11 months of investing. $67k saved, debts cleared, and a portfolio just shy of a quarter million. Taking my finances into consideration last year was worth it in retrospect.
I didn’t have prior investing experience. A CFA, Herman W Jonas has taken all the guesswork out ever since I got into his program. My initial capital of $5k invested over the short term yielded me huge profit plus bonuses. It’s all about accumulating wealth through compound interest investments.
Do not forget that when it comes to investing, prices can be erratic, rising and declining quickly, often about companies' policies, which individual investors or “experts” do not influence.
60 years old all equities retired and the key is to have plenty of cash in a HYSA for at least two-three years with $0 debt. I own everything house, car and $0 CC debt with living expenses in a regular checking account and working part time. While working as a fitness instructor. So plan plan plan...Good info Erin
This is my plan too! I’ll be 52 this year and plan to retire in 3 years. All equities and 3 years of expenses in a HYSA. I may adjust my equities to include a dividend fund like SCHD though.
When I was working (retired now) I did 100% equities in my 401K investments over 38 years and during that time the investment advisor company my employer used to help us kept telling me I was too aggressive. So glad I didn't listen to them. We are at around 80% domestic equities with 4 to 5 years of expenses in cash and bonds.
I'm glad you didn't list to them. When I stopped listening to them, then my $ start growing much more rapidly. I'm very surprised at how many of financial folks think that is risky. Really not. Just look at the history.
100% agree. I have done this for 30 years. Some years I was way down, but it has always come back and more. I will continue in retirement albeit with a larger cash bucket.
Im 31 also doing 100% but I need to tell you all to please be honest with yourselves when it comes to your risk tolerance. This lady's nice voice and calm demeanor makes it so you dont really understand what going in 100% means. These last 4 years was great for us but i saw MANY people pulling out everything when the market started diving. 4 PEOPLE out of 37. I was able to convince FOUR PEOPLE to not sell out. People in their 40s who should know better. People in their 70s who had just retired lost almost 30% of their total earnings and didnt make it back because they pulled out. The fear people get when the market starts tanking is real. If youre not able to walk away from your money for at least a decade i believe a lot of you would mentally be happier having 15% of your money in a bank somewhere not in the same account as your emergency fund. I cant stress it enough how chaotic it can get for people who are risk averse
Its all about managing fears over staying rational. Someone doing a 100% portfolio needs to stay rational and calm during a down turn, and not panic sell. The problem is that people who are doing 100% portfolio AND panic selling are the type of people who should not being doing that, and should stick to like... a 20/80 or higher bond ratio.
I’m still contributing, so it’s easy to tell myself that a downturn is a chance to buy or do conversions at a discount. That won’t work once I’m retired, but that’s why I like the bucket approach: lock in the gains and wait out the losses.
Great advice Erin. Most importantly it is what the investors tolerance level combined with age. Younger person has longer to recover from the ups and downs. I dont look at the markets every day. No need to as l am still in it for the long run at 60+. Have been retired for 4 years now. I am blessed l always say. Love the out takes as they always make me laugh. Cheers
It ALL changes when you get 5 years from retirement. I’ve been 100% equity for decades, hardly paid attention to the market, and even got excited when I heard it dropped because I was now buying cheap…..but when you are planning to stop working, and you have 3M, a 30-40% drop is 900k-1.2M decline just before walking away from work. It hits you MUCH differently, trust me. Wealth preservation is a different game than wealth accumulation, and the risk reward is paramount. You don’t see any family offices at 100 equities do you? HNW are usually 35%, and UHNW are around 18%. The more you have, the less risk you should take because you don’t have to chase returns. 1 mo ago when the S&P hit 6090 I went from 100% to 35%, with the majority in t bills for now for a risk free return above inflation. Sure they’re only returning 4.5%, but on ~2M that’s 90k per year and I’m back to wanting the market to crash again. When the yield drops below 4% I’ll reallocate, but will only go back to 100% stock if it’s way down, otherwise I’ll probably do the traditional 60/40. It’s unnerving that the same firms that predict a 10-15% return this year, also predict a 10 yr return of ~3% annualized…which means there has to be a significant correction for that to align.
Great to see you bringing up the outside the box strategy. I have been 98-100% equities for the majority of my life. It has served me well because I chose to stay the course. As you state, it is gut-wrenching to watch my portfolio drop 20-40% a quarter or half. However, in the long run it has been a winner. In 10 years of retirement, my portfolio has gone up about 3X. Scary but satisfying. Love your work.
Get really educated on the history of capital markets and how they work. You’re a business owner- know the businesses you own and how they generate earnings (which ultimately drives long term share prices). And remember if it wasn’t for the volatility, you wouldn’t have those superior long term returns. The one don’t come without the other- It’s a package deal. 😊
I’m not shocked by the results but surprised by such a high international play - I plan to use US Equities and smooth the ride with dividend etfs and cash
Good morning Erin. Good discussion and presentation of the data. I am an agressive investor and have been 100% equities my whole life up, riding out all the market events and never making an emotional decision to sell. I'm retired at 62, 12.5 years ago, and now have 1.5 years of expenses set aside in cash and treasury bonds. I remain an aggressive investor. I've never been a fan of bonds, target date funds, or an age based portfolio approach. I currently have @ 5% international and the rest domestic index funds. This isn't for everyone but has worked well for me and I have no regrets. You are correct when you say to expect a bumpy ride, some were breathtaking. The key is to have a plan and don't make decisions based on emotions, and stay the course. I enjoy the out takes and the dog is cute 😉Have a blessed week and I'll see you on the next one. Larry, Central Valley, Ca.
I so agree. I am 71 and retired for 10 years now. I am still 100% equities. While I was working and raising a family, my 401K and IRA was all equity based mutual funds. When I was over 50, saving and building a “pile” became more critical, so I learned and did long dated call options. Never more than 15% of my funds, but by not being too greedy, I was able to win and build my retirement even quicker. Leading up to retirement and today, I no longer do options, but instead I have moved into a balanced portfolio of dividend paying stocks. These dividends are now my income. I no longer reinvest, but they feed my cash account. Bottom line… I have the income I wanted, my portfolio continues to grow in value each year and my total withdrawals continue to be less than 3% per year. 100 % equities have clearly worked for me. I am just not a Bond guy.
I am 70 and working. The financial pros say they can't do what I've done for performance the last two years which is 54% cumulative. All individual stocks. And I have made mistakes in buying and selling too soon but you don't know that till later. I never had bonds.
@@BarryGoldmanBroker-AssociateCR good for you and nicely done. This is why equities are where to be! But…. You need to have the stomach to do it and to be able to not worry about a 20% drop in valuation. Happy retirement, once you get there.
This is good news and bad news. The good news is that it's a no brainer to be 100% in on equities based upon the data. The bad news is that if there is a correction that we've never seen before this could change the data in the future. We've had gains that we've never seen before in the last 15 years, it would be dumb to assume that we can't see losses like we've never seen before in the years to come. Great video.
_The bad news is that if there is a correction that we've never seen before this could change the data in the future_ While that's not wrong, consider that if equities drop 80%, the dollars you're holding will probably not be worth much either, nor the bonds, since those would be subject to horrific deflation. If you're planning for the worst case, you'd want to hold gold coins and (surprisingly) firearms and ammunition because society would be in a terrible place and "things" are better than "money" at that point.
You didn’t notice the 2000 Tech Bubble or the 2008 financial crisis? Seemed to me those were things anybody living had never seen before? Certainly, if you’re retired, you should have emergency funds to outlast a multiple year downturn.
Would you rather have a portfolio that gets a 50% drop or one that only drops 25% at the same time? Dumb question, right? How about if the 50% drop cuts the portfolio value to $500,000 and the 25% portfolio only drops to $300,000?
Worst drop was in 1987 since 1929. I was invested then. Many family members were invested at the time. We managed to survive. Its not as bad as investment advisors always warn about. If you panic, then its very bad. The safe investment path is just removing fear from investing.
I started my nursing career at 29. I went 100% equities into my 401K. By 53 I reached $2 million. Not bad for 24 years of saving. Not to mention $500k in my Roth IRA. Also a $125K mortgage at 2.125%. Obviously no rush to pay that off!! I’ll stay equities until I’m dead
My daughters are 31 and 29, and I have them 100% equity funds, as they have 30 year timeframes. As for me, as a 64 yer old retiree, I am 90% equity and 9% cash, 1% bond. The cash & bonds are 4 years worth of expenses, at this time, before social security. With my equities, 38% are strong dividend payers. As long as I have cash to cover a few years expenses, I am perfectly fine with heavy equities.
This is what I do, and I just retired last spring. I've been heavy equities since 2002, when I realized the traditional approach didn't save me from the Y2K tech crash and I had to figure out a better approach for myself.
Likewise, I am 65 and until 2023 I was over 95% equities. In 2023 I took out 2 years worth of living expenses and put it into a CD ladder and money markets. Since the market did so well in 2024, I took another 2 years worth of expenses and did the same again. If markets crash I am comfortable. I even have some funds to use if a 'buy' opportunity arises.
@@lesbolstad Been hearing that for a couple years now. Meanwhile, the s&p has had 20+% returns in each of the last two years! I've got plenty of cash to get through a downturn, and only gets better in three years when I start collecting social security!
