ERICOPOLY Posted March 2, 2011 Share Posted March 2, 2011 Hi Eric, you have been retired for some three years now - can you share your opinions on the same? On how much is enough: It's been interesting to be living on financial assets with everyone constantly chattering about the banking system completely collapsing, the S&P500 going to 250, hyperinflation making the dollar worthless, etc... Fortunately I can send my wife back to work if things get really bad :). I recommend anyone else choosing to retire right before the biggest scare since the Depression had better build the bridge 3 times strong else you'll be a wreck. I've been real lucky to have more than doubled my assets, even though the market is lower and I've spend a lot. Family life: My daughter was two when I quit, and her first two years went by so fast when I was working. But my son was born two months after I retired, and it seemed like those were the longest 2 years of my life. So it's been great. I have this great bond with the kids that I wouldn't have if I worked like I used to. They both ski down the hill now without assistance -- skiing together is so fun. We can go midweek when the lifts are empty. My wife does want me to get out of the house, so I have a room rented in town where I bring my laptop and spend a few hours sometimes. We tell the kids I am "going to work". Well, maybe that will give them a work ethic :D My grandmother is 93, and I question whether this is the last time we'll spend time together (she lives in Sydney). I've taken my family out here 5 years in a row now, as 2006 was the beginning of my exit from work (after my initial big score, I started taking month long vacations in 2006 and 2007). My five year old daughter has spent a month a year here every year of her life! This has been just fantastic for my grandmother, as despite the long distance she is seeing more of my children than of great-grandchildren living in Australia, including here in Sydney! And I am getting good long discussions with her, enjoying her as I never have before. She is 100% mentally intact, thank goodness. I didn't get to know her as well earlier on because living in America, I only saw her every other year or so, sometimes not for 3 or 4 years at a time, and for shorter visits (a week or two). Fortunately, she remembers practically everything -- including what you talked about with her the day before (which is rare in 93 yr old people). I learned while talking to my grandmother last week that my grandfather's aunt was married to a Wehrmacht general (Hans Reichsfreiherr von Boineburg-Lengsfeld). He was commander of 4th and 23rd Panzer divisions (quite literally" "I rode a tank in the general's rank, when the blitzkrieg raged and the bodies stank"). So I told my parents about that and discovered that my father had visited with him in Germany. They say he was very nice. He had been a cavalry officer in WWI so naturally when horses left the scene he was given command of armor. According to my grandmother he was interviewed for a TV documentary about the plot to kill Hitler -- he played a role in the rounding up of the SS in Paris... until word got out when the plot failed they let the SS go again. The SS that were easily captured were not ready to admit their defeat to Hitler and just reported the activity as "exercises", or something or other. Anyhow, that's the family version and I haven't researched it to see if that's really true or not. For example, no mention of his role in the plot is to be found under his description in Wikipedia, and her version is that he was commander of Paris at the time of the plot (also not mentioned in Wikipedia). She knew that he was in command of Panzer divisions, but wasn't aware of his roles in the Invasion of Poland and Barbarossa. So, this gives me something to spend time researching. Anyhow, in short it's been fun. I've caught more steelhead fly fishing in the past few years than ever before in my life -- helps to have time to get a few good trips in. I don't live far from the Olympic Peninsula and that really helps. I can fish midweek when the competition is at work. I'll figure out something to do -- there's been no rush as the kids are still cute and want to spend time with me. Later they will be in school and finding something to keep myself occupied then would be good timing. I've read a zillion books on my Kindle -- so I'd say my education has advanced. People like to ask what I do -- I'm still uncomfortable telling them that I stay home while my money works. The customs officer asked me a second time what I do for a living (I entered "retired" on my customs and immigration form). You are retired? He was like 60 or something -- clearly shaking his head. It didn't help that my contact address was "Palm Beach, NSW". That's one of the wealthiest suburbs near Sydney -- but hey in reality this little cottage is a little dilapidated (built in 1949 by my father and grandfather). My grandmother has a lot of money but she is really tight! The fridge has never been replaced and vibrates the floor! Link to comment Share on other sites More sharing options...
