At What Age Should A person Get Out Of Investing In Stocks?

fmdog44

fmdog44

Well-known Member
Location
Houston, Texas
Has anyone set a date when you will pull out a lot or all of your money in stocks or other investments and go for strictly cash to live out the remaining years? Second question where do you get your advice from?
I am 71 and have about 45% of my money in fairly "safe" stocks/bonds (alot of dividend stocks). I have been through all the sharp downturns as well as the up swings. The latest downturn cost me money but it appears it could have seen the bottom and I did not move any money through this down turn. But I have always pondered when to sell off 100% and just live off CDs especially now that the rates are higher. I know I will not out live my money so it is looking more that I will get out in the next year or so. My only problem is I love investing so even if I don't need the money it will be nasty to watch stocks go up that I owned. Way too many "pros" are saying the bull market is a long way from over even though Jim Cramer is saying CDs are a nice place for cash right now.
 

I know I will not out live my money
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My only problem is I love investing so even if I don't need the money
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Sounds like if you won't out live your money, and you love investing, keep it where it's at and enjoy the interest (interest made and interest in investing)

As far as my plan...if the wife and I make it to 70, then SS will pay for normal living, and the 401Ks will pay for taxes/travel/unknown expenses. 2 CDs will pay for anything after 90. No real advice...just seeing what my Mom & Dad did and 2 Aunts (both of them lived alone).
 

I'm basically a mutual fund investor at this point.

I plan to stick with a balanced portfolio of 60/40 or 50/50 stocks/bonds until I croak.

I am considering consolidating my investments into one or two mutual fund accounts and having a predetermined monthly draw deposited into my checking account if my health begins to fail, sort of an autopilot plan to keep things simple in my declining years.

As far as advice I don't need much, I read and listen to folks in a similar situation then I pretty much do what I've always done.
 
Never ... even at 65 you have long term money you won’t be eating with for 20 to 30 years .

unless you intend to draw a sub 3% income from your portfolio , which would be very inefficient use of your money ,you need at least 40% equities to pull 4% inflation adjusted. I am 50/50

it all depends what you want to draw ... trying to draw 4% inflation adjusted for a 30 year retirement time frame with out equities has failed to last so many times it is considered unsafe
 
Camper6 said:
Holdings in stocks give you no return unless you get dividends.

In order to get liquid assets you have to sell them.
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nonesense ... that dividend is a return of your invested capital which comes right off the share price. You may not have sold a thing but they did . They effectively off sold a piece of your share price .. all exchanges are required to reduce your value by an equal amount .

THERE IS NO DIFFERENT BETWEEN A 4% DIVIDEND AND DRAWING EQUAL DOLLARS FROM A PORTFOLIO OF NON DIVIDEND PAYER..ASSUMING THE SAME TOTAL RETURN .. YOUR INCOME AND BALANCE WILL BE THE SAME AND LAST JUST AS LONG .

retirees have been creating income streams via rebalancing their portfolios forever . The portfolios contain appreciation , dividends and interest and all parts are adjusted yearly back to original allocations while producing cash to live on.

actually dividends are the least tax efficient method of drawing income . You are taxed on the entire dividend.when the same dollars come from appreciation you are only taxed on the gain portion
 
The only way I'll ever stop investing is if I have to go into a nursing home and all my money winds up paying the cost. Because we're living longer, the advice for seniors and equities has changed a bit. That's because the thought is to keep up with inflation one needs to remain invested in stocks (mutual funds, ETFs, etc.) and the percentage of stocks to fixed income vehicles based upon age has also changed. I'm pretty aggressive for my age but that's because in addition to my SS I also get a pension which means I don't have to take distributions except for my RMDs (a negligible amount since most of my investments are in a Roth). Therefore I do not have to worry about market swings
 
mathjak107 said:
nonesense ... that dividend is a return of your invested capital which comes right off the share price. You may not have sold a thing but they did . They effectively off sold a piece of your share price .. all exchanges are required to reduce your value by an equal amount .

