Is a 100% Stock Portfolio in Retirement a GOOD or BAD Idea? 📈 📉

[@Will67267]

I consider my pension and social security as bonds, so I’m 90% stocks , 10% cash. It works for me.

[@TheFirstRealChewy]

Same!

[@kcanyon9108]

@@TheFirstRealChewy Same here.

[@Joe-lb8qn]

Same !

[@AEVMU]

Bonds don't buffer portfolios as much as people think. Most of the actual buffering is more so that you have less stock, than it is the bonds, IE, you can accomplish nearly the same thing with some cash and no bonds, albeit at a slightly different ratio. The bonds do of course offer slightly more buffering over cash because they have a lower correlation to stocks, but the effect is simply not nearly as significant as people think largely because you are only say, 30% bonds, as opposed to 100% bonds, so you are diversified away from the diversification, if that makes sense.

[@jpdriver1967]

Appreciate the statistics. Been pretty sure I was going to stay 100% equities and this video has really helped me lock the decision in. I will not need my portfolio for any day-to-day living expenses and plan only to pull funds for a pair of new cars over the retirement period, home remodel work, etc. I want to leave it all to my kids and a couple of charities.

[@stevemyopinion423]

Remember all stock could mean spy or something like high divided eta. Like vym.

[@SilentSputnik]

Same. Just be dynamic with withdrawal rate.

[@mere_cat]

I’m really impressed with safeguards videos. Once my portfolio gets too large to handle and my taxes get more complicated I’ll be sending in an inquiry.

[@EdA-bz3bu]

I am amazed how some people with hundreds of thousands in retirement account still have no reverse money to draw on when needed. This is why we have reserves so we can hold of for couple years and even buy when the market is down. And we also a portfolio that gives us a 3% dividend. Which we could use to pay our bills if need to. But we have always lived of one of our income anyway .

[@davidfolts5893]

If you can stomach the volatility, I would say a Warren Buffet 90% S& P Index with a 10% Treasury Bond Market Index would be the way to go. However, neither my wife nor I can handle a potential 50% drop in stocks, so we are more conservative. Thanks, Eric, for another outstanding video! You, gentlemen, are KZbin rock stars!

[@dlg5485]

This is my plan for retirement. I'm 53 and planning to retire in 10 years. I currently have 100% of my retirement savings in highly diversified stock funds and will stick with that for another 5 years. Then I plan to start building a cash reserve of about 5 years expenses to enter retirement with, keeping everything else in stocks. Since the Fed broke the bond market after the 2008 crash, there's little benefit in putting a bunch of money in bonds. Besides, with a large enough cash reserve, a stock portfolio is less risky than a large bond allocation, in my opinion. That said, I try to keep an open mind, so nothing is written in stone. You have to be willing to adjust if the plan (or the results) calls for it.

[@SantaBarbaraAlberto]

Very good video. As a retiree we have come to the conclusion that if we have a pension and social security with a 50% burn rate, we can afford to be on stocks 80% to 100%. Your criti al factors are right on que. We start my FRA Social Security this year and with a 50% burn rate, our withdrawal rate goes to zero. Having enough cash flow so we do not depend on the investment portfolio is ultimately the key. We are comfortable and fine with 80% to 100% stocks portfolio because it is all legacy not needed at this point in time.

[@geraldclough2870]

Good, valid point

[@sjvarney]

401K in stable fund. Live off IRA & Delay SS. Move money from 401K to IRA when market is down. Investments have kept up or exceeded for me. Stay in 12%/15% and pay zero traditional after tax brokerage account.

[@joseCalderon1976]

Very good advice. I'm 100% stocks currently, but I'm only 47 and I plan to work until 62 at a minimum. Subscribed. Once I start getting closer to 62, I'll probably start putting my investments in in less aggressive things like bonds. We'll see. I do have a pention from the Feds and hopefully whatever is left from social security.

[@glasshalffull2930]

I was also a government employee and as I neared retirement at 55 my C stock Fund, that I’d been 100% in, had grown to $1.2 million and my annual contributions were really insignificant (1.25%) as far as helping me to rebuild wealth if there was a downturn. The recovery of the market was by far the driver that would rebuild the wealth. For an example, during the Covid Correction of 2022 the market dropped by 19.44%, but in the next year it recovered by 24.23%. Would my 1.25 contribution really have helped to rebuild my C Fund? The answer is ‘NO’, it would not have made a difference. When your portfolio gets to this size, it is known as The Land Of Critical Mass. Your contributions are nice, but they no longer helping you to recover. Everyone has a different financial situation, but in my case I had emergency cash on hand, a government pension and a spouse that was working for a few more years after my retirement and so I could weather a downturn by not having to pull from the C Fund. I stayed fully in the C Fund and now 9 years after retiring, my C Fund has grown to $3.3 million even though I’ve been pulling $54K a year the last four years. Something to consider. Best of Luck!

