Interesting. Several years ago, we had the highest inflation in over 40 years, and millions really suffered. Then in 2022, bonds had the worst year in 50+ years for 10-11 months, but the same group of people who scream murder now never did it in that time. So far in 2025, the SP500 is down about 10% and VGIT (treasuries) are up 3+%. For March 2025, CPI fell -0.1% and PPI fell -0.4%. Let's be patient for several more months. The SP500 made 50% during 2023-24, valuations are very high. Is there a chance that the decline this year has something to do with past performance and valuation?
According to Buffett and Bogle you never have to look for excuses and lessons. Buy and hold is an easy answer of doing nothing. Stock-picking and beating the SP500 are extremely difficult, but investment doesn't have to be all or nothing. Buffett said..."Diversification is protection against ignorance, it makes little sense if you know what you are doing." But Buffett also said that most investors use the SP500.I have a good friend who did both. In 1990 he invested $3K in 10 companies; before that and after that, he invested all his money in the SP500. 9 companies didn't beat the SP500, but MSFT made him more than 1.5 million dollars.
I based my system loosely on 3 Buffet’s rules but adapted it to funds: Rule No. 1: Never Lose Money. Rule No. 2: Never Forget Rule No. 1 and Rule 3: Diversification is a protection against ignorance. I added a fourth rule: momentum. I also liked Bogle's ideas of owning just 2-3 funds but changed it to 5 funds. My system was born in early 2000. I didn't want to own stocks, so I used funds.Basically: my generic system looks for the best 5 wide range funds with good risk-adjusted performance, keeps changing them using momentum, and each fund must perform well. You do that 2-3 times annually. The idea is to be mostly in the right category + achieve better risk-adjusted performance by looking at performance first and then selecting the best SD + Sharpe ratio funds. In 2017, I changed it from owning 5 funds to just 2-3 funds, back to Bogle's idea. BTW, Buffett said many times that most investors should use just one fund, the SP500, again, concentration and not over-diversification.The above led me to invest as follow 1995-2000: Mostly SP500 + SP500 growth
2000-2010: Mostly US Value+small cap and some International
2010-2017: Mostly US large-cap tilting growth.
2017: One year prior to retirement, invested mostly in bond OEFs since then and timing markets. Timing is another subject that isn't supposed to work, but it did great for me. That's because my portfolio is big. I don't care much about performance; I just want to beat 50/50 portfolios, but I never want to lose more than 3% and...I have done that.
The most important for me as a retiree was to have a big portfolio (now at 50+ times our annual expense) and protect our money to age 75. After that, the risk of not making it is lower. That solves LTC, basic expenses, longevity, and using annuities. For people who worry about longevity, there is a "simple" solution: deferred annuity. If you invest $100K at age 65 in a simple annuity, you get about $6K per year; if you invest $100K and start collecting at age 85, you get over $60K. That makes a lot more sense. See this site: https://www.schwab.com/annuities/fixed-income-annuity-calculator For years I was invested in 90+% in stock funds, but since retirement in 2018, it has all been in unique bond funds + avoiding all the big meltdowns. The performance is similar to stocks. It took me just 15 years to develop it. Read https://fd1000.freeforums.net/thread/3/portfolio-performance-over-years
Savings and investing can resolve many of these challenges. In 2018, I retired after just 23 years of being actively involved in the market. At that time, I set aside $500K as an imaginary bucket for long-term care (LTC) expenses for both my wife and myself, but it was never truly segregated as a separate bucket. Everything remained invested within our overall portfolio. By staying disciplined and focused, I more than doubled our money.
LTC is too expensive with too many holes.
Insurance is similar to many others. I decided to learn as much as I can about anything that deals with money because I believe in "Give a Man a Fish, and You Feed Him for a Day. Teach a Man To Fish, and You Feed Him for a Lifetime"Every 2-3 years I shop the market; every year I call my insurance and ask why? Being a longer-term insured in most cases doesn't guarantee lower rates. Reading Consumer Reports for years taught me that Amica and USAA are in the top. Amica has been much more expensive, and I can't get USAA (military). Most are pretty close. I used to have State Farm. When my kids started driving, they wanted to triple my insurance.I switched to Liberty and went thru several accidents and totals with our vehicles, and they were fatastic.
