I Sold 8% of My Portfolio – Here’s How I Secured My Retirement for Two More Years

The stock market has offered tremendous long-term returns, but the risks become more difficult to justify as you get older. A Redditor in the FIRE subreddit recently did something that would be unthinkable for an investor in their 20s. This individual sold off 8% of their portfolio.

While that money won’t generate compounded growth anymore, the Redditor said that selling 8% of their portfolio has secured an additional two years of retirement. This individual does not want to go back to work, so selling some assets may be the right choice.

Now, regardless of what the stock market does over the next two years, the Redditor is fine. Furthermore, it’s easier to hold on to the remaining stocks knowing that the next two years have been secured. Here’s what this individual’s decision can teach you about saving and retiring.

You Can’t Rely On The Stock Market Roaring Higher Each Year

Some people who aim to retire early depend on the stock market generating high returns over a long period of time. However, this mentality can cause you to retire too early or put less emphasis on growing your income.

The best way to retire early is to regularly increase how much you earn. You can do that by working longer hours, picking up a side hustle, asking for a raise, or job hopping. 

One of the top comments came from a Redditor who remarked how everyone thinks they can retire early when the stock market is soaring. A bad week shouldn’t result in a sharp change to your long-term financial goals. If it does, you may be relying too much on future stock market gains when crafting your retirement goals.

The Stress Isn’t Worth It For Every Retiree

Stock market volatility can cause a lot of stress, especially when people retire and rely on their nest eggs to cover their expenses. Not everyone wants to deal with the stress of seeing their portfolio drop by 10% or 20%. Both of thoseoutcomes are possible in the stock market, but putting money into less risky assets can safeguard more of your money.

The Redditor didn’t want to deal with the stress of seeing their portfolio lose significant value. Thinking in terms of time instead of money allowed the investor to see an opportunity to ensure two more years of retirement. However, this individual hasn’t abandoned the stock market completely, as 92% of their money remains invested. 

Park The Money In High-Yield Assets

When you remove money from the stock market, it can still earn a respectable return. Putting the money into a high-yield savings account can net you an APY as high as 4%. You can also get a 5% APY from some CDs, especially if you do business with online banks.

It’s better to earn some extra cash flow than nothing at all, and these accounts are also more stable. You don’t have to worry about your principal losing value over time. You can access your money right away if you put it in a high-yield savings account or a money market fund. 

Adding money to these accounts makes it easier to fulfill the 4% withdrawal rule. The interest you receive may be enough to fulfill this benchmark without depleting your balance. You will have to contend with taxes on your interest income, but it’s better to get taxed on some cash flow than it is to not receive any additional cash flow.