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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 07:39 AM   #41
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Re: Help me design a portfolio that generates $50,000 a year

I agree with Dory that adding in SS or other "extras"(inheritance?) only obscures the picture when looking at firecalc results.

I do think we sometimes are too conservative here actually. Using firecalc we look at the historical WORST case scenario holding US large cap growth minded equity holding only , only holding US based fixed income and for a retiree not willing to reduce the w/r just a LITTLE bit when the market is hit bad .

As raddr-pages.com has showed having a more diversified portfolio(say 20% each SP500,SCV,TIPs,EFA,commodities) have had a 5.7% SWR in the period the study covers (which includes the worst case Firecalc period too).

If one is willing to adjust spending in bad times by freezing inflation increase or similar there is another increase to pick up there.

so basic budget at say 3% and "luxuries" as 2% (2 budget system) seems ok TO ME.

Cheers!
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 07:54 AM   #42
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Re: Help me design a portfolio that generates $50,000 a year

Yep

Da Norwegian wider says - 3% is my current yield - portfolio wise which I can live on in hard times. The extra is lagniappe for the good times.

I too like Raddr's effort to demonstrate the effects of commodities in a diversified portfolio. Haven't done anything about it for my portfolio yet - but it's on the table as a potential diversifier.

heh heh heh heh heh heh heh heh heh heh heh heh
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 08:34 AM   #43
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Re: Help me design a portfolio that generates $50,000 a year

Quote:
I too like Raddr's effort to demonstrate the effects of commodities in a diversified portfolio. Haven't done anything about it for my portfolio yet - but it's on the table as a potential diversifier.
Professor Siegel says that we should be careful about investing in commodities
http://finance.yahoo.com/columnist/a...ureinvest/4496
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 12:09 PM   #44
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Re: Help me design a portfolio that generates $50,000 a year

I'm gonna back out of this thread after this last contribution, folks. I'm not quite sure what standard protocol is supposed to be when you are a relative newcomer and upset longer longevity participants, and since I don't intend upset, I'll keep my hands where they can be seen and step out of the car.

A contribution (of questionable value) re: dory's point: How many get SS.

http://www.census.gov/popest/nationa...ST2005-sa.html

This website lays out the demographics of the US. The year of interest was 2003 to accomodate the item below. It appears that about 42 million Americans were over the age of 62ish at that time (I divided the 12 million in the 60-64 category in half). Feel free to check the math on this, I used their excel stuff.

Beyond that, here is a document from Soc Sec Admin

http://www.ssa.gov/history/pdf/T5a4.pdf

It says how many people are getting SS benefits. Answer . . . is kind of hard to answer as you'll see. Excluding disability numbers and children the number seems to be north of 37 million -- but I frankly don't understand the categories and I don't know what divorce does and stuff like that. It starts with 29 million retirees but then there are widows and other people who I thought might be in the right age group that could properly expect COLAed input. Shrug. I freely admit I may have done this wrong -- but 37M is the number I got.

If 37.5ish million is correct and the proper number applicable to this thread's discussion, then . . . it's 88ish% of Americans likely to wander onto this website. As for non Americans . . . no way I can research all of their equivalent programs.

Yeah, I'm kind of surprised 88% is that big a number too. I thought the CSRS people and state employees would be more populous, too. Shrug.

And worse . . . one more thing . . . that Census document that said 42 million. Those might not all be US citizens. That document is just population, not SS qualified or could have been qualified population. Might even include illegals.

Well, that would drive the 88% number higher. Weird.

Very possible I have misunderstood these two documents and I'll read any replies that shoot holes in this interpretation because it may be useful data to have for some other non thread reason.
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 02:25 PM   #45
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Re: Help me design a portfolio that generates $50,000 a year

The good news is that, as a discussion group, you can tell anyone anything you want, whenever you want!

Expecting your analysis to become the defacto standard of "what everone should be told" is true?

I guess thats one way of approaching life. Good luck with it.

JDW - before you pop another gasket, Nords wasnt talking to or about you in his comments, as far as I can see. Just like I wasnt. Detecting a pattern here? :
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 02:33 PM   #46
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Re: Help me design a portfolio that generates $50,000 a year

Quote:
Originally Posted by ben
I agree with Dory that adding in SS or other "extras"(inheritance?) only obscures the picture when looking at firecalc results.

I do think we sometimes are too conservative here actually. Using firecalc we look at the historical WORST case scenario
............................
If one is willing to adjust spending in bad times by freezing inflation increase or similar there is another increase to pick up there.

so basic budget at say 3% and "luxuries" as 2% (2 budget system) seems ok TO ME.