Two years ago, Liberty increased the auto insurance by 50% I switched to Allstate for only 20% increased. Six months after the switch, our house was hit by a tree, and they paid for it. That process was a lot harder and longer.
I never used an independent insurance broker. Maybe it's time to use one. I'm never sure about "independent."
From my experience, reps have been cut for years. They want you to call 800# and talk to someone who doesn't know you or care too much. The local reps who I got to know helped me with great rates and service.
Lastly, there are more auto insurances, but if you look for auto, home, and umbrella, the total amount is what I'm looking for. When I looked for Medicare Advantage, I found quickly that most are not honest and/or don't know enough. It took me months to understand it and do it myself.
Was I lucky? I knew and planned my future and most other stuff years in advance. In my teens I was thinking about the best future jobs for my skills. I knew in the 70s I wanted to work in IT. I studied IT in a tech high school and then graduated with a finance + Computer Science degrees and worked in it all my life. I immigrated to the US with almost nothing in my 30s.
Then, I learned about investing and retired in just 23 years at age 61 with a nice portfolio. The last job I had was the easiest. I hardly worked, but they paid me a full salary. Luckily, all my IT jobs paid me short+long term insurance.
I retired in 2018 and never looked back because I didn't feel bored or unproductive; after all, my new job, a retree, is the one I planned for years.
The US is the easiest way to retire among the advanced countries. I was telling my co-worker my big "secret". If you invest $1000 per month at 8% per year, you would have 1.4 million in 30 years...so why are you not doing it now? Why are you not saving even more?
Do you know that if you start saving $1000 per month at age 25 and stop after 10 years, you will have more money at age 65 than someone who started at age 35 and saved for 30 years?
What do I do in retirement? I tried card games but never liked any. One day about 15 years ago, someone offered free Bridge lessons. I'm hooked since then with this great game. I played it 4-5 times a week for about 3-4 hours each time. It's a great social and brainiac game.
The other part was staying frugal. While my coworkers bought luxury vehicles, we bought 2 new ones every 10 years from Toyota and Honda. Our house was big as theirs, but it was a much cheaper neighborhood in the same school district.
Over the years, I have been telling my kids and their friends that the future is in STEM. You can always find something that you like in that field.
One of my kids friend told me he loves to fix cars. I told him that's great; no need to go to university, but you must certify in the field. You should learn how to fix Mercedes and BMW. Why would work on cheaper vehicles?
If you have good hands, be an AC specialist or electrician, or another good-paid job BECAUSE the money is better there. Think carefully before selecting your future jobs.
BTW, my wife and I hardly ever got bonuses, stock options, or inherited anything, even the salaries were not top in our field because we decided at a very young age that working more than 40-45 hours isn't for us. Everything came from savings, investing wisely, and being frugal. We still enjoyed life doing many things, especially long travel around the world.
401K usually protects your money from creditors, civil lawsuits, and even bankruptcy proceedings.
Since I never thought I would one I did the following..
I have changed employers many times thru my career.
Every time I change jobs, I roll over my 401K to Fidelity/Schwab (Vanguard is another good choice). It's a logical choice.
I have been pondering the following for about 3 decades. I immigrated to the US with my family with just $5K which was gone in 2 months. I didn't know much about investment. After I read the book A Random Walk... I started to invest in 1995 in Vanguard indexes. My goal was one million dollars.
I told anybody I know that if you invest just $1000 per month at 8% annually, you will have 1.4 million since compounding is a huge force.
I got a lot more and retired after 23 years in 2018. It was all based on investing, never options or crazy raises, and we never had pensions or inheritance. Today, $1 million is worth a lot less than 30 years ago, but the % of people who have a $1 million dollar portfolio is still small, maybe 10%. It was one of the easiest decisions I have made in my new country.
I still ponder why many can't do it.
Congrats, we spent an extra $180K (2 new vehicles and home remodeling) in the last 2 years. We also are not going to downsize because we have a big portfolio (it's 50 times our annual expense, not including SS). We were frugal, managed our money well, and made great investment choices. It's time to spend. Many can't do it; we started doing it.
Comments
Interesting. Several years ago, we had the highest inflation in over 40 years, and millions really suffered. Then in 2022, bonds had the worst year in 50+ years for 10-11 months, but the same group of people who scream murder now never did it in that time. So far in 2025, the SP500 is down about 10% and VGIT (treasuries) are up 3+%. For March 2025, CPI fell -0.1% and PPI fell -0.4%. Let's be patient for several more months. The SP500 made 50% during 2023-24, valuations are very high. Is there a chance that the decline this year has something to do with past performance and valuation?
