[USER]

Sequence of returns risk planning question. Take a look at your crystal ball — how much do you plan for in terms of market decline?

I’m okay with 25% for maybe 5 years, but am also prepared for 50%.

Realize there are many factors in terms of asset allocation, income streams, etc, but want to get a sense of what others are considering.

[Shawn]

Are you retired now? If you are accumulating the stock market declines are when you get rich.

Keep buying, or ideally find a way to buy more, during market declines.

[Amy]

You are OK with a 50% market decline. God! Well that is good but I bet you are the only one OK with that.

I lost 40% in the tech wreck in 2000, not all of its permanent loss, but probably 25% at least that basically never recovered( nortel, jds uniphase).

I am now OK with 15% drop before I get upset about it.

But now I buy mostly dividend stocks that I wouldn’t sell and I just harvest the dividends for income and I try to ignore the share price entirely

[Dave]

It’s not going to happen. If you are fearful, then DCA into market. You sitting in fear is actually hurting you.

Put yourself in a hedge fund POV, you want the stocks to be at a cheap price so you purposely kick off selling just to rebuy at the bottom and push it back up.

[Colin]

50% in five years would probably derail most people’s plan. I personally would consider that too costly an over-preparation.

If the market drops 50% in the first five years of my retirement well then hey I had a good run

[Tom]

We are in year 5 of retirement after 32 years of investing. Never lost a penny in the market corrections 2000 Tech/ 9/11, 2008-9, or 2020 COVID because we never sold anything.

Our portfolio is:

75% Total Market Index Fund (FSKAX)

20% Fixed Income

5% HYSA

Like I said we are in year 5 of retirement and our fixed income covers 150% of our expenses.

I am doing Roth conversions each year to round out our tax bracket.

A big multi year correction would actually be a plus, cause that would allow me to convert more to Roth.

But I’m not wishing for it an anyone’s expense.

We pay our taxes with the fixed income so we still haven’t sold anything yet.

Portfolio is up 35% overall since we retired.¯

[Mark]

I’m in the accumulation phase so I’m good with a 100% drop. Because I understand this ultimately is where the true wealth building happens

[Author]

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