Best SWR Contest

[wabmester]

What's the best SWR FIREcalc has given you that was 100% safe over a 40 year period?

I was playing around with microcaps, and got the following:

60% microcap
10% large value
30% cash (1 month treasury)

40-year 100% SWR = 4.97%

[IBWino]

Are you assuming no Social Security and no pension?

Assuming that I get SS at 65 and my wife starts drawing her pension at 55 (we're both 45 now), our 40 year SWR is 5.55%. Assuming no SS for me, but pension for wife, our SWR is 5.05%. I didn't mess with the investments mix. Although not exact, this was as close to our actual portfolio as I could get:

10% US small cap
10% US small value
20% S&P 500
10% US Large Value
10% LT US Treasury
10% LT Corp. Bond
30% 1 month treasury

[wabmester]

Quote:

Originally Posted by IBWino Are you assuming no Social Security and no pension?

Yes, I just used the defaults and made the following changes in Advanced FIRECalc:

How much will you spend: change 30 years to 40 years.
How is it invested: use "a mixed portfolio"
Results: set the radio button to "how much you spend each year" and change the search criterion from 95% to 100%.

For your allocation above, FC gives me 4.18%

Since FC doesn't have a "find optimal portfolio" feature, I'm just curious what sort of SWR different allocations support.

FWIW, raddr did a study that showed 45% ScV + 55% commodities could give you a SWR of 7.1%.* *I'm not sure he specified, but I think that was 95% success for 30 years.

[d]

strikes me there is a considerable danger in back-searching for a particular portfolio mix ... both portfolios mentioned (that with 60% micro-cap and the SCV+commodities) seem very unbalanced.

[wabmester]

Quote:

Originally Posted by d strikes me there is a considerable danger in back-searching for a particular portfolio mix ... both portfolios mentioned (that with 60% micro-cap and the SCV+commodities) seem very unbalanced.

Frankly, there's a danger relying on historical data at all, but it's still interesting to see what happened. FWIW, I'm pretty sure that Larry Swedroe's asset allocation consists of just ScV + TIPS.