THERE IS NO DIFFERENT BETWEEN A 4% DIVIDEND AND DRAWING EQUAL DOLLARS FROM A PORTFOLIO OF NON DIVIDEND PAYER..ASSUMING THE SAME TOTAL RETURN .. YOUR INCOME AND BALANCE WILL BE THE SAME AND LAST JUST AS LONG .

retirees have been creating income streams via rebalancing their portfolios forever . The portfolios contain appreciation , dividends and interest and all parts are adjusted yearly back to original allocations while producing cash to live on.

actually dividends are the least tax efficient method of drawing income . You are taxed on the entire dividend.when the same dollars come from appreciation you are only taxed on the gain portion
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Once again I disagree with you on this subject. You "speak" as if once the dividend lowers the share price, the share price stays the same. It does not (not if it's a good equity anyway). I have a fund that pays hefty capital gains (which also reduces share price upon distribution). I purchased that fund for between $17 & $19 a share. Now the share price is $46 and change. So all the shares I purchased plus several years worth of capital gains purchased via reinvesting of those distributions are worth much more than their original purchase price. My portfolio has more examples of this kind of growth on both divs and caps.

Next, dividends are only less tax efficient if they are held in non-Roth accounts. When one has a Roth, as you know, all dividends and capital gains are tax free. I've read that it's better to hold capital gains paying investments in non-Roth accounts and dividend paying ones in a Roth because dividends are taxes as regular income and capital gains are not. Of course I'm talking about buying and holding here, not jumping in and out of equities every time there's a market swing.
 
you are confusing the fact your stock goes up with the mechanics and actual benefit of the dividend .


dividends have to lower the share price , it is mandatory....... that does not mean your stock does not go up... you are confusing issues . follow carefully here so you can be one of the few who actually get it .

1000 shares of a 100 dollar stock is 100k invested . lets pretend it pays 4% , so it is MANDATORY by the exchanges that it is to to be reduced when it goes ex div so they drop your value automatically ... so you get 4k and have 96k left for markets to work on . ... now the markets act on 96k which is made up of your 1000 shares at 96 bucks when the bell rings and you have 4k in pocket as a return of investment in that dividend . ..

so you give them back the 4k and buy 41.666 shares effectively returning the same 4k back to them albeit construed differently .... now you have 1041.666 shares at 96 a share which is the exact same 100k you had before it went ex div . it is just arraigned differently .

so lets suppose the market doubled your stock ...so your 1041.666 shares at 96 a share worth 100k grew to 200k if you reinvested , which if you notice is the same as the 100k you were at before it went ex div. in both cases it is the same 100k that had doubled . but if you did not reinvest the dividend you would have had only 96k left for the markets to double so you would only have 192k if you kept the dividend .. see how that works .

your stock went up from whatever you paid for it originally to 100k in value . they gave you back 4k of it , knocked your value to 96k by reducing the price automatically before it can trade , you then hand them back the 4k and say no thanks , keep it invested , so they buy you 4k in more shares at the lowered price and you have the same 100k you had the night before it went ex div .... they merely handed you a piece of your gain back and you returned it .

pre div you had 100k and 1000 shares at 100 a share equaling 100k , after the div and reinvestment you have 1041.666 shares at 96 a share worth the same 100k . markets open and go up 100% , you picked a fabulous stock and it soared . in both cases you have the same exact 200k ...



no different than a portfolio of non div stocks ... if you have a portfolio of non div payers worth 100k and you take out 4% you have the same 96k left and 4k in hand . if your stocks double you have the same 192k left and 4k in hand ,,, if you reinvest the 4k back in you have the same 200k .

both the dividend payers and non payers are both redistributing the exact same gains ... it is not how many shares you have that make up those dollars , it is the total dollars you have that is compounded on . that is why a stock split is a wash .