Post: School Is In
Link to comment from April 19, 2025
According to Buffett and Bogle you never have to look for excuses and lessons. Buy and hold is an easy answer of doing nothing. Stock-picking and beating the SP500 are extremely difficult, but investment doesn't have to be all or nothing. Buffett said..."Diversification is protection against ignorance, it makes little sense if you know what you are doing." But Buffett also said that most investors use the SP500. I have a good friend who did both. In 1990 he invested $3K in 10 companies; before that and after that, he invested all his money in the SP500. 9 companies didn't beat the SP500, but MSFT made him more than 1.5 million dollars.
Post: School Is In
Link to comment from April 19, 2025
I based my system loosely on 3 Buffet’s rules but adapted it to funds: Rule No. 1: Never Lose Money. Rule No. 2: Never Forget Rule No. 1 and Rule 3: Diversification is a protection against ignorance. I added a fourth rule: momentum. I also liked Bogle's ideas of owning just 2-3 funds but changed it to 5 funds. My system was born in early 2000. I didn't want to own stocks, so I used funds. Basically: my generic system looks for the best 5 wide range funds with good risk-adjusted performance, keeps changing them using momentum, and each fund must perform well. You do that 2-3 times annually. The idea is to be mostly in the right category + achieve better risk-adjusted performance by looking at performance first and then selecting the best SD + Sharpe ratio funds. In 2017, I changed it from owning 5 funds to just 2-3 funds, back to Bogle's idea. BTW, Buffett said many times that most investors should use just one fund, the SP500, again, concentration and not over-diversification. The above led me to invest as follow 1995-2000: Mostly SP500 + SP500 growth 2000-2010: Mostly US Value+small cap and some International 2010-2017: Mostly US large-cap tilting growth. 2017: One year prior to retirement, invested mostly in bond OEFs since then and timing markets. Timing is another subject that isn't supposed to work, but it did great for me. That's because my portfolio is big. I don't care much about performance; I just want to beat 50/50 portfolios, but I never want to lose more than 3% and...I have done that.
Post: Spreading Your Bets
Link to comment from April 12, 2025
The most important for me as a retiree was to have a big portfolio (now at 50+ times our annual expense) and protect our money to age 75. After that, the risk of not making it is lower. That solves LTC, basic expenses, longevity, and using annuities. For people who worry about longevity, there is a "simple" solution: deferred annuity. If you invest $100K at age 65 in a simple annuity, you get about $6K per year; if you invest $100K and start collecting at age 85, you get over $60K. That makes a lot more sense. See this site: https://www.schwab.com/annuities/fixed-income-annuity-calculator For years I was invested in 90+% in stock funds, but since retirement in 2018, it has all been in unique bond funds + avoiding all the big meltdowns. The performance is similar to stocks. It took me just 15 years to develop it. Read https://fd1000.freeforums.net/thread/3/portfolio-performance-over-years
Post: Dump the 60/40 and target date funds for 100% stock plus annuity portfolio?
Link to comment from February 14, 2025
Savings and investing can resolve many of these challenges. In 2018, I retired after just 23 years of being actively involved in the market. At that time, I set aside $500K as an imaginary bucket for long-term care (LTC) expenses for both my wife and myself, but it was never truly segregated as a separate bucket. Everything remained invested within our overall portfolio. By staying disciplined and focused, I more than doubled our money. LTC is too expensive with too many holes.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 14, 2025
Insurance is similar to many others. I decided to learn as much as I can about anything that deals with money because I believe in "Give a Man a Fish, and You Feed Him for a Day. Teach a Man To Fish, and You Feed Him for a Lifetime"Every 2-3 years I shop the market; every year I call my insurance and ask why? Being a longer-term insured in most cases doesn't guarantee lower rates. Reading Consumer Reports for years taught me that Amica and USAA are in the top. Amica has been much more expensive, and I can't get USAA (military). Most are pretty close. I used to have State Farm. When my kids started driving, they wanted to triple my insurance.I switched to Liberty and went thru several accidents and totals with our vehicles, and they were fatastic. Two years ago, Liberty increased the auto insurance by 50% I switched to Allstate for only 20% increased. Six months after the switch, our house was hit by a tree, and they paid for it. That process was a lot harder and longer. I never used an independent insurance broker. Maybe it's time to use one. I'm never sure about "independent." From my experience, reps have been cut for years. They want you to call 800# and talk to someone who doesn't know you or care too much. The local reps who I got to know helped me with great rates and service. Lastly, there are more auto insurances, but if you look for auto, home, and umbrella, the total amount is what I'm looking for. When I looked for Medicare Advantage, I found quickly that most are not honest and/or don't know enough. It took me months to understand it and do it myself.
