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Tag Archives: SWR
It must be that time of the year again. Retirement hysteria time. Usually in the new year I start seeing a slew of articles on how your retirement is at risk, how you cannot possibly retire now, and the theme for the last few years – how high stock market valuations and low interest rates will guarantee that either you are going to work forever or you are going to retire with a much lower living standard. This time the offending piece was in Kiplinger’s of all places, which was brought to my attention by one my weekly econ reads, … Continue reading
Today I wanted to revisit the topic of spending in retirement. Having a retirement spending plan and monitoring that plan is just as important to retirement success as asset allocation or deciding on safe withdrawal rates (SWRs). Yet, it’s not discussed nearly as much as the other retirement topics. And most retirees don’t do it. I’ve talked about retirement spending in the past on the blog, from a personal anecdotal perspective, and from the overall perspective for all retirees, both questioning the conventional wisdom. The conventional wisdom models retiree spending as being adjusted for inflation, as measured by CPI (Consumer … Continue reading
Time for screencast #4. In today’s screencast I cover spending in retirement. I cover the three key aspects of spending in retirement; the level of post retirement spending relative to pre-retirement, the yearly increases to spending, and the impact of maintaining flexibility in spending during retirement. The combination of these three can create a powerful impact to how much you need to retire or conversely how much you can withdraw in retirement. I’ve covered these topics before on the blog. For more detailed information please see these previous posts on spending. Post retirement spending Yearly spending increases Maintaining flexibility in spending … Continue reading
Time for screencast #3. In today’s screencast I cover how the 4% rule, or 4% safe withdrawal rate (SWR), changes for different retirement periods. I thought I had covered this topic in an old post but as turns out I had not. It’s an important topic to cover. This is the first screencast where I cover one of the basic issues with the 4% rule of thumb – that not every retirement period is 30 years. In the screencast I discuss how the SWR changes for shorter and longer retirement periods. I also start the discussion how it varies with … Continue reading
Well, that was fast! I just finished the second Investing For A Living screencast. In this one I tackle ‘How to Implement the 4% rule’. After publishing the first screencast I quickly realized that there is still quite a bit of misunderstanding when it comes to actually implementing the 4% SWR rule. And I happened to have all the material right at hand. It is not, as many believe, simply taking 4% of your portfolio value every year. I did tackle this early on in the blog but a screencast is a much better platform to explain more complicated concepts. … Continue reading
Today I’m introducing something new for Investing For A Living. Screencasts. I love writing the blog. I love doing the research that goes into the blog posts as well. But I realize it is for a small audience. Especially with some topics like quant investing. Over time I’ve received more and more requests to discuss a variety of basic and fundamental investment topics. After considering many of the options available I’ve settled on screencasts. It’s relatively easy for me to put together and gives me flexibility to go over many subjects. Also, the people I’ve discussed this with think the … Continue reading
Compounded annual returns are the crack of the investment world. Wall Street is the pusher and investors are the addicts. Investment companies and investors focus on the annual return metric as the most important in a portfolio to the long term detriment of most investors. This myopic focus on annual returns is bad for investors’ wealth wether they are in the wealth building phase or the withdrawal phase of their investment lives. Lets look at how bad and expensive this unhealthy obsession can be. First, lets look at the case of the investor building future wealth. In a world where … Continue reading
In my recent overview post on the landscape of available buy and hold portfolios, I said I would come back with a comparison of all the portfolio types; buy and hold, tactical asset allocation (TAA), and quant investing portfolios. Here is that comparison. I’m pretty sure I’ve discussed all the portfolios I compare in this post on the blog at some point but here is a list of the portfolios and some links for more info. Also, I have uploaded a spreadsheet to Google Drive that has more info on the data sources I used for the portfolios. Quant TV … Continue reading
I often get asked “how do I get started with an investment portfolio?”. The best answer, but not very helpful, is to learn about building and investing in a diversified buy and hold portfolio for the long term. A very true statement but it usually leaves the investor still looking for answers. In this post I plan to be much more helpful in providing guidance for investors either looking to get started or for investors looking for a better approach to building investment portfolios than what they are using now. For this post I will rely heavily on a new book … Continue reading
One of the challenges in dealing with modern portfolios like the Permanent Portfolio, the various IVY portfolios, Risk Parity portfolios, etc is the lack of long term historical data. Most of the modern portfolio data for a broad range of asset classes only goes back to 1973. The period from 1973 onward obviously only represents a subset of historical economic and financial conditions. This represents quite a challenge when looking forward and trying to model probable future outcomes for different portfolios. In the context of retirement this fact makes determining SWRs for modern portfolios difficult. The worst case historical 30 … Continue reading