No. of Recommendations: 2
<<It's definitely not an argument for a portfolio that's 90% S&P 500 and 10% short term treasuries unless the time frame is more like 25 years instead of 7 years.>>
I have always considered that advice to be fully suitable only for those that are so wealthy (like Mr Buffett's widow) that rate of return is of no real concern.
It also has a big hidden problem...when does the person spend cash, versus when does the person sell stock to top up the cash? If the person in question is capable of valuing the market and making a sound decision on that subject, they don't need advice on the cash/stock allocation. If they don't have that skill, the advice is a bit incomplete. Presumably the cash cushion is there for those instances that it's better to use the cash than to be selling equities--but what's the test for that? Does the heir know how to answer that question?Just saw a Bogleheads thread on the buckets strategy:
A Comparative Performance Analysis of 15 Bucket Strategy Refill Policies
https://www.bogleheads.org/forum/viewtopic.php?t=4...Their conclusion: "No-Backfill consistently achieves near-lowest failure rate together with highest legacy".
That is, spend the cash first, then start selling equities. A bit counter-intuitive, but I can dig it. Reverse glide path.
I've been self-employed nearly my entire career, and holding a lot of cash is second nature. I'll continue that policy in retirement.
