It’s been a week since we know that the next president of the US will be Donald Trump. Once thing I can promise: this is never gonna be a blog about politics. Also this post will be totally politically neutral. First of all it’s easy for me to be neutral as I live in Europe. Secondly everyone must respect the decision of the American people; at the end of the day the guy got almost as many votes from them as Hillary 🙂 But let’s stick to the topic of finance and let’s see what kind of conclusions we can make from this week!
In the previous post we have checked whether it worth to reallocate our portfolio during the wealth accumulation phase in case the stock market dips. That example showed that it doesn’t really worth the effort. Seemingly I am not the only one who was thinking about such strategy. Joe from retireby40.org (who is by the way a great example to prove that early retirement is achievable) had similar thoughts and asked how this strategy would work in the years of early retirement. Let’s see what the numbers show!
In the previous two posts I have checked the performance of 3 different portfolios from 2003/2004 up until today. I wanted to know how did the 2008/2009 financial market crash has impacted the early retirement plan of our imaginative friends. These examples already allow us to make some conclusions, nevertheless I am still searching for the perfect portfolio. Let’s see what part 3 will show us!
In the previous post we checked the performance of 3 types of portfolios and found big differences between them. Now let’s see how timing affects these portfolios. Why is it important? Because we can’t really influence it. Market crashes can happen at any time. It may be tomorrow, but stock prices can also continue growing for many years in a row. I want to find the perfect allocation that makes my portfolio as bullet proof as possible, without sacrificing too much potential returns. Furthermore what I would definitely like to avoid, is to jeopardize the sufficient income during the years of early retirement.
￼Ever since I have decided to retire early I was always wondering what should be the perfect allocation of my portfolio. I want to accumulate wealth as fast as possible, but at the same time I don’t want to take any reckless risk that would wipe off the work of the years. The fastest way to get one million euro is to save 500k and put it all on red at the roulette table. But in case I lose it all on black, I would be extremely…. sad. I need a better plan!
In the previous post I have explained my investment principles, now let’s see how we can implement them in practice. Following two main principles, I want to keep it simple and of course I want to diversify my assets. I am focusing on 3+1 main asset categories: stocks, bonds, real estate and cash. Also within these assets I want to further diversify in order to spread the risk. Let’s see how!