The 2020 GCC Asset Allocation

asset allocation and rebalance

We have been living off our portfolio since late 2012. Along the way I’ve made only minor adjustments – annual rebalancing, minimizing long-term taxes with capital gain harvests and Roth conversions, and adding the occasional small chunk of fresh capital as blog income allowed.

But after ~7 years of the stock market trending upward, and the conscious decision to spend more, in early 2019 we took some money off the table (sold stocks / bought bonds.)

When literally everything went to hell due to COVID-19, we sold some of those bonds to buy stock and increase our cash cushion..

After all of that… This is what our portfolio looks like in 2020.

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F.I.R.E. Damage

As poor an acronym as it is(*), F.I.R.E. (Financial Independence Retire Early) has become widely known, inspiring many to spend less and save more.

Not everybody thinks it is a good thing, however, and we are probably guilty of setting a bad example – indolent, hubristic, aggressive, patronizing, flippantly roaming the globe in luxurious fashion…

… so when the economy struggles and the stock market implodes, I am unsurprised that some headlines and individuals are excited for the opportunity to say, “I told you so” or to predict “the death of FIRE.”

Are early retirees at risk of serious F.I.R.E. Damage?

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The CARES Act

This weekend the Coronavirus Aid, Relief and Economic Security (CARES) Act was passed into law, with the intention of providing relief to taxpayers affected by the coronavirus (COVID-19). I imagine this is but one of many stimulus/emergency relief efforts to come, and the details will undergo much scrutiny in the coming months.

This is a massive and wide-reaching law. I’ve done my best to summarize the parts that I think will have the greatest interest or impact to early retirees and aspiring early retirees, although it will affect nearly everyone.

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Lessons From Japan’s Lost Decade(s)

Lesson's from Japan's Lost Decades

Following an epic collapse of double bubbles in the stock market and real estate prices, Japan “suffered” 2+ decades of stagnation and deflation.

You would be hard pressed to find somebody who hasn’t at least heard of Japan’s Lost Decade(s.) It’s a popular topic people raise as soon as our early retirement and living off an investment portfolio comes up in polite conversation.

“Oh man, what are you doing to do when the United States (inevitably) experiences it’s Lost Decade(s)?!”

“20 years of 0% investment performance is bound to put a dent in your retirement plans, hehe”

“I want to retire early too but I’m really concerned about a Japan-style financial collapse. What can I do?”

That last question is probably the best – What lessons can we learn from Japan’s challenging times?

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Reflections of 2019 – Normality (and Other Life Changing Events)

Nice view! – Bali

2019 was our 7th full year of post-work life and probably our most “normal” year to date – we lived in a normal city, Jr went to a normal school, and we did normal life things. It was nice. And different.

We did manage ~5 weeks of travel vacation (Thailand, Vietnam, Bali) and I took most of the summer off from anything with a screen, which was also very wholesome and normal and nice.

So of course something happened that will completely change our lives, forever.

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The SECURE Act – Compression of the Stretch IRA

After 10 years or so of “this legislation will pass soon”, at the end of 2019 the Setting Every Community Up for Retirement Enhancement Act finally became law.

Besides a cool acronym, the SECURE Act offers a wide range of changes and “enhancements” to 401(k)s, IRAs, and 529s, as well as a whole slew of incentives for small businesses to add or expand retirement plans to both full and part-time workers.

In my opinion, most of the changes (including the much-touted compression of the stretch IRA) are of limited interested (to the living.)

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