[Kimmy]

For those who are already FIRE and hold mostly your asset in stock market, wondering how you are doing in this market down turn?

What is your strategy to deal with it? Given you’ve stopped working.

Genuinely wanna learn as I am in prep to reach my number and plan to stop working in a couple of years.

[Cody]

Holding “most” of your investments in the stock market is not usually recommended in early retirement (unless you have a very low distribution rate).

Most early retirees I know are allocated between 65% and 80% in global equity, but it depends on how much they plan to distribute over the coming years (and considering other future income sources, such as Social Security).

[Bella]

I sold half of my S&P two weeks ago.. just put in a whole bunch of buy orders from that money now that it fell

[Ron]

I am diversified in retirement. This is cushioning the overall portfolio as long term treasuries are up.

They represented 18% of my portfolio a month ago. Now they are 22%.

At some point I can rebalance LT treasuries into lower stock prices.

[Frank]

Hold a diversified portfolio that has worked well in decades like the 1930s, 1970s and early 2000s.

It will NOT resemble what is currently popular, which is “giant pile of total market and tech stocks, and smaller pile of cash arranged in buckets, ladders and flower pots.”

That only works well in eras like the last 15 years, but not in bad decades which could start at any time.

Or if your real strategy is “just don’t spend much money and continue to accumulate until death”, which is what anyone spending 3% or less of their portfolio is really doing.

But you don’t really need a portfolio strategy to implement “don’t spend money and keep accumulating.” Just someone to build your golden coffin.

This is a simplified version of what we use, which has a safe withdrawal rate in excess of 5% on a forever time frame.

There are many other variations, but they all involve holding only about 40-70% in stocks.

[Angelo]

I’m only down just under 6%. I hold a diversified portfolio. Gold and long term treasuries are up pretty good so far this year.

[Scott]

This is the key point – way too many people hold 100% stock portfolios and think that this means that they are at or close to FIRE.

If the goal is FIRE the portfolio needs to sustain life in the “near term” and the “stocks always go up over the very long term” argument is both true and unhelpful in bad markets.

[Nicole]

Stopped looking. Relying on my pension. Hoping it recovers in less than 10 years.

[Yaw]

I’ve already FIREd but 98% net worth in real estate. Keep DCA-ing into lower prices I think

[Matt]

In addition to 25x of expenses, I’m planning to hold 3 years of HYSA cash for market downturns.

[Max]

Retired last year in April at 55. Holding about 60-40. Down about 8% for the year but up since I retired.

My opinion this will blow over in a couple months and will be up slightly EOY

[Johnathan]

If you’re FI & not working the stock portion of the portfolio should mostly be money you won’t need for many years.

Other asset classes would make up the portion you’d be drawing from over the next several years.

[Jeff]

Golden ratio type portfolio. I’m pulling from my money market and gold allocations at the moment.

[Frank]

We found our base expenses are about what we get from after tax dividends plus rental income.

Thats plus our cash reserves would keep us from selling any assets for several years.

[Sheila]

I have 2 yrs cash. If things are still bad after that, I’ll go back to my professional work part time

[Angela]

Dividend paying stocks that have over 50 years of growing payments every quarter regardless of market (research dividend kings) are a great way to start your research.

You get paid every month if you have a diverse portfolio.

[Jake]

I’m not there and I’m not a professional by any means, but I would think a conservative approach would be calculated by a number of years to make your required minimum distribution to survive and be pretty happy held in an investment that has little to no downward risk.

The rest being in the best overall performance/risk ratio, essentially US stock market as a whole or large cap index fund seems very reasonable.

If your rate of withdrawal is 5% and you want to take the full amount even when the market is down, and you consider 4 years a pretty reasonable time for turnaround then you’d want to keep 20% allocated to low risk to draw from.

You can rebalance funds towards this when the market seems to be doing well, but specifically only draw from it when the market does poorly.

This also means you can have a set minimum draw amount, so you expect to draw 5% at the time of retirement, you have $1M so you expect $50k. But the market tanks the following year and you are looking at $850k.

You could withdraw the $50k from the allocated amount for 4 years before it’s depleted, waiting for the growth stocks to return to their previous value.

Again, I’m no expert, I welcome anyone with anything to add. I know this sounds like market timing, but I see it as a reactive plan, no a predictive plan.

And if the market keeps doing poorly it would be best to reduce living expenses if possible to stretch longer.

On the flip side the low risk allocation is missed potential gains.

[Blair]

We hit FI last year. I left teaching a few years earlier and my partner is still working (plans to leave later this year).

I am running a small business that should be able to generate about half of our living expenses in the next year or so.

So, we’re planning to draw down starting in January, but we’ll only need to touch about 2% of our starting portfolio balance in any given year. (while I am still running my business).

That said, this is crazy times, not because of a 10% correction, but because of the longer term economic impacts of the US administration’s policies.

[Tony]

We have a very outside the box style and portfolio.
Right now we are living off our taxable account. We hold high yield income investments.

Then against that portfolio using a safe amount of margin we sell options running the wheel strategy.

While we are bringing in less than we normally yield we are still doing fine.

We are being very conservative with our options at the moment. The ability not to have to sell shares is very nice in this kind of environment.

That said a portfolio like ours you have to give up A large portion of upside.

[Hin]

We FIREd a few years ago. Not worried since we have two years expenses in cash.

I am watching the markets like a hawk looking for the time to move my bonds back into equities.

Not time yet.

[Kelly]

My husband retired last year and I’m retiring end of April. I’m 53 and he’s 52, no pensions. We have several years of money outside of stock market saved in CDs and HYSA.

It is normal for stock market ups and downs so we aren’t worried and sticking to the plan.

No debt so expenses are pretty low. We have several nice vacations planned this year, if stock market is still bad we will not travel as much and might work a couple days a week as we both have a lot of marketable skills.

[Author]

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