YES!!!! Finally! I've always been invested in stocks, never in bonds. I've just not seen the performance and/or stability in bond funds when I've done my amateur/superficial (compared to investment professionals) look into them. I've had multiple investment experts always push the target age funds, or push to invest a given percentage in bond funds, and when I press them on "why?", they go back to platitudes. And when I push them on those platitudes, they then fall back on "well, it depends on your risk tolerance" statement, like it's some kind of get out of jail free card. So, I've always stayed in stocks, with a 1-2 year cash reserve. SO GLAD YOU POSTED THIS SEGMENT! 👍
It all comes down to using rules of thumb and disregarding current market conditions to determine risk. These rules of thumb rely on 100% negative correlation between bonds and stocks which isn't as reliable as it was in the 80s and 90s. Backdating investment strategies ignore important changes that have occurred. We are no longer in a long-term trend of falling bond yields (rising bond prices). Globalization has reduced the value of diversification across national boundaries. With the increase of employer 401K plan use, index funds are starting to distort the market and the increase of funds entering the market are raising P/E ratios as more money is chasing fewer stocks. If you don't understand the assumptions behind those rules of thumb, you won't know when they will break down.
@@darrenmatthews1667 Please don't take this personally, but that sounds EXACTLY like the wonks I was referring to. Lots of buzzwords and esoteric phrases that, when pushed as to "just how long should I suffer employing your strategy that hasn't worked in a LONG time?", the response is sometimes literally a shrugged shoulder.
@ Ha yeah. No offense taken. I did sound wonky. In the end, no one knows what happens next and many times I made the right decision for the wrong reason.
I'm 60 now, for about the last 30 years I've been around 90% stocks, 10% cash, 0% bonds. I was interested in Bonds in the late 90s and studied them, but I just never could find any evidence that it was a wise thing to do in the declining and then low interest rate environment.
I can stomach the risk after 2008's huge fall. We've been 100% index fund mix of equities since and have had no regrets. Only a few short years to retirement and the only thing we'll change is just keep more liquid cash in the HYSA. You learn to ignore the pundits and the bumpy ride! Thanks for the great content!
I’ve been essentially 100% equities for 30 years (I’m 52) and it has been far, far, far better than some “balanced” approach that some advisor would have charged me to allocate. I’m many millions ahead of where the conventional wisdom would have put me.
i am 100% in equity since i was 29, now 43 with 1.1 M in my portfolio, no student loan or mortgage, if market crash or down 40% i always add more in, and i personally love market downturn, that when you buy share for less.
That's awesome. I did the same, and I hope it works as well for you as it did for me. I used to find it a fun/challenging game - when the market dropped, how much can I add to bring the value back up? It was easy the first 10 years, but it became impossible as the portfolio increased.
@@Sylvan_dB when market drop like today, buy in with whatever you have and then save, buy again later when it drops again, the beauty about index is it never drop to zero. The price of funds will balance out in the end, and over the long term, you will gain a lot.
@@Sylvan_dB Indeed. When your portfolio increases to over 8x your current salary... its pretty hard to find more cash to buy during downturns, when all the extra cash you have amounts to less than 5% of the portfolio, and this constantly decreases as time goes on. But hey, its still better than not buying during a down market.
I am 100% for it. I have always been at least 95+% invested in equities. I am now more or less retired and am still all in with equities other than a cash reserve for just in case expenses. The key for me is now to be flexible with spending if necessary. Yes, it can be a very bumpy ride at times but to me the rewards have been VERY good!
In 1996 my wife told me she did not want to work till she was 65 yoa. We had control of our debt, so I went hard into stocks, with 50% in cash to buy on sale whenever possible. (Cash paid much better back then.) Twelve years later we walked away from our jobs, making more $ than working. Sixteen years later, we are blessed, taking out 2% each year and oh yea, some cash to buy stocks on sale.
With that perspective, do you think the market is currently oversold? Have you considered lowering your stake in equities to stockpile more cash for when they go on sale again?
Totally agree with all your well presented points, Erin. Calculate your living expenses, then calculate the amount needed to provide for those expenses, then double that number to allow for a 50% crash. 90% in broad-based index fund, 10% in HSA, draw from HSA and rebalance yearly. Thanks for your work, always inspiring.
I am in support of this approach. I currently have 95% of my investments in equities and I cannot foresee myself ever getting more conservative than 100% in the S&P 500. I am currently 53 yo and have been investing for 34 years now. I have limited my international exposure compared to how I invest 30 years ago. I cannot see me ever having mor than 20% of my equities in international stocks.
Exactly, about the international stuff. Everyone tells you that you gotta do this, you gotta do that. I watched my international funds. The returns sucked compared to what I get from domestic stuff. You do that long enough and after awhile I just stopped listening. I look at what is producing for me, not what it isn't.
@@wmb9419 I also looked at the international funds for a while and they just weren’t performing. The truth is there are a lot of international funds out there and maybe one is kicking A$$, but it’s just so much easier to go S&P 500.
EXELLENT VIDEO! Wish I had seen this 50 years ago. As an example of someone who did stay heavily in equities for 50 years and a couple of time periods did go to a more conservative 30% / 70% mix I can tell you it was a mistake going conservative even though a small time period each time. I retired 6 years ago and have been ~95% in domestic ETF’s & MUTUAL’s. 50% of those in the Fortune 100 and another 25%. -35% in tech and the rest in consumer products & various cap funds. Portfolio is up ~25% after 5% withdrawals . I keep 12-24 months in cash & laddered cd’s. Use these in a down mkt when needed. I’ve learned to stomach the dips.
I'm 72, and 100% equities. One further step is having modest equities in IRA (SP500 ETF), and more aggressive stocks in Roth. Im relying on the IRA for income via RMDs, and Roth for hopefully greater growth (fun money and inheritance). Also use the Roth for 'cash' reserves. I can get cash in 3-4 days, no taxes.
My FA talked me into a portfolio of 100% equities last year. There are 56 different individual invested companies in my Ira. I left my roth with the same vanguard funds that were in my Ira. My Ira gained 23%, my roth only 16%. The risk is absolutely worth it. Since i am in my early 60's it pays to stay somewhat aggressive. This video is spot on and i commend you for it's content, very well done. I also keep some money in a protected indexed annuity and keep 10% cash invested in CD's. Retirement is good so far. Never invested in or liked bonds.
Retired debt free with all equities invested and we have enough in our money market and T bills to last us through a few years of down turn. We can actually cover all of our expenses with our SS.
Hi Erin . I will let you know that I am about 90% equities, 9% cash and about 1% fixed income. I have been this way from my 20s and have benefited greatly for not doing the bond or age fund approach. Today, as I am retired, I do plan to go higher in liquid short term basically cash. (Am locking in Interest rates for max of 3 year for uneed cash). I particular dislike the age target funds as they put people into more FI based on solely on the persons age. And if that person got older at the point when rates were rising, they were gong to see a drop in the NAV. that would dramatically cause portfolio value decreases. And there is anterestnig side effect of this strategy. It allows me to only need to withdraw about 1% of the portfolio each year. And for those who thinkI must have had a really high paying job. For many of the years it was under 100K. My son now makes much more than I ever did.
I have no doubt 100 percent equities gets you the best return over time but I don't have the temperament and my wife sure as hell doesn't have it. I've been 50/50 for a long time and while I won't be as rich as some, that's something I'm willing to accept.
Thumbs up for the "wife sure as hell doesn't have it" ... :) ... but ... my wife likes to say I told you so ... --- so she is letting me do it my way ... she wins either way... from my success or her ability to say "I told you so" every day as we split a 6" subway sandwich cuz I was wrong ...
@@carlyndolphin Probably but no way in hell I have the temperament for that either. FWIW my method has made me enough money to satisfy me and that's all that matters to me.
I retired last october… been SO FUN since then.. my exposure to the stock market since I retired is all in income ETFS… they are JEPI and JEPQ.. income funds that pay about 8% dividends a year and hopefully some stock exposure gains long term… I also invest in sports cards.. got about 10% invested in that alternative asset...
I never could do 100% equities once I got in my 50's (admire those who can), but I am definitely 100% in on "Erin Talks Money" for information delivered with grace, humility, and a dash of sass occasionally! Happy New Year 2025, Miss Erin!
Thank you Erin. I’d say this is one of the most important videos you have released. We’ve been in 100% equities for 30 years and were in a position to retire without a drop in income at about 55. We both love our work so who knows when we will retire but it will be with a comfortable income that will allow us to share our good fortune. Thanks for the great work you do helping people. Cheers!
The Cederburg paper uses a globally diversified portfolio in its modeling. “An optimal lifetime allocation of 33% domestic stocks, 67% international stocks, 0% bonds, and 0% bills vastly outperforms age-based, stock-bond strategies in building wealth, supporting retirement consumption, preserving capital, and generating bequests.” The S&P 500 is US only and heavily concentrated in a handful of technology stocks. The top 5 holdings currently make up ~27% of the index and they’re all tech. If you want to follow the conclusions of this paper, you need to add international diversification.
Perfect timing for this video. As a mid-50s investor, I've been 100% equities for years. I've been trying to decide whether to switch things up a bit as I get older. This definitely makes me want to do a little more research before moving forward.
One of the most important things is to establish an emergency fund that could carry you over several years of a down market. If you’ve got that and a million or so in your portfolio then you can be more aggressive. Best of Luck!
100% in equities means you have NO emergency funds. It's one thing to have all your investments in equities, but have a few years of expenses in cash or short term us treasuries. Though it hasn't happened recently, with a downturn followed buy a few years of average no-growth, you'll be selling your equities at the bottom, and likely never be able to catch back up. It goes to risk tolance, not risk tolance of volitility, but risk tolerance of having to severely curtail retirement expendatures. All this is subject to how much investment $$$ you have, because if you've been investing for decades, and kept your spending habits reasonable, you should have more than enough to create a barbell of cash cushion and equities, to allow you to use the cash in the downturns, and benefit and replenish when the market is prospering.
I agree with the comment about home bias in our investing portfolio. Here is just a random sample of companies from an international equity ETF. Many of these are household names in the US and are really nothing to be afraid of: Nestle, Unilever, Shell, Toyota, Sony, Novo Nordisk, Novartis, Roche, LVMH group(Louis Vitton, Moet, Hennessy), Royal Bank of Canada.
