Anyone having to sell any assets yet?
For those folk already FIRE'd, have you had to liquidate anything yet to meet your living requirements? Or is everyone still living on their cash buffers? If so, how long before you need to sell?
If anyone needs to sell less than two months into a bear market then they should have their mustacheian-card revoked.
Why? If you FIREd let's say last summer with whatever portfolio mix you saw fit and and emergency-fund of cash, why would you not be drawing down on your portfolio month by month?
Does this downturn qualify as an emergency to dip into your emergency fund? I thought an emergency was when you hot water heater exploded, not when your portfolio goes for a walk.
In the above hypothetical the person still hasn't thought out the 4% rule very well or planned well in advance.
Here's how I plan on doing it when I'm RE (currently FI), if I'm 100% in stocks. This downturn has just confirmed for me that this is the way to go:
1) Have a cash position worth two years' expenses, drawing down the portfolio month by month.
2) When the market drops X%, stop drawing down.
3) Ride out the bear market.
Alternatively, if I'm in stocks and bonds, when the bear hits I stop selling stocks and live from the bonds. Then rebalance as close to the bottom as I can.
I think that this topic has been discussed at length on other threads.
No, it hasn't.
There is nothing in the 4% "rule" that says how large your cash buffer should be, or when it should be used.
If you are living off your portfolio then at SOME point you are going to have to sell some assets when the market is depressed. That is simply inevitable.
What I am getting at is that this is possibly the first time, or at least since 2008-09, that anyone still living off their portfolio will need to sell into a market that is -20% down or more.
we talk about SORR all the time. Is anyone actually now living it?
We agree that real-life plans usually include a bit of fat to try minimizing the impact of things like this. So what I am trying to get at is, is anyone simply ignoring the market and carrying on with their drawdown plan and selling into this bear market, or does this actually demonstrate that the 4% rule is thrown out of the window along with everything else when the SHTF.
It's very popular to say that you can't time the market on this forum, yet people trying to delay drawing down from their portfolios and living on their cash buffer are unwittingly doing just that. The risk in blowing through your 6 month cash reserve immediately is that 6 months from now the S&P is at 1200 and now you have to sell many more units to meet your living expenses that you can no longer delay. The piper must be paid.