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Twerk from Home posted:What kind of asset allocation are you guys running in Hell world 2020, and does anyone have reasoning behind it? Some coworkers who I know are planning early retirement were ridiculing the idea of owning anything but domestic equities. I was surprised and asked for more info, and yes they are literally 100% S&P index in all accounts, retirement & taxable. It depends on your age and risk tolerance. I am 34 (not planning to retire particularly early or anything) and I am 60% US Equities, 30% International and 10% Bonds across all my accounts (401 k, Roth IRA, and taxable).
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Feb 21, 2020 14:05
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^^^ same age, same allocationPollyanna posted:Not gonna lie, it’s a bit alarming to see a large chunk of your paycheck missing from your bank statement, even if it is going to your retirement now. But if you add your new takehome + retirement contributions, you get a greater number than your original takehome!
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Feb 21, 2020 14:08
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Pollyanna posted:Not gonna lie, it’s a bit alarming to see a large chunk of your paycheck missing from your bank statement, even if it is going to your retirement now. The best is yet to come. There will be a day where you look at your paycheck and suddenly realize that you don't even miss that money, having forgotten that it was ever gone in the first place. Even better is the day you start a new job and are mad that your first paycheck is too big because that they haven't had time to process your retirement election.
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Feb 21, 2020 14:37
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Pollyanna posted:Not gonna lie, it’s a bit alarming to see a large chunk of your paycheck missing from your bank statement, even if it is going to your retirement now. Yes, but if you have all your savings and expenses squared up then your paycheck is just guilt-free play money.
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Feb 21, 2020 14:49
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Twerk from Home posted:What kind of asset allocation are you guys running in Hell world 2020, and does anyone have reasoning behind it? Some coworkers who I know are planning early retirement were ridiculing the idea of owning anything but domestic equities. I was surprised and asked for more info, and yes they are literally 100% S&P index in all accounts, retirement & taxable. I'm equities and cash, maintaining a pretty heavy emergency fund in a high yield savings account and putting everything else into stock index funds. My U.S/international split is ~75/~25 and I hold only developed market international, no emerging market. I don't trust emerging markets, I do not believe the additional risk of holding them will ever be commensurately rewarded. You could honestly do a lot worse than S&P500 + cash and if you include international you probably will 
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Feb 21, 2020 14:51
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Twerk from Home posted:What kind of asset allocation are you guys running in Hell world 2020, and does anyone have reasoning behind it? 100% Equities in both retirement and taxable because no mods no masters. In retirement I'm 80/20 domestic/foreign though. All index funds.
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Feb 21, 2020 15:09
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70/20/10 because your asset allocation should be independent from how Hellworld everything is.
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Feb 21, 2020 15:12
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69/21/10 because I’m a child
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Feb 21, 2020 15:26
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Fhqwhgads posted:100% Equities in both retirement and taxable because no mods no masters. In retirement I'm 80/20 domestic/foreign though. All index funds. Exactly this.
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Feb 21, 2020 15:27
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totalnewbie posted:Yes, but if you have all your savings and expenses squared up then your paycheck is just guilt-free play money. It also brings into light your actual expenses. Jesus, I need to redo my budget.
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Feb 21, 2020 15:39
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Democratic Pirate posted:69/21/10 because I’m a child
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Feb 21, 2020 15:46
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48 domestic 32 international 10 reit 10 bond
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Feb 21, 2020 15:57
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I think my retirement funds are 85/15/0, but I keep all of my emergency fund in bonds.
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Feb 21, 2020 16:28
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Wait, so even the emergency money should be in Vanguard? I thought that should be accessible in your bank account if necessary? Also, is the emergency money 6 months of pre-tax monthly pay, or post-tax monthly pay? I set aside 6 months of monthly pre-tax pay.
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Feb 21, 2020 17:06
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Pollyanna posted:Wait, so even the emergency money should be in Vanguard? I thought that should be accessible in your bank account if necessary? Your e-fund should be 3-6 months of your expenses.
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Feb 21, 2020 17:09
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Ohhhhhhhhh. Okay. Got it! I’ll make some adjustments.
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Feb 21, 2020 17:10
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Yeah the goal is if your job disappears, you want a cushion where you don't need to withdraw from markets (that might be down at the moment) while you search for something else, and the usual 3-6 months is a common recommendation, obviously depends on your risk tolerance, job stability, job replacement ability.