I've been doing this for 8 years... yeah it works. Keep the principle, live off divvies, heirs are happy since I don't die with zero. Slowly moving everything to Roth - seems to be working fine for me.
Thanks for the video. It comes down to determining your willingness, ability and need to take risk. Also how is enough, money after a certain amount just becomes excess and you likely will never need it, so why risk it. This is all good until the market crashes and people in retirement don't have time to recover.
I was 100 percent Equities in my 30s, 40, and 50s. It was the right choice. Now in my 60s and retired (mostly) I am 80/20. And yes, an emergency fund in cash is crucial at any stage of life. Your channel is among the best financial UA-camrs. Clear and concise.
80/20 sounds pretty heavy so close to retirement. Bonds have stunk the last few years though, all the risk of equities and negative return. Though yields getting close to 5% gives more upside
Great video. I think the key to an aggressive portfolio is to change your outlook on downturns. As u said, cash is key. With it, folks should think of downswings as buying opportunities - it’s a rewiring for a lot of people. As you get older, increase the cash reserves to cover expenses but also to take advantage of those buying opps. I’m not so keen on international exposure. For me, it’s always underperformed so I’d prob switch that allocation rec that the report noted (for me).
Good topic and content. I think of retirement planning like a football game. Winning the first two quarters isn’t essential, but by the fourth quarter, you want to leave no doubt you’ll win. Playing too safe early in life-avoiding calculated risks in career or investments-can hurt your ability to build momentum. The goal is to take smart risks early, grow steadily, and secure a strong position so you can confidently cross the retirement finish line.
I started with 100% in my 20's, now in my 50's I have no plans to change anything. I think the biggest thing for my household is being debt free and living beneath your means. When your only monthly expenses in retirement are easily covered by SS money, all the other retirement savings is gravy at that point. My biggest concern is being able to make the switch from a savings mentality to a spending mentality.
Same here. I've reached a point where my distributions, dividends and interest are so huge that I can't begin to spend it. There's nothing that I need or want, so I give a lot of it to charities, endow scholarships, etc.
I came to the same conclusion about two years ago. I am 100% equities since then. Results have been phenomenal since then. Fits my investment style and tolerance for risk. Thank you for the content!
Be careful to recognize that the last two years were very much outliers in market history. It’s easy to stick with 100% equity when the market is compounding at 20+% per year. It’s much harder when half of your portfolio evaporates in a nasty bear market. I’m 100% equity, but I regularly look at my balances, halve them, and say ‘yup, that could happen’. Be prepared or risk capitulation to a bad market.
@@s0cr4t1c What if the market doesn't stop compounding at a highish rate but inflation races up? How good would that make you feel about a high fixed income portfolio?
@@s0cr4t1c agreed, and a 50 percent loss means you need 100 percent gains to be back at even. A 70 percent drop requires a 233.33% gain to get back to even.
@@GetStrongfit - Um, look at the market's jagged line that goes upward shows the market has consistently gained it back and more, so why people get such mileage out of such statements boggles the mind. The problem is not gains and losses but timeframe of when you need the money.
From personal experience, my 100% domestic equities as far exceeded my wife’s 60% domestic equities 20% foreign equities 20% bonds and it’s really not even close I think with a historic 8 to 10% return the S&P or something similar is an almost no lose situation. Thanks for the great content
Erin, I have sent your links to many of my friends and family. I have my adult children watching you. This equities video was very helpful for me. Of all the financial people that I watch, you are defiantly my favorite. What you produce is high quality and super helpful. Thank you for all the good you do.
59 1/2 Retiring early in around 5 mo. I am also around 90 stocks and 10% cash. In the next 2 years, I'll likely shift to a process of 3-4 years of cash and the rest in stocks but a high % in dividend etfs.
I've been doing exactly this type of investing for exactly the reasons you list. It felt so good to have my theory examined by an expert (SSRN, You). I downloaded the 81-page SSRN report. Whew, that is a bit much to digest. Having relied on your advice in the past, and now learning your strategy matches mine, I'm resting more easily. Thank you and God bless Erin!
I am 53, I just switch over to 60/40. I have some 80/20 and some cash. I don't need that much, once I have my mortgage paid, I won't need too much. I don't have the stomach for 100% equities.
Love how you challenge the prevailing wisdom - even for those who are already in retirement. It is always easier to manage withdrawals and spending around bear markets, which are usually much shorter in duration relative to bull markets. Your commentary around US companies with international operations is spot on.
I’m 52 and happily invested 100% in US equities. International stocks tend to drag the portfolio down more than they would ever help and I view bonds in the same way. Maybe I’ll change my views in the future, then again…. Everyone has to invest in a way that suits their needs and goals.
I've always been 100% equities. I recently retired and only then started the bucket strategy and keep a year or two of expenses in high interest savings or CDs.
Lots of talk of the market being inflated. Do u think there will be a recession or downturn anytime soon? I recently came into a sum of money. I bought a house and paid off half of it. The rest is neutrally geared and just ticks away in the background. I barely even think about it. I still have around 400K cash though and would love to turn that into as much as possible of course but I’m uncertain about my next steps… Do u think now is a good time to invest in stocks, or should I wait for a more favourable opportunity?!
I for one believe investors should start off with the traditional S&P ETFs for a solid foundation, then move to getting in on different asset classes and maintain discipline to minimize risks and maximize positive outcomes
I do think there will be a correction or recession. As far when? I have no idea. It's good to have a nice balanced portfolio, including cash on the side, so we're forever ready to trickle in when a downturn occurs. Having had my portfolio steered by a CFA I guess it's a smart move to choose experience and professionalism over financial videos online if you're looking to really get on the positive side of the market, being guided avoids you unseen mistakes and has gotten my startup of 200k - $1m+ in twenty seven months with downside risk...
Who's your coach, I'd really appreciate if you don't mind. I’m trying to get an advisor for guidance but it’s been a hassle. Anyone who is fee-based is hard to find and usually have a heavy workload.
Oh very well then, conducting due diligence on *Lina Dineikiene* should suffice. The lady's been around for a while and her recommendations and market entry and exit points are quite top notch
I’ve always been 100% TSM index. It has served me well, even with 2001 and 2009. Bonds, to me, is a losing game. Outstanding video, Erin! Keep the content coming! I’ve been pushing my friends to follow you, zero political nonsense and clearly focused on relevant topics.
100% equities does not seem too crazy especially for someone who has quite a few years until retirement, but the 67% international does seem crazy to me.
The chart at 5:07 that shows the volatility is an eye opener. I think a nice addition to this is the number of big mover days (up and down) in the stock market and how important it is to stay in. I work on the belief most major moves correct in three years. In retirement I keep two years of expenses in High Yield Savings and CDs. The 1/3 domestic 2/3 international is just something as you say I am not "emotionally" comfortable with regardless of the data. Thanks for another informative concise video.
80% S&P 20% Company stock. No reason to be bonds till you're 60 imo. Target date funds only exist to charge you fees 🙄 Edit: really good video. After 10yrs working I realized much of this based on my portfolio performance. Good to see there is data and I am not crazy.
I'm very comfortable with 100% US & International index fund equities with a two year emergency cash pile in the HYSA. Everyone's risk tolerance is different. Thanks for the perspective!
Sorry, but my entire ride or die is FXAIX (Fidelity’s S&P 500 Index Fund). I am 100% allocated now and will be 100% the rest of my life. I’m sure people will point out “the lost decade”, but a one time event isn’t enough to deter the statistical likelihood that the S&P will keep going up
Similar here, the lost decade was a bit before when I started. But if you buying you want it low anyway. planning on retiring in 6 years so any stagnation I hope happens and ends in the next 6 years while I’m buying.
I’ve always been 100% TSM index. It has served me well, even with 2001 and 2009. Bonds, to me, is a losing game. Outstanding video, Erin! Keep the content coming! I’ve been pushing my friends to follow you, zero political nonsense and clearly focused on relevant topics. I get plenty of international exposure through domestic equities, just not a fan of unstable economics and rapidly changing leadership in these countries.
We are doing this portfolio (but total US stock index fund) atleast for now. May change in retirement. Good to see it validated! 😅 JL Collins is right! 😊
@@curt5802 from what I have read he recommends total us stock index fund portfolio for the “The Wealth Building Portfolio”. I have updated my comment a little to reflect what we are doing exactly.
At the bottom of the 2022 correction, I traded in my target date fund for 100% S&P 500 within 401k. One of the best financial decisions I have made thus far.
I’ve been retired for a couple of years and am now 58. I’m 100% invested in stocks/etfs and I’m comfortable with it. I have no debt and the house is paid off and I do have significant amount of cash in high yield accounts as a buffer in the event of stocks falling for a protracted period. It’s working so far.
Erin, great vid, I'm with you, I plan to have equities as my base, my most conservative investment. I had a slow-moving investment portfolio for a number of years until I went all in on S&P 500 as my base, biggest bulk, most conservative investment. I always welcome the big dips, because this means I'm getting great deals on more stock as I purchase on a bi-weekly basis. Hold for the long term and then it's not so risky. Great outtakes again. Look forward to seeing them at the end. Keep it up Girl, great stuff! Mark
Hi Erin! Great video! Based on my experience, I've always been 100% invested in stocks. If I can make 10%, on average, in the stock market, then why would I do anything else? I've never followed/believed in conventional wisdom, or target date funds. 😎🏆And, my emergency fund is in gold. As long as countries stack it, I will stack it
I can see the all equities approach working if you have a decent sized cash emergency fund to cover expenses when the market is down. The 66% international/33% US seems weird to me. I feel like swapping those would be better, but then I don't have the data to back up if that's a good idea or not.
