Hacker News Reader

Comment by SketchySeaBeast | Hacker News Reader

My parents retired a year ago. If they'd kept all their money in the stock market until this month they'd be in a lot of trouble, and probably will be for the foreseeable future - how is that not a gamble? "You need to diversify" would be an argument against gambling in the stock market, and getting into something safer.

View on HN

If they stick to a reasonable withdrawal rate, they likely would not be. The stock market will rise in time, and has almost certainly risen in value since the time they made investments, even with the current drop in share prices.

Even if your parents put everything in the stock market, they would presumably draw down that capital gradually over the coming 20+ years.

i.e. They are diversified over time.

In addition to the withdrawal rate as others have mentioned, the prudent approach to retiring now would be gradually changing their allocation to a less risky mix over the course of several years. Had for example they rotated some equity into a modest amount of Treasuries, that portion of their portfolio would actually be doing well right now (see for example $TLT).

Yeah it’s common advise to move a higher proportion of your wealth into cash as you approach retirement and I think it is the default behaviour of superannuation plans (I.e. pension) in Australia.

You need to rebalance your portfolio as you get closer to retirement as you can’t time the market. I think by the time you’re retirement age, your portfolio should be 30% equities

Would you say that you should put it into safer things, maybe gamble with it less?

Reply on news.ycombinator.com