Thinking about changing investment strategies and need someone to talk me off the ledge (or not)

Spread the love
  • This topic is empty.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
  • #82463 Reply

      I am pessimistic about world economies & debt which has me wondering if we are stuck in a long term flat market.

      Here’s my situation: I’m 56 with no mortgage and $2.4M of retirement investments.

      Currently invested 60/40 global equities and bonds.

      My annual family expenses run around $100,000 and I am not currently working. I am looking at the Vanguard money market fund VMRXX which pays 5%.

      I know inflation is higher than 5%, but for the next 9 years I could collect $120,000 annually with no risk to my investments and then when I turn 65 my wife and I can collect pensions and SS worth around $80,000. So from there on, I would build wealth more rapidly.

      I can always change strategies once stocks are cheaper.

      I know this sounds like timing the market, but I am trying to decide if I want to even play the investment game any more. Seems like I could sleep easy at night if I pull my cards out of the game.

      Has anyone else bailed out of the traditional portfolio?

      #82464 Reply

        The rate of interest it’s paying now won’t last forever. I’d expect within the next few years rates will start going back down. Why don’t you just invest it in dividend paying funds or dividend stocks?

        There are plenty out there that are good stable companies that pay a good dividend. I wouldn’t put all of your savings in dividend stocks/funds but you could put a portion.

        #82465 Reply

          I struggled at the beginning of Covid when stocks tanked and I watched a large portion of our net worth evaporate.

          Had I sold when I wanted to, I’d be much worse off than I am now, as much pain as it was to see everything go down, I just stopped logging into Personal Capital to see our numbers during Covid.

          I also tried to bet against the Fed around 2008 and bought a bunch of commodities, short treasuries, etc. Let’s just say that overall that went poorly.

          It’s a struggle, but there is a saying, the Fed (therefore the market) can remain irrational longer than you can remain solvent.

          #82466 Reply

            Personally speaking….our pensions and soc sec is exactly why we are staying aggressive in equities. Keep building that wealth. And never again will I be outguessing/timing the markets.

            #82467 Reply

              “Pessimistic about world economies and debt” -> “collect pensions and SS”. How pessimistic are we talking here if you think SS and pensions stay intact?

              I play more conservatively now that I’m retired. I’d work on cutting back spending though if I was worried.

              #82468 Reply

                Using your own abilities to forecast the future is a very poorly conceived investment strategy. And this one appears to be based on the idea that the next 9 years are critical, but after that the planning is irrelevant.

                But I have seen a lot of these types of posts from amateur investors recently (sell long-term investments and go to CDs, etc.), which typically means that its exactly the wrong thing to do.

                But here’s the real truth that you need to come to grips with: YOU DON’T NEED A STRATEGY BECAUSE YOU ARE OVERSAVED FOR YOUR LEVEL OF EXPENSES, especially if your wife is working. Your real strategy is to severely underspend your assets. If you are going to be an under-spender, ALMOST ANY STRATEGY WORKS. Just keep at least 30% in equity index funds and you can shove the rest under a mattress or whatever money market you like.

                So if this makes you happy, go right ahead — its simply trivial in your case. Just don’t give yourself any credit for being a good investor and don’t think this decision ultimately matters except as to how big the inheritance pile will be when they are lowering your coffin.

                While it may be a ding to your ego, you should be just giving yourself credit for having low expenses, not for being proficient or knowledgeable at investing. But consider whether you would like to spend more in the future. Then you might actually need a strategy that allows for that.

                #82469 Reply

                  No. This is classic market timing. It’s an absolutely horrible plan.

                  Also, while I’m sure you are a perfectly smart person, you have absolutely no special insight on the global economy. None. That’s not a person attack, just a statement that you have not outsmarted the collective wisdom of billions of other humans. And to point out the obvious, if global growth really does slow to nothing, your assumption about being able to get 5% money is just absurd.

                  In areas where that happened, interest rates actually go negative and they would charge you to keep your money safe. Savings institutions can old pay out less than the average returns or else they go broke.

                  #82470 Reply

                    You assume VMRXX will pay 5% indefinitely, it can change tomorrow and almost certainly will in 9 years.

                  Viewing 8 posts - 1 through 8 (of 8 total)
                  Reply To: Thinking about changing investment strategies and need someone to talk me off the ledge (or not)
                  Your information:

                  Spread the love