What a timely video! I was just researching some bond ETFs for when the time comes to re-balance and I was (reluctantly) thinking of a combination of USHY and SCHP. My 401k is currently 90% FXAIX and 10% FSPSX and I'm fine with keeping it that way. I may consider increasing the percentage for international but I don't see myself going over 20-30%. My Roth is currently all US equities and it's worked quite well the last several years so I don't foresee any changes there either. Thank you for reading though academic sources and taking the time to present them in laymen's terms, this has been very helpful!
What they dont mention is in that same scenario ending up with over $1 million dollars at retirement is what if the next year it's a protracted bear market. Four simple words, Sequence of Returns Risk. That couple would most likely run out of money or since they had no fixed income in their portfolio probably went back to work. Simulations are neat but they don't take into account individual risk tolerances and goals. If you are younger I do wholeheartedly believe most target date funds are too conservative though and prefer 100% equities for most with a long time horizon and ability to psychologically handle the swings.
Great video and excellent comments from the reviewers. Good to know that there is a community that has a similar investing style. I’m 63 and have a 15% allocation to high yield savings and 85% stocks. Vast majority of sock allocation sits in the S&P 500. The last 13 years have been amazing. With the understanding that this high return era may be subsiding, I still believe the S&P is a good “Global” index. If you’re in the S&P it’s highly likely you’ve got an international presence.
Never understood why to invest in bonds, been 100% in stocks over the last 35 years, retired at 50 ten years ago despite only working 11 years full time over my career. Worked for me.
I'm a little confused by the suggestion to be 66% in international and 33% in us stocks. If we are taking a market weighted approach, the us makes up 50% or more of the world's stocks, depending on the source you look at. I haven't seen anything that consistently shows the us as only 33% of the world market. Often it is the other way around, depending on performance that year. Why the suggestion for such a heavy weight toward international? I understand that is how the data comes out and the authors are only suggesting based on their findings, but it seems odd to lean so heavily against what the market weight is.
Lots of international funds have underperformed the S&P500. This study ‘doesn’t’ indicate ‘what’ international equities. Much simpler and safer to invest in the S&P500, IMHO.
Yep, I think the US is generally around 70% of the world's market capitalisation, or a little less. Also, I had thought over the last 30 years the annualised average performance of the S&P 500 was better than that of the MSCI World index, but I'd have to check that. If so, that would tend to indicate leaning into the USA rather than international - unless you think things are going to change for some reason.
@ That does seem a little weird that they would recommend something that strongly mirrors the S&P 500. Since inception in 1987, MSCI Workd market has returned average of 8.56% whereas my S&P500 employer fund since 1988 has 11.17%. That’s 2.61% below the S&P. The 3yr, 5yr and 10yr have been about the same. Not terrible, but over a 30 year career this would have had a significant negative impact. (…past performance is no indicator…..). I like to do a 40 year comparison analysis with a monthly contribution of $500 to see how things would shake out over the long term. With the 60/40 International mix you would have made $2.66 million vs $3.84million with a 100% S&P 500. Even with a more conservative 10% S&P return, a 100% would give you $2.77 million. That’s a big chunk of money to leave on the table.
agree with this and i am in 100% equity and can seriously consider early retirement .. As you correctly mentioned you must be ready for huge gains as well as huge falls and the discipline to stay invested For young folks saving is important but how you invest those savings will determine if you have 1 million or 5 million when you get to your 50’s
Thank you! I’ve been saying this for years!! I plan on retiring at 63 with 1.3 mil in the bank and roughly a $78k pension. My goal will be to leave the money in stocks and only withdrawal the dividends.
I am a 67 year old retiree with a pension and social security that provides 100% of my retirement income needs. Yes, I am one of the fortunate ones. Currently, I am invested 90% equity and 10% cash and within that equity figure, about 60% is in S&P 500 Index or S&P "style" mutual funds. If I had to advise a young investor, (as I did with my two daughters) I would say that a S&P 500 Index should be your baseline investment. As Erin pointed out, a lot of the S&P companies have a significant exposure to international markets, so I am less bullish on putting too much money in that area - maybe 10% or less. I also like the "Three Bucket" portfolio strategy (Long, Intermediate, Short time frames) which can be adjusted to where you are in life's journey.
I’m 69 with a similar investment profile. I use iShares EFTs mostly: ITOT, IVV, HDV; my Vanguard funds are VFIAX and VYM. 28% in cash to get through the dips. 😊
Of course, all else equal, 100% equities is better. But in many cases, all else is not equal. People may panic sell when the market crashes, withdraw from their 401k when they leave their employer or for an emergency, or invest less overall because they are all in equities. Having more in bonds or cash may prevent people from doing that. If 100% equities is better than having some bonds, isn’t 200% equities (by using leverage) even better? It can be based on average returns, but may not be based on risk. Point is, what’s best for each person varies. I’m 90% equities and don’t plan to change.
She asks "Can you stomach your portfolio being cut in half (or 70%)"... for anyone seeing retirement in the next 5 years the answer almost HAS to be "no". I don't think the majority of investors realize how depressing that will be when you lose half and feel like you need to work several more years (or for the rest of your life).
@@ZCAR355 I don't think that will happen again because in 2022 the 10-year started around 1.75%. Starting 2025 around 4.75% should make a huge difference.
I think I'd be ok with that, because I invest mainly in ETFs. At the end of the downturn, the market will return to its usual levels and then some, and because ETFs track an index not the companies, the ETF itself takes care of some companies dropping out and others stepping up. So, a 70% downturn (for people in the growth phase who still have a job, anyway) is really just a massive buying opportunity to buy bargain equities. In any case, a 70% downturn would be massively unusual. It's like a 1930s style great depression, not like the 2008 or 2000 downturns. More typical would be a drop of 30%, or in extremes perhaps 50%. And if you're aware of current market behaviours, you should see it coming and not get caught out. For example, the market is currently approaching the peak / hype part of the market cycle (look at the pricing of the magnificent 7, which have been driving the S&P, in relation to earnings), and a downturn sometime is pretty much inevitable - which is why Warren Buffet is piling up cash for buying opportunities during the downturn. So if you need to do something to protect yourself (like you plan to retire in a few years and want to avoid volatility / downturn exposure) now is a good time to build up cash. If you're a long term growth investor with a time horizon of decades, you'd likely just keep on going and ride it out. It might be another bumper year or two before the downturn. And if you look at the charts for past downturns, there's a period where it falls before it falls further ... so you kind of get a warning to get your ship in order before the bottom really drops out of the market.
11 months of investing. $67k saved, debts cleared, and a portfolio just shy of a quarter million. Taking my finances into consideration last year was worth it in retrospect.
Wow that's impressive. I don't mean to be all nosey but can you share how you're doing it? Everything about investing seems quite complicated.
I didn’t have prior investing experience. A CFA, Herman W Jonas has taken all the guesswork out ever since I got into his program. My initial capital of $5k invested over the short term yielded me huge profit plus bonuses. It’s all about accumulating wealth through compound interest investments.
Do not forget that when it comes to investing, prices can be erratic, rising and declining quickly, often about companies' policies, which individual investors or “experts” do not influence.
I'm currently in a hopeless place with my finances. My new year's resolution is to improve my financial situation. How can I join his program?
Hermanw jonas that’s his gmail okay
60 years old all equities retired and the key is to have plenty of cash in a HYSA for at least two-three years with $0 debt. I own everything house, car and $0 CC debt with living expenses in a regular checking account and working part time. While working as a fitness instructor. So plan plan plan...Good info Erin
This is my plan too! I’ll be 52 this year and plan to retire in 3 years. All equities and 3 years of expenses in a HYSA. I may adjust my equities to include a dividend fund like SCHD though.
Adding SCHD/JEPQ will help with dividend growth/income also
Did you spend at least 4% of your investment portfolio in 2022 when the market was down?
@@michaelhuber1107 absolutely
@@nino714 awesome yes I definitely invest into dividend stocks a few that doesn't pay but good growth
When I was working (retired now) I did 100% equities in my 401K investments over 38 years and during that time the investment advisor company my employer used to help us kept telling me I was too aggressive. So glad I didn't listen to them. We are at around 80% domestic equities with 4 to 5 years of expenses in cash and bonds.
…and you’re likely a multimillionaire now with 3 or 4 million at least.
@@glasshalffull2930and probably only spending 60k/yr... even less in down years😂😂😂
This is how you do it
Still do that today and I'm 15 years in my industry. I always mention that I don't want to pay the expenses for funds and think it should be freeeee
I'm glad you didn't list to them. When I stopped listening to them, then my $ start growing much more rapidly. I'm very surprised at how many of financial folks think that is risky. Really not. Just look at the history.
This is what I’ve done minus about .05% in cash, and it’s worked very well for me!
I love the dog in the blooper!
Retired and about 90% in equities and 10% cash for the rainy day!
Smart retired right there.
100% agree. I have done this for 30 years. Some years I was way down, but it has always come back and more. I will continue in retirement albeit with a larger cash bucket.
I am 84, been 100% in equities since 1980, worked very well for me
I’ve been investing since 2013 and even in that short amount of time, this strategy has also worked great for me.
Excellent. It's a good reflection of your emotional stability.
Im 31 also doing 100% but I need to tell you all to please be honest with yourselves when it comes to your risk tolerance. This lady's nice voice and calm demeanor makes it so you dont really understand what going in 100% means.
These last 4 years was great for us but i saw MANY people pulling out everything when the market started diving. 4 PEOPLE out of 37. I was able to convince FOUR PEOPLE to not sell out. People in their 40s who should know better. People in their 70s who had just retired lost almost 30% of their total earnings and didnt make it back because they pulled out. The fear people get when the market starts tanking is real. If youre not able to walk away from your money for at least a decade i believe a lot of you would mentally be happier having 15% of your money in a bank somewhere not in the same account as your emergency fund. I cant stress it enough how chaotic it can get for people who are risk averse
Exactly, people think this the stock market will keep going up but it is unpredictable. We can't assume we will never see a crash.
