I'm a three-fund portfolio disciple (total US stock, total international stock, total US bond index funds). But I have a friend who's worked in tech for the last decade and he's invested religiously in Microsoft and a couple other large tech companies. While I don't agree with his strategy, he's in a much better position than someone who doesn't invest at all. I also respect that he's continued to invest in these same companies through ups and downs, removing some of his "luck" through dollar cost averaging.
I agree and don't think this idea gets enough attention. The standard analysis is always chance of success based on a static withdrawal rate throughout retirement. I'm more interested in my chances of success assuming a higher initial withdrawal rate (i.e. 5%) in the first ten-ish years of retirement, as this could be when you are bridging the gap between retiring and collecting social security. Then, after you begin social security, the withdrawal rate could be adjusted downward to 3-4%. This is what I want analysis for. I suspect many have worked longer than they needed, targeting 4% as a must-have number to acquire before they retire. But could they have retired with an initial 5% withdrawal rate, if they were willing to adjust it downward later?
I also had a problem with binge drinking. I had to take responsibility and face the consequences of behavior I engaged in while drunk and this led me to never want to be drunk again. It's been a year and a half since I've been drunk. I never drink alone anymore. I only drink on rare celebratory occasions like holidays or reunions alongside family or friends, and I never drink more than two drinks. In advance of these occasions, I remind myself of my limit and take other "fun" beverages like seltzer, diet soda, etc. to mix in among my two alcoholic beverages. I also don't put myself in situations with people where there is an expectation of everyone drinking for sport, like taking shots, drinking games, etc. It requires a lot of forethought and as I age, I may eliminate drinking altogether.
I live on the East Coast and am jealous of all the Bureau of Land Management (BLM) land the Western US has to offer. I believe the widespread and free, dispersed BLM camping options allow you to stay at a site for up to 14 days before needing to move on. In retirement, I imagine traveling the West in a well-equipped van, camping at BLM land for months at a time, with a small home base like yours to return to when I grow tired of the road.
As with many things in life, the decision to leave or stay in an unhappy marriage is rarely black and white, even if infidelity has occurred. As you point out, there may be financial concerns for a low or no-income spouse. More importantly, maintaining a stable home environment for young children complicates this choice greatly. Maybe this is why "grey divorce" is such a popular option.
Regarding point #2, I'm not sure the performance needs to be similar for these two asset classes. US multinationals can incorporate the benefit of large-cap international and still exceed in performance based on its own unique merits. Allocating 40% International in one's stock portfolio is difficult to argue against, because that's what the world markets tell us is appropriate. Yet, I don't think it's wrong to view the US as exceptional and to overweight this to one's preference. To point #5, you're right to call out the irony of our tendency to balk at overweighting certain pockets of the US market (value, small, etc) while behaving similarly by overweighting US over International. Yet, we all have our own quirks to how we tilt certain asset classes. I believe your own portfolio - outside of your world funds - includes tilts to value assets in both domestic and international stocks. Personally, I don't take issue with tilts so much as I do with massive overweighting or investing solely in certain asset classes (dividends only, value only, etc.). If we were perfect indexers, what about Alternatives? Some may view Gold and the like as unnecessary, and have a visceral reaction to something like Crypto, despite the crypto market capitalization currently sitting at $3.38T. That's not the behavior of a "perfect indexer," but in my opinion, that's ok.
I don't think where one keeps the cash should matter, whether that is in a taxable account, a tax-advantaged account, or an account that happens to also contain stocks and bonds. I agree that holding cash simply for "dry powder" to invest during market declines is not a good use of cash, as the opportunity cost for holding too much cash is probably greater than the potential return one could have received for purchasing stocks on sale.
I'm not against dividend-paying stocks and I think you make a great point that some companies best use of excess capital is to pay a dividend. But I'm not going to focus on or exclusively own dividend-paying stocks, ignoring companies who don't pay dividends because, as you mention, companies can have perfectly valid reasons for re-investing excess cash into their companies. I think it is this approach that many advocate for - overweighting dividend-paying companies - which many like myself take issue with. I don't mean to say I'm passionately against this. To each their own. But I've heard others' reasons for it, and I remain unconvinced.
Comments
I'm a three-fund portfolio disciple (total US stock, total international stock, total US bond index funds). But I have a friend who's worked in tech for the last decade and he's invested religiously in Microsoft and a couple other large tech companies. While I don't agree with his strategy, he's in a much better position than someone who doesn't invest at all. I also respect that he's continued to invest in these same companies through ups and downs, removing some of his "luck" through dollar cost averaging.
