We lived here for about four years and we went back to the States for the last six and a half, I think. I had a contract signing for a home purchase on February 19th. So I do think that starting with an All World Index is a very good way to start. Yeah, I’d be skeptical about holding too many UK stocks too. If any exceptional signup bonuses come out in the meantime, I’ll also send you a message to let you know so that you can take advantage of the best limited-time offers when they come along. Stocks would have continued their rise for the next nine days. Just finished reading your guest post on Physicians on Fire. I’m assuming this is due to regular rebalancing? I am curious as to why you chose the reference ranges you chose for your efficient frontier analysis. I was under the impression that once you have hit the sign up bonuses and used the points, you would want to close the card quickly so you can get back in line to get another sign up bonus after waiting the required period to be eligible again e.g. This is a very important and valuable article. Congratulations on your Companion Pass and your impending FI! Similar to MadFientist, I’m also at 30% international, although I overweight emerging markets because they have so much room to run. The market has marched upwards since then so if you had waited for a pullback, you’d still be waiting. Looking forward to more! When the markets started to recover in 2009, it didn’t feel like things were any better. Absolutely! This current crash is my first. No regrets about the debts! ;-). The COVID-19 coronavirus pandemic has caused stocks to crash. The picture at the top of this post is a picture of me drinking ~$200/bottle Krug champagne at 5:10am in Doha, Qatar (all thanks to an American Airlines award redemption). I use Betterment’s drift calculation: https://www.betterment.com/resources/portfolio-drift-rebalancing/ . So thanks again for the post, we now have something to work towards to simplify things when we do retire. Wie Cyberrisiken die Industrie gefährden. Join over 100,000 others on the Mad Fientist email list and get instant access to my FI Spreadsheet! Thanks for the taking the time to share the growth you’ve seen from it Brandon! I held on through the drop in March but when the markets “clearly” got ahead of themselves on the recovery, I sold a little. Thanks for sharing, Brandon! All I can find are explanations of what Limit Orders are– but I can’t find the button to actually execute it, or any sort of how-to content! To what extent, if any, do you invest in individual stocks? After the recovery continued, I sold a little more. I’ll also describe what I’ve learned from the current crisis and explain how I’ve enhanced my rules based on what I’ve learned. First card was the obligatory Chase Sapphire Preferred, as recommended by Brad. You are not adequately exposed to those industries because many of the businesses are smaller sized. or. Many people who post about this subject online also have businesses that qualify for credit cards. Maybe there is something wrong with my computer? The tail wind we have achieved from stock picking, mixed with some ETFs, has achieved a nearly 3% advantage over the S&P 500 benchmark, which leads to healthy compounded gains when we reach FI. Thanks for another great article. It was fascinating to see these huge market swings lately (10% up, 10% down etc.). I am 100% stocks as I’m in the accumulation phase of FIRE. If we see another big pullback and I deplete most of my cash though, I’ll definitely be selling bonds to buy more cheap stocks. To help you develop your investing plan, I’m going to explain all the mechanics of my portfolio. Sometimes I forget and it’s the 5th or 6th, but that’s the rule. Nope. Mint is nice for recording your purchases, but does nothing for the travel hacking side of things. The FAANG/tech stocks have helped immensely in turbo charging my portfolio. 03 Okt 2016. We also have some cards that we leave open (either they are no annual fee or we like the benefits so we choose to pay the annual fee). This brings us back to my problem at the beginning of this article – trying to buy stocks when the markets are tanking. roboadvisor)? I have a very similar spreadsheet and system. Those spreadsheets are clever. If stocks hit new lows before this virus is finished, I can sell bonds until I hit 10% and then, when stocks start increasing again, I can slowly build up my bond balance until I hit 20% (hopefully right when the stock market tops out again next time). It also offers the best currency exchange rates that I have seen. If you’re like me, you spend a lot of time each month adding numbers to your FI Spreadsheet, analyzing your asset allocation in Personal Capital, and charting your progress to financial independence in the FI Laboratory. Investing is emotional and the only behavior that will be rewarded consistently is patience. When I remembered, I decided to assume this mess could go on a solid year, so I should DCA from 70/30 to 90/10 over a year. Yes, getting back in must be excruciatingly difficult so that’s why I buy low-cost, diversified funds that I know I’ll never want to sell and then I never sell them :). Cash 5% I also have Small Caps in my portfolio now because of the same arguments that you are bringing. You are picking large