SPY, Early Retirement, And Dynamic Cash Reserve

Nov. 22, 2021 9:05 AM ETSPDR S&P 500 Trust ETF (SPY)2 Comments


  • The SPDR S&P 500 Trust ETF (SPY) fund is a cornerstone fund in our early retirement portfolio.
  • However, the fund’s valuation is currently near a record high in its entire history, actually the entire stock market history. And it has suffered large volatility risks in the past.
  • Capital preservation becomes a high priority considering the combination of historical volatility and high valuation.
  • This article describes a framework based on SPY, one that we use for our own early retirement planning, to balance capital preservation and long-term growth.
  • Our model also shows that now is a good time to increase cash reserve and be in a hunker-down mode with the summation SPY yield and treasury rate at a historical low.

Early retirement handwritten in a note.

designer491/iStock via Getty Images

Thesis and background

The SPDR S&P 500 Trust ETF (NYSEARCA:SPY) offers diversified exposure to the overall U.S. economy - which I am very optimistic about in the long run. Probably like you, we hold this fund as a cornerstone in

This article was written by

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** Disclosure** I am associated with Envision Research

I am an economist by training, with a focus on financial economics. After I completed my PhD, I have been professionally working as a quantitative modeler, with a focus on the mortgage market, commercial market, and the banking industry for more than a decade. And at the same time, I have been managing several investment accounts for my family for the past 15 years, going through two market crashes and an incredible long bull market in between. 

My writing interests are mostly asset allocation and ETFs, particularly those related to the overall market, bonds, banking and financial sectors, and housing markets. I have been a long time SA reader, and am excited to become a more active participator in this wonderful community! 

Disclosure: I/we have a beneficial long position in the shares of SPY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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