Author Topic: Profit taking only post-FIRE?  (Read 267 times)


  • 5 O'Clock Shadow
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Profit taking only post-FIRE?
« on: August 09, 2017, 11:07:44 AM »
So I'm clearly no investment maven, but here's an honest query on the following scenario.  We have a balanced portfolio 75/25 equities, with a heavier weight on international stocks than domestic.  Given all the uncertainty politically and economically, I'm looking for a withdrawal strategy that will allow us to leave the portfolio capital alone, and just take the profit opportunistically.

Total portfolio: approx $1m with a 10% profit this year to date, so $1.1m.  Current cash=$275k+ in high interest account.  With other assets (paid off real estate, etc), the net worth is about $2m. 

Ultimately, we will settle into about 60-70k per year in expenses.  I understand I'm losing to inflation and lost opportunity by keeping a large cash reserve, but why couldn't I just ride out the down market, living on the accumulated cash account, while taking profits when the present themselves.  That is taking $75k-$100k of this year's profits off the table now, so I've made the year's income in August.  If the market goes up, we start 2018 with a higher noncash balance.  If the market drops, we wait (even if it takes a few years) before touching it until it is again positive.  Cap out cash account at 5 years of expenses to wait out a major correction.

Easy decision making, sell above $1m balance, and hold at or below.  Where does that fail compared to a 4% withdrawal?