Post: Home, Auto & Umbrella Insurance—“Longevity Benefit”?
Link to comment from January 25, 2025
Was I lucky? I knew and planned my future and most other stuff years in advance. In my teens I was thinking about the best future jobs for my skills. I knew in the 70s I wanted to work in IT. I studied IT in a tech high school and then graduated with a finance + Computer Science degrees and worked in it all my life. I immigrated to the US with almost nothing in my 30s. Then, I learned about investing and retired in just 23 years at age 61 with a nice portfolio. The last job I had was the easiest. I hardly worked, but they paid me a full salary. Luckily, all my IT jobs paid me short+long term insurance. I retired in 2018 and never looked back because I didn't feel bored or unproductive; after all, my new job, a retree, is the one I planned for years. The US is the easiest way to retire among the advanced countries. I was telling my co-worker my big "secret". If you invest $1000 per month at 8% per year, you would have 1.4 million in 30 years...so why are you not doing it now? Why are you not saving even more? Do you know that if you start saving $1000 per month at age 25 and stop after 10 years, you will have more money at age 65 than someone who started at age 35 and saved for 30 years? What do I do in retirement? I tried card games but never liked any. One day about 15 years ago, someone offered free Bridge lessons. I'm hooked since then with this great game. I played it 4-5 times a week for about 3-4 hours each time. It's a great social and brainiac game. The other part was staying frugal. While my coworkers bought luxury vehicles, we bought 2 new ones every 10 years from Toyota and Honda. Our house was big as theirs, but it was a much cheaper neighborhood in the same school district. Over the years, I have been telling my kids and their friends that the future is in STEM. You can always find something that you like in that field. One of my kids friend told me he loves to fix cars. I told him that's great; no need to go to university, but you must certify in the field. You should learn how to fix Mercedes and BMW. Why would work on cheaper vehicles? If you have good hands, be an AC specialist or electrician, or another good-paid job BECAUSE the money is better there. Think carefully before selecting your future jobs. BTW, my wife and I hardly ever got bonuses, stock options, or inherited anything, even the salaries were not top in our field because we decided at a very young age that working more than 40-45 hours isn't for us. Everything came from savings, investing wisely, and being frugal. We still enjoyed life doing many things, especially long travel around the world.
Post: Taking Center Stage
Link to comment from January 25, 2025
401K usually protects your money from creditors, civil lawsuits, and even bankruptcy proceedings. Since I never thought I would one I did the following.. I have changed employers many times thru my career. Every time I change jobs, I roll over my 401K to Fidelity/Schwab (Vanguard is another good choice). It's a logical choice.
Post: Love, Hate and My 401(k)
Link to comment from December 6, 2024
I have been pondering the following for about 3 decades. I immigrated to the US with my family with just $5K which was gone in 2 months. I didn't know much about investment. After I read the book A Random Walk... I started to invest in 1995 in Vanguard indexes. My goal was one million dollars. I told anybody I know that if you invest just $1000 per month at 8% annually, you will have 1.4 million since compounding is a huge force. I got a lot more and retired after 23 years in 2018. It was all based on investing, never options or crazy raises, and we never had pensions or inheritance. Today, $1 million is worth a lot less than 30 years ago, but the % of people who have a $1 million dollar portfolio is still small, maybe 10%. It was one of the easiest decisions I have made in my new country. I still ponder why many can't do it.
Post: Bet on Low Costs
Link to comment from December 4, 2024
Congrats, we spent an extra $180K (2 new vehicles and home remodeling) in the last 2 years. We also are not going to downsize because we have a big portfolio (it's 50 times our annual expense, not including SS). We were frugal, managed our money well, and made great investment choices. It's time to spend. Many can't do it; we started doing it.
Post: Living It Up
Link to comment from November 30, 2024