hyten1 Posted March 2, 2011 Share Posted March 2, 2011 ericopoly inspirational comment. I totally agree with you about building the bridge 3 times strong since you never know what will happen. I am still struggling with how much is enough. I guess technically I can retire now, move to a cheaper part of the US and live a regular medium income life, but how fun is that. Even this I am not 100% sure. I have a hard time believing base on the numbers (i.e. you have X in networth, if you spend Y per yr you can live Z years). I personally need the X to be way larger and Y way larger than what I spend now so that I feel comfortable and prepare of the unexpected. thanks for the comment. Eric not sure if its possible, just thought I ask. Can you give some specific numbers? how much you have? how much you spend per month etc etc. I understand you don't want to share this. I wouldn't in a open forum. But I thought I ask, you never know. thanks hy Link to comment Share on other sites More sharing options...
rmitz Posted March 2, 2011 Share Posted March 2, 2011 Interesting results from the poll. There is no pattern to the results; no up or down trend; nothing approaching a normal distribution; no kurtosis. This implies that the information content of the board's wisdom on this subject is low, despite the investment acumen. I think people are also interpreting the question differently. What you need for retirement at 70 is quite different from taking early retirement in your 30s. If you're aiming to retire young, you can go back to work pretty easily if it looks like funds aren't keeping up. You're also probably going to have some other sources of income. Part-time consulting, a small business, etc. All these factors have a dramatic effect on the amount of money you need. Link to comment Share on other sites More sharing options...
Mikenhe Posted March 2, 2011 Share Posted March 2, 2011 The retirement question is one that is eating away at me. I just don’t know how to plan for it – or more to the point when the right time to say goodbye to the full time job is. I can’t see myself quitting totally and am currently planning to head into the big wide world of consulting – when I know I can get a few gigs a year for a couple of years. Doin something to cover expenses is what I’m looking for – and that may be as low as 3 months a year. Not an impossible target. After that (or maybe at the same time) I plan on doing some part time volunteer work. If its paid then that’s a bonus – but something as simple as meals on wheels to the local community – brings something of value to more than just me. The long term money still needs to increase and the mortgage decrease but I’m comfortable with having a mortgage where the interest rate is low and tax efficient and having the same amount working for me in the markets. It helps that I can get out of my job in a few years with a severance package that could easily cover 3 years worth of expenses. Throw in the consulting for a couple of years and I could cover 5 years without touching any of the funds I currently have invested. However as I approach mid forties I know that the odds of getting full time work at the end of that period would probably be very low so I may need to make sure that I do a few more years in the cube farms to build up the funds first. I’m fortunate in that I have a wife that loves her (low paid) job and she can get family health benefits there that would cover a big chunk of expense. Five more years? 7? 10? I don’t have the answer. I’m not sure I’ll ever have the right answer as to when to jump – or even if there is a right answer… I do have to do 7 more years in the US system to qualify for social security… but I don’t think I’ll be relying on that!! Link to comment Share on other sites More sharing options...
Kraven Posted March 2, 2011 Share Posted March 2, 2011 My first post here. Good discussion and a good overall board. This thread hit home. I am in my early 40s and just recently left the workforce as well to manage my investments and spend time with my kids who are 3 and 1. Like many on the board, I spend many years working crazy hours and rarely being home. I know too many people who never see their children. They make a lot of money, but their kids don't know them and/or hate them. Many of them leave before the kids are awake and get home long after they are asleep. Then weekends are for social activities, golf, and other things. Of course this is when they aren't traveling. I looked around and thought this wasn't what I wanted. It's been a month or so now and all is well! Kraven Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 2, 2011 Share Posted March 2, 2011 Eric not sure if its possible, just thought I ask. Can you give some specific numbers? how much you have? how much you spend per month etc etc. I understand you don't want to share this. I wouldn't in a open forum. But I thought I ask, you never know. I had never discussed any dollar numbers in the past, up until a few days ago when I mentioned my 2009 tax bill. I regret doing that because I wanted to never discuss the money itself, because we all start with different sums at different ages (some with student loans and whatnot, and different incomes). For example, it isn't how much money that Buffett has that is interesting to people around here, it's his rate of compounding that is interesting. But anyways, when I told my manager I was quiting I had about 30 times my annual base salary. I spend far more than I "need" to. The vacations and such. But my wife still drives the same car, we still live in the same house (although for a moment there I tried to buy a larger one). We pay for house cleaning and landscaping. I bought a hot tub this year. Things like that. Link to comment Share on other sites More sharing options...
