No one knows what the RE market will do in advance and many will be unlucky when it comes to either buying or selling a home. My experience has been different than yours, but I attribute that to luck and timing, not any skill on my part. What does affect whether or not the purchase of a home will make financial sense is how long you plan to live in it. Owning a home has a fairly long return tail and for many people, renting can be a much safer and less costly alternative than buying a home. There a lot of calculators available on line that can help identify the particular break even point for purchasing a home v. renting, but any solution is at best an estimate and will vary greatly, based on market trends and interest rates. Did I pay any attention to any of this when I bought my first home? Of course not. And, my son was no better when he bought his first house. Instead of being a rational, cold blooded decision, buying a home is often anything but.
No, but it was very expensive and continues to be as we have helped our son to buy a home. There is no single answer to why people are having less children today, but cost has to be a significant factor. AI suggests that the cost to raise a child is $300-$375K per child, but this number seems low. Send your child to a good college, maybe graduate school and help buy their first (and second?) home, and the cost quickly rises. In the 50's, families of 4+ in which only Dad was the breadwinner were common. Today, unless Dad (and Mom) has a very good income, families are much smaller. Why? There are a lot of reasons, but the simplest reason is that family incomes have simply not kept pace with the major costs (day care, education, owning a home, healthcare) that drive the cost of everyday family life.
Thanks. This is a great reminder to all of us to sit on our hands and not do anything foolish in the face of a declining market. I worked in the investment biz and when markets started to fall, we would inevitably get phone calls from clients, asking what we were going to do. The answer was in most cases was "nothing," or "very little," neither of which was much appreciated by our clients as they truly believed that we could somehow avoid losses in their accounts. The worst calls were from panicked clients who insisted that we sell all of their holdings - inevitably at the bottom of the market. Now that I am retired and the shoe is on the other foot, I can better empathize with my former clients as the fear of losing it all is a powerful force, especially as we age. Rather than do nothing, I have raised more cash to meet several years of RMD payouts and have added more to my non-US holdings, but have otherwise remained fully invested using a balanced portfolio strategy. Beyond this, I continue to remind myself almost daily to not panic and do something foolish that I will only live to regret.
Of course. Every economic cycle brings its own particular risks and anxieties, and no matter how many you may have weathered in the past, the next downturn (or current one, as it increasingly appears likely) will likely generate similar fears and concerns. When I was saving for retirement - especially as my retirement date was approaching - my fear was that everything I had saved could be wiped out and I'd be forced to keep working. It didn't happen, and we were able to retire with a nice nest egg and have enjoyed 12 good years of retirement, so far. However, the effects of a dot.com or housing crises-like downturn is never far from our minds. That said, has any of this affected our approach to investing? Only somewhat. I have raised cash to fund our RMD's for several years and have increased our exposure to non-U.S. markets a bit, but not much else. The income generated from our investments, plus SS and a small amount of pension income is enough to live on, albeit with fewer frills. Having good health insurance and no debt is also an advantage at our age.
We have raised cash in anticipation of a market decline and have more than enough to weather the usual market storm. However, the question in the back of our minds always is: is this time different? I am happy to be 10+ years into retirement and am less worried about whether our money would last than when I first retired. For those retiring now, or soon to retire, I expect their answer would be different.
Focusing on bear market dips seems like an invitation to market time. If one had simply remained invested over these time periods, the long term total returns for a 60/40 investor should be in the 8.0%+ range. The "real" return after fees (23 basis pts) and inflation (2-3%), should still provide a reasonable long term rate of return. And, if you can stand the volatility of a higher equity exposure, your comfort margin should be even greater.
Tom: I think a lot of us are having similar thoughts, and if you haven't already raised your cash levels and added to international holdings, probably should be thinking about it soon. That said, as past inflections in the market have demonstrated, the benefits of non-correlation can quickly become iffy when markets begin a serious nose dive. Finding a safe place to invest until any semblance of a market bottom has been reached can be hard. At my age (78), I am also increasingly conscious of my investment time horizon. in which I have less time to endure and then recover from a significant market decline. On the other hand, either I or my wife are likely to live for at least 10 more years, and a goodly portion of our holdings will be tied up for up to an additional 10 years in an inherited IRA. As we need to be reminded, past returns are no guarantee of future returns. That said, if you have the resources to live through a major decline, sometimes doing the minimum can also be a successful strategy.