Cheers!
This is a nearly perfect quote, IMHO. *4% is thrown around here way too much and by the majority is nearly gospel. *My playing around research *has proven to me to not only consider the inflation adjusted approach but keep some flexibility in the withdrawl scheme. *Using some form of portfolio adjustment and inflation adjustment will buy you 1% additional. *Using Ty's 'Reality' approach adds about another 1%, and adding extras (job's extras of SS, DWSS and pension) is about 1%. * So perhaps 3% more than the generally accepted Fixed, Inflation Adjusted, SWR; IN MY CASE. *Add higher diversification levels and maybe that buys a little more. *

Many here say it is too risky or they do not want to eat cat food in their old age, blah, blah. *Way too over dramatic. *Granted I'll run more simulations, shave a couple tenths off my final number and add a couple of years to life expectantcy for good luck, so I'll end up around 6% maybe. *I'll also continue to monitor the portfolio to see if it is working like most people here will do. *That should keep me from ending up with cat food when I'm 85 (God willing i make it there).

I would love if someone validated/refuted my conclusions. *The 4% number is conservative, and only one withdrawl scheme. *I would love to hear of others that are using other alternatives and indicate how it is working. *To those that want to use 4% Inflation Adjusted Fixed, more power to you, everyone has to use the method that they can understand and be comfortable with.

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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 02:42 PM   #47
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Re: Help me design a portfolio that generates $50,000 a year

Quote:
Originally Posted by Cute Fuzzy Bunny
JDW - before you pop another gasket, Nords wasnt talking to or about you in his comments, as far as I can see. Just like I wasnt. Detecting a pattern here? :
OK CFB maybe I'm slow and don't understand the lingo, what does all this mean and to whom was he referring with this? *
Quote:
Originally Posted by Nords
Well, I think my only accomplishment so far has been getting trolled by someone who's put up 80-something posts on SWR since April Fool's Day.* Deja vu all over again.* But thanks anyway.
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 02:52 PM   #48
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Re: Help me design a portfolio that generates $50,000 a year

I'll give you a hint. Theres another poster in this same thread with over 80 posts that so far has only really talked about SWR's, not that theres anything wrong with that. Its not you.

SWR's are probably not as interesting to most posters here than a lot of the "SWR challengers" might think. Heck, I was retired for 3 years before I even heard the term SWR. I'm surprised I even survived that three year period, safe in my ignorance

However, it seems rather immutable that for what firecalc does, investing and spending in a manner consistent with how it is coded, if one were to emulate that investing and spending, 4% would have been the most you could have spent 'safely' by its terms of what 'safe' is, no more and no less...through the historic period for which it has data. Its simply one data point.

You can add other incomes, social security, play with withdrawal times and dates, add expenses, tweak the inflation numbers. Knock yourself out.

Bottom line is, the hilarity reality that ensues will be absolutely, positively, 100% different from what you "calculated". With this or any other tool.

So I guess its good that I was well practiced in "doing it wrong" and have persisted in this process of investing soundly with decent diversity, staying fully invested, not being overly conservative or trying to "play to not lose too badly", spending what seems prudent and enjoying my life, and paying heed to the fact that my portfolio value continues to grow rather than shrinks at an alarming rate.

Continue course, light hand on the rudder, enjoy the sunny days and be prepared to change plans when you see clouds approaching or that first big drop of rain from nowhere hits you between the shoulder blades.

4%? 4.65? 6? 2? 3?

How many angels on the head of a pin?

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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 02:59 PM   #49
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Re: Help me design a portfolio that generates $50,000 a year

Quote:
Originally Posted by Cute Fuzzy Bunny
I'll give you a hint.* Theres another poster in this same thread with over 80 posts that so far has only really talked about SWR's, not that theres anything wrong with that.* Its not you.
Thanks for clearing that up for me. * BTW what does "getting trolled by someone" mean?
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 03:03 PM   #50
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Re: Help me design a portfolio that generates $50,000 a year

Seriously?

Someone who posts with the primary purpose of the post being to get a rise out of someone in order to increase their sense of self worth, with very little interest in the actual subject matter at hand. Usually picks one topic and bangs away on it until everyones sick of hearing about it and just the newb's get worked up over it.

I'm not sure theres trolling action here, but then I dont care about SWR's. Seems like a lot of interesting dialog. Until it gets to the point where the accusations start, real or perceived, and someone believes that their idea(s) or points of view are the only ones that matter. Then its not productive.
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 03:04 PM   #51
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Re: Help me design a portfolio that generates $50,000 a year

Quote:
Originally Posted by Cute Fuzzy Bunny
Seriously?

