years, with the longest being a little over 5. So this approach allows you to stay in equities as much as possible, but protects vs sequence of returns risk. It's why rules of thumb by age allocations are not ideal - the distributions someone wants to take in the next 5 years relative to the size of their portfolio dictates the mix. Much more customized/optimized
This is a really good video for people approaching retirement. I recommend the entire thing, but starting at minute 19 is a really good example of the sequence of returns risk which he then rolls into how to manage it (which directly leads to "what should my bond mix be?")