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Old 07-08-2013, 07:04 PM   #21
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Anglo-Saxon? Not in my house! The US is more Germanic/Hispanic, but neck-and-neck with Canada as the most diverse country on the planet.
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Old 07-08-2013, 07:14 PM   #22
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ok. "Anglosphere" may be more precise : Anglosphere - Wikipedia, the free encyclopedia And the map : http://en.wikipedia.org/wiki/File:Anglospeak(800px).png

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Anglo-Saxon? Not in my house! The US is more Germanic/Hispanic, but neck-and-neck with Canada as the most diverse country on the planet.
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Old 07-08-2013, 07:17 PM   #23
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I am usually reluctant to add to any thread asking about investment or budget ideas.

Well, the truth is I normally do not even care enough to even have an opinion to post about it. But since I consider Redduck a friend of mine - we have exchanged a few tongue-in-cheek posts in the past - I will throw in my 5 cents here (up from the normal 2 cents).

Let's examine his "wife"'s numbers. Given her nice pension, what she needs to draw from her investments each year is

$36,287.37 - ($2600.00 + $130.00) X 12 = $3527.37

Note that I have preserved the to-the-penny precision that Redduck has provided in the problem statement.

The lady has a portfolio of $76K + $440K + $8.5K + $8K + $98K = $630.5K

Note how redduck is no longer using penny-precision in the latter numbers. Perhaps he has rounded off all asset numbers to the lower thousand dollars (and diverted the lose change to his own accounts for his convenience). Sorry I digressed.

So, unless I miscalculated something (which is quite likely given my state of mind the last few months), the lady in the wonderful companionship of my friend redduck needs to draw a whopping 0.55945% WR!

How does redduck invest the money to guarantee that WR in the years ahead? Tough problem... Lemme think about this a bit...

I need to make some FIRECalc runs, perhaps varying the expected future inflation rate over a wide range to make sure I cover all possible outcomes.

You see, there might be some unknown expenses that the lady may not be aware of, such as raises for redduck's rendered financial services, his needs for a new car, etc..

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And, I’m beginning to feeling a bit guilty about charging her two percent of assets under management, plus 20% of the profits (I’ve been lying about the profits for the last few years) plus a .25% fee for office supplies.
Ah hah! I think I found the source of my friend's quandary. He did not state what ROI he promised his wifey, but he did admit to lying about the investment returns, which of course will cause problems with the books. This is exactly the problem that Madoff had, particularly since redduck most likely already spent the annual 2% of asset plus the 20% of the imaginary return.

Come clean my friend! Is the current balance really $630K, or is it more like $30K now?

Or perhaps you started with $2MM, and only $630K is left?

My, my, my... When the truth sees the light, you yourself may be living with 0% WR the rest of your life, because the fed will provide all living expenses for you.

As you have little left to lose, I propose that you go for broke. You may need to boost that money 2X or 3X in a hurry. The only way I know of doing it outside of Vegas is with the Forex, or with equity options.

Not just any options, but you want options of the most volatile stuff like triple-leveraged ETFs, such as SOXL, SOXS, EDC, etc... Just search the Web for "triple-leveraged ETFs", then narrow down to the ones that have options traded. Those are the ones you want and need. A problem you will have is that FIRECalc knows nothing about these, and you will need to write your own software, just like the "quants" at the hedge funds have been doing all these years.

I would keep you in my prayers, but then I do not pray and am too honest to offer that consolation.


PS. I have responded here in the same spirit as my friend redduck has made the original post, in case anyone missed it.

PPS. In the time I prepared my long post off-line, some people already figured this out. Oh well! I need to be faster next time.
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Old 07-08-2013, 07:33 PM   #24
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Neither was I, but I do see the humour (With a U. I am in Canada!)
Isn't that like the 51st state?

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Let's all lighten up!

