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Over the years that shows be very conservative or income model is not the best strategy. I finally notice they didn’t all start the same year. What if they all started the same year to make it fair and balance.
Over the years that shows be very conservative or income model is not the best strategy. I finally notice they didn’t all start the same year. What if they all started the same year to make it fair and balance.
They give you each years return so you would have to put together the years you want to compare ....
When it comes to the models , once you are out of your 100% equities stage you can allocate to the various models laddering the money by when you need it .
I use the income model for short to intermediate term money and I use the growth and income model for longer term money ....after a dip I may allocate a bit to the growth model too...so it really is up to you and your own plan.
I think some here who follow the models use quite a few of the models together .
The "4% rule" or any rule fir withdrawal wont apply to us.
Because we are late to the party ( i for medical reasons causing me to go broke and taking a set back; my OH for finacial mismanagement, until we got together and I took over), we will have to try to make interest only withdrawals for as long as possible, and even leave some interest reinvested if at all possible.
That way we can preserve as much capital as possible.
We've never had a pension, so that is out.
Even 401ks at workplaces have also gotten really cheap. Sometimes to where you are basically paying them to keep your money. Thats IF you qualify. Like 3 cents on the dollar of the first 1% of your saved amount. Its like why even bother. My OH had one of those for a year. My OH stopped it cause there was little movement, and some months ran negative, making gains even harder. It was like having your savings earn 1/4% in a brick and mortar bank , versus 2.49% at an online bank. So that is out.
So our meager investing and savings will have to be as preserved as possible.
I think going where we want to ( Warmer cheaper climate/city) will make our SS work for us, so as lobg as we can make that work without touching principal, or even adding what is leftover at the months end to principal will have to work.
I used to be able to save something even during lean times, like $0.25 per hour worked, but this summer with my OH s hours cut so dramatically, even thst wasn't possible. Point being i try to save every check i/we get. Even if its only a small amount.
And the key, like in the future is to NOT touch it.
We wont be lavish, but we should be able to make it and still do somethings like do some travelling. There will be a whole new area to explore when we get to our retirement area. That can include day trips to explore. Plus, like we do now every about 5 years go on a major vacation, if ican still save for a major vacation.
Best to those who like us, will make it work.
If you are talking about interest from savings accounts you might look at individual dividend paying stocks. Look for stocks with a history of increasing dividends.
Is there any similar withdrawal analysis that works on a “what money will buy†context? Perhaps living in an average house in an average climate driving an average car. Paying taxes in average times. Average inflation. Etc. Then maybe you could designate where you wanted to spend. At the 50% level (average)? Or at the 68 % level? How soon would you run out.
Sure there would have to be a lot of conditions like no other investments, but could it be informative?
I don't think there are. A big problem is average would vary by the individual and the part of the country the person lived in. Best you can do is to calculate your average expense budget. Subtract income such as social security and pensions and then see what percent of your retirement savings your budget is.
If you are talking about interest from savings accounts you might look at individual dividend paying stocks. Look for stocks with a history of increasing dividends.
Dividends are not the same as interest ...these are stocks ,plain and simple and someone with no slack in the budget for cutting back in an extended downturn has to be extremely careful what they do with their money .
When there is no slack in the plan the sequence risk and volatility of equities can be a bad idea as Bernstein says .... you need a modest amount of discretionary spending that can be adjusted if need be ...when everything is a fixed expense there is no room to adjust so Bernstein is dead set against these types of retirees being in equities
If you are talking about interest from savings accounts you might look at individual dividend paying stocks. Look for stocks with a history of increasing dividends.
We have savings accounts, CDs, and ROTH s, which...tada! Are in equities.
There are a few individual sticks with excellent dividends, but I'm not good at picking out the best, so i let fund managers do that for us. That doesn't mean THEy do the best either!
If we have $300k and get a great 10% average return, in what, 7 years OF NOT TOUCHING IT or the income, it will do what? Double, that is our goal for the next 10 years. And if. Big if, we can avoid touching it for the next 7 years putting my other half at 85,cand me at 81, well have even more. Then ill feel safe about leaving what do you call it? The accumulation phase and start the spending phase, but only income.