[@TheFirstRealChewy]

8:46 That scenario looks fine to me.😊

[@gordonkennethkoves7831]

A video on the 'five asset class diversified portfolio' would be nice.

[@moniquemonicat]

*WHAT ABOUT DIVIDENDS?? I've had 100% 'Qualified' stocks (no bonds) for 10 years, live off their dividends and plan to continue through my retirement in 2 years.* Yields $40k per year, I've never had to pay federal tax in 10 years, especially since one of them is an MLP which is basically $10k a year tax free as long as i don't sell it. But I have NOT been that careful either, sure I've got the "safer" BLUE CHIP stocks like CVX, AAPL, BAC, ET (MLP); but i also have 4 super risky high-divie preferreds (oil tankers out of GREECE; CMRE, SSW, GLOP, TNP) which surprisingly have done quite well, no losses in 7 years. Ironically, I had losses with the less than but still risky REITS like NLY, AMC, WMC but not the high risk Greece oil tankers! So no love affair between me and REITS. *I don't understand this video because I didn't hear anything about the dividends.* My ss to come at $18K won't make me over the tax limit (I make sure never to go over the threshold so for me $100% stocks is the only way (for me) to go. It's very helpful to have that $10k MLP income that doesn't get reported on a 1099 nor counts in my AGI. I understand there's risk and I've just been lucky. But maybe not just luck because also my sister lives on divies from 100% stock preferreds too and does the same, so it doesn't seem to be too hard. She has a broker that does it for her, but I do mine all on my own. So just wanted to say it can be done. But I am also on top of my portfolio every day too, I didn't just "set it and forget it." So I don't think this would work for those that can't be on top of things. AAPL was a fluke, bought $90k of it in 2013 and it turned into almost $1M by 2022, so that one is going to be hard to sell without a tax event, meanwhile it pays a divie. Again, luck! *Your advice to "do cleanup" (get our gains taken care of during the last 2 years before we go on ss) is valuable advice THANKS* (saw that on your withdraw video). So the next 2 years I'll be sure to sell the profits from the oil tankers before I head into collecting ss, don't want one of them to get called and suddenly dump an extra gain of $16k pushing me over the threshold while i'm collecting ss!

[@jaysteinmetz5915]

Great videos. I’ve recommended you to many others. Related to portfolios, I’d love to see your take on the differences or nuances of the “all weather portfolio”, the “Yale portfolio” and any other portfolio mix that you think offers a better outcome.

[@enonknives5449]

About 8 minutes in, we find that a 4% withdrawal rate -- widely touted as the best -- is the ONLY withdrawal rate where a balanced portfolio has a lower failure rate than an all-stock portfolio. Of course, if the stocks pay dividends, you can sell a smaller portion of your portfolio in bad years. Bonds suck. Stock can create wealth; bonds can only preserve wealth. It is the very nature of the assets.

[@damienbates]

I agree with you on the Dividend stocks however too many people forget that dividends can skip years or dramatically reduce in bad years. They’ll recover but some people think dividends will always be constant no matter what.

[@enonknives5449]

@@damienbates -- They aren't guaranteed, but dividends are FAR more consistent and less volatile that stock prices. A diversified portfolio of dividend paying stocks or an ETF like SCHD have very stable returns.

[@user-mm8jv3tn2l]

Er great video. I would love to see an analysis considering a modified bucket strategy with a safe 10 year basic income invested in an indexed annuity that you could draw from during down markets and the balance invested in all stock portfolio both in a total stock market vs a small cap value stock fund. Thanks RSB

[@daw7773]

The chart only goes to 1990 and not 2012.

[@brute_force_and_ignorance]

Question: what modification is needed for a Monte Carlo analysis to mimic stock market behavior, since it's not really random, and it's not really a drunkard's walk? Is there literature on how to create random simulations of the market? Do people like Personal Capital do that, or do they use purely random Monte Carlo? Thanks

[@davidknecht]

Suppose you have "buffer assets" such as cash in a MMF to whether the bad equity years. Essentially a two bucket approach. 20% cash and 80% stocks. Seems like if you have enough cash to allow the stock market to recover without having to take money out that may work. You'll have some "cash drag" in the up years (3/4), but protection against serious market declines. Thoughts?

[@hicham7120]

That is Exactly my plan, the problem is if we get another lost decade we will have to go back to work full time . I don't think there's a plan that can stand a lost decade.