Someone who posts with the primary purpose of the post being to get a rise out of someone in order to increase their sense of self worth, with very little interest in the actual subject matter at hand. Usually picks one topic and bangs away on it until everyones sick of hearing about it and just the newb's get worked up over it.

I'm not sure theres trolling action here, but then I dont care about SWR's. Seems like a lot of interesting dialog. Until it gets to the point where the accusations start, real or perceived, and someone believes that their idea(s) or points of view are the only ones that matter. Then its not productive.
Thanks again, I thought it had something to do with taking a quote out of context and thus changing the meaning.
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 04:04 PM   #52
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Re: Help me design a portfolio that generates $50,000 a year

This SWR thread is the "anti-*****"... :P

The REAL SWR is 1.324095876... just don't ask for any math...
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 04:41 PM   #53
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Re: Help me design a portfolio that generates $50,000 a year

God forbid theres a discussion about SWR's on Fire and Money board of the ER forum.

HFWR, i thought you were going to say it was pi.. 3.14159.....
Then we could have a real argument about what the 400th digit was for the SWR.

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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 05:16 PM   #54
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Re: Help me design a portfolio that generates $50,000 a year

Quote:
Originally Posted by Daddy O
God forbid theres a discussion about SWR's on Fire and Money board of the ER forum.

HFWR, i thought you were going to say it was pi.. 3.14159.....
Then we could have a real argument about what the 400th digit was for the SWR.

job

Pi That's absurd. The SWR is (sqrt(7654.321))^(1/pi) . . . ignoring social security payments.
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 05:34 PM   #55
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Re: Help me design a portfolio that generates $50,000 a year

small total reits corp total bills Past u.s. averages (up to 200 yrs)
stock bond
12 arithmetic return (overstates stock, bond differ)
-1 near goemetric return (true geometric -2)
-1 survivor bias (records drop failed companies )
10 6 nominal return (tax deferred or paid from work)
-3 -3 inflation (varied considerably)
-2 -1 investing costs (commissions, fund fees, etc)
6 5 4 3 2 1 u.s. domestic saver net real return (u.s. only)
-1 -1 lower international (lower capital gains)
5 4 3 2 1 0 u.s. global saver net real return (u.s still ½)
-1 -1 lower international (more bad runs)
4 3 2 1 0 -1 u.s. international saver net real return (no u.s.)
-2 -1 average down (withdrawal return ratchet down)

Cooley, Hubbard, Walz “Retirement savings: choosing a withdrawal rate…”paper
Charnes, Robinson “Sustainable withdrawals” paper (includes synopsis of other articles)
Dimson, Marsh, Staunton “Irrational Optimism” paper
Jorion, Goetzmann “Global stock markets of the 20th century” paper
Dichev “What were investors actual historical returns” paper
Ervin “Shortfall risk, asset allocation, and over funding a retirement account” paper
Lewellen “Predicting stock returns with financial ratios” paper
Frazzini “Dumb money: mutual fund flows and the cross section of returns” paper
Bernstein “Four pillars of investing” book (efficientfrontier.com)
Bogle “Common sense on mutual funds” book (vanguard.com, related sites)
Hebeler “JK Lassers guide to your winning retirement” book (analyzenow.com)
Dimson, Goyal, Reid “103 year u.s. real estate returns” article
Jorion “Long term risks of global stock markets” Fin. Mgmt. winter 2003 article
Mandelbrot, Taleb “Focus on exceptions that prove the rule” Fin. Times Mar.2006 article


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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 05:46 PM   #56
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Re: Help me design a portfolio that generates $50,000 a year

I'm more than happy to believe that 4.65%, but firecalc uses U.S. history only, while ignoring lower international returns. In essence the most optimistic data is the easiest to obtain. Further more past investing costs were much higher than todays index fund costs, so your net return would have been lower.

What we have is the old test where person #1 is given a few good broad decision rules and later is shown poorly performing complicated rules used by person #2. Inevitiably #1 tries to incorporate the more complicated rules into their decision process, to their detriment.

I simply expect to divide my SS, pension, 403b, and funds annually over my remaining life expectancy, relying on broad diversification to reduce annual withdrawal swings. I posted my cheat sheet above.
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 05:50 PM   #57
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Re: Help me design a portfolio that generates $50,000 a year

The "only 95% in down year" I view as a joke. The records just aren't that good.
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 05:52 PM   #58
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Re: Help me design a portfolio that generates $50,000 a year

Having whined enough, I'm putting "Victory at Sea", disc 2 , into the player. Its time to invade Sicily.
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Re: Help me design a portfolio that generates $50,000 a year
Old 05-29-2006, 05:53 PM   #59
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Re: Help me design a portfolio that generates $50,000 a year

Patton...
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