I’d recommend you dont second guess yourself on when you should be in or out of the market. You will drive yourself crazy because no one knows.
Imagine if you pulled out of the market last month when the S&P’s low was 4835. How would you feel now that the S&P is at 5600.
If you are really really concerned, there are buffered ETFS and buffered annuities that you could research and determine if they are appropriate for you.
Exactly. And in addition, my stock equities are all US, because in 40 years of investing, I never doubted that the world’s biggest economy would be the one to bet on. Now I have completely lost confidence, and sure wish I was more diversified. Still don’t want to buy gold, or God forbid, bitcoin!
I had another idea for you that is a little more measured if you would like to change your allocation without selling any of your current assets.
If your equities are set to automatically reinvest profits, you could switch that. Instead of reinvesting, dividends could automatically be put into money market funds and would slowly reallocate some of your assets into non-equity positions without selling anything.
I am the same. I have almost NOTHING invested in international. (I have a small amount in a dated fund that has some in international, but most everything I have is in the S&P fund, US bonds, or what’s called the G fund in the federal TSP, which is almost like a high yield savings account.
If I make a change, it will be to lower the amount I have in stocks a little, and to consider investing more in international, which I haven’t done until now. It’s hard, because of course you have to take some risk to keep up with inflation, but you don’t want to lose too much in a down-turn.
It’s amazing, isn’t it? Seeing how far the US as a brand has fallen? And so quickly.
I already had gotten into int’l stocks and last month went in more at the advice of my FA. Thanks to a Scott Galloway observation I already was prepared to make that move and had doing so on my list of questions for the FA so when he suggested it I was a quick yes.
@1214mom I agree that there doesn’t seem to be a lot of logical thinking, but I still will just hold on to my plan as drawn up and hope for the best.
@ColdWombat We do YNAB. I don’t love it as much as dh, but it’s helped him to get more engaged with our finances so it’s a worthy investment to me. I didn’t know that kids were free. I’m guessing they have to be younger? I bet mine wouldn’t qualify.
It appears to be included as part of my subscription, so if you have the same standard subscription as I do (as opposed to the old way where you just bought it once), I believe you can have up to 5 additional people use your single subscription. And there are a variety of options for how much info you share or keep separate with the other people.
My spouse isn’t bad with money or irresponsible or anything, but would benefit from more intentional spending on hobbies and eating out. It adds up and we don’t have enough extra for it to be comfortable. I would love to just have amounts earmarked for our food and fun funds and have us be able to see in real time how much is available in a category at any given moment. All of us in the family will benefit from it, I suspect.
I’m just tired of using each paycheck to pay for the previous month’s expenses and worrying if it will be enough. Even though we pay our credit cards in full each month it still stresses me out because the margins are just too thin.
For my spouse, money in the bank account means it’s available and then it’s nervewracking to deal with “unexpected” expenses. In reality, we need to have money earmarked to deal with that stuff and I’m using averaged data from the past to generate those estimates for assigning our money monthly. Then the unexpected expenses will be accounted for and there will be money assigned to cover them.
And we’ll all have limits on certain categories and live more according to our collective priorities, given the resources available to us.
Dh and I do a monthly reconcile. We did April’s this morning. We definitely approach things differently. Personally, I think that he robs Peter too often to pay Paul, but I actually pay the bills so I let him do whatever he wants in YNAB.
It always feels different, and in some ways it always is. Quoting Sagan, “Things that have never happened before happen all the time.”
For example, you mentioned the Global Financial Crisis in 2008. This wasn’t just usual “market ups and downs.” Unlike typical previous declines that were triggered by by things like inflation, interest rates, or stock speculation; the 2008 decline relates to a collapse of the global financial system itself, specifically the banking and mortgage sectors. Many of the largest banks and insurance companies in US went bankrupt and/or nearly failed. I previously mentioned that a money market broke the buck and others had runs with investors fleeing finance-linked assets.