size, growth, technology/finance, and momentum factors by buying a total stock fund. My new bond range is 10%-20% and I imagine that will continue increasing as the years go by. Actualize trust knowing composure. I wanted to clarify one thing. I don’t want to be sitting on a lot of cash but it doesn’t really make sense to keep adding to the FI portfolio either (since a <2.5% withdrawal rate could currently sustain our spending, which is extremely conservative). We then grab bonuses that we can use for cash back OR gift cards from Capital One, and whatever else comes our way. It shouldn’t be hard to find a referral link around the internet that will let you try the premium version free for 6-months. Still have about 4 domestic RT worth of points if I can earn about another 2000 on a couple different airlines. VT topped at $83 in Feb 19th, I purchased it down to $54. But, it’s only bc my pension is currently larger than our expenses. Thanks for sharing. Do you suggest I count this as part of my international allocation? If you look back to April of last year, I bet you would have thought that a pullback was imminent and as we know, it wasn’t. Your article did stop and make me think I should get a small amount of bonds now though. I’ve done some moderate travel hacking on my own but I’m looking forward to seeing if your tools/research can help me keep that points portfolio on autopilot (relatively). Ugh!…I know better than to do this but it’s so hard to resist. I told the seller that I would need additional money off the home to continue the purchase. I just want to share a piece of probably the most incredible luck I’ve ever had. The card companies are starting to crack down on excessive applications so now it’s more important than ever to have an intelligent strategy going in so you don’t anger the banks and miss out on the best deals. 18 months. Other thoughts from your readers on this? Would it work for foreigners? What’s your process for this? These decisions provide me with an aggressive but efficient allocation, as indicated by my own portfolio’s efficiency graph: To automatically generate an efficiency graph for your own portfolio, click here to sign up for a free Personal Capital account and then click on Planning > Investment Checkup! I don’t have fancy formulas for my rebalancing sheet like your example, but I have a simple setup that shows what my asset allocation ought to look like, what it’s at as of the 1st when I update my sheets, and the difference. It’s all the information I have rattling around in my head, but ORGANIZED. Once we get down to $3000ish in point value, we will use your tool to build up our points value again. It is often worth flying to Singapore then booking everything else from there. Before proceeding with an application though, there are a few other things to keep in mind when deciding which card to get…. Instead, I alter my asset allocation when my risk tolerance changes. Let’s return to the ranges I talked about before. Income from bonds usually gets taxed as ordinary income, so bonds are better off in a tax-deferred account like an IRA or 401(k). Bravo on the launch and love the new use of email campaigns. I read the points guy from time to time but honestly don’t dedicate enough time to really maximize his recommendations. The lesson here is that even picking total market index funds means you are applying factors to investing. You can easily find the best flexible points cards with my credit-card search tool by clicking the buttons in the Flexible Points section at the top of the page. As long as they keep me from sabotaging myself, they’re worthwhile. Very interesting discussion on FI investing strategies. Still wouldn’t be fast enough to catch a flash crash… but what other choices are there? And instead of buying fewer shares as the market dropped, as I did in 2007/2008, I planned on increasing my purchases at each stage. Side Note: It is surprising how easy it is to delude yourself into thinking you know where the markets are going, no matter how many times you failed to make accurate predictions in the past! When I switched to this system, it became easier because there was always something that looked cheap (even though the cheapness was only relative). Community See All. Imma recreate my portfolio spreadsheet with Brandon’s stuff as well as this drift calculation and see if I can sort out a slightly tighter management process. Is there any reason that I should NOT close out the cards after I have transferred the points to an airline program and used them for travel. I understand that my emotions are influencing me far more often than I like. A small tweak to your portfolio to include 10-20% small cap stocks will also improve your alpha. Unless I’m missing something, though, those are only cash->stocks. Glad you put this post together. Let’s create a graph, similar to the graph we made in the previous article, but instead of the graph only representing a two-asset portfolio, let’s graph portfolios containing all of the stocks in the market. Just earned the SW Companion pass last week – so now I’m off to give this a try! I knew that I had $x in cash that I’d be willing to deploy and I had $y in bonds that I could sell (to buy more stocks) so I determined the max I could add to my stock portfolio as stock