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Best SWR Contest
Old 08-12-2006, 01:37 PM   #1
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Best SWR Contest

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%
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Re: Best SWR Contest
Old 08-12-2006, 07:40 PM   #2
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Re: Best SWR Contest

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

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Re: Best SWR Contest
Old 08-12-2006, 07:54 PM   #3
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Re: Best SWR Contest

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.
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Re: Best SWR Contest
Old 08-12-2006, 08:11 PM   #4
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Re: Best SWR Contest

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.
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Re: Best SWR Contest
Old 08-12-2006, 08:38 PM   #5
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Re: Best SWR Contest

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.
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