Its all about managing fears over staying rational. Someone doing a 100% portfolio needs to stay rational and calm during a down turn, and not panic sell.
The problem is that people who are doing 100% portfolio AND panic selling are the type of people who should not being doing that, and should stick to like... a 20/80 or higher bond ratio.
I’m still contributing, so it’s easy to tell myself that a downturn is a chance to buy or do conversions at a discount. That won’t work once I’m retired, but that’s why I like the bucket approach: lock in the gains and wait out the losses.
Great advice Erin. Most importantly it is what the investors tolerance level combined with age. Younger person has longer to recover from the ups and downs. I dont look at the markets every day. No need to as l am still in it for the long run at 60+. Have been retired for 4 years now. I am blessed l always say.
Love the out takes as they always make me laugh.
Cheers
It ALL changes when you get 5 years from retirement. I’ve been 100% equity for decades, hardly paid attention to the market, and even got excited when I heard it dropped because I was now buying cheap…..but when you are planning to stop working, and you have 3M, a 30-40% drop is 900k-1.2M decline just before walking away from work. It hits you MUCH differently, trust me. Wealth preservation is a different game than wealth accumulation, and the risk reward is paramount. You don’t see any family offices at 100 equities do you? HNW are usually 35%, and UHNW are around 18%. The more you have, the less risk you should take because you don’t have to chase returns. 1 mo ago when the S&P hit 6090 I went from 100% to 35%, with the majority in t bills for now for a risk free return above inflation. Sure they’re only returning 4.5%, but on ~2M that’s 90k per year and I’m back to wanting the market to crash again. When the yield drops below 4% I’ll reallocate, but will only go back to 100% stock if it’s way down, otherwise I’ll probably do the traditional 60/40. It’s unnerving that the same firms that predict a 10-15% return this year, also predict a 10 yr return of ~3% annualized…which means there has to be a significant correction for that to align.
Great to see you bringing up the outside the box strategy. I have been 98-100% equities for the majority of my life. It has served me well because I chose to stay the course. As you state, it is gut-wrenching to watch my portfolio drop 20-40% a quarter or half. However, in the long run it has been a winner. In 10 years of retirement, my portfolio has gone up about 3X. Scary but satisfying.
Love your work.
You sound exactly like me. I just hit my ten year retirement anniversary and my 100% S&P500 has more than tripled.
Get really educated on the history of capital markets and how they work. You’re a business owner- know the businesses you own and how they generate earnings (which ultimately drives long term share prices).
And remember if it wasn’t for the volatility, you wouldn’t have those superior long term returns. The one don’t come without the other- It’s a package deal. 😊
I’m not shocked by the results but surprised by such a high international play - I plan to use US Equities and smooth the ride with dividend etfs and cash
Good morning Erin. Good discussion and presentation of the data. I am an agressive investor and have been 100% equities my whole life up, riding out all the market events and never making an emotional decision to sell. I'm retired at 62, 12.5 years ago, and now have 1.5 years of expenses set aside in cash and treasury bonds. I remain an aggressive investor. I've never been a fan of bonds, target date funds, or an age based portfolio approach. I currently have @ 5% international and the rest domestic index funds. This isn't for everyone but has worked well for me and I have no regrets. You are correct when you say to expect a bumpy ride, some were breathtaking. The key is to have a plan and don't make decisions based on emotions, and stay the course. I enjoy the out takes and the dog is cute 😉Have a blessed week and I'll see you on the next one. Larry, Central Valley, Ca.
Great content. Again clear, concise and informative. As always keep up the great work!
I so agree.
I am 71 and retired for 10 years now. I am still 100% equities.
While I was working and raising a family, my 401K and IRA was all equity based mutual funds.
When I was over 50, saving and building a “pile” became more critical, so I learned and did long dated call options. Never more than 15% of my funds, but by not being too greedy, I was able to win and build my retirement even quicker.
Leading up to retirement and today, I no longer do options, but instead I have moved into a balanced portfolio of dividend paying stocks. These dividends are now my income. I no longer reinvest, but they feed my cash account.
Bottom line… I have the income I wanted, my portfolio continues to grow in value each year and my total withdrawals continue to be less than 3% per year.
100 % equities have clearly worked for me. I am just not a Bond guy.
I am 70 and working. The financial pros say they can't do what I've done for performance the last two years which is 54% cumulative. All individual stocks. And I have made mistakes in buying and selling too soon but you don't know that till later. I never had bonds.
@@BarryGoldmanBroker-AssociateCR good for you and nicely done. This is why equities are where to be! But…. You need to have the stomach to do it and to be able to not worry about a 20% drop in valuation. Happy retirement, once you get there.
This is good news and bad news. The good news is that it's a no brainer to be 100% in on equities based upon the data. The bad news is that if there is a correction that we've never seen before this could change the data in the future. We've had gains that we've never seen before in the last 15 years, it would be dumb to assume that we can't see losses like we've never seen before in the years to come. Great video.
_The bad news is that if there is a correction that we've never seen before this could change the data in the future_
While that's not wrong, consider that if equities drop 80%, the dollars you're holding will probably not be worth much either, nor the bonds, since those would be subject to horrific deflation. If you're planning for the worst case, you'd want to hold gold coins and (surprisingly) firearms and ammunition because society would be in a terrible place and "things" are better than "money" at that point.
You didn’t notice the 2000 Tech Bubble or the 2008 financial crisis? Seemed to me those were things anybody living had never seen before? Certainly, if you’re retired, you should have emergency funds to outlast a multiple year downturn.
Would you rather have a portfolio that gets a 50% drop or one that only drops 25% at the same time? Dumb question, right?
How about if the 50% drop cuts the portfolio value to $500,000 and the 25% portfolio only drops to $300,000?
Sure, but what if we see inflation like we've never seen before? Why are all those advocating a "safe" portfolio sure that won't happen?
Worst drop was in 1987 since 1929. I was invested then. Many family members were invested at the time. We managed to survive. Its not as bad as investment advisors always warn about. If you panic, then its very bad. The safe investment path is just removing fear from investing.
I started my nursing career at 29. I went 100% equities into my 401K. By 53 I reached $2 million. Not bad for 24 years of saving. Not to mention $500k in my Roth IRA. Also a $125K mortgage at 2.125%. Obviously no rush to pay that off!! I’ll stay equities until I’m dead
Completely agreed. If you have a long term time horizon ahead of you, go all in on equities.
If you’re retired, it might make sense to have 2-3 years cash in reserve to ride out step down turns and then everything else in equities
I’m a personal finance nerd and you have the most informative content. I always learn something new.
My daughters are 31 and 29, and I have them 100% equity funds, as they have 30 year timeframes. As for me, as a 64 yer old retiree, I am 90% equity and 9% cash, 1% bond. The cash & bonds are 4 years worth of expenses, at this time, before social security. With my equities, 38% are strong dividend payers. As long as I have cash to cover a few years expenses, I am perfectly fine with heavy equities.
Exactly my strategy and I’m 64. Have been 100% in S&P 500 since 1990.
This is what I do, and I just retired last spring. I've been heavy equities since 2002, when I realized the traditional approach didn't save me from the Y2K tech crash and I had to figure out a better approach for myself.
Likewise, I am 65 and until 2023 I was over 95% equities. In 2023 I took out 2 years worth of living expenses and put it into a CD ladder and money markets. Since the market did so well in 2024, I took another 2 years worth of expenses and did the same again. If markets crash I am comfortable. I even have some funds to use if a 'buy' opportunity arises.
Really bad move considering the long bull market. You should be 50/50
@@lesbolstad Been hearing that for a couple years now. Meanwhile, the s&p has had 20+% returns in each of the last two years! I've got plenty of cash to get through a downturn, and only gets better in three years when I start collecting social security!
YES!!!! Finally! I've always been invested in stocks, never in bonds. I've just not seen the performance and/or stability in bond funds when I've done my amateur/superficial (compared to investment professionals) look into them. I've had multiple investment experts always push the target age funds, or push to invest a given percentage in bond funds, and when I press them on "why?", they go back to platitudes. And when I push them on those platitudes, they then fall back on "well, it depends on your risk tolerance" statement, like it's some kind of get out of jail free card. So, I've always stayed in stocks, with a 1-2 year cash reserve.
SO GLAD YOU POSTED THIS SEGMENT! 👍
It all comes down to using rules of thumb and disregarding current market conditions to determine risk. These rules of thumb rely on 100% negative correlation between bonds and stocks which isn't as reliable as it was in the 80s and 90s. Backdating investment strategies ignore important changes that have occurred. We are no longer in a long-term trend of falling bond yields (rising bond prices). Globalization has reduced the value of diversification across national boundaries. With the increase of employer 401K plan use, index funds are starting to distort the market and the increase of funds entering the market are raising P/E ratios as more money is chasing fewer stocks. If you don't understand the assumptions behind those rules of thumb, you won't know when they will break down.
@@darrenmatthews1667 Please don't take this personally, but that sounds EXACTLY like the wonks I was referring to. Lots of buzzwords and esoteric phrases that, when pushed as to "just how long should I suffer employing your strategy that hasn't worked in a LONG time?", the response is sometimes literally a shrugged shoulder.
@ Ha yeah. No offense taken. I did sound wonky. In the end, no one knows what happens next and many times I made the right decision for the wrong reason.
I'm 60 now, for about the last 30 years I've been around 90% stocks, 10% cash, 0% bonds. I was interested in Bonds in the late 90s and studied them, but I just never could find any evidence that it was a wise thing to do in the declining and then low interest rate environment.