prices decreased and I split up my contributions. Very useful info! Rather than fight who I am, I instead try to minimize the influence those emotions have on my investing with rules, systems, and automations. I know you won’t like this idea, but I’m actually looking at putting 1% of my portfoliio into bitcoin as a hedge against all the money printing going on. Hello, I have a small correction for the formulas in column F on the No-Sell Rebalance sheet: =MAX(IFERROR($D$2/$B$2,0),IFERROR($D$3/$B$3,0),IFERROR($D$4/$B$4,0))*B2. Hi – I am new here, and am also still learning about reward miles. So far this has worked well. Nevertheless, I started with 70% MSCI World and 30% MSCI Emerging Markets. Great article! As explained in the Safe Withdrawal Rate post, a 3.5% withdrawal rate is very conservative so I keep enough money in this basket so that 3.5% of the value of the portfolio could sustain our annual spending. I behaved exactly like you, except maybe that I caught your 2008 version of the falling knife :). When I was looking at it, my instinct was to just take B2*$D$8 in cell F2 and then drag that down. I think I still have pending limit order at 53, 52, and 51. The decision we made was that we’d made enough at the roulette table, so why keep playing if we didn’t have.to. US Stocks (VTSAX/VTI) 50% The Netherlands? Better late than never. I think I must be thinking about it differently. Very cool. As soon as I graduated, I moved back over. I just started travel hacking recently. Although I’m used to the feeling of buying low, then buying lower, then hating yourself and buying even lower, I started falling into the same trap I fell into in 2007 – I stopped buying enough because I thought I knew that the markets were going to go lower. Could I stand to be in cash and miss out on even more gains and new highs? We’re at 10k ourselves (when factoring the Sapphire Reserve’s 50% bonus, or 60% bonus when transferring them to SW). He’s a microbiologist and I asked him what he thought about the new virus that had forced China to shut down. You are picking equity risk premium, intermediate duration, almost all US, by picking total bond market fund. Now that stocks have gone down and bonds have gone up, I can move back into a heavier stock allocation and feel like I’m taking advantage of the lower stock prices (by selling bonds to buy stocks). Amminochloride The genus name for border. With so many cards out in the market and the never ending confusion on which one is best for you, this is something that can come in handy. If the purpose of your cash buffer is cost of living and avoiding withdrawal in periods of significant decline (like in our current crash), are you ok with utilizing this money for investing? I’ve tried different combinations of contributions, rebalancing, etc, and VTSMX seems to outperform. ), I sold $x of stocks in my IRA and bought $x of bonds in the same account, I bought $x of stocks in my taxable account using my cash. Great post! Our current desired AA is 65/35. Those limit orders I mentioned were to help me catch the falling knife when the market was dropping like crazy in Feb/Mar. Thanks for your post. Living in the States with the largest GDP in the World, this bias seems ok but, with the UK being a long way down the league table, I am much more sceptical about holding too much in UK stocks. Log In. I haven’t had a problem just canceling outright and then reapplying with an issuer as needed…. Keep em coming. How has your thinking changed during this latest market turmoil? I wanted to suggest adding a “portfolio drift” calculation to your spreadsheet. this is manna from heaven. Great article! My cash allocation is now less than 10% of my net worth and I’m comfortable with that level but if stocks start making new lows, I’d be fine deploying a big chunk of that to buy more stocks (since we still have some income coming in that we could live off of). Again, how is this not timing the market? We will be able to live well off of pension income and safely drawing from the TSP starting in 8 years, while putting off collecting SS until age 70 to maximize the benefit. JL Collins is here with his answer. Now I’m tempted to sell a lot more to raise my average price so that I can buy back in a much smaller decline. This is the first time I have heard of this. I am a big fan of your allocation set-up, as I follow a very similar % in my portfolio. Is it manual or automatic via scripts? I logged in to my investment account once in March, was irked to see how much it had dropped, and haven’t logged in since. Hmm, it works with Chrome on my computer. I like your target ranges mentioned in this article, so maybe I will call it 0-5% cash. Today’s total stock fund is 25% technology, 17% financials, and 15% health care. I’ve been on the Boglehead forums, but didn’t find anything to convince me otherwise. Before I left my job, I increased my cash buffer because I expected to start living off of that money. I wouldn’t be surprised if you’re drifting very little because you’re continually investing new money, but once you’re drawing down, drift happens a bit more quickly. As quoted by JLC (?) 2.4% in utilities is also not enough to make any difference. In taxable with new money your IRA when you ’ re 25 %,. 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