ericd1 Posted March 2, 2011 Share Posted March 2, 2011 I think there's a huge difference in what it would take to retire at 30 vs 60 years. At 30 there's a huge unknown ahead. The same unknown exists for the 60 year old, but he has a much shorter timeframe to fund expenses. Therefore I would say the younger you are the more you would need for "a margin of safety". One key element of the equation that hasn't been mentioned is that I would expect most of us would become more conservative in our investing as our net worth grows. Obviously if the nest egg is large enough, like Buffett or Gates, living off the dividends or tax-free interest is easily accomplished and there's little need for superior investment performance. But my guess is most here aren't quite in that net worth category (...yet!) but may well have Buffett's investment ability (?). With that thought in mind perhaps in addition to "how much is needed to retire" one should consider "How will I invest my money" when I retire. I'm semi-retired (could be retired) at 63, with a 60/40 equity/fixed income mix and sleeping very well! Link to comment Share on other sites More sharing options...
Liberty Posted March 2, 2011 Share Posted March 2, 2011 With that thought in mind perhaps in addition to "how much is needed to retire" one should consider "How will I invest my money" when I retire. I'm not quite ready to live off my investments (I'm 28), but that's a question that I have been trying to answer too. The conventional wisdom is to move more heavily into bonds when you take the plunge, but I feel like there must be a way that is more tax efficient (so you don't realize too much capital gains and pay tons of taxes) and gives better return prospects over the long-term while retired, even if the ride isn't as smooth. Something like taking out enough money to live 2-4 years comfortably and leave the rest mostly into high-quality equities, so that if there's a big recession, you should have enough cushion to get through it without having to sell at the bottom. f.ex. You have 2 million in stocks. You take out 300k (after tax) because you want to live on 75k/year and leave ±1.5 million to keep compounding tax free in stocks. Sell a bit out when you feel valuations are high so that you have 3-4 years of cushion most of the time, rinse and repeat..? Is this a strategy that makes sense to the people here (even if it isn't the conventional wisdom in the mass financial media)? Or would you try to sell more, pay the taxes, and move heavily into bonds when you decide to retire? Link to comment Share on other sites More sharing options...
hyten1 Posted March 2, 2011 Share Posted March 2, 2011 Eric not sure if its possible, just thought I ask. Can you give some specific numbers? how much you have? how much you spend per month etc etc. I understand you don't want to share this. I wouldn't in a open forum. But I thought I ask, you never know. I had never discussed any dollar numbers in the past, up until a few days ago when I mentioned my 2009 tax bill. I regret doing that because I wanted to never discuss the money itself, because we all start with different sums at different ages (some with student loans and whatnot, and different incomes). For example, it isn't how much money that Buffett has that is interesting to people around here, it's his rate of compounding that is interesting. But anyways, when I told my manager I was quiting I had about 30 times my annual base salary. I spend far more than I "need" to. The vacations and such. But my wife still drives the same car, we still live in the same house (although for a moment there I tried to buy a larger one). We pay for house cleaning and landscaping. I bought a hot tub this year. Things like that. eric, thanks for sharing. I should've ask what multiple of your current salary or expense you had when you decide to retire. I hear agree the actual numbers is very personal. the 30 times you mention is very help! Is this 30 time pre or after tax? Link to comment Share on other sites More sharing options...
hyten1 Posted March 2, 2011 Share Posted March 2, 2011 With that thought in mind perhaps in addition to "how much is needed to retire" one should consider "How will I invest my money" when I retire. I'm not quite ready to live off my investments (I'm 28), but that's a question that I have been trying to answer too. The conventional wisdom is to move more heavily into bonds when you take the plunge, but I feel like there must be a way that is more tax efficient (so you don't realize too much capital gains and pay tons of taxes) and gives better return prospects over the long-term while retired, even if the ride isn't as smooth. Something like taking out enough money to live 2-4 years comfortably and leave the rest mostly into high-quality equities, so that if there's a big recession, you should have enough cushion to get through it without having to sell at the bottom. f.ex. You have 2 million in stocks. You take out 300k (after tax) because you want to live on 75k/year and leave ±1.5 million to keep compounding tax free in stocks. Sell a bit out when you feel valuations are high so that you have 3-4 years of cushion most of the time, rinse and repeat..? Is this a strategy that makes sense to the people here (even if it isn't the conventional wisdom in the mass financial media)? Or would you try to sell more, pay the taxes, and move heavily into bonds when you decide to retire? Liberty this is actually the approach I was thinking of. But i am a bid more parinoid, I would like to have maybe 10 yrs of cushion most of the time and have the rest of the money in stock or whatever investment that is the best at the time in terms of appreciation. Link to comment Share on other sites More sharing options...
