Is It Time To Stop Investing In 100% Stocks?

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[@abr7192]

Great topic and very interesting. I’m 64 and have been aggressively invested 100% in mutual funds since 1996. This strategy has enabled me to build a $3 million portfolio. My investment strategy has always been you invest to win. Defensive strategies are investing not to lose. Bottom line, it’s a personal choice of each investor based on their risk tolerance.

[@superslyko123]

I have to laugh when they're trying to sell me DEI stocks!!!! Ahhhhh yeah, I'm investing my $$$ not for return %. 🤨

[@Lolatyou332]

I'm 100% equity but I disagree with your way of thinking.. there are plenty of times when using a mixture of asset classes is more effective than stocks especially when it comes to sequence of return risk as well as coming up to retirememt. If you don't have a large nest egg you have to be more conservative because you have to live on less and a drop in portfolio just before or at the start of retirement can be a death sentence and make you entirely dependent on SS.

[@glasshalffull2930]

I’m 64 too and have been 100% in the S&P 500 for 34 years. Retired almost 9 years ago with $1.2 million. Stayed 100% in the S&P and now my portfolio has grown to $3.44 million after withdrawing about 1.5% the last five years. I also have a pension (44% of salary) and emergency fund to last a few years if necessary. Realized as I approached retirement that my contributions of about $20K were of no consequence to “rebuild” my portfolio in a downturn. The portfolio had reached ‘Critical Mass’ and would go up and down with the market, but over the long term (hopefully decades) it would be going up the average of 10% a year. BTW- I’m the robot engineer that didn’t flinch when the market takes a big hit as it certainly will do.

[@swright5690]

Which mutual funds? S and P 500? Bond mutual funds.

[@abr7192]

@@swright5690 I invest in 2 vanguard funds: VUG (Vanguard Growth ETF), and VGT (Vanguard Information Technology ETF). I keep $350K in a brokerage account for sequence of returns risk. My portfolio is designed for at least 10 years. I am a buy and hold investor and I never invest in bonds or bond funds.

[@noreenn6976]

Good job training Molly!

[@jimbarnes4073]

Thanks for another great video! And thanks for the segment on Molly! She's awesome buddy! Jim

[@HDCybersun]

I get that we're not robots, and we tend to behave irrationally when given stressing situations like a 50% draw down in stocks but I kind of just prefer stocks. It's just super easy to set it and forget it. Just invest in the total market in a low cost fund and balance it once a year, don't ever switch it to anything else or mess with it. Have it sell what you need to live monthly, keep in the 3% withdrawal range across 12 months, which can be done automatically so you don't even need to think about it. I just want to set it and forget it and have it sell automatically what I need. If there's a black swan event I'll be prepared to get a part time job to subsidize things, last resort but it's good to keep it an option. I am in the 100% stocks forever with a 3% withdrawal rate camp. But that's also because it's easy and I already put around 36k/year into the market and will continue to do so for the next 35 years. So I expect at least to have around 7m by the time I'm done which should ideally get me through anything even if it reduces in value by 65% the first day I take retirement.

[@JarradMorrow]

Thanks for sharing your perspective 👍🏻

[@glasshalffull2930]

Awesome! I’m at the other end at age 64 and that’s what I did with a 100% S&P 500 index. I wasn’t contributing anywhere near your contributions at the beginning of my career as my salary was only about $28K, but my portfolio is at $3.44 million.

[@az21bob666]

also most peopel if there stock goes down a lot may for that year not take 4 pereent maybe 2 perecent when you do you bills you have think like go out to eat, fix yoru car every year, have fun, travel, if you investment down a lot you many not do any of that,

[@glasshalffull2930]

@@az21bob666 A significant market downturn is where your emergency fund might also be used to preserve your portfolio.

[@Alextronics]

@@glasshalffull2930congrats. I investing recently (2022) and my age is 24. It’s just the beginning ! I invest with Vanguard, FTSE All-World Index.

[@etrans09]

You are so right. Academics rarely translates well to reality, but it is great to have these thought experiments.

[@NickOloteo]

My uncle is in his mid 60s and still invests in aggressive stocks

[@parkerbohnn]

He'll lose everything and I'll stake my reputation on it.

[@NickOloteo]

@@parkerbohnn pretty sure the also has a pension since the was a cop and then city worker for decades so probably doesn’t matter. Market also at all time highs every week.

[@What1zTyme]

Ahhh yes, sweet Molly. "Who's a good girl?"

