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Last February, just before I retired, I was wrestling with how to generate my retirement income. I flirted with the idea of moving 25% of my portfolio into a Vanguard UK equity income fund. I thought deeply about it—the fund historically yields above 4%, and combined with an annuity I was considering, it would have nicely solved my paycheck dilemma.
Eventually I decided against it, mainly because of the concentration risk. Betting that heavily on a single economy felt like too many eggs in one basket. I kept my small 2% position in the fund and maintained my globally diversified portfolio instead.
I can’t help but notice that UK fund has been my portfolio’s standout performer over the last year—trailing 12-month returns of 34.1%. Meanwhile, the 25% I didn’t reallocate stayed in a boring global mix that returned about 12%.
It’s a classic case of “the one that got away.” Watching a fund I almost bought climb 34% while my diversified holdings plodded along is enough to make any retiree’s heart sink just a little. I wouldn’t be human if I didn’t admit that.
But looking at this strategically, my decision was actually sound risk management—and I have no regrets.
In investing, it’s tempting to judge decisions by their results rather than the reasoning behind them. A 34% return would have been fantastic, but it doesn’t retroactively make a concentrated bet “safe.” If I’d moved 25% of my portfolio into a single-country fund and the economy had tanked due to unforeseen political or economic shocks, I’d be calling that same decision reckless.
I didn’t miss a “sure thing”—I avoided a significant risk. The fact that the risk didn’t materialize this time doesn’t mean it wasn’t there. Choosing stability over speculation is the cornerstone of retirement planning.
More importantly, the experience has strengthened my confidence. Every time I’m tempted to second-guess myself when I see a hot performer, I can now ask: “Am I judging by outcome or by process?” That question alone is worth more than the 22 percentage points I “left on the table.”
No regrets—just validation that my decision-making process is sound, even when the outcomes don’t prove it…but I have to say, it’s still rather annoying.
I read your first sentence quickly and had to back up and read it again. I swear, I thought you said “Last February, before I retired from wrestling…” hahaha. I thought Whoa. Who IS this guy?!
Thanks for the post.
Actually we had a luchador who was a contributor to HD. Haven’t seen him here in quite a while.
New word unlocked: ‘luchador.’ Thanks for the mini education today!
😂
Generating income doesn’t have to mean dividends, it could be selling shares.
I totally agree. In my case, I eventually decided to time-segment my first ten years of spending with a collapsing bond ladder and a ten-year term annuity, and leave the rest of my portfolio to its own devices for the next decade. As you say, selling appreciating shares is another option. There are many ways to generate a retirement paycheck… that’s what makes personal finance interesting.
Why did you treat the decision as all-or-nothing?
It doesn’t have to be that way.
For example, if you had 60% of your portfolio in U.S. equities and 10% in international, you could have reallocated 10–20% of that U.S. portion into the U.K. or other international markets—without abandoning your overall structure.
You also didn’t have to leave the U.S. market to make a change. You could have stayed domestic and shifted from broad large-cap exposure to U.S. value.
The phrase “Choosing stability over speculation is the cornerstone of retirement planning” is often used as reassurance. But sometimes it becomes an excuse for rigidity. Non-flexible investors may ignore other asset classes for years—and eventually become unwilling to even evaluate them.
A more balanced approach might be:
Core (70–80%): Broad, diversified, long-term holdings aligned with your plan.
Explore (20–30%): Tactical tilts, factor shifts (value, small cap), international opportunities, or active managers.
You protect your foundation while allowing room for flexibility and adaptation. The key isn’t abandoning discipline—it’s avoiding rigidity.
I treated it as an all-or-nothing choice because that’s exactly what it was. I was considering rotating 25% of the portfolio into an equity income fund with a 4.25% yield—enough to cover my retirement spending needs.
This was one pathway I explored specifically for generating retirement income, and I ultimately discarded it. The point wasn’t to restructure the portfolio for any other purpose. It was narrowly focused on income generation for retirement.
Why is 20% being used for generic exploration results in restructuring?
If you are rigid, any change looks like a restructuring.
I think we’re talking past each other. Let me be concrete:
I needed £X per year in retirement income. A 25% allocation to a 4.25% yield fund would generate that £X. A 10% or 15% allocation wouldn’t—it would generate less than half what I needed.
I understand what you’re saying—that a 10-20% tactical shift shouldn’t feel like a major restructuring, and if it does, that signals rigidity. I agree with that principle. But in this specific case, the threshold wasn’t arbitrary portfolio philosophy—it was income math. Anything less than 25% didn’t solve the problem I was trying to solve.
So the choice was: commit 25% to a single-country fund (which solved the income need but created concentration risk), or find a different income solution entirely. I chose the latter because 25% in one market felt like excessive concentration for retirement capital.
That’s not rigidity—it’s risk management. If a better opportunity comes along that meets my needs without concentrated exposure, I’ll consider it. But I won’t second-guess sound risk decisions just because one outcome would have been lucrative.
Excellent perspective, and it works on the other side of the allocation transaction, too. I gifted some of a highly concentrated, low basis stock after it had grown significantly to $300 – $350. And then sold most of the remainder at $450 – $520 . . . . only to see it surpass $600. Like you, no regrets on the “derisking” rationale for the decision, but hard not to notice what you missed out on, too. I have ~20% left, though, which will likely go to my heirs with a stepped-up basis.
I have second-guessed investments never made many times. One example is Netflix. We have been subscribers for many years, and I remember thinking that it was a great business model, and would be a great investment. Looking at the chart, the stock was probably about $1 per share at the time.
Good post. In case you didn’t know, you were (almost) doing something called “resulting” – judging the quality of a decision based on outcome rather than how and why it was made. Annie Duke talks about it in her book Thinking in Bets. Good that you saw the outcome doesn’t make your decision a bad one.
“Resulting” – never heard that term before, but it makes sense and I like it. I have to admit though, even if the decision was “good” by all the rational metrics, my monkey brain is still sitting here slightly sulking about it. It seems I’m hardwired to cling to the tree that gives the most bananas, even when it’s planted right next to a snake pit!