I got burned ONCE by medical issues and spending retirement money accumulated in the 80s well before its it's time. NOT AGAIN if I can avoid it. If it happens, lol we'll at least qualify maybe for some welfare programs. Lol.if theres any left.
This summer since my OH s hours got cut so severely, nothing got added, but i refused to touch any savings for retirement. Absolutely. Went to a food pantry once to stretch the budget, but retirement savings stayed intact.
My .02 concerns fees. Sure some sectors have had what look as great gains over boring S&P index funds, and maybe in the wash they did better overall with fees, but what is it, 90% of all fund managers DO NOT even beat the base index they are trying to beat, all the while charging INSANE fees for crappy performance.
I volunteer to help a local non-profit with their 403b plan, and frankly for the fees they are charged, complete lack of education provide to the members by the investment company, and low matching by the employer I pretty much swing them to Vanguard date type funds, or a well planned mix of stock and bond indexed mutual funds. These investment companies blind them with slick glossy brochures, push them toward high fee funds, do not explain the LONG TERM net effect of their fees, and then leave them on their own in the wilds. One thing I do in a board meeting is ask that 3-5 employees join us, and then in a compassionate manner so as not to embarrass them or make them feel silly/stupid, I'll ask such things as:
- What is your investment goal, scope, philosophy?
- Can you tell me say, the top three holdings in your portfolio, and why do you hold them?
- Do you understand how the fees of the plan impact your returns?
- Etc, etc...
Usually, everyone one of them will say they have no idea what their goals are, other than to "Make a lot of money", and they did whatever the annual rep from the company suggested, with absolutely no real one-on-one interaction to help with the choices, and ESPECIALLY about fees. These poor folks are bamboozled by the belief that even once known, a portfolio that has an average expense of 1.25%-1.75% of AUM *seems* pretty low... Hell, you can't even catch a buzz on 1.75% beer . It sickens me when I bring out my charts and show that yes, in the very short term, the fees seem like no big deal, but how about 15, 20, 30, 40 years of compounding fees??? Well, here is the math to prove it.
$10,000 w/o addition other than rolled in dividends up to 50 years in the future, using a 7% rate of return.
First chart with .15% fees, you keep 95% of the investment:
Now with just 1.25% fees, you keep only 67% after 25 years, and it gets much worse over time.
Hell, many of the participants did not realize in down markets, you still pay the fees! I even see 25 year old employees with almost all of their $$$ allocated into little more than a low yield MM fund, destroying all of the virtue of a long investment cycle! Easy to say they should have known better, been better educated... These people are not stupid; they are simply ignorant of the system by lack of sufficient education, and rightfully concerned about having to seemingly look many decades into the future now, planning for a huge life issue where there is no do-over, no crystal ball.
IMO it is criminal how the 401k/403b is implemented in many companies, and I make it my mission to show what a lot of these investment companies are - Disgusting, money grubbing robbers who just happen to wear stylish gender appropriate suits, silky ties, display all the appropriate hand gestures, grinning ear-to-ear with inhumanly white, glowing teeth. True scum, who at your retirement party will say "Wow, look WE did it"... Sure did, having them retire with $300k, rather than the $800k going on it on your own with advice given toward YOUR best interest... Fiduciary my ass!
My .02 concerns fees. Sure some sectors have had what look as great gains over boring S&P index funds, and maybe in the wash they did better overall with fees, but what is it, 90% of all fund managers DO NOT even beat the base index they are trying to beat, all the while charging INSANE fees for crappy performance.
I volunteer to help a local non-profit with their 403b plan, and frankly for the fees they are charged, complete lack of education provide to the members by the investment company, and low matching by the employer I pretty much swing them to Vanguard date type funds, or a well planned mix of stock and bond indexed mutual funds. These investment companies blind them with slick glossy brochures, push them toward high fee funds, do not explain the LONG TERM net effect of their fees, and then leave them on their own in the wilds. One thing I do in a board meeting is ask that 3-5 employees join us, and then in a compassionate manner so as not to embarrass them or make them feel silly/stupid, I'll ask such things as:
- What is your investment goal, scope, philosophy?
- Can you tell me say, the top three holdings in your portfolio, and why do you hold them?
- Do you understand how the fees of the plan impact your returns?
- Etc, etc...