Post: The unskilled investor can be lucky – by RDQ
Link to comment from January 24, 2025
I agree and don't think this idea gets enough attention. The standard analysis is always chance of success based on a static withdrawal rate throughout retirement. I'm more interested in my chances of success assuming a higher initial withdrawal rate (i.e. 5%) in the first ten-ish years of retirement, as this could be when you are bridging the gap between retiring and collecting social security. Then, after you begin social security, the withdrawal rate could be adjusted downward to 3-4%. This is what I want analysis for. I suspect many have worked longer than they needed, targeting 4% as a must-have number to acquire before they retire. But could they have retired with an initial 5% withdrawal rate, if they were willing to adjust it downward later?
Post: Reality Check
Link to comment from January 19, 2025
I also had a problem with binge drinking. I had to take responsibility and face the consequences of behavior I engaged in while drunk and this led me to never want to be drunk again. It's been a year and a half since I've been drunk. I never drink alone anymore. I only drink on rare celebratory occasions like holidays or reunions alongside family or friends, and I never drink more than two drinks. In advance of these occasions, I remind myself of my limit and take other "fun" beverages like seltzer, diet soda, etc. to mix in among my two alcoholic beverages. I also don't put myself in situations with people where there is an expectation of everyone drinking for sport, like taking shots, drinking games, etc. It requires a lot of forethought and as I age, I may eliminate drinking altogether.
Post: Why I Don’t Drink
Link to comment from December 31, 2024
My strategic Bitcoin reserve has more than doubled this year. To any fellow Bitcoin investors: HODL.
Post: Worth Repeating
Link to comment from December 29, 2024
I haven't but I really enjoyed the movie.
Post: My Humble Abode
Link to comment from December 18, 2024
I live on the East Coast and am jealous of all the Bureau of Land Management (BLM) land the Western US has to offer. I believe the widespread and free, dispersed BLM camping options allow you to stay at a site for up to 14 days before needing to move on. In retirement, I imagine traveling the West in a well-equipped van, camping at BLM land for months at a time, with a small home base like yours to return to when I grow tired of the road.
Post: My Humble Abode
Link to comment from December 18, 2024
As with many things in life, the decision to leave or stay in an unhappy marriage is rarely black and white, even if infidelity has occurred. As you point out, there may be financial concerns for a low or no-income spouse. More importantly, maintaining a stable home environment for young children complicates this choice greatly. Maybe this is why "grey divorce" is such a popular option.
Post: Price of Playing
Link to comment from December 3, 2024
Regarding point #2, I'm not sure the performance needs to be similar for these two asset classes. US multinationals can incorporate the benefit of large-cap international and still exceed in performance based on its own unique merits. Allocating 40% International in one's stock portfolio is difficult to argue against, because that's what the world markets tell us is appropriate. Yet, I don't think it's wrong to view the US as exceptional and to overweight this to one's preference. To point #5, you're right to call out the irony of our tendency to balk at overweighting certain pockets of the US market (value, small, etc) while behaving similarly by overweighting US over International. Yet, we all have our own quirks to how we tilt certain asset classes. I believe your own portfolio - outside of your world funds - includes tilts to value assets in both domestic and international stocks. Personally, I don't take issue with tilts so much as I do with massive overweighting or investing solely in certain asset classes (dividends only, value only, etc.). If we were perfect indexers, what about Alternatives? Some may view Gold and the like as unnecessary, and have a visceral reaction to something like Crypto, despite the crypto market capitalization currently sitting at $3.38T. That's not the behavior of a "perfect indexer," but in my opinion, that's ok.
Post: Stuck at Home
Link to comment from November 23, 2024
I don't think where one keeps the cash should matter, whether that is in a taxable account, a tax-advantaged account, or an account that happens to also contain stocks and bonds. I agree that holding cash simply for "dry powder" to invest during market declines is not a good use of cash, as the opportunity cost for holding too much cash is probably greater than the potential return one could have received for purchasing stocks on sale.
Post: What should be our % cash allocation in investment portfolio?
Link to comment from November 8, 2024
I'm not against dividend-paying stocks and I think you make a great point that some companies best use of excess capital is to pay a dividend. But I'm not going to focus on or exclusively own dividend-paying stocks, ignoring companies who don't pay dividends because, as you mention, companies can have perfectly valid reasons for re-investing excess cash into their companies. I think it is this approach that many advocate for - overweighting dividend-paying companies - which many like myself take issue with. I don't mean to say I'm passionately against this. To each their own. But I've heard others' reasons for it, and I remain unconvinced.
Post: Don’t Dis Dividends by Jonathan Clements
Link to comment from November 8, 2024