you can learn more about how it works here

https://finance.zacks.com/dont-investors-buy-stock-just-before-dividend-date-then-sell-9577.html


https://www.investopedia.com/ask/answers/buy-before-dividend-then-sell/
 
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now lets talk about the roth . follow closely .


to get 5k in a roth 401k as an example or in a conversion you need to take 6666 in pre tax dollars to clear 5k in the 25% bracket to randomly pick one , it can be any bracket you just need to adjust the pretax dollars ..

so lets say you put the 5k in the roth and all your reinvested dividends and appreciation doubled your stock over time . so now you have 10k tax free ....

well the same 6666 in pretax dollars in the traditional is 13,332 .000 if it doubles ... less the same 25% tax is the same 10k ...

so both cases got taxed the same . one got taxed up front , one at the end , but both saw the same 25% tax rate ...so effectively , yes , those dividends were pretaxed at regular tax rates IN ADVANCE .

THAT IS WHY IN BOTH CASES THE BALANCE WOULD BE 10K NET .

so roth or not that income is taxed the same way .

now if that were a brokerage account of dividend payers you would be taxed on 15% of the whole 4k or possibly zero if in the zero % capital gains bracket ...

but if that was a brokerage account in non div payers and you pulled out 4k you are not taxed on 4k you are taxed at 15% on just the gains or zero if in the zero capital gains bracket.

so nooooooooooo , dividends when spent are not tax efficient compared to the same draw rate off of a portfolio of non div payers assuming the same total returns .
 
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All performance is based on total return... your draw does not care how that return is made up . It can be distributed in a dividend , it can be all appreciation, or a comb of all ...

a 4% dividend is going to be no different than a 4% draw from a portfolio .... they both need the same total return to grow and be solvent as they absorb the payouts... they both are effected the same way when you keep the payout and don’t put it back in as a reinvestment . If you do put it back in then they both act the same way...only differences may be taxes and transactional costs ..
 
mathjak107 said:
nonesense ... that dividend is a return of your invested capital which comes right off the share price. You may not have sold a thing but they did . They effectively off sold a piece of your share price .. all exchanges are required to reduce your value by an equal amount .
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No sir. That dividend does not come off your share price. If a company is profitable it will pay a dividend to the shareholders from the profits depending how may shaes you own and not from selling off a piece of the share price. The share price stays the same or it may go up and down on the market.



THERE IS NO DIFFERENT BETWEEN A 4% DIVIDEND AND DRAWING EQUAL DOLLARS FROM A PORTFOLIO OF NON DIVIDEND PAYER..ASSUMING THE SAME TOTAL RETURN .. YOUR INCOME AND BALANCE WILL BE THE SAME AND LAST JUST AS LONG .
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I'm not sure what you are talking about. If you own shares you don't have any income until you sell the shares or a portion of them.

retirees have been creating income streams via rebalancing their portfolios forever . The portfolios contain appreciation , dividends and interest and all parts are adjusted yearly back to original allocations while producing cash to live on.
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That too I don't understand



actually dividends are the least tax efficient method of drawing income . You are taxed on the entire dividend.when the same dollars come from appreciation you are only taxed on the gain portion
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That too depends on the country or possibly the state on how they treat dividends when filing an income tax return. There may be such a thing called a dividend tax credit applied.
 
Camper6 said:
No sir. That dividend does not come off your share price. If a company is profitable it will pay a dividend to the shareholders from the profits depending how may shaes you own and not from selling off a piece of the share price. The share price stays the same or it may go up and down on the market.

