Since the time horizon of FI stash is usually shorter (i.e. people want to start withdraw a lot earlier).
Huh, I look at it the exact opposite. Sure, one may want to start some withdrawals within 5-10 years.
But I see the time horizon of my FI stache as very, very long term - it needs to last the rest of my life, which could be 50+ more years.
Not if I need to withdraw in a few years and saw the stock market lost 70% in value by then..
Like the earlier post.. I see risks everywhere these days, not little risks but very concerning risks.
OK. You are correct, there seem to be risks everywhere right now, because of past events. (Note, this is usually a great thing for long term investors like us).
Don't panic.
So my recommendation would be to spread your stash using a very conservative AA, that would be as robust as possible to the events you describe and makes you feel comfortable and safe.
The disadvantage of this is that it will reduce returns over 30+ years according to the past history of the world so far. And you are right to remind us of that assumption.
But what are these safer assets? Cash means you'll loose to inflation and lost real returns; gold seems beyond a bubble compared to other commodity prices; real estate seems stuck, stock market volatile;
and bond prices at record highs, increasingly dominated by non- market forces like central banks; municipal bankruptcies...
So,
1/ Look to own a modest mustashian home mortgage free in a place with very low property taxes. Maybe take advantage of the foreclosures market.
2/ Think of adding an adjacent rental unit or 2, if strong cash flow, with 80% financing (30 yr fixed). Learn how to manage it if required to 'force' additional income in extremis.
3/ Asset allocation.
Use the 401ks if you can, and roths etc. Assign assets as per Arebelspy's chart.
Then split between 25% each of :
- commodities,like Vanguards precious metals fund VGPMX, or other ETFs (caution, these can high fee and volatile), energy companies, heck even a little bit of physical gold
- a balanced fund, like VWINX, has a 35/65 bond/stock mix
- international stock, maybe focused a bit away from Japan.
- cash (not too much as green), but insured CDs,
maybe spread across US$, Canadian $, Aussie $, Sing $
I wouldn't do this myself, but as long as you stick to it, I can't see a 70% dip ever.