[@b4804514]

Imagine the elderly turning tricks...... nice visual Jarrad... great script. Excellent infor

[@etrans09]

LOL... you beat me to the "turning tricks" I spit some coffee out LOL 😁

[@JarradMorrow]

😂

[@cryengine_x]

you say that but i read std's are rampant in retirement homes lmao

[@paulj2948]

​@@cryengine_xI heard that as well. In The Villages in Florida at swingers parties.

[@parkerbohnn]

The shoeshine boy in 1929 gave similar advice. That was back when the stock market was a lot less overvalued than today.

[@shellys7950]

I love Molly❤ what a good girl. Interesting video. Thank you

[@JarradMorrow]

She's the best. Thanks for check out the video

[@QuadTap]

stack cold sats and chill

[@ExtraGuac007]

If someone went through Dave Ramsey's FPU, there's no chance that they will go bankrupt. It's the same with anyone that has spent decades pursuing the FIRE movement. Both will have the discipline to follow the 100% stock allocation rule without breaking a sweat.

[@paulj2948]

Turning tricks is tax free retirement income. Doesn't go against IRMAA or increase your taxable social security income either.

[@JarradMorrow]

A little money under the table never hurt anyone

[@DB-xp9px]

if not for sequence of return risk and being able to shield yourself emotionally from a big pullback in the market, i think most would remain 100% stocks. i would anyway but not being up 1/2 the night worrying is worth pulling 25% into something very conservative, rebalancing annually.

[@mjs28s]

100% stocks, not tapping principal. Only spending part of the dividends and reinvesting what I don't spend each month which makes the rising dividend income stream climb even faster. Just start with a first year yield of 4% and then you never have to touch principal so price movements are a non-issue.

[@alanross2243]

Another way to think about this is that your allocation can change over time. Just like expenses change. So I’m really close to retirement but I’m going to be a bit more conservative the first few years prior to social security. I’ll set aside living expenses for a few years in something stable. Once SS starts I’ll get more aggressive because I won’t need as much from the portfolio. Instead I want it to grow for legacy. You just need to get thru the first few years until all your income streams are in place. Then get more equity.

[@JarradMorrow]

I like that strategy. Thanks for sharing your thoughts.

[@lmelior]

I've only recently heard about the "bond tent" strategy to protect against sequence of return risk, which sounds pretty close to what you're talking about. I kind of like the idea of piling into bonds before retirement and drawing down those funds first without rebalancing, allowing your allocation to grow more aggressive naturally both from selling bonds and (hopefully) the higher growth of equities.

[@carmenpardo6900]

Great video as always. I am retired, 74 and transferred my TSP to Vanguard two years ago, since then I have 100% invested in money market because I thought stocks were overvalued at that time, but stocks continue to go up every day. I want to invest 50% in VOO, should I do it all at once? I still feel very nervous. My social security, RMD, and pension cover all my monthly expenses. At TSP, I invested 50/50 C fund and G fund and was very happy with that allocation. Thanks for any comments!

[@andrewkingdon2000]

I've heard a suggestion that states you should segregate the pension into investment money and spending money. The theory goes that if you have a section of the fund in safer assets and that covers you for about 5 years you simply draw that down and top it up if the stocks part does well. If not just wait for stocks to recover. 5 years is considered sensible as the markets nearly always recover within 5 years so you let one part ride the waves (and rise on average) while living off the other less volatile part. Just remember to top up the safe part when the stocks part rises.

[@dukeu78]

I'm new to investing and am dollar-cost averaging on a monthly basis into various growth, dividend and broad-based ETFs, but also some tech sector ETFs, too, such as SMH, AIQ, etc. I'm wondering if, at least while I'm building up my portfolio, I should invest more into the higher growth areas (I'm particularly high on SMH) before they go too high? Basically, my reasoning is SMH and QQQM, for example, are likely to outperform the S&P 500 and the various Dividend ETFS like SCHD, so I'm thinking to buy as much of the growth now and then can jump into the slower growing assets in a couple years. Thoughts?

[@duc1198s]

This has been a topic on my mind for a couple of years now. I've done countless simulations in different retirement tools including Monte Carlo analysis, etc. I can never convince myself that bonds are the way to go as part of the my portfolio; in no case does a bond mix do better than all stocks. A key thing in my mind is to have enough cash on hand to get you through any bumps in the market. With a bit of planning, that's not that difficult to achieve.

[@KENTOSI]

Yeah same. I don't see the point in bonds when you can just have emergency cash built up for a while, and invest the rest aggressively in stocks.