That too depends on the country or possibly the state on how they treat dividends when filing an income tax return. There may be such a thing called a dividend tax credit applied.
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you sir are very wrong and really do need to start to learn about this stuff if you are going to comment . . dividends are subtracted off the share price and mandated by exchange rules to be done that way ., see the mandated rules below or better yet , learn from the links above ...

market action going forward is on a reduced value when the market opens . like i said if you had 100k before it went ex div , in the morning you have 96k invested at the ring of the bell and 4k in hand .

if you give back the 4k and reinvest it , you have the same 100k compounding that you had pre div . just more shares at a lower price making up the 100k .

if the stock doubles and you reinvested you have the same 200k you would have had if it did not go ex div ...if you did not reinvest the dividend and the stock doubles you only have 192k ...

what part of the reduction being mandatory don't you get ?


companies don't pay dividends profit or not ,. dividends are voted on by the board quarterly and paid even when companies have a foot in the grave ... many dividend payers have gone bankrupt and paid right up to the end . ever hear of gm , ge , kodak ? to name a few .

sorry wrong again on the taxes . unless you are in the zero capital gains bracket in a brokerage account that entire dividend is taxed unless it is a return of capital as reits do .

you are taxed on the entire 4% in my example . drawing 4% out of a portfolio of non dividend payers is only taxed on the gain portion not the whole 4% .

to be in the zero capital gains bracket your total taxable income plus the dividend or capital gain has to all fit in the lowest bracket . but that applies to all capital gains and dividends that qualify not just dividends .



FINRA MANUAL :

5330. Adjustment of Orders

(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01)
 
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Camper6 said:
I'm not sure what you are talking about. If you own shares you don't have any income until you sell the shares or a portion of them.


That too I don't understand





That too depends on the country or possibly the state on how they treat dividends when filing an income tax return. There may be such a thing called a dividend tax credit applied.
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obviously there is a lot you don't understand .

as retirees we have lots of ways of creating income . it is all based on total return .

there is no difference selling some shares in a 100k portfolio that had a 4% total return then a 4% dividend ...

the dividend stock needs to see at least a 4% capital appreciation to offset the dividend subtraction and still have 100k left , the portfolio needs at least a 4% total return to sell some shares and have the same 100k left

whether the company sells of a piece of your share price or you sell a piece of your shares is identical .

so this year i had to rebalance back to my 50/50 mix since equities fell to 40% plus i need my years cash .

i sell off enough bonds to do both . i added to stocks and i put my years money in the checking account .

all year dividends , interest and appreciation all add up to the total return and it is the total return that matters when spending down , not what the total return is comprised of . unless you want your stock allocation to go higher and higher at some point in a bull you need to rebalance back to your preferred allocation ..

in down years bonds get sold to fill the gap in your income and in bull markets equities get sold to fill the gap in income . but in the end it does not matter how you raise your spending money .

having dividends just makes it easier because the company gives you a piece of your investment back and takes it off your investment balance just like selling shares does in a portfolio . of course markets can pull things back up but in both cases you have less dollars invested unless total return brings you back up .
 
mathjak107 said:
unless you intend to draw a sub 3% income from your portfolio , which would be very inefficient use of your money ,you need at least 40% equities to pull 4% inflation adjusted. I am 50/50
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How can you say drawing less than 3% is an inefficient use of your money? Many don't need it and want to leave a legacy(not me). Or have plenty stockpiled for nursing homes and end of life issues.

As far as AA goes as we age, it's a personal decision. No one size fits all. One conservative method is the 100 rule. 100 less your age = stocks....the rest goes in fixed income. I'm actually more conservative than that but many use it as a guideline. Many are more aggressive.
 
Bullie76 said:
How can you say drawing less than 3% is an inefficient use of your money? Many don't need it and want to leave a legacy(not me). Or have plenty stockpiled for nursing homes and end of life issues.