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Feb 21, 2020 17:13
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Pollyanna posted:Not gonna lie, it’s a bit alarming to see a large chunk of your paycheck missing from your bank statement, even if it is going to your retirement now. Last year when I was making up ground on my 401k and espp my net pay for 5 or 6 months was $0. You get used to it after a while. It's also why having a strong emergency fund is key, it let's you be flexible in how you allocate cash flow. Getting a paycheck again was pretty fun! I'm back in the same boat now but my espp is full as of this paycheck, assuming that I did the math right. I haven't reviewed the stub yet.
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Feb 21, 2020 17:25
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Wait, 3-6mo of expenses for emergency money doesn’t make sense. rear end in a top hat medical bills go for tens of thousands at a time. What happens then?
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Feb 21, 2020 17:27
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My favorite part about my paycheck is seeing all of the different accounts go up. My checking account stays at basically the same place and only matters to me enough to make sure I can make my rent payment and credit card bill (paying off the last statement balance, not rolling charges).Pollyanna posted:Wait, 3-6mo of expenses for emergency money doesn’t make sense. rear end in a top hat medical bills go for tens of thousands at a time. What happens then? Hoodwinker fucked around with this message at 17:30 on Feb 21, 2020 |
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Feb 21, 2020 17:27
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Who says insurance will always cover you?
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Feb 21, 2020 17:31
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Pollyanna posted:Who says insurance will always cover you?
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Feb 21, 2020 17:34
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Pollyanna posted:Who says insurance will always cover you? You can't prepare for literally everything, not in this hellhole society. You just do what you can, and be ready for enough so that small and medium emergencies don't wreck your ability to save (i.e. make you pull money out of markets during a downturn)
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Feb 21, 2020 17:34
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Pollyanna posted:Who says insurance will always cover you? Sell some bonds then?
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Feb 21, 2020 17:37
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Pollyanna posted:Who says insurance will always cover you? Crippling debt from a normal emergency / injury with corporate insurance is unlikely. It might be a fight with the insurer but your out of pocket max is a good target. Cancer all bets are off but you couldn't possibly save enough to cover that without being wealthy to start. Medical bills are also very flexible on payment terms because of how hosed up the system is. Don't worry about it. Odds are in your favor here.
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Feb 21, 2020 17:37
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Pollyanna posted:Wait, 3-6mo of expenses for emergency money doesn’t make sense. rear end in a top hat medical bills go for tens of thousands at a time. What happens then? As others have said, you can't plan for everything. rear end in a top hat medical bills are relatively rare (but not rare enough  ), and honestly if you get to the point where 3-6 months of expenses can't cover it, you're in some pretty deep poo poo. And again as mentioned, generally medical bills are easier to negotiate reductions and/or payment plans for. It's generally understood that they're not strictly your fault, and hospitals would MUCH rather recover some portion of that money instead of selling it off to collections and getting pennies on the dollar (edit: not to say that some hospitals won't be dicks about it and sell your rear end off to the highest bidder if you're 1 day late, but most aren't like that).The 3-6 month emergency fund is there to guard against more likely occurrences, like unexpected car/house repairs or a job loss. DaveSauce fucked around with this message at 18:00 on Feb 21, 2020 |
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Feb 21, 2020 17:57
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More food for my VFIAX then, I suppose.
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Feb 21, 2020 18:12
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Democratic Pirate posted:69/21/10 because I’m a child Holy poo poo lol  69 domestic 21 international 10 G fund which I'm considering my bond allocation
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Feb 21, 2020 18:26
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33% Target 2045 67% VFIAX
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Feb 21, 2020 19:37
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Does anyone just go with something like VTWAX? Looks to be about 60% domestic right now.
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Feb 21, 2020 19:39
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All my Target 2055 (that’s for retiring at 65 right? Should I change that to 2045 instead if I was born in 1990?) are in Rollover or Roth IRAs, and my non-IRA funds are considered “not retirement” as I answered in the Vanguard questionnaire when I made them, so they’re VFIAX. Should I have changed that? Should I be using Target 2045 instead?
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Feb 21, 2020 19:45
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Pollyanna posted:All my Target 2055 (that’s for retiring at 65 right? Should I change that to 2045 instead if I was born in 1990?) are in Rollover or Roth IRAs, and my non-IRA funds are considered “not retirement” as I answered in the Vanguard questionnaire when I made them, so they’re VFIAX. Should I have changed that?
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Feb 21, 2020 19:46
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I assume it’s not as simple as “I wanna retire at 55 instead of 65 so choose 2045”.
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Feb 21, 2020 19:48
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Pollyanna posted:I assume it’s not as simple as “I wanna retire at 55 instead of 65 so choose 2045”.