I can stomach the risk after 2008's huge fall. We've been 100% index fund mix of equities since and have had no regrets. Only a few short years to retirement and the only thing we'll change is just keep more liquid cash in the HYSA. You learn to ignore the pundits and the bumpy ride! Thanks for the great content!
100% stocks, 100% of the time! This is how it is for me at 51, and how it will be for me until I leave the earth!
95% domestic 5% bonds😊😂..I'm 54
With what duration of cash on hand?
@@jasonbroom7147 Very minimal cash. Our situation doesn't require we keep much cash on hand.
@@jasonbroom7147 We have minimally cash. Our situation doesn't require much.
totally!!!!
100% in domestic equities at 41 with a year worth of an emergency fund in a HYSA. 60% SnP, 19% SCHD, 13% SCHG/VGT and 8% GOOGL/JNJ. Great info Erin!!!
I’ve been essentially 100% equities for 30 years (I’m 52) and it has been far, far, far better than some “balanced” approach that some advisor would have charged me to allocate. I’m many millions ahead of where the conventional wisdom would have put me.
Exactly. Most "advisors" are useless parasites, IMHO.
I'm a 100% equity investor. Market downturns means there are bargains to be had. Cha-ching!
I have been doing this for 20 years and I'm fine with how it has played out.
i am 100% in equity since i was 29, now 43 with 1.1 M in my portfolio, no student loan or mortgage, if market crash or down 40% i always add more in, and i personally love market downturn, that when you buy share for less.
You are a beast!!! Keep up the good work!
That's awesome. I did the same, and I hope it works as well for you as it did for me. I used to find it a fun/challenging game - when the market dropped, how much can I add to bring the value back up? It was easy the first 10 years, but it became impossible as the portfolio increased.
@@Sylvan_dB when market drop like today, buy in with whatever you have and then save, buy again later when it drops again, the beauty about index is it never drop to zero. The price of funds will balance out in the end, and over the long term, you will gain a lot.
You sir have won!!
@@Sylvan_dB Indeed. When your portfolio increases to over 8x your current salary... its pretty hard to find more cash to buy during downturns, when all the extra cash you have amounts to less than 5% of the portfolio, and this constantly decreases as time goes on. But hey, its still better than not buying during a down market.
I am 100% for it. I have always been at least 95+% invested in equities. I am now more or less retired and am still all in with equities other than a cash reserve for just in case expenses. The key for me is now to be flexible with spending if necessary. Yes, it can be a very bumpy ride at times but to me the rewards have been VERY good!
Appreciate your analysis. I believe in all equities and I’m 69 and still working
This is my plan, all equities throughout life. 60% US , 40% international
How have the International performed?..haven’t they been trash for the past decade or longer?
I wish people had been talking about this 20 years ago when I got my first 401k; I’d be retiring now instead of needing to work another 10 years.
In 1996 my wife told me she did not want to work till she was 65 yoa. We had control of our debt, so I went hard into stocks, with 50% in cash to buy on sale whenever possible. (Cash paid much better back then.) Twelve years later we walked away from our jobs, making more $ than working. Sixteen years later, we are blessed, taking out 2% each year and oh yea, some cash to buy stocks on sale.
You guys retired in 2008? My God, you brave soul. I imagine you knew enough to be recession proof?
@@MattyLiam333 They are multi millionaires from the sounds of it.
With that perspective, do you think the market is currently oversold? Have you considered lowering your stake in equities to stockpile more cash for when they go on sale again?
@@TheFourthWinchester yeah people don't tell the whole story
@@jasonbroom7147 you mean overbought.
Totally agree with all your well presented points, Erin. Calculate your living expenses, then calculate the amount needed to provide for those expenses, then double that number to allow for a 50% crash. 90% in broad-based index fund, 10% in HSA, draw from HSA and rebalance yearly. Thanks for your work, always inspiring.
I think you meant HYSA (High Yield Savings Account) and not HSA (Health Savings Account)??
@heidikamrath1951
Sorry, I missed an 'a' !
I meant 'a HSA' aka a high yield savings account....
I am in support of this approach. I currently have 95% of my investments in equities and I cannot foresee myself ever getting more conservative than 100% in the S&P 500. I am currently 53 yo and have been investing for 34 years now. I have limited my international exposure compared to how I invest 30 years ago. I cannot see me ever having mor than 20% of my equities in international stocks.
Exactly, about the international stuff. Everyone tells you that you gotta do this, you gotta do that. I watched my international funds. The returns sucked compared to what I get from domestic stuff. You do that long enough and after awhile I just stopped listening. I look at what is producing for me, not what it isn't.
@@wmb9419 I also looked at the international funds for a while and they just weren’t performing. The truth is there are a lot of international funds out there and maybe one is kicking A$$, but it’s just so much easier to go S&P 500.
EXELLENT VIDEO! Wish I had seen this 50 years ago. As an example of someone who did stay heavily in equities for 50 years and a couple of time periods did go to a more conservative 30% / 70% mix I can tell you it was a mistake going conservative even though a small time period each time. I retired 6 years ago and have been ~95% in domestic ETF’s & MUTUAL’s. 50% of those in the Fortune 100 and another 25%. -35% in tech and the rest in consumer products & various cap funds. Portfolio is up ~25% after 5% withdrawals . I keep 12-24 months in cash & laddered cd’s. Use these in a down mkt when needed. I’ve learned to stomach the dips.
I'm 72, and 100% equities. One further step is having modest equities in IRA (SP500 ETF), and more aggressive stocks in Roth. Im relying on the IRA for income via RMDs, and Roth for hopefully greater growth (fun money and inheritance). Also use the Roth for 'cash' reserves. I can get cash in 3-4 days, no taxes.
My FA talked me into a portfolio of 100% equities last year. There are 56 different individual invested companies in my Ira. I left my roth with the same vanguard funds that were in my Ira. My Ira gained 23%, my roth only 16%. The risk is absolutely worth it. Since i am in my early 60's it pays to stay somewhat aggressive. This video is spot on and i commend you for it's content, very well done. I also keep some money in a protected indexed annuity and keep 10% cash invested in CD's. Retirement is good so far. Never invested in or liked bonds.
Retired debt free with all equities invested and we have enough in our money market and T bills to last us through a few years of down turn. We can actually cover all of our expenses with our SS.
Hi Erin . I will let you know that I am about 90% equities, 9% cash and about 1% fixed income. I have been this way from my 20s and have benefited greatly for not doing the bond or age fund approach. Today, as I am retired, I do plan to go higher in liquid short term basically cash. (Am locking in Interest rates for max of 3 year for uneed cash).
I particular dislike the age target funds as they put people into more FI based on solely on the persons age. And if that person got older at the point when rates were rising, they were gong to see a drop in the NAV. that would dramatically cause portfolio value decreases.
And there is anterestnig side effect of this strategy. It allows me to only need to withdraw about 1% of the portfolio each year. And for those who thinkI must have had a really high paying job. For many of the years it was under 100K. My son now makes much more than I ever did.
I have no doubt 100 percent equities gets you the best return over time but I don't have the temperament and my wife sure as hell doesn't have it. I've been 50/50 for a long time and while I won't be as rich as some, that's something I'm willing to accept.
All investing in personal. If you have enough for YOU, who is to argue about your strategy being safe.
Thumbs up for the "wife sure as hell doesn't have it" ... :) ... but ... my wife likes to say I told you so ... --- so she is letting me do it my way ... she wins either way... from my success or her ability to say "I told you so" every day as we split a 6" subway sandwich cuz I was wrong ...
If that’s the price you have to pay to sleep well at night, so be it.
Better to just invest globally and hold 3 to 7 years cash.
@@carlyndolphin Probably but no way in hell I have the temperament for that either. FWIW my method has made me enough money to satisfy me and that's all that matters to me.
Excellent video! Keep up with the great work! Thanks!
I retired last october… been SO FUN since then.. my exposure to the stock market since I retired is all in income ETFS… they are JEPI and JEPQ.. income funds that pay about 8% dividends a year and hopefully some stock exposure gains long term… I also invest in sports cards.. got about 10% invested in that alternative asset...
I never could do 100% equities once I got in my 50's (admire those who can), but I am definitely 100% in on "Erin Talks Money" for information delivered with grace, humility, and a dash of sass occasionally! Happy New Year 2025, Miss Erin!
Wow the professionalism of your video has really stepped up. Everything is looking great! Graphics and transitions and all that.
Thank you Erin. I’d say this is one of the most important videos you have released. We’ve been in 100% equities for 30 years and were in a position to retire without a drop in income at about 55. We both love our work so who knows when we will retire but it will be with a comfortable income that will allow us to share our good fortune.
Thanks for the great work you do helping people.
Cheers!
I'm 100% in S&P 500 index funds and totally fine with it :).
And save loads of dollars on fees.
Same here
I Agree. Retiring soon.
The Cederburg paper uses a globally diversified portfolio in its modeling. “An optimal lifetime allocation of 33% domestic stocks, 67% international stocks, 0% bonds, and 0% bills vastly outperforms age-based, stock-bond strategies in building wealth, supporting retirement consumption, preserving capital, and generating bequests.”
The S&P 500 is US only and heavily concentrated in a handful of technology stocks. The top 5 holdings currently make up ~27% of the index and they’re all tech. If you want to follow the conclusions of this paper, you need to add international diversification.
Greatest investor in my lifetime is Warren and he says index funds are best for individual investors
Perfect timing for this video. As a mid-50s investor, I've been 100% equities for years. I've been trying to decide whether to switch things up a bit as I get older. This definitely makes me want to do a little more research before moving forward.
One of the most important things is to establish an emergency fund that could carry you over several years of a down market. If you’ve got that and a million or so in your portfolio then you can be more aggressive. Best of Luck!