As far as AA goes as we age, it's a personal decision. No one size fits all. One conservative method is the 100 rule. 100 less your age = stocks....the rest goes in fixed income. I'm actually more conservative than that but many use it as a guideline. Many are more aggressive.
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because if it is legacy money then it is not for you correct ???? so having it not in assets that grow over decades then would still be inefficient use of your money if it was in only fixed income .

the point being that if you are going to draw an income off of your portfolio 4% is so conservative that 90% of the time you die at the end of 30 years with more than you started .. 70% of the time you die with 2x what you started and 50% of the time you die with 3x what you started .

so why not use at least 40% equities and even if you don't want 4% to spend why not let it accumulate for heirs or give them some now while you can see them enjoy it or give to the causes you support.

in my opinion not using at least 40% equities seems to make inefficient use of what you worked a life time for . either for yourself or heirs . just because you have allocated to be able to take 4% does not mean you have to .

we certainly don't spend more than 3-1/2% a year but we know we could . if it was all fixed income we would not only not be able to safely take 4% but the legacy money would not grow to its potential .

yeah , i get it not everyone wants to be in equities . but " feeling good " does not always go hand in hand with what makes good financial sense.

fixed income has not only grown legacy money barely above the rate of inflation but for those living on it why take a 25% pay cut from what you could draw with as little as 40% equities

does that reason make sense to you ?
 
Camper6 said:
No sir. That dividend does not come off your share price. If a company is profitable it will pay a dividend to the shareholders from the profits depending how may shaes you own and not from selling off a piece of the share price. The share price stays the same or it may go up and down on the market.


.
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just ask yourself , if it wasn't for the fact the exchanges have to roll the price back by the payout , why would someone pay the same price for a stock that just paid out tens of millions of dollars in their value the next morning ? no one would ever pay the pre-div price and not get the dividend ... let the profits replace the millions for next quarter and then the stock would be worth the same . so exchanges have to take whatever the closing price was and execute all the waiting orders at the lower prices . ..the exchange lowers the offers automatically reducing the price before the open so all market action is on the lower price . in this case if you don't give it back as a reinvestment you had a 100k in the stock , now you have 96k ....

reinvesting gives you back your 100k at the open .
 
mathjak107 said:
because if it is legacy money then it is not for you correct ???? so having it not in assets that grow over decades then would still be inefficient use of your money if it was in only fixed income .

the point being that if you are going to draw an income off of your portfolio 4% is so conservative that 90% of the time you die at the end of 30 years with more than you started .. 70% of the time you die with 2x what you started and 50% of the time you die with 3x what you started .

so why not use at least 40% equities and even if you don't want 4% to spend why not let it accumulate for heirs or give them some now while you can see them enjoy it or give to the causes you support.

in my opinion not using at least 40% equities seems to make inefficient use of what you worked a life time for . either for yourself or heirs . just because you have allocated to be able to take 4% does not mean you have to .

we certainly don't spend more than 3-1/2% a year but we know we could . if it was all fixed income we would not only not be able to safely take 4% but the legacy money would not grow to its potential .

yeah , i get it not everyone wants to be in equities . but " feeling good " does not always go hand in hand with what makes good financial sense.

fixed income has not only grown legacy money barely above the rate of inflation but for those living on it why take a 25% pay cut from what you could draw with as little as 40% equities

does that reason make sense to you ?
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I really don't give a rats ass how you would invest your money. If you want to be aggressive....fine. I don't and I'm fine with it.

I don't think I have ever seen a poster so full of himself.
 
aggressive ???/ 50/50 ain't aggressive ..


i spent a lot of years learning what i needed to learn and put in a whole lot of time learning the basics . so if knowing what i am talking about is full of myself , then yeah , i will go with that .


i disprove the bull shit and myths that constantly get posted so those who want to learn can learn . obviously you are not one of them . ..so don't read my posts
 
.

Thank God, I have been a conservative saver all my life which enabled me to retire comfortably early [age 55] and totally out of debt [including my house.] I was able to do that [as a single mom with a modest salary] without one cent profit from the stock market. In fact, the one and only time decades ago I had invested in a stock mutual fund, I lost money [thank you, God, for that valuable life lesson.]