[@glasshalffull2930]

Some advisors lump bonds and cash together as they do their analysis. If you’ve got that emergency fund built up, your stock portfolio can withstand big corrections.

[@AT-hs9nf]

Spot on. I am planning to keep 300k cash in high yield account at any given time once i retire. And rest fully in stocks. 5% in bonds just for fun 😂.

[@BrianNC81]

Thoughts about tossing a large chunk in a covered call ETF like JEPQ/JEPI and live off the monthly dividend premium?

[@Antandthegrasshopper]

I have 20-30% in JEPI/JEPQ.. they haven’t done much of appreciation however I get juicy monthly Divs!

[@justthebrttrk]

These funds limit upside. That's pretty dangerous especially for a longer than standard retirement

[@BrianNC81]

@@justthebrttrk maybe a 50/50 split putting the other half in growth like VTI?

[@mattjaco81]

Replace bonds with value / dividend driven etf’s. Dependable yield with less downside than aggressive stocks and bigger upsides than bonds.

[@johnurban7333]

Why use the 4% rule. Just take out what you need for the month. Been doing it for years and it’s been just fine. That way your money stays invested. I’m glad my advisor lives in my head

[@tomaszp2027]

I guess you're saying "below 4%" or "below 4% on average", that makes sense. You can also cut costs / e.g. skip vacation in a bad year.

[@kylen6430]

Yeah, defining withdraw rate as 4% regardless of need is a bit backwards. The 4% rule is used to determine what amount you will likely need. Portfolios that drawdown 4% per year are statistically likely to outlive its owner through retirement. But yes, if you don’t need to withdraw 4%…don’t.

[@eddiemalvin]

I've always translated the "4% rule" to mean "not to exceed 4%". We have other sources of semi-passive income so our target withdrawal rate for our investment and retirement accounts is 0% (until RMD kicks in).

[@kylen6430]

@@eddiemalvin the 4% rule is just to predict future portfolio size requirement. Your personal and specific variables are going to determine what the withdrawal rate actually is

[@johnurban7333]

@@eddiemalvin Good point

[@ryanevans4533]

I enjoy listening to all his videos, but anyone else want to know what he eats day to day and his lifting routine?

[@MC-gj8fg]

I would be 100% stocks up until I approached retirement. However, while in retirement, a 100% stock portfolio could be exposed to sequence of returns risk. If a retiree has sufficient income in retirement not connected to the market to cover their monthly liabilities during a bear market this may not be an issue, but if they don't market a downturn could be especially damaging.

[@DK-pr9ny]

I think Molly ran away after that release lol.

[@nicksmith8141]

I've seen significant drops in my portfolio over the past 5 years. I just increase my contributions during those times. Not a big deal.

[@glasshalffull2930]

May I ask what you are invested in? Hard to believe your portfolio is down as the last five years have been great, even with 2022, for the overall US market.

[@nicksmith8141]

@glasshalffull2930 I've temporary big drops in my portfolio in which I didn't sell. Should have clarified... I've averaged 34% per year returns since 2020. My largest individual holdings since 2020 are Nvidia, AMD, Costco, VISA, Chevron, Apple and Amazon.

[@glasshalffull2930]

@@nicksmith8141 Got it! I thought you might be holding a lot of individual stocks. Through my employer I always contributed to the 401K, but when I was younger I did buy individual stocks, but most of these were for short time frames. Certainly, not day trading, but stocks that were expected to make big moves within a year. It was too stressful on me and so I just stuck with the 401K and went 100% S&P 500.

[@withzyou]

What happened the last 8 months was traumatic for people in cash

[@kathy1501]

What about 60% bitcoin 40% stocks?? I want to see that study!

[@parkerbohnn]

50 percent gold 40 percent Bitcoin and 10 percent short stocks.

[@DK-pr9ny]

😂

[@MrJeffgonz]

💯🙋‍♂️

[@bgt54rfvcde32wsxzaq1]

Molly needs to start picking stocks 😅😂

[@xaxb4178]

Instead of "Winter is coming", I think it is more like the Black Swan is coming.

[@user-un6pu1zd5s]

Buffett said 90/10 and that’s what I’m sticking with.

[@daxenraxen8362]

I believe that was his brokers instructions for his wife after he passes. But, she can live off just the 10%. If you have more than you need during retirement, then 90/10 should be considered.

[@az21bob666]

he could live after .1 percent. i mean he has a 100 billion dollar, 1 percent of that is a billion dollars

[@mattball2700]

Jarred, why have you stopped working out? ;-)

[@swright5690]

Naw. Check out the tricep bulge on the right arm.