[@hpd_hero]

SCHD for bonds

[@larryjones9773]

I'm 100% stock (age 61 and retired). I'm trying to (sort of) mimic what America's billionaires do: All stock portfolio & never sell stock (& thus, avoid capital gains tax). And, borrow $ to pay for bills, yachts.

[@larryjones9773]

@@_-Karl-_ I'd look into renting a yacht, rather than buying one. I water-skied with coworkers one summer. We rented a boat & skis each time we went, and split the rent. This was much more reasonable than buying.

[@nomadicsouls3290]

Not retired yet but I’m 100% in stocks and always will be. It’s something I’m comfortable with and have enough cash to see me through downturns.

[@larryjones9773]

@@nomadicsouls3290 I just applied for two 0% interest rate credit cards, to 'see me through this downturn'. I got a total credit limit of $30,500, and expiration dates of 9-23 & 5-24. Hopefully, stock prices rebound by the time I need to pay off these credit cards. I'm glad I'm not the only 100%er. My friends think I'm crazy. One friend is 100% bonds and the other is 80% bonds. I calculated the opportunity cost, for one; for the last decade the number was $2,000,000 (ouch!).

[@nomadicsouls3290]

@@larryjones9773 The 0% interest cards is a good bet as I’m sure we will be back up and running before they run out. As I’m getting older I don’t find myself requiring a great deal of money to have a comfortable life. I’m no way frugal but I’m content with the simple things. I could retire earlier than what I’m going to, but I enjoy my work and feel it’s good for my mental health to keep myself busy.

[@larryjones9773]

@@nomadicsouls3290 I have learned a key to retirement is: working out (walk or run in the park). If I'm working out and feeling good, then everything (mental health) is much easier.

[@jimlow6824]

It partly depends on the size of the portfolio. If it's big enough where dividends cover expenses, then a 100% stock portfolio is fine. Also, many companies raise their dividends so the income increases over time.

[@SafeguardWealthManagement]

Yes, size certainly matters. We used withdrawal rate in this video as a proxy for size

[@rawhideslide]

Thanks so much, you must be watching my current google research. I am hung up on two things: 1. I cannot seem to find data that says bonds counter balance stocks, to me it just looks muted (less gains, less losses). What should be the tempering investment? 2. How should I dynamically adjust my withdrawals? Normal two year recession could be covered with cash (though knowing when to start spending cash is not obvious). Longer recessions mandate cutting back on expenses. The plan that appeals to me most is withdrawing 7% of the remaining balance (without inflation adjustment). Expenditures drop as they should (go/no go), and the plan never completely"fails".

[@SafeguardWealthManagement]

We actually have planned videos coming out on both topics! Google searches from our viewers are a way we determine topics on this channel ;)

[@andrewroth9175]

If you retired at 60 making 100,000 per year and had a total of 3 million, put 2 million in 100% stocks. 1 million in cash taking 100,000 per year for ten years. Then take SS at 70. You protect your downside till 70. The 2 million should grow to 4 million in ten years. If not you have SS coming into offset more declines. Offense wins games, defense wins championships.

[@SafeguardWealthManagement]

Agree 100% with the premise, prudent defense can actually translate to offense. I think there is a more optimal mix than 10 years of cash here but I agree with the underlying idea you're getting at here.

[@josephbangs6111]

60/40 is not all stock?

[@touchofgrace3217]

60 stock/40 bond

[@swright5690]

Do you guys all get together to troll sites like SWM with your silly banter to shill for some magical unicorn stock picker? It is all so tiresome.😜

[@SafeguardWealthManagement]

Yeah, it's largely just a waste of whoever's time. I doubt the SWM viewing audience is falling for the scammy, "I made a billion dollars in 2 days by trading FOREX. Reach out to learn more!" In general, the conversion rates on these scam posts have to be terrible regardless of the audience.

[@mariahreform8612]

*Even with the economic fluctuation, I am very excited to have earned $45,000 on my $10,000 investment every 10 days*

[@brandythompson298]

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[@mariahreform3046]

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[@yossarianmnichols9641]

An obvious point from your volatility graph: You lose way more money with an all stock portfolio during a bad bear market because you gained so much more during the long bull market. Bonds lose money too but their gains are much smaller as are their losses.

[@glasshalffull2930]

IMHO, bonds are a way for investors not to fell ‘too bad’ when the market makes a major correction. Your ‘paid’ financial advisor can tell you, How much I saved you from losing because of your bond position!” Of course they never mention the huge amount you missed out on when the market recovered and went on to new highs.