Originally posted by: Lothar
Originally posted by: LegendKiller
Personally, I put in 15.5k/yr + 50% employer matching. I am 100% stocks and will be until I am 10 yrs from retirement, then I'll step down ~5% per year. It's stupid to invest in bonds, they are a portfolio drag on long-term investing. I am a complete buy/hold guy unless I see a major drop coming, I get out of equities, move into stable investments, then rebuy after what I think is the bottom. It's worked pretty well for me over the last 7 years, averaging a 15% annual net return.
People forget that as long as you can buy and hold and not worry about crashes you can wait out any temporary economic cycle. Time is a diversification technique that works as a perfect compliment to diversification itself. I have yet to see a solid unrefuted study that shows that over a 30 year period a portfolio of stocks/bonds is better than straight stocks. I have only seen evidence to the contrary.
The golden rule "never put all your eggs in one basket" applies here.
We can all say stories of our successes but I'm quite sure many who entered the 2000 bear market with 100% stocks haven't recovered.
Sun Microsystems was $38.72 in 12/31/99...the stock is still sitting at $5-6 today. How long more should those people keep holding in hoping it would reach it's $35+ price?
Cisco, VA linux, Juno, Qualcomm, and many more among them.
Everyone suggests buy low, sell high.
In reality most people end up buying high and selling low.
Studies have shown that
MOST people(except maybe yourself and a tiny minority of principled investors) hit the "sell" trigger button during a bear market, and push the "buy" trigger button during a bull market.
I would never recommend to anyone who hasn't survived a bear market to go in with 100% stocks.
I also see no reason why "age" should determine how much risk one should take.
BTW...I know people who are in 85/90% stock:15/10% bond ratio and they still beat your 15% average returns over 7 years. Clamoring about your returns and claiming that it's been working pretty well for you proves nothing here.