Yup
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Old 07-08-2013, 07:39 PM   #25
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(Actually, we are not legally married, but have been living together for 26 years. It's just easier and quicker to say "married" than to say anything else. And, saying "married" works great when you're in the emergency room).
No need to lie anymore ! Now you can be registered Domestic Partners and enjoy some of the same rights as married folks at least in the ER !
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Old 07-08-2013, 07:47 PM   #26
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I think if you read back several of Redduck's posts you would realize he has a nice quirky little sense of humor...
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I would like to apologize to Redduck if I missed the joke. As mentioned in the past, I was not born in the US and my culture and language from birth are very different from the Anglo Saxon ones, hence the occasional misunderstanding.
I came to the US as a young adult, and have been here long enough to consider myself a genuine American (most people do not agree with it though, and still call me a Martian).

Still, I share redduck's sense of humor as we have exchanged posts in the past. I doubt that he would also be a Martian. That would be just too much of a coincidence.
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Old 07-08-2013, 07:53 PM   #27
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Like in "My Favorite Martian"?
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Old 07-08-2013, 08:01 PM   #28
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Those Martians live a long time. He will be working as a gardener at Star Fleet Academy in the 24th century, if my memory of future events is correct.
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Old 07-08-2013, 09:41 PM   #29
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Psst.....

She could put everything in Wellesley which had a greater than 3% distribution yield and a 2.66% SEC yield and have more than what she needs.

My only question is why do you look at her separately? I suspect there is a good reason.

I would condense accounts so there are less accounts to deal with unless there is some good reason for their being separate.

P.S. I can't see obgyn ever having such a risky portfolio. Dodge & Cox? surely you jest!
OK, the accounts will be condensed and Dodge and Cox will be eliminated. Pssst Wellesley will be bought.
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Old 07-08-2013, 09:41 PM   #30
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Raise your fees...
Thank you for participating.
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Old 07-08-2013, 10:18 PM   #31
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Questions:

Is that pension COLA'd?
How safe is that pension?
Is she happy with ~ $36-37K spending? Would she like to spend more, or any big recurring expenses to consider? If a new car in 10 years might cost $20K, that's $2K/year to set aside, etc...

If the pension is COLA'd, and let's just bump the spend up to $40,000 for round numbers, she only needs ~ $8K after pension/SS. Total accounts ~ $630K, that's just 1.3% WR. Just about any AA can handle that WR. The divs on that VTINX are 1.68%. That alone just about gets her there.

I don't see any reason to make any big changes, that VTINX is ~ 30% Equities, and that's fine for that WR. The $100,000 in MM could be moved to the VTINX or Wellesley, or maybe start moving several of these smaller things to Wellesley. But unless she wants to spend much more, or have a better chance (historically) of leaving a larger pile of $$$ to heirs/charities, no big deal that I can see.

-ERD50
Yes, ERD50, the pension is COLA'd. How safe? It's with State (Calif) Teachers Retirement System. I have no idea how safe it actually is.
She will be moving into Wellesley. And, yes, it's time to get rid of the smaller funds.

The only large expense coming up (that we know of) is a new central air conditioning system and a new furnace (a topic discussed on this board awhile back). The guy Costco sent out gave us and estimate of about $13,000. Hopefully, this gets done much sooner than later.

She's really good about putting away money for a car. That's a never-ending process.

There's no need to leave money to the heirs. One is genuinely rich (that is the absolute correct word) and the other is doing just fine.

Oh, earlier today, I told her a bit of what you had suggested. She was keen on spending $40,000 (a year). So, off to the mall we went and she bought a pair of workout shorts at Nordstroms Rack.

Apparently, you are now her favorite person in the world, bumping me back from 186 to 187.

Thank you.
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Old 07-08-2013, 10:21 PM   #32
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...

Oh, earlier today, I told her a bit of what you had suggested. She was keen on spending $40,000 (a year). So, off to the mall we went and she bought a pair of workout shorts at Nordstroms Rack.

Apparently, you are now her favorite person in the world, bumping me back from 186 to 187.

Thank you.
Glad to help. Tell I said that she should buy you a nice gift or two, and/or show her appreciation to you in other ways.