Usually, everyone one of them will say they have no idea what their goals are, other than to "Make a lot of money", and they did whatever the annual rep from the company suggested, with absolutely no real one-on-one interaction to help with the choices, and ESPECIALLY about fees. These poor folks are bamboozled by the belief that even once known, a portfolio that has an average expense of 1.25%-1.75% of AUM *seems* pretty low... Hell, you can't even catch a buzz on 1.75% beer . It sickens me when I bring out my charts and show that yes, in the very short term, the fees seem like no big deal, but how about 15, 20, 30, 40 years of compounding fees??? Well, here is the math to prove it.
$10,000 w/o addition other than rolled in dividends up to 50 years in the future, using a 7% rate of return.
First chart with .15% fees, you keep 95% of the investment:
Now with just 1.25% fees, you keep only 67% after 25 years, and it gets much worse over time.
Hell, many of the participants did not realize in down markets, you still pay the fees! I even see 25 year old employees with almost all of their $$$ allocated into little more than a low yield MM fund, destroying all of the virtue of a long investment cycle! Easy to say they should have known better, been better educated... These people are not stupid; they are simply ignorant of the system by lack of sufficient education, and rightfully concerned about having to seemingly look many decades into the future now, planning for a huge life issue where there is no do-over, no crystal ball.
IMO it is criminal how the 401k/403b is implemented in many companies, and I make it my mission to show what a lot of these investment companies are - Disgusting, money grubbing robbers who just happen to wear stylish gender appropriate suits, silky ties, display all the appropriate hand gestures, grinning ear-to-ear with inhumanly white, glowing teeth. True scum, who at your retirement party will say "Wow, look WE did it"... Sure did, having them retire with $300k, rather than the $800k going on it on your own with advice given toward YOUR best interest... Fiduciary my ass!
Yes it can be hard for non financial employees of companies to pick good plans. I think a lot of companies were taken advantage of. I saw one proposal from a large NY City stock broker that tested poorer than the investments they were replacing. The reason is that they did not sell funds that did better than what the plan already had. Although they had full access to the plans history they did not even realize that their proposal performed worse than the one they were replacing for the same period of time.
Any parameter taken and compounded on over decades can seem monumental....
The truth is compared to poor investor behavior from trying to do things on their own most investors do rather poorly getting less than the funds they were in got so those fund expenses may be cheap in comparison to typical poor investor behavior .
Throw in when we buy ,when we sell ,when we rebalance , our tax structure ,etc and suddenly those fees are not front and center any more ...vanguard did a great marketing job promoting one aspect .
But it reminds me of the boglehead buying a car ....he shops around for the rock bottom price , then pounds the finance guy for the best terms .. a few years later he trades in the car wholesale , takes a beating and starts over again .
On the other hand grandma pays a higher price , gets slightly higher financing and sells the car privately getting a better overall deal than our mr boglehead ...in the end grandma won ...
The fact is we get some parameters better then others and in the end getting more right and one or two less right may end the same regardless of the lowest expenses or not ....i know our 401k has expenses under 1% with fidelity .
Fund expenses have to be compared to performance as well ...for decades now I will gladly pay the higher fund expenses for my fidelity contra fund , fidelity growth company and fidelity blue chip growth ... they have surpassed a total market fund over almost all longer periods of time despite higher fees.
Same with my fidelity bond funds ...they have surpassed vanguards lower expense versions with no real increase in risk because fidelity’s total bond fund is managed and not an index and it has outperformed vanguard for a long long time now
Last edited by mathjak107; 09-08-2019 at 05:56 PM..
One of the points that frequently comes up is whether the 4% SWR will work today due to such low yields, however what is not taken into account is that we are also in a period of historically low inflation. So, to make a valid argument you have to take into account yields as well as inflation. Yes, in the 70s/80s you had high yields but also high inflation so what is the Net Real yield - that is the only thing that matters. Real yield is not different in those periods vs today.
Today we have 1.7% yields but < 2% inflation vs 10% yields but 12% inflation back then so the discussion on low yields affecting SWR is moot.
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. It sickens me when I bring out my charts and show that yes, in the very short term, the fees seem like no big deal, but how about 15, 20, 30, 40 years of compounding fees??? Well, here is the math to prove it.