Comments
No one knows what the RE market will do in advance and many will be unlucky when it comes to either buying or selling a home. My experience has been different than yours, but I attribute that to luck and timing, not any skill on my part. What does affect whether or not the purchase of a home will make financial sense is how long you plan to live in it. Owning a home has a fairly long return tail and for many people, renting can be a much safer and less costly alternative than buying a home. There a lot of calculators available on line that can help identify the particular break even point for purchasing a home v. renting, but any solution is at best an estimate and will vary greatly, based on market trends and interest rates. Did I pay any attention to any of this when I bought my first home? Of course not. And, my son was no better when he bought his first house. Instead of being a rational, cold blooded decision, buying a home is often anything but.
Post: The Home Ownership Gamble
Link to comment from April 11, 2026
No, but it was very expensive and continues to be as we have helped our son to buy a home. There is no single answer to why people are having less children today, but cost has to be a significant factor. AI suggests that the cost to raise a child is $300-$375K per child, but this number seems low. Send your child to a good college, maybe graduate school and help buy their first (and second?) home, and the cost quickly rises. In the 50's, families of 4+ in which only Dad was the breadwinner were common. Today, unless Dad (and Mom) has a very good income, families are much smaller. Why? There are a lot of reasons, but the simplest reason is that family incomes have simply not kept pace with the major costs (day care, education, owning a home, healthcare) that drive the cost of everyday family life.
Post: Financial regrets about parenthood?
Link to comment from April 11, 2026
Thanks. This is a great reminder to all of us to sit on our hands and not do anything foolish in the face of a declining market. I worked in the investment biz and when markets started to fall, we would inevitably get phone calls from clients, asking what we were going to do. The answer was in most cases was "nothing," or "very little," neither of which was much appreciated by our clients as they truly believed that we could somehow avoid losses in their accounts. The worst calls were from panicked clients who insisted that we sell all of their holdings - inevitably at the bottom of the market. Now that I am retired and the shoe is on the other foot, I can better empathize with my former clients as the fear of losing it all is a powerful force, especially as we age. Rather than do nothing, I have raised more cash to meet several years of RMD payouts and have added more to my non-US holdings, but have otherwise remained fully invested using a balanced portfolio strategy. Beyond this, I continue to remind myself almost daily to not panic and do something foolish that I will only live to regret.
Post: Recency Bias (or: You’re Running Buggy Software)
Link to comment from April 7, 2026
Of course. Every economic cycle brings its own particular risks and anxieties, and no matter how many you may have weathered in the past, the next downturn (or current one, as it increasingly appears likely) will likely generate similar fears and concerns. When I was saving for retirement - especially as my retirement date was approaching - my fear was that everything I had saved could be wiped out and I'd be forced to keep working. It didn't happen, and we were able to retire with a nice nest egg and have enjoyed 12 good years of retirement, so far. However, the effects of a dot.com or housing crises-like downturn is never far from our minds. That said, has any of this affected our approach to investing? Only somewhat. I have raised cash to fund our RMD's for several years and have increased our exposure to non-U.S. markets a bit, but not much else. The income generated from our investments, plus SS and a small amount of pension income is enough to live on, albeit with fewer frills. Having good health insurance and no debt is also an advantage at our age.
Post: Any concern?
Link to comment from April 4, 2026
We have raised cash in anticipation of a market decline and have more than enough to weather the usual market storm. However, the question in the back of our minds always is: is this time different? I am happy to be 10+ years into retirement and am less worried about whether our money would last than when I first retired. For those retiring now, or soon to retire, I expect their answer would be different.
Post: Any concern?
Link to comment from March 28, 2026
Focusing on bear market dips seems like an invitation to market time. If one had simply remained invested over these time periods, the long term total returns for a 60/40 investor should be in the 8.0%+ range. The "real" return after fees (23 basis pts) and inflation (2-3%), should still provide a reasonable long term rate of return. And, if you can stand the volatility of a higher equity exposure, your comfort margin should be even greater.
Post: What, Me Worry?
Link to comment from March 14, 2026
My strategy, as well: rebalance with gains, not losses.
Post: The Anatomy of a Threshold Rebalance: April 2025
Link to comment from March 14, 2026
Tom: I think a lot of us are having similar thoughts, and if you haven't already raised your cash levels and added to international holdings, probably should be thinking about it soon. That said, as past inflections in the market have demonstrated, the benefits of non-correlation can quickly become iffy when markets begin a serious nose dive. Finding a safe place to invest until any semblance of a market bottom has been reached can be hard. At my age (78), I am also increasingly conscious of my investment time horizon. in which I have less time to endure and then recover from a significant market decline. On the other hand, either I or my wife are likely to live for at least 10 more years, and a goodly portion of our holdings will be tied up for up to an additional 10 years in an inherited IRA. As we need to be reminded, past returns are no guarantee of future returns. That said, if you have the resources to live through a major decline, sometimes doing the minimum can also be a successful strategy.
Post: Sector Fund by Stealth
Link to comment from March 7, 2026