Liberty Posted March 2, 2011 Share Posted March 2, 2011 Liberty this is actually the approach I was thinking of. But i am a bid more parinoid, I would like to have maybe 10 yrs of cushion most of the time and have the rest of the money in stock or whatever investment that is the best at the time in terms of appreciation. You'll get no argument from me that 10 years is better than 3-4, but for me that would delay things quite a bit, unless I keep my expenses really low (which might happen anyway as I'm very frugal and tend to be happy as long as I have books and an internet connected computer). Maybe there's a way to start with 3-4 years of cushion and progressively build it up to something closer to 10 years if your equities perform well, and still have enough for most recessions in the meantime. It's not the safest thing in the world, but worse case when you retire young is you go back to working a bit until things bounce back. Link to comment Share on other sites More sharing options...
jb85 Posted March 2, 2011 Share Posted March 2, 2011 why would you need to take out 300K as a buffer? The 2 million should be your buffer. Use that excel file i posted earlier to calculate your chances of going broke given a certain expected return and nest egg. And like others have said, you don't need to be at 100%. Say you're at 90% or 80%...then it ain't the end of the world if you fail, just means you may need to spend less or get a part time job etc. In my mind if i could get to 80% chance of never working again (with the alternative being i need to reduce spending and maybe restart work for a few years if i was unlucky, that is ok with me) The buffer idea in my mind seems to be a false comfort. Also, i think that you should be at the point of being in stocks 100% of the time. putting money into a buffer (or even bonds for that matter) doesn't make sense to me, because if you stock portofolio does badly over a LONG period of time, no amount of buffer will help you. And if you stock portofolio only does badly over a SHORT period of time, you should have enough to get through the rough patch. I could be off on these ideas, but that's just my input, i'm open to critiques to my logic Link to comment Share on other sites More sharing options...
Liberty Posted March 3, 2011 Share Posted March 3, 2011 That's an interesting idea, jb85, so let me elaborate on my thinking and you (or someone else) can tell me if I'm off base: The idea of having the buffer is to 1) have liquidity if you need it for emergency or whatever and 2) be able to live off of it if the market does something like it did in 2008 and you don't want to have to sell parts of wonderful businesses at 50% of their IV or whatever. Obviously, if the markets stay quite depressed for more than 3-4 years, you might have to sell at low prices or get a job to get you to the end of the crisis (if you REALLY don't want to sell those businesses at those prices). If I understand your approach correctly, you would be 100% invested and just live off dividends and frequent sales of stock. Is that correct? Link to comment Share on other sites More sharing options...
alertmeipp Posted March 3, 2011 Share Posted March 3, 2011 Interesting thread - i think most here think retirement as quit day job and manage our own money. Is that really retirement... Money needed to quit your damn job seems more appropriate. Link to comment Share on other sites More sharing options...
ericd1 Posted March 3, 2011 Share Posted March 3, 2011 I'm not sure the "buffer" needs to be in cash. I look at some bond funds (CEF, ETF, MF) as a reasonable substitute for cash. I'm willing to trade a couple of points of decline for extra yield rather than hold cash. Don't forget there's also an opportunity to grow the fixed income part of the portfolio. It doesn't have to be an anchor. Good gains can be made with fixed income investments - For example preferreds in '09, muni's this year and I racked up some nice gains years go when high-quality long-term bonds were yielding more than 10% and yields dropped to 5% in a couple of years. Where and what you invest in also depends on the type of account - taxable vs tax-advantaged. I've seen a few different strategies for spending from multiple accounts, but at least for me, tax vs tax-advantaged really clouds the picture. For example, someone recommended using up all the money in your taxable accounts before ever touching the tax-advantaged account (if possible). That statement by itself doesn't make sense to me. If you have huge gains in the taxable accounts it could cost more in taxes if you sold those than withdraw from tax-advantaged accounts. Plus what if tax rates change? And we know they will. Heck the 15% dividend rate was only recently extended for two years... In addition to the investments there's another way to fund living expenses - use a home equity line of credit. I have one and would draw on it if both my stocks and bonds tanked together and I didn't want to sell at the time. Link to comment Share on other sites More sharing options...