.
 
people make due with whatever they have . everyone backs in to a lifestyle that works around what they have ,. but some could have had a lot more, or led better less stressful lives with more choices with little long term risk ...
 
mathjak107 said:
you sir are very wrong and really do need to start to learn about this stuff if you are going to comment . . dividends are subtracted off the share price and mandated by exchange rules to be done that way ., see the mandated rules below or better yet , learn from the links above ...

market action going forward is on a reduced value when the market opens . like i said if you had 100k before it went ex div , in the morning you have 96k invested at the ring of the bell and 4k in hand .

if you give back the 4k and reinvest it , you have the same 100k compounding that you had pre div . just more shares at a lower price making up the 100k .

if the stock doubles and you reinvested you have the same 200k you would have had if it did not go ex div ...if you did not reinvest the dividend and the stock doubles you only have 192k ...

what part of the reduction being mandatory don't you get ?


companies don't pay dividends profit or not ,. dividends are voted on by the board quarterly and paid even when companies have a foot in the grave ... many dividend payers have gone bankrupt and paid right up to the end . ever hear of gm , ge , kodak ? to name a few .

sorry wrong again on the taxes . unless you are in the zero capital gains bracket in a brokerage account that entire dividend is taxed unless it is a return of capital as reits do .

you are taxed on the entire 4% in my example . drawing 4% out of a portfolio of non dividend payers is only taxed on the gain portion not the whole 4% .

to be in the zero capital gains bracket your total taxable income plus the dividend or capital gain has to all fit in the lowest bracket . but that applies to all capital gains and dividends that qualify not just dividends .



FINRA MANUAL :

5330. Adjustment of Orders

(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01)
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You don't know what you are talking about. A dividend does nothing to the share price of the stock you hold. It's a dividend at the option of the company that you hold the stock in. They can issue a cash dividend and it does not change the value of the stock you hold unless it might be traded. That's the only thing that changes a share price. Bid and ask.

I'm not going to bother with your comments anymore. Sorry.

Regular cash dividends are those paid out of a company's profits to the owners ofthe business (i.e., the shareholders). A company that has preferred stock issued must make the dividend payment on those shares before a single penny can be paid outto the common stockholders.Feb 25, 2015

What are Dividend Stocks? - Dividend.com


https://www.dividend.com/dividend-investing-101/what-are-dividend-stocks/


If the stock is trading at $20.00 it stays at $20.00 regardless of whether a dividend is issued except if it is traded on the market.

The dividends come from the retained earnings of the company.


 
nonsense . go learn about what you are talking about . if you can understand english it is right in the finra rules i posted above . you could not be more wrong . exchange computers AUTOMATICALLY LOWER THE SHARE PRICE

---------------------------------------------------------------------------------------------------------------------------------------
Here is your first lesson

"Effects on Stock Price

Because paying a dividend lowers the amount of money a company is worth, the stock market responds by lowering the price of the company's shares . Finra rules mandate all prices are lowered by the exchanges.

For example, say a company is worth $50 million and has 2.5 million shares outstanding. Based on that valuation, an investor would be willing to pay $20 per share. If the company pays a $1 million dividend, or 40 cents per share, the company would still have 2.5 million shares outstanding, but only be worth $49 million. So, after the dividend the market would only value the stock at $19.60 per share. All trading begins at 19.60


No Loss for Current Shareholders

Even though the price of the stock goes down after a dividend, current shareholders don't lose out. Instead, their wealth just takes a slightly different form -- it's split between the reduced share value and the dividend payment. For example, say you owned shares worth $20 each before a 40-cent per share dividend. After the dividend, your stock is only worth $19.60. However, you now have 40 cents in your pocket from the dividend payment. Adding that 40 cent dividend to your share value of $19.60 puts your total worth at $20 -- right where you were before the dividend.

https://finance.zacks.com/dont-investors-buy-stock-just-before-dividend-date-then-sell-9577.html

 
we just closed it all out before the recent drops....we wanted to pay off everything completely. ..totally out of debt....we are 65 &64...it'll be enough for what we need from social security. ...best to you
 

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