Stay the course!! Just keep an emergency fund with 1-2 years expenses. You are entering the biggest building years.
@@jameschaves5723 agreed.
I’m 100% equities and have been for the last 15 years, with at least another 20 years to go before retirement.
U da man! I hope you are staying away from international funds.
Yeah unless you plan on retiring in the next 10 years this makes sense.
100% in equities means you have NO emergency funds. It's one thing to have all your investments in equities, but have a few years of expenses in cash or short term us treasuries. Though it hasn't happened recently, with a downturn followed buy a few years of average no-growth, you'll be selling your equities at the bottom, and likely never be able to catch back up.
It goes to risk tolance, not risk tolance of volitility, but risk tolerance of having to severely curtail retirement expendatures.
All this is subject to how much investment $$$ you have, because if you've been investing for decades, and kept your spending habits reasonable, you should have more than enough to create a barbell of cash cushion and equities, to allow you to use the cash in the downturns, and benefit and replenish when the market is prospering.
I agree with the comment about home bias in our investing portfolio. Here is just a random sample of companies from an international equity ETF. Many of these are household names in the US and are really nothing to be afraid of: Nestle, Unilever, Shell, Toyota, Sony, Novo Nordisk, Novartis, Roche, LVMH group(Louis Vitton, Moet, Hennessy), Royal Bank of Canada.
There are a boat load of international funds and most I’ve looked at have a poor long term performance.
I've been doing this for 8 years... yeah it works. Keep the principle, live off divvies, heirs are happy since I don't die with zero. Slowly moving everything to Roth - seems to be working fine for me.
Thanks for the video. It comes down to determining your willingness, ability and need to take risk. Also how is enough, money after a certain amount just becomes excess and you likely will never need it, so why risk it. This is all good until the market crashes and people in retirement don't have time to recover.
agreed. Why the need for excess? Enough is enough... after that, preserve it.
How specifically do you define "risk"?
I was 100 percent Equities in my 30s, 40, and 50s. It was the right choice. Now in my 60s and retired (mostly) I am 80/20. And yes, an emergency fund in cash is crucial at any stage of life. Your channel is among the best financial UA-camrs. Clear and concise.
80/20 sounds pretty heavy so close to retirement. Bonds have stunk the last few years though, all the risk of equities and negative return. Though yields getting close to 5% gives more upside
Great video. I think the key to an aggressive portfolio is to change your outlook on downturns. As u said, cash is key. With it, folks should think of downswings as buying opportunities - it’s a rewiring for a lot of people. As you get older, increase the cash reserves to cover expenses but also to take advantage of those buying opps. I’m not so keen on international exposure. For me, it’s always underperformed so I’d prob switch that allocation rec that the report noted (for me).
No. Your cash loses more in foregone gains than the extra gains you'll get by keeping the cash for a downturn.
Good topic and content. I think of retirement planning like a football game. Winning the first two quarters isn’t essential, but by the fourth quarter, you want to leave no doubt you’ll win. Playing too safe early in life-avoiding calculated risks in career or investments-can hurt your ability to build momentum. The goal is to take smart risks early, grow steadily, and secure a strong position so you can confidently cross the retirement finish line.
I started with 100% in my 20's, now in my 50's I have no plans to change anything. I think the biggest thing for my household is being debt free and living beneath your means. When your only monthly expenses in retirement are easily covered by SS money, all the other retirement savings is gravy at that point. My biggest concern is being able to make the switch from a savings mentality to a spending mentality.
Major issue for me. I can’t let go of the money
Same here. I've reached a point where my distributions, dividends and interest are so huge that I can't begin to spend it. There's nothing that I need or want, so I give a lot of it to charities, endow scholarships, etc.
I came to the same conclusion about two years ago. I am 100% equities since then. Results have been phenomenal since then. Fits my investment style and tolerance for risk.
Thank you for the content!
Be careful to recognize that the last two years were very much outliers in market history. It’s easy to stick with 100% equity when the market is compounding at 20+% per year. It’s much harder when half of your portfolio evaporates in a nasty bear market. I’m 100% equity, but I regularly look at my balances, halve them, and say ‘yup, that could happen’. Be prepared or risk capitulation to a bad market.
@@s0cr4t1c What if the market doesn't stop compounding at a highish rate but inflation races up? How good would that make you feel about a high fixed income portfolio?
@@s0cr4t1c agreed, and a 50 percent loss means you need 100 percent gains to be back at even. A 70 percent drop requires a 233.33% gain to get back to even.
These historical and mathematical facts have been widely known for many decades.
@@GetStrongfit - Um, look at the market's jagged line that goes upward shows the market has consistently gained it back and more, so why people get such mileage out of such statements boggles the mind. The problem is not gains and losses but timeframe of when you need the money.
From personal experience, my 100% domestic equities as far exceeded my wife’s 60% domestic equities 20% foreign equities 20% bonds and it’s really not even close
I think with a historic 8 to 10% return the S&P or something similar is an almost no lose situation.
Thanks for the great content
Erin, I have sent your links to many of my friends and family. I have my adult children watching you. This equities video was very helpful for me. Of all the financial people that I watch, you are defiantly my favorite. What you produce is high quality and super helpful. Thank you for all the good you do.
I'm 90% stocks, 10% cash. I just retired, so we'll see how well this works out.
That's pretty much exactly my plan... I'm about a year out from retirement.
Nice! Happy Retirement!!!
That's the Warren Buffet plan.
59 1/2 Retiring early in around 5 mo. I am also around 90 stocks and 10% cash. In the next 2 years, I'll likely shift to a process of 3-4 years of cash and the rest in stocks but a high % in dividend etfs.
I've been doing exactly this type of investing for exactly the reasons you list. It felt so good to have my theory examined by an expert (SSRN, You). I downloaded the 81-page SSRN report. Whew, that is a bit much to digest. Having relied on your advice in the past, and now learning your strategy matches mine, I'm resting more easily. Thank you and God bless Erin!
I am 53, I just switch over to 60/40. I have some 80/20 and some cash. I don't need that much, once I have my mortgage paid, I won't need too much. I don't have the stomach for 100% equities.
Love how you challenge the prevailing wisdom - even for those who are already in retirement. It is always easier to manage withdrawals and spending around bear markets, which are usually much shorter in duration relative to bull markets. Your commentary around US companies with international operations is spot on.
I’m 52 and happily invested 100% in US equities. International stocks tend to drag the portfolio down more than they would ever help and I view bonds in the same way. Maybe I’ll change my views in the future, then again…. Everyone has to invest in a way that suits their needs and goals.
Depends what years you look at. US stocks did terrible 2000-2010, but Intl stocks did well. That’s why we need to diversify.
I've always been 100% equities. I recently retired and only then started the bucket strategy and keep a year or two of expenses in high interest savings or CDs.
Lots of talk of the market being inflated. Do u think there will be a recession or downturn anytime soon? I recently came into a sum of money. I bought a house and paid off half of it. The rest is neutrally geared and just ticks away in the background. I barely even think about it. I still have around 400K cash though and would love to turn that into as much as possible of course but I’m uncertain about my next steps… Do u think now is a good time to invest in stocks, or should I wait for a more favourable opportunity?!
It's just a minor correction no need to sell stocks here
I for one believe investors should start off with the traditional S&P ETFs for a solid foundation, then move to getting in on different asset classes and maintain discipline to minimize risks and maximize positive outcomes
I do think there will be a correction or recession. As far when? I have no idea. It's good to have a nice balanced portfolio, including cash on the side, so we're forever ready to trickle in when a downturn occurs. Having had my portfolio steered by a CFA I guess it's a smart move to choose experience and professionalism over financial videos online if you're looking to really get on the positive side of the market, being guided avoids you unseen mistakes and has gotten my startup of 200k - $1m+ in twenty seven months with downside risk...
Who's your coach, I'd really appreciate if you don't mind. I’m trying to get an advisor for guidance but it’s been a hassle. Anyone who is fee-based is hard to find and usually have a heavy workload.
Oh very well then, conducting due diligence on *Lina Dineikiene* should suffice. The lady's been around for a while and her recommendations and market entry and exit points are quite top notch
I’ve always been 100% TSM index. It has served me well, even with 2001 and 2009.
Bonds, to me, is a losing game.
Outstanding video, Erin! Keep the content coming! I’ve been pushing my friends to follow you, zero political nonsense and clearly focused on relevant topics.
100% equities does not seem too crazy especially for someone who has quite a few years until retirement, but the 67% international does seem crazy to me.
The chart at 5:07 that shows the volatility is an eye opener. I think a nice addition to this is the number of big mover days (up and down) in the stock market and how important it is to stay in. I work on the belief most major moves correct in three years. In retirement I keep two years of expenses in High Yield Savings and CDs. The 1/3 domestic 2/3 international is just something as you say I am not "emotionally" comfortable with regardless of the data. Thanks for another informative concise video.
80% S&P 20% Company stock. No reason to be bonds till you're 60 imo. Target date funds only exist to charge you fees 🙄
Edit: really good video. After 10yrs working I realized much of this based on my portfolio performance. Good to see there is data and I am not crazy.
I'm very comfortable with 100% US & International index fund equities with a two year emergency cash pile in the HYSA. Everyone's risk tolerance is different. Thanks for the perspective!
Sorry, but my entire ride or die is FXAIX (Fidelity’s S&P 500 Index Fund). I am 100% allocated now and will be 100% the rest of my life. I’m sure people will point out “the lost decade”, but a one time event isn’t enough to deter the statistical likelihood that the S&P will keep going up
Similar here, the lost decade was a bit before when I started. But if you buying you want it low anyway. planning on retiring in 6 years so any stagnation I hope happens and ends in the next 6 years while I’m buying.
Like it !!
100% agree
I would add some international.