With globalization of the finance market, the US brought down much of the rest of the world with it. Total International indexes had a larger decline in 2008 than US indexes, which was the most severe single year decline of our lifetime. The S&P 500 nearly lost half its value during 2008. The S&P 500 had a 57% peak to trough decline.
After such severe declines, some of the index funds I had invested in were liquidated to cash. The general public had so little interest in investing that the brokerage closed the funds. Unfortunately I didn’t notice they were sold to cash until well after the market hit bottom, so I had a steep loss. However, I was more fortunate on home purchases. I live in a bubble area where in some neighborhoods the majority of homes were either short sales or foreclosures, so lots of opportunities. I got a good deal on a home that fit me well. The seller owed ~$400k more on on his mortgage than the selling price. The bank agreed to take the $400k loss ($600k in 2025 $). We closed on the day before switching from short sale to foreclosure.
There were many economic consequences that we have never seen in modern times. For example, I am taking a CourseRA class in Financial Markets by Robert Shiller. The class was recorded a few years after these events. In the class, Shiller talks about things like short term bonds paying negative interest rates – things few even considered possible before the GFC.
By comparison, this recent decline seems quite mild. Sure, many very negative things could theoretically happen that haven’t happened before. However, the same could be said about the Great Financial Crisis, COVID crash, or nearly any other noteworthy market decline.
I find these two statements are a bit counter “My spouse and I don’t make a lot of money nor do we have a big portfolio (though we’re on-target to retire at 60 if we want).”
It may be that you have health insurance through employer for ages 60 - 65. It sounds like you are being conservative in your budget. How many years until you are 60 and what is your target nest egg to retire then?
I don’t know what you mean with term AA, set my own AA. “move in either direction with our AA”. Annuity?
Controlling income and expenses. “Kids nearing financial independence.”
IDK with your other’s situation - if she likes her house, if she has ideas on controlling her tax situation if she decides to live elsewhere (or if she does need to live elsewhere). At 80, hope she can continue her independence for a while yet.
Studies have shown one doesn’t ‘outsmart the market’ with getting in and out - so I agree not to do that, and staying the course is tweaking the plan a little for us.
Two of our annuities is with an insurance company that now has our guaranteed non-penalty monthly amount dropping (each about $200/month) due to the performance of the instrument – none of our other annuities has this. They have the annuity adjusted annually. But our FA has a plan that will work with maintaining our cash flow – an instrument with our Roth IRA has income generating so we can draw that amount out to ‘make up’ for the monthly annuity drop. Not perfect, because you want to use Roth IRA funds last typically, but we will go along with this situation fix.
AA=Asset Allocation
If you have a FA and have an overall plan, you could meet with FA and discuss your concerns. Let FA work out the scenarios and also indicate your risk profile. Maybe you are more risk adverse at this point, and FA can provide information. Sounds like you might be having trouble SWAN.
I think it feels different because I’m retired now. Also the downturn seems planned and like watching a train wreck in slow motion. I may be misremembering wrong but 2008 felt like it moved fast with little warning of impending doom. We weren’t retired at that point though
In hindsight, the 2008 crash should have been foreseeable. Clearly there was a real estate bubble and plenty of precrash articles on easy credit with little to no income verification, a lot of speculative flipping, and people living high and/or reinvesting based on inflated asset values (the era of the McMansions). I think what caught people was the amount of derivative products that were built on mortgage backed securities which multiplied the risks for financial institutions. Falling dominoes became an avalanche.
Well, we don’t make a lot of money so our portfolio isn’t very big compared to probably most on this thread. But we never had much lifestyle creep. Living in poverty for a few years with a baby taught us to live pretty cheap. There’s very little we’d want that we don’t already have. The only thing we might add would be some money for travel. We are a classic example of people who have eked out saving whatever we possibly can. We have enough home equity that we can buy our next house in cash when we downsize soon.