-ERD50
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Old 07-08-2013, 10:22 PM   #33
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MichaelB....

I know it's hard to believe, but I have never met Christopher Walken (I guess that's a relief for a lot of you).
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Old 07-08-2013, 10:26 PM   #34
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I think if you read back several of Redduck's posts you would realize he has a nice quirky little sense of humor, Ob (just as we appreciate from reading your posts that you have been a very good sport about your conservative take on your nest egg). I have a feeling Not-Really-Mrs. Redduck isn't really paying him for his financial services . Well, not in cash, anyway.
I get paid in cash.
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Old 07-08-2013, 10:30 PM   #35
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I would like to apologize to Redduck if I missed the joke. As mentioned in the past, I was not born in the US and my culture and language from birth are very different from the Anglo Saxon ones, hence the occasional misunderstanding.
obgyn, we are fine. And, no need to apologize (but, I do accept your apology). Apparently, my culture and language from birth are very different from the Anglo Saxon ones as well.
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Old 07-09-2013, 07:20 AM   #36
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.....P.S. I can't see obgyn ever having such a risky portfolio. Dodge & Cox? surely you jest!
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OK, the accounts will be condensed and Dodge and Cox will be eliminated. Pssst Wellesley will be bought.
To be clear, I wasn't criticizing holding Dodge & Cox - while I don't hold it from what I know it has a good record and reputation. I was just saying that I can't see obgyn ever owning it.
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Old 07-09-2013, 09:17 AM   #37
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Don't need to do anything. I would simplify by adding the Scottrade IRA to the VG IRA, but that is about managing finances not about risk/return. DW's IRA is mostly VG Wellesley and it has outperformed the part of our portfolio I manage myself without any grief so if absolute simplfying is the goal you could consider one fund. But what you have works and there is no NEED to change anything.
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Old 07-09-2013, 11:32 AM   #38
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MichaelB....

I know it's hard to believe, but I have never met Christopher Walken (I guess that's a relief for a lot of you).
His loss is our gain. Your GF's portfolio still needs more cowbell, though.
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Old 07-09-2013, 01:35 PM   #39
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All I said is that at the moment, my FIRE spreadsheet assumes about 3 or 3.5% SWR, and this number is likely to continue to change in the future. Additionally, it is correct to say that I could live on less than 3-3.5% SWR. Yes, i am financially independent. I no longer think it is a good idea to share absolute expense, nest egg and budget numbers - since some people around here got quite upset recently about this - so I will let you play around with your calculators (if you feel like it :-) ) and guess my likely minimal, optimal and maximal expenses and their associated SWR levels.

I also found out that buying deferred annuities while still in my 40s and buying SPIAs in my 70s is better than sticking to CDs and munis mainly. These findings may also change in the future, as rates and remaining life expectancy change. This works for me and of course does not mean will work for everyone else.
I think I've finally got it. A 3 - 3.5% WR from a portfolio made up nearly entirely of fixed income investments will last for 30 or so years, but with no (or minimal) increases in withdrawal to allow for inflation. I think you may have even said in the past that you're willing to accept a loss in the real value of your money in exchange for the feeling of security. You have also mentioned that your nest egg is substantial so given your frugal nature, I can understand how you would be able to live on less as inflation takes it's slow toll, or perhaps work a little etc. Your signature says that you have a pension, so perhaps the pension can take up some of the slack.

As long as it works for you, that's fine.

Apologies for questioning it (and I know that others have, but I'm a little slow), but when you mention a 3 - 3.5% WR on a portfolio consisting of nearly all fixed income investments, it appears to contradict the commonly-held train of thought on this board.
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Old 07-09-2013, 05:28 PM   #40
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As long as it works for you, that's fine.

Apologies for questioning it (and I know that others have, but I'm a little slow), but when you mention a 3 - 3.5% WR on a portfolio consisting of nearly all fixed income investments, it appears to contradict the commonly-held train of thought on this board.
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