Liberty Posted March 3, 2011 Share Posted March 3, 2011 I'm not sure the "buffer" needs to be in cash. I look at some bond funds (CEF, ETF, MF) as a reasonable substitute for cash. I'm willing to trade a couple of points of decline for extra yield rather than hold cash. Indeed. I wasn't specific, but I didn't mean that the whole buffer should be in cash. The problem remains that by the time I decide to live off my investments, I might have quite big unrealized gains. If I sell those stocks to buy bond stocks or whatever, I'll pay as much in taxes as if I went straight in cash, which is why I'd like to have a "buffer" only as big as necessary and not bigger so that the rest of the money can keep compounding tax free. Link to comment Share on other sites More sharing options...
jb85 Posted March 3, 2011 Share Posted March 3, 2011 Yes, I would be 100% in stocks (or atleast 100% in non buffer assets. This may occasionally mean i am in cash if the market is overvalued etc., but i wouldn't not be in cash in order to provide a buffer). I would live off the occasional selling of stock and dividends, howerver i also would not specifically look for dividend stocks. I would rather own an undervalued stock that pays no dividend and sell some of it occasionally, than own a more overpriced dividend paying stock which i would not have to sell and (b/c i could live off the dividends). over time, dividends really don't matter, what matters is how much you are buying businesses at at discount to their IV. The idea of buying dividend stocks i think applies to any sort of fixex income security. It is ok to buy the fixed income security if it is the most deeply discounted security you can find in relation to IV, but if you are buying a fixed income security for its fixed income, at the expense of a more deeply discounted nonfixed income security, i don't really understand that. Again i could off in my thinking, but i would rather sell a small portion of a security that appreciates at 30% a year (in order to fund living expenses) as opposed to living off the dividends (at 2% lets say) of a security that appreciates at 15% a year. To a degree this is all hypothetical #'s but my main point is don't worry about selling good stock occasionally, i would rather buy good stock and sell occasionally than buy less quality stock just because it produces a dividend, and therefore i can say "i never sell my stock". Link to comment Share on other sites More sharing options...
jb85 Posted March 3, 2011 Share Posted March 3, 2011 to alerts point... yes, retiring to manage one's own money would be work (although i think the magic formula stocks will do pretty well overtime, and that is very minimal work) For me the problem is not that i don't like work. paraphrasing charlie munger, "what i want is independence". The thing i hate most about work is having a boss who overrules my decision simply because they are the boss. I hate this, and most of the time decisions are made by whoever has the authority, not who is logically right. I like the idea of not reporting to anyone. For being responsible for my own gains and losses. Too often in the working world (i've only just graduated from college 3 years ago, so i'm still new, but from what i've seen) horrible decisions are made in which I have to deal with them. Link to comment Share on other sites More sharing options...
Liberty Posted March 3, 2011 Share Posted March 3, 2011 Thanks jb85, very interesting. I think that I now see how your approach could work for you but maybe not for me. You can see my investment approach (at least at this point) here: http://cornerofberkshireandfairfax.ca/forum/index.php?topic=3762.0 I'm more of a late-Buffett/Munger than a Graham kind of guy, so I tend to hold a certain type of stocks for a very long term rather than find undervalued stuff that I sell when it becomes fairly priced and then move on to another stock. If I used that approach, I wouldn't have that much unrealized gains so the tax hit would only be marignally higher if I frequently sold stocks. Or am I overestimating the impact of the difference between our two approaches on wether it would be a good idea to have more "buffer" or keep it minimal? I think I need to think some more about this.. Link to comment Share on other sites More sharing options...
jb85 Posted March 3, 2011 Share Posted March 3, 2011 but even if you have a 3 year buffer in cash, won't you still be selling every year (on average) in order to fill up your 3 year buffer again? its seems to me, even with a buffer your selling of stock will still be the same amount overtime. Link to comment Share on other sites More sharing options...
