The main reason I feared volatility and focused on locking in profits was due to emphasis on growing the all of our portfolios. Growth meant getting bigger. Going smaller, even by a little, was losing. Fear of losing created the fear of outliving declining retirement funds.
I've tried to change that mentality, from growth to income stability. Now, my strategy is to create a monthly "retirement paycheck," one that I can depend on whether the market goes up or goes down. I've been doing this strategy for almost 2 years. It has helped me become volatility agnostic. The main difference from a working paycheck is there is variability in monthly payments since I have not sequenced the payments to have equal monthly payments. Way too much work. It has served us well for the past two years. While the going has been good, the strategy has not been tested in a significant bear market.
This strategy is based on blending fixed income, social security, dividends, and rental income with growth investments. Up until 2023, fixed income was paying very little. Now interest rates have increased to the point of 10 year Treasury yielding over 5%. One can count on 5+% returns for 10, 20, or even 30 years. Of course, there is always the risk of inflation, but I think that social security, dividends and rental income with help offset inflation and mitigate the impact of a market downturn.
Since I expect a market downturn in the near future, we'll soon see if the retirement paycheck strategy with fixed income was a good choice, in hindsight.
This is not financial, investment, bond, CD, nor retirement income advice. Please consult a professional advisor.
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