I’m in a global fund. 65% weighted on North America
I’ve always been 100% TSM index. It has served me well, even with 2001 and 2009.
Bonds, to me, is a losing game.
Outstanding video, Erin! Keep the content coming! I’ve been pushing my friends to follow you, zero political nonsense and clearly focused on relevant topics.
I get plenty of international exposure through domestic equities, just not a fan of unstable economics and rapidly changing leadership in these countries.
We are doing this portfolio (but total US stock index fund) atleast for now. May change in retirement. Good to see it validated! 😅
JL Collins is right! 😊
but JL Collins did not recommend this portfolio; he recommends total domestic (U.S.) stock plus total domestic bond index funds.
@@curt5802 from what I have read he recommends total us stock index fund portfolio for the “The Wealth Building Portfolio”. I have updated my comment a little to reflect what we are doing exactly.
At the bottom of the 2022 correction, I traded in my target date fund for 100% S&P 500 within 401k. One of the best financial decisions I have made thus far.
I’m 50. I plan to retire in 13 years. My retirement investments are allocated as follows: 72% US stocks, 13% Foreign stocks, 13% bonds, 2% in Crypto
I’ve been retired for a couple of years and am now 58. I’m 100% invested in stocks/etfs and I’m comfortable with it. I have no debt and the house is paid off and I do have significant amount of cash in high yield accounts as a buffer in the event of stocks falling for a protracted period. It’s working so far.
100% in stocks. No bonds. 40% - S&P 500, 32% - large growth, 28% - dividend. 14 years 2 retirement. Just keep maxing it out & DCA.
Erin, great vid, I'm with you, I plan to have equities as my base, my most conservative investment. I had a slow-moving investment portfolio for a number of years until I went all in on S&P 500 as my base, biggest bulk, most conservative investment. I always welcome the big dips, because this means I'm getting great deals on more stock as I purchase on a bi-weekly basis. Hold for the long term and then it's not so risky. Great outtakes again. Look forward to seeing them at the end. Keep it up Girl, great stuff! Mark
It’s no secret why bonds have been recommended on your way to retirement, it keeps you working longer.
Just started saving and investing at 42. 100% all stocks. Nothing to lose, everything to gain.
Hi Erin! Great video! Based on my experience, I've always been 100% invested in stocks. If I can make 10%, on average, in the stock market, then why would I do anything else? I've never followed/believed in conventional wisdom, or target date funds. 😎🏆And, my emergency fund is in gold. As long as countries stack it, I will stack it
Glad to see someone finally discussing this.
I can see the all equities approach working if you have a decent sized cash emergency fund to cover expenses when the market is down. The 66% international/33% US seems weird to me. I feel like swapping those would be better, but then I don't have the data to back up if that's a good idea or not.
What a timely video! I was just researching some bond ETFs for when the time comes to re-balance and I was (reluctantly) thinking of a combination of USHY and SCHP. My 401k is currently 90% FXAIX and 10% FSPSX and I'm fine with keeping it that way. I may consider increasing the percentage for international but I don't see myself going over 20-30%. My Roth is currently all US equities and it's worked quite well the last several years so I don't foresee any changes there either. Thank you for reading though academic sources and taking the time to present them in laymen's terms, this has been very helpful!
What they dont mention is in that same scenario ending up with over $1 million dollars at retirement is what if the next year it's a protracted bear market.
Four simple words, Sequence of Returns Risk.
That couple would most likely run out of money or since they had no fixed income in their portfolio probably went back to work.
Simulations are neat but they don't take into account individual risk tolerances and goals.
If you are younger I do wholeheartedly believe most target date funds are too conservative though and prefer 100% equities for most with a long time horizon and ability to psychologically handle the swings.
Great video and excellent comments from the reviewers. Good to know that there is a community that has a similar investing style. I’m 63 and have a 15% allocation to high yield savings and 85% stocks. Vast majority of sock allocation sits in the S&P 500. The last 13 years have been amazing. With the understanding that this high return era may be subsiding, I still believe the S&P is a good “Global” index. If you’re in the S&P it’s highly likely you’ve got an international presence.
My kids are in their 20's and they are 100% stocks. I haven't decided when to recommend a change, but I don't see why it should be before they're 50.
Not even before 60. Let it buildup
Never understood why to invest in bonds, been 100% in stocks over the last 35 years, retired at 50 ten years ago despite only working 11 years full time over my career. Worked for me.
Wow, incredible information.............................
Those worst case drops are interesting! Good work, thanks.
I'm a little confused by the suggestion to be 66% in international and 33% in us stocks. If we are taking a market weighted approach, the us makes up 50% or more of the world's stocks, depending on the source you look at. I haven't seen anything that consistently shows the us as only 33% of the world market. Often it is the other way around, depending on performance that year. Why the suggestion for such a heavy weight toward international? I understand that is how the data comes out and the authors are only suggesting based on their findings, but it seems odd to lean so heavily against what the market weight is.
Saw another video on this. Worldwide study. For a U.S. Investor consider 25-30% International.
Lots of international funds have underperformed the S&P500. This study ‘doesn’t’ indicate ‘what’ international equities. Much simpler and safer to invest in the S&P500, IMHO.
Yep, I think the US is generally around 70% of the world's market capitalisation, or a little less. Also, I had thought over the last 30 years the annualised average performance of the S&P 500 was better than that of the MSCI World index, but I'd have to check that. If so, that would tend to indicate leaning into the USA rather than international - unless you think things are going to change for some reason.
@ That does seem a little weird that they would recommend something that strongly mirrors the S&P 500. Since inception in 1987, MSCI Workd market has returned average of 8.56% whereas my S&P500 employer fund since 1988 has 11.17%. That’s 2.61% below the S&P. The 3yr, 5yr and 10yr have been about the same. Not terrible, but over a 30 year career this would have had a significant negative impact. (…past performance is no indicator…..). I like to do a 40 year comparison analysis with a monthly contribution of $500 to see how things would shake out over the long term. With the 60/40 International mix you would have made $2.66 million vs $3.84million with a 100% S&P 500. Even with a more conservative 10% S&P return, a 100% would give you $2.77 million. That’s a big chunk of money to leave on the table.
agree with this and i am in 100% equity and can seriously consider early retirement ..
As you correctly mentioned you must be ready for huge gains as well as huge falls and the discipline to stay invested
For young folks saving is important but how you invest those savings will determine if you have 1 million or 5 million when you get to your 50’s
Retired 1/3 cash at 4% interest, rest in Nasdaq, swing of 38% down in ‘22, gotta let it roll, up 2x in 5 years, even with the dip!
Thank you! I’ve been saying this for years!! I plan on retiring at 63 with 1.3 mil in the bank and roughly a $78k pension. My goal will be to leave the money in stocks and only withdrawal the dividends.
I am a 67 year old retiree with a pension and social security that provides 100% of my retirement income needs. Yes, I am one of the fortunate ones. Currently, I am invested 90% equity and 10% cash and within that equity figure, about 60% is in S&P 500 Index or S&P "style" mutual funds.
If I had to advise a young investor, (as I did with my two daughters) I would say that a S&P 500 Index should be your baseline investment. As Erin pointed out, a lot of the S&P companies have a significant exposure to international markets, so I am less bullish on putting too much money in that area - maybe 10% or less. I also like the "Three Bucket" portfolio strategy (Long, Intermediate, Short time frames) which can be adjusted to where you are in life's journey.
I’m 69 with a similar investment profile. I use iShares EFTs mostly: ITOT, IVV, HDV; my Vanguard funds are VFIAX and VYM. 28% in cash to get through the dips. 😊
Erin great video💯
You are the best!
Of course, all else equal, 100% equities is better. But in many cases, all else is not equal. People may panic sell when the market crashes, withdraw from their 401k when they leave their employer or for an emergency, or invest less overall because they are all in equities. Having more in bonds or cash may prevent people from doing that.
If 100% equities is better than having some bonds, isn’t 200% equities (by using leverage) even better? It can be based on average returns, but may not be based on risk.
Point is, what’s best for each person varies. I’m 90% equities and don’t plan to change.
She asks "Can you stomach your portfolio being cut in half (or 70%)"... for anyone seeing retirement in the next 5 years the answer almost HAS to be "no". I don't think the majority of investors realize how depressing that will be when you lose half and feel like you need to work several more years (or for the rest of your life).
Unfortunately, bonds didn’t provide much of a ballast in 2022.
@@ZCAR355 I don't think that will happen again because in 2022 the 10-year started around 1.75%. Starting 2025 around 4.75% should make a huge difference.
@@UltimateStaredown Let’s only hope!
I think I'd be ok with that, because I invest mainly in ETFs. At the end of the downturn, the market will return to its usual levels and then some, and because ETFs track an index not the companies, the ETF itself takes care of some companies dropping out and others stepping up. So, a 70% downturn (for people in the growth phase who still have a job, anyway) is really just a massive buying opportunity to buy bargain equities. In any case, a 70% downturn would be massively unusual. It's like a 1930s style great depression, not like the 2008 or 2000 downturns. More typical would be a drop of 30%, or in extremes perhaps 50%. And if you're aware of current market behaviours, you should see it coming and not get caught out. For example, the market is currently approaching the peak / hype part of the market cycle (look at the pricing of the magnificent 7, which have been driving the S&P, in relation to earnings), and a downturn sometime is pretty much inevitable - which is why Warren Buffet is piling up cash for buying opportunities during the downturn. So if you need to do something to protect yourself (like you plan to retire in a few years and want to avoid volatility / downturn exposure) now is a good time to build up cash. If you're a long term growth investor with a time horizon of decades, you'd likely just keep on going and ride it out. It might be another bumper year or two before the downturn. And if you look at the charts for past downturns, there's a period where it falls before it falls further ... so you kind of get a warning to get your ship in order before the bottom really drops out of the market.