Liberty Posted March 3, 2011 Share Posted March 3, 2011 but even if you have a 3 year buffer in cash, won't you still be selling every year (on average) in order to fill up your 3 year buffer again? its seems to me, even with a buffer your selling of stock will still be the same amount overtime. The idea with the buffer is that you wouldn't be forced - or at least only very rarely - to sell at bad times. If there's a big recession, you can wait it out. Your buffer would become smaller, but at least you usually won't have to sell are really low market valuations. The thing about taxes was mostly in comparison with the general wisdom of going 50% or more in bonds. If I start with 100% stocks that have been compounding for 15 years and have to sell half of them to go in bonds, the tax bill would be enormous. My alternative of only selling enough to create a buffer would reduce these taxes and allow the money to keep compounding tax-free. But it isn't really advantageous over your approach, unless there's a recession that forces you to sell really low. Link to comment Share on other sites More sharing options...
twacowfca Posted March 3, 2011 Share Posted March 3, 2011 Thanks jb85, very interesting. I think that I now see how your approach could work for you but maybe not for me. You can see my investment approach (at least at this point) here: http://cornerofberkshireandfairfax.ca/forum/index.php?topic=3762.0 I'm more of a late-Buffett/Munger than a Graham kind of guy, so I tend to hold a certain type of stocks for a very long term rather than find undervalued stuff that I sell when it becomes fairly priced and then move on to another stock. If I used that approach, I wouldn't have that much unrealized gains so the tax hit would only be marignally higher if I frequently sold stocks. Or am I overestimating the impact of the difference between our two approaches on wether it would be a good idea to have more "buffer" or keep it minimal? I think I need to think some more about this.. Your philosophy is good, and I like your concentration on insurance because that's where the money is. In other words: many insurance companies potentially have optionality to return all their earnings in cash to their shareholders without losing their competitive position. Most other businesses have to reinvest a substantial amount of their earnings merely to maintain their competitive standing. The amount of money available to shareholders in most businesses is even less than "owners' earnings" because maintaining competitive standing often requires more than replacing depreciated assets. Maintaining a healthy company frequently means having what are really expenses that are often catagorized as investments. For example, a company that is starting to lose its edge may buy a more cutting edge competitor to keep from falling behind, but ultimately may not increase its market share enough to compensate for the price of the acquisition. However, failing to have made the acquisition might have made their competitive position untenable. This is the Catch 22 of most businesses. Insurance companies that don't have much fixed costs, such as agents and lots of staff they have to feed, are in the opposite situation. They can pass on business if rates aren't acceptable and return even more than their current earnings to their shareholders in dividends or share repurchases when business is poor. This can actually help improve their profitability because the business they pass on will be less profitable than the business they retain. However, Most other businesses with substantial fixed costs will have to chase sales in a downturn to have enough revenue to make payroll and meet other more or less fixed costs. Then, when business gets better, they may have to hoard their earnings to catch up on forgone expenses/investments. There is a big potential bonus for shareholders who own a good P&C company with low fixed costs: the return of capital in a general business downturn when it can be reinvested most profitably with many bargains available for purchase. :) Link to comment Share on other sites More sharing options...
bookie71 Posted March 3, 2011 Share Posted March 3, 2011 The amount depends on your lifestyle and standard of living. What works for me probably might not work for you. It also depends on your comfort zone. Link to comment Share on other sites More sharing options...
Myth465 Posted March 3, 2011 Share Posted March 3, 2011 I like the rolling 3 years - 5 years methodology. When the markets get frothy maybe push out to 5 years, and be willing to let it get to 1 years on undervaluation. Thats a good plan. Link to comment Share on other sites More sharing options...
jb85 Posted March 3, 2011 Share Posted March 3, 2011 Hi Liberty, good discusion...I think I understand a bit better now the buffer idea. I was thinking of a live example, where there might be an issue. lets say you are in 2007. You have 3 year buffer capital in cash. in 2008 you have used up 1 year of capital, so inorder to restock buffer, you sell 1 year worth of securities, and are back at 3 year buffer of cash. That is ok, because it is before the crash. then the market collapses in 2009 you have a decision to make. Do you sell 1 years worth of securities to go back to 3 year buffer or do you let your buffer slide to 2 years worth of cash (again, you don't know at the beginning of 2009 whether the dow will stay at 7000 or go to 5000 in the next year). You start thinking "what if the dow is at 5000 next year. if i don't sell any security then i'll only have 1 year of cash" This may tempt you to sell even in a depressed market. This is just a consideration... I don't mean to be negative just working through some issues. Overall though i do see how the buffer would work...I also think some sort of cash % in relation to market overvaluation might work also (you approach seesm similiar to this anyway) Link to comment Share on other sites More sharing options...
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