I’ve budgeted extra for all the health insurance etc. we’ll need if we both retire at 60. I’m not saying we both will, we just want the option for at least one of us to do so, and ideally both if we want. We’re both eligible for workplace health benefits while working. We’re happy maintaining a modest lifestyle since it means we get to trade it in for the peace of mind that we don’t have to work past age 60.
Our target nest egg is 1.5M at the lowest (should hit at age 57), but I’m shooting for closer to 2M (age 60), with 2.5 being super comfortable (age 62). This does not take into account SS or the large inheritance my spouse will receive. I’ve run all the calculators and simulations every which way and feel good about our plans. We’re still in our mid-40s so we’ve got a bit of time and will be able to save aggressively (30% of our income) soon since we had kids pretty young.
My college sophomore son is now covering all almost all his expenses including room and board. We only pay for a few smaller things like medical, phone, etc. He’ll be fully financially independent as soon as he graduates. Our junior in high school has been maxing out his Roth IRA every year, has additional savings in the bank, and plans to work full time after HS. He’ll live at home for a while but will contribute to the household until he’s independent.
I’ve spent a ton of time running hypothetical scenarios for my mom with housing and have elaborate contingencies planned out. She’s cash poor and house rich. Her income is matching her expenses fine for now, but I’ve decided that if she ends up depleting her savings by 30K it will be time to liberate the money she has in her house so she can start earning interest off of it, which will more than cover the cost of rent. I suspect that she’ll be physically unable to live in the house by that point so it will be a good time to move to senior living anyway – it might end up being moot.
The SPIA was a good move for her because her financial literacy is poor and I wanted to convert that chunk of money to a lifetime income stream rather than have her think she’s better off than she really is with her savings. Her house is worth 900K so honestly she’ll be fine and will make plenty off interest from investing that wad when the time comes. She won’t be able to live in it forever and it’s much too big for her anyway (my childhood home). I met with 2 FAs who agreed with my plans for her.
There was a lot of financial abuse going on - and insiders could see what was going on (and a lot of people profited from these ridiculous loans with ‘easy credit’) - the bundling of financial instruments (both overseas UK and the US). Economy was ‘going stronger’ due to all of this, until the burst.
A balance between regulation and deregulation. And then the government didn’t allow a big insurance company to fail but did allow Leeman Brothers. It was what it was.
The failure of Bear Stearns in March of '08 really rattled me. I moved our then limited investments to cash, but forgot about the 529 accounts until the third quarter statements arrived in the mail. It was too late to pivot on the 529 accounts, so I ignored. I forget how many years it took before the balances recovered, but they did, and continued to grow.
Meanwhile, it took me far too long to return to the equity market after my March scare, so I am trying to stay the course this time.
I agree with deb922 and others who have commented that this time feels different. It’s not exogenous. There were hints in I think Sept of 2007 (cannot remember what, but I recall being spooked).
As BKSquared said–the signs were all there from the consumer side w/o having any knowledge of CMOs.
Did the FA’s indicate what her tax liability might be with sale of the house? As a single person with sale of residence, there is a onetime amount for sale/capital gains and she might be well above that. IDK with records from purchase price and the capital gains amount above her onetime amount. IDK if buying into a senior community will offset any tax - it may be worth getting a tax professional’s advice (which FAs could recommend someone). At some point you also may need tax advice if DH’s inheritance comes to fruition.
Retirement is a good feeling when the funds are in place. DH doesn’t want to travel (he did a lot with work), and I am doing just limited travel. It was good for DH to get out of his workplace when he did (and we had the funds in place for him to do so).
The calculation of capital gains tax due (at least at the federal level) is based on the value of the house at the date the first spouse died. IIRC, the basis steps up on half of the house to the value at the date of the death of the first spouse, and then you add half of the original purchase price & any capital improvements, + the 250,000 exemption & real estate sales commission… So the tax due might not be that onerous.