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Feb 21, 2020 19:53
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I would argue that if you are retiring early you need your money to last longer and probably should be more aggressive. So 2065 would be better at this point. Although you will need to look at your savings rate and how your returns are doing and adjust up/down based on how on track you are.
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Feb 21, 2020 19:58
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88 swtsx, 10 swagx, 2 gbtc
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Feb 21, 2020 20:19
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Doghouse posted:88 swtsx, 10 swagx, 2 gbtc quote:i’m about 1/3 index fund (VIIIX) through my 401k, 1/3 tesla (wasn’t always 1/3, this is just because of the stock price growth), and 1/3 high-dividend stocks through my roth ira.
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Feb 21, 2020 20:34
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Remember that asset allocations aren't purely "how much money you want to make" - what you are doing is sacrificing some potential earnings (of a 100% equities position) to reduce your volatility risk (bonds are less volatile than stocks) and concentration risk (more diversified = less concentration risk). The closer you are to retirement, the more that volatility has a chance of screwing up your retirement plans, and the more concentrated, the more a single unfortunate event can blow you away. And people who just say "well I'll just work longer in that case" are discounting the increasingly high chance that as they age they will develop medical problems that prevent them from being able to work, or at least, work full time in their chosen profession. BUT if you're trying to retire early, that health risk drops substantially, and you're maybe back to "well I wanted to retire at age 50 but I was 90% equities and a recession hit when I was 45, so I guess I'm working for a few years past age 50 while I wait for the market to recover" and if you're OK with that - like, genuinely you'll be able to hold firm and not sell your stock positions at the bottom of the market - then maybe it's OK to keep an allocation that is more exposed to volatility risk. The domestic/international split is similar, in that international is considered to be more volatile but potentially have higher returns. Secondarily, spreading to international and bonds is supposed to increase diversity, which reduces your exposure to concentration risk. However, in recent decades it sure seems like bonds and international stocks are pretty highly correlated to domestic stocks, e.g. when the US economy goes down usually the global economy also goes down. Nonetheless you can improve your diversification without costing yourself much or any performance by having some international, so why not? On that basis alone I'd argue nobody should be 100% S&P500; a 90/10 split domestic/international barely affects performance (or might even enhance it) while possibly giving you some buffer against a purely-domestic downturn. For my own part, I've always had an allocation in bonds as well, even when I was younger. I don't think it's made a huge difference in my long-term performance. I'm now 45 years old and I'm 25% bonds as of two years ago. That's considerably more conservative than the average Goon, but still lower than the old rule of thumb "your age in bonds" that used to be the advice when I started saving for retirement over 20 years ago. I'm not planning to retire early: it could happen if both my wife and my parents die in the next ten years, which could lead to an inheritance that would put us around a decade ahead on our retirement savings, but I really hope they don't. We don't have kids, I own a house with enough equity that my equity is equal to about 80% of my retirement portfolio, and I consider that quite a large concentrated exposure that I "balance" a little by being a little overweight bonds in my portfolio. I think this kind of analysis is important and just reporting your domestic/international/bonds ratios with no other information is basically useless for other people - nobody should base their own allocation decisions on that kind of info because portfolio balance has to be based on a lot of these factors, most especially your age but also your health, other assets like a home, likelihood of inheriting more, cost of living locally vs. where you want to retire, and of course your personal tolerance for risk. Leperflesh fucked around with this message at 20:38 on Feb 21, 2020 |
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Feb 21, 2020 20:35
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Adding to what Leperflesh said, there's the concept of the "Efficiency Frontier" (which I won't go into deep detail here) for why you would want to mix in some other asset classes beyond just domestic equities. Even something as small as 10% bonds can have a measurable reduction in your overall risk profile without much effect on your returns. The reason you would do this is that since you can't predict returns, but you can calculate risk profiles, that controlling your risk profile is a great way to reduce volatility - which also has a measurable impact on your rate of return.
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Feb 21, 2020 20:42
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Leperflesh posted:I'm now 45 years old and I'm 25% bonds as of two years ago. That's considerably more conservative than the average Goon, but still lower than the old rule of thumb "your age in bonds" that used to be the advice when I started saving for retirement over 20 years ago. I'm pretty similar, and the same age. I'm 65/15/20 and have been for quite a while. The next time I'm rebalancing I'm going to think very hard about the international portion, and some of it will likely end up going to bonds. Leperflesh posted:I'm not planning to retire early I'm not either, but I want the option as soon as possible, because I will certainly change what I'm actually doing for work.
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Feb 21, 2020 20:47
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