[@MrTedTederson]

Does thir take dividends into account? It's possible to have a portfolio 100% in div stocks to whetr you don't need to sell shares. My parents are retired and do this. They get about $70k a year in divs which along with ss is plenty for them to live comfortably on.

[@justthebrttrk]

Dividends aren't relevant. All that matters is your total portfolio return.

[@MrTedTederson]

@justthebrttrk my point is if you make enough in dividends you don't need to sell off a chunk of your portfolio to live on. Dividend investors don't need to watch their portfolio go to zero in down market periods.. so long as coke and pepsi and caterpillar and Microsoft continue to pay dividends ... you don't need to touch your portfolio's value at all.

[@JarradMorrow]

You do understand that dividends aren’t free money, right? Which means they come from somewhere. The money to pay dividends comes out of the company’s bank account. When money leaves the bank account of a business the value of the business drops by that exact same amount (the value of your share of the stock drops AKA your portfolios value is “touched”). Dividends are another form of selling shares except they’re forced by the company whether you need the money or not. No offense, but whoever taught you about dividends either doesn’t understand them or they’re intentionally leaving this out to make dividend investing look better.

[@justthebrttrk]

@@MrTedTederson whether or not you have to sell shares to fund your retirement or lifestyle isn't relevant. Maybe you feel better holding a bunch of dividend stocks, and that's fine. But the research is pretty clear that there is no functional difference between selling shares and collecting a dividend. Depending on the length of your retirement, those "boomer stocks" (as I like to call them) may not have the growth to get you to the end of your plan. Dividends do not protect you from portfolio downside or market crashes simply because they pay dividends. Sure, it's unlikely that Coca Cola or other dividend payers are going to go to $0 in a market crash, but that isn't BECAUSE they pay a dividend, it's because they're an established company with a long track record of consistent profits. BUT those types of companies also often don't have the type of long term growth opportunity that you need in order to keep your spending power consistent throughout retirement.

[@user-fe8vj3ge1s]

My plan is SCHD at 3.5 percent dividend that are qualified so very low tax. Then watch your principal grow by the historical avg of 10%

[@MrProsat]

Nothing wrong with being aggressive, but 100% stocks is foolish - when if you need money during a down market? Better to have a small amount that you could live on/supplement income to ride out the bad markets.

[@supreme5998]

5% of my stocks for Molly.

[@JarradMorrow]

😂👍🏻

[@tonycardazzi6301]

Mom tells me she still loves you 😉

[@JarradMorrow]

😂😂

[@JoeSoCal2303]

Remove the risk and invest in dividend stocks & dividend etfs so you never have to touch the principle. Not only do you never have to take out the principle so you cant run into issues, but if the dividends are ever not enough you could start to sell the principle. I get about 4k in dividends in my 401k per year, 400 per year in my HSA, 650 in my roth and 450 in my brokerage or about 5,500$/year. Still have 25 years left to invest and because of RMDs on the 401k i will have to touch the principle on that but the rest i should be able to never touch the principle. We'll see how it goes!

[@QUEENSBRIDGE_10TH_ST231]

The number one rule of investing is to not lose money. As long as you’re making decent yields that outpace inflation you’re a successful investor. Speculation leads to soul crushing losses.

[@parkerbohnn]

The tortoise always beats the hare and everyone in stocks will of course and as history always rep4eats itself will lose everything while me in bonds and gold live like a king.

[@mikewhitaker8496]

Nah---totally disagree--will keep making a killing in my inflation adjusted bonds. ETFS--absolutely. Stocks---over valued and only one way to go--plus it's totally corrupt with counterfeits and naked shorts. Ponzi scheme--look what other countries are doing with naked short selling.

[@russellhunter8460]

Schd is the "bond" in a portfolio Safer than most, provides growing dividends year over year. However things like jepq and cefs like gof and csq are definitely a better alternative to bonds or even Schd.

[@dh2profit]

That’s fine for the last 40 years. Now show your chart using what the next 40 years will be like.

[@JarradMorrow]

Great point

[@kona6451]

Bonds are for suckers

[@bonanzatime]

Nice try, Punky Brewster, trying to assert yourself😂

[@kens805]

Bonds are boring.

[@user-hk4lc2wf8e]

So which portfolio better?

[@glasshalffull2930]

Stocks if you have the intestinal fortitude to not panic sell on a big downturn and you have an emergency fund to cover the downturn.