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Re: Here's a piece I wrote for my wife...
Old 08-04-2005, 02:54 PM   #21
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Re: Here's a piece I wrote for my wife...

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Yes but the band uniforms will have to be sleevless to accomodate the armpit section.

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The right to bare arms!

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Re: Here's a piece I wrote for my wife...
Old 08-04-2005, 05:51 PM   #22
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Re: Here's a piece I wrote for my wife...

Great summary! Thanks very much for sharing that Cb, it is really well written. It solidified some of the things that have been bouncing around in my head.

-LiveWell
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Re: Here's a piece I wrote for my wife...
Old 08-05-2005, 03:27 AM   #23
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Re: Here's a piece I wrote for my wife...

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Originally Posted by Cb
Her only comment was, "I liked the part about the commodities...there was a guy on the finance talk show on WLW the other day who said something about how oil was going to go up and commodities might be a good investment now..."
That's more or less what I hear from anybody I give the SWR and asset allocation spiel to. Or it's more along the lines of "OK, but what do you think the next hot sector will be?"

So, if you're trying to persuade somebody, I've found a couple of points that seem to hit home:

1) Demystify the stock market. I think the best way to do this is to show GDP growth vs stock market cap growth. Talk about how the stock market is just a proxy for the economy (long-term weighing machine vs short-term voting machine), and while you can't really predict how economies will grow, it's a hell of a lot easier than predicting how investors will vote in the short-term.

2) Show that the standard practice of chasing hot money is hazardous to your financial health. One of my favorite stats is that while the market returned an average of 13% a year in the last 20 years, the average stock fund investor made only 3.7% a year (2004 Dalbar study).

And then tell them what the next hot sector will be.
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Re: Here's a piece I wrote for my wife...
Old 08-05-2005, 05:28 AM   #24
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Re: Here's a piece I wrote for my wife...

CB, Really good summary. My questions was where did the flexible withdrawl formulas come from. I've been playing with some strategies as advocated on analyzenow and sensible-withdrawls but I do not think they are as formalized as your take.

Again good summary. I will be trying to spoon feed my DS the paper to get her to a higher level.

job
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Re: Here's a piece I wrote for my wife...
Old 08-05-2005, 07:44 AM   #25
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Re: Here's a piece I wrote for my wife...

For the SO: "Do Something, Just Stand There."

Should I croak - follow the instruction sheet with the Will - let Vanguard continue to auto deduct the preprogramed balanced index to checking:

GO spend the money - AND DO NOT CHANGE ANYTHING!

No matter what - "Stay the course."

Not at all interested in investments - she understands spend the money and how to balance a checkbook.
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Re: Here's a piece I wrote for my wife...
Old 08-05-2005, 04:16 PM   #26
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Re: Here's a piece I wrote for my wife...

Quote:
Originally Posted by obryanjf
CB, Really good summary.* My questions was where did the flexible withdrawl formulas come from.* I've been playing with some strategies as advocated on analyzenow and sensible-withdrawls but I do not think they are as formalized as your take.*

Again good summary.* I will be trying to spoon feed my DS the paper to get her to a higher level.

job
SG outlines how you can use FIREcalc to model different variable withdrawal strategies in this thread:

http://www.retireearlyhomepage.com/c...num=1107790433

I used SG's approach, but changed the inputs to reflect our own situation.

The only "original" thought in my paper was the notion of timing our long-cycle (>1-2 years) purchases to coincide with market up years, thereby taking taking some of the sting out of the variable nature of our withdrawals.

Cb
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Re: Here's a piece I wrote for my wife...
Old 08-05-2005, 04:21 PM   #27
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Re: Here's a piece I wrote for my wife...

Quote:
Originally Posted by unclemick2
For the SO: "Do Something, Just Stand There."

Should I croak - follow the instruction sheet with the Will - let Vanguard continue to auto deduct the preprogramed balanced index to checking:

GO spend the money - AND DO NOT CHANGE ANYTHING!

No matter what - "Stay the course."

Not at all interested in investments - she understands spend the money and how to balance a checkbook.
I intend to write out something like that for my wife to read after I'm dead, though I'll give a bit more detail as to how to transitioning to a life-cycle type fund and my rationale for then "staying the course". With any luck one or both of my sons will take an interest in personal finance and will be on hand to help her (if the bacon doesn't kill her first)

Cb
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Re: Here's a piece I wrote for my wife...
Old 08-05-2005, 06:11 PM   #28
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Re: Here's a piece I wrote for my wife...

Cb, thanks a lot for sharing the doc!* I read it all the way through and understood the concepts.*

I am not as gifted in math as most of the board members seem to be, so I thank you for writing so clearly without overheating my brain cells--therein lies the originality of your doc, at least to me.* (I especially like the Homer doh! and emoticon* )

The one question I had pertained to the flexible withdrawal rates, but as I've learned on this board, if I wait long enough, someone else will ask the same question, and the answer will be forthcoming.* I know that SG, ESRBob, and intercst have some writings on withdrawal but I put it off because I'm not even close to ER.* I did take a peek at SG's post that you linked, and I (hallelujah!) understood the method.

I am hard at work accumulatin' but the dream of withdrawin' makes it bearable.*
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Re: Here's a piece I wrote for my wife...
Old 08-08-2005, 01:44 PM   #29
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Re: Here's a piece I wrote for my wife...

I noticed the dramatic effect of 2-sector combos in the Fifteen Equity Portfolios chart, which would be expected. However, some 2-sector combos do better than some 3-sector combos. I.E., AC, AD, and CD do better than ABC.* Also, one 3-sector (ACD) does better than the 4-sector combo, ABCD. Is there any way to explain these differences?* It seems like the more sectors you add, the better off you should be, but that is not the case.
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Re: Here's a piece I wrote for my wife...
Old 08-08-2005, 04:40 PM   #30
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Re: Here's a piece I wrote for my wife...

I'm sure one could engineer even better risk/return portfolios by shifting away from the 50/50, 33/33/33, and 25/25/25/25 weightings Gibson used, seein' as we now have the historical data.

A similar thing happens in raddr's backward-looking analysis on International & Commodities diversification on this page:

http://raddr-pages.com/research/index.htm

Here's the bottom line as I see it: if you know what class or classes are going to perform best in the future, load up on that class or classes...if you don't, then diversify as broadly as is practical to get over on that side of the graph.

When I look at a chart like that, I try to imagine the various dots as each being about an inch in diameter (to represent the uncertainty and variation in correlations and returns over time). All I'm trying to do is construct a portfolio with as many of the overlapping dots crowded toward the high return / low risk corner. My portfolio performance should tend to lie in the heavily over-lapped zone, give or take an inch or so, if history is anything to go by.

Cb*
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Re: Here's a piece I wrote for my wife...
Old 08-08-2005, 06:06 PM   #31
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Re: Here's a piece I wrote for my wife...

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Is there any way to explain these differences?* It seems like the more sectors you add, the better off you should be, but that is not the case.
Frank Armstrong calls it "diworsification". It's caused by overlap and by turning your portfolio into a clone of the total stock market & total bond market.
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