No, I don't think you're out of your gourd. Actually my planning is based on about 40 years, and I found your comment interesting because I just happen to use 2.5% (plus inflation) as a basis for my plan. I hope for better but plan for around 2.5%. But I arrived at that figure in an entirely different manner.If you are thinking perhaps that I am somewhat out of my gourd, it is a little similar to a method mentioned by the Coffee House invester in one of their "portfolio ponderings" articles a few weeks ago. Not to say they may be a bit daft, too.
In my example of dividing savings by years of survival I think the favored investment would probably be inflation protected securities. My portfolio is currently being reorganized from a traditional broker's account and I am weighting it that way to a degree. But I had hoped to point out as well that there are alternate methods to predict future returns without using past performance as the primary indicator. And that there may be externalities to consider before assuming that past performance is a shoe in for future returns.
Again I think I had hoped to point out or discuss that past returns are not based on a fixed set of variables, but have had a changing face of eras, one of which would be a relatively recent influx of money from the private investor into equites. So my personal confidence in past performance predicting future returns is probably less than the confidence numbers used by many calculators that are based on statistics only. Borrowing/lending institutions such as banks and treasuries probably have less volitility from speculation and emotion, but also by their nature and history of investor base, a more predictable return from past performance. But certainly not without risk.
I certainly am offering nothing beyond discussion. We all have to come up with our own method of estimating returns. Risk and return will always be intrinsically related. There will be some who take risks and will be rewarded and others who will be disappointed. The method of dividing savings by years of retirement and investing in inflation protected securities is a very low risk approach. It also means that many will have to work more years. The opposite is high yield, high risk investments. The middle ground is a conservative diverse portofolio. But assuming that past returns will insure this method beyond doubt is ignoring risk. I think that inflation is a very high risk for any one with a long retirement and no corporate pension. And that if we depend only on the numbers to identify risk we're missing some important elements of risk. The middle ground we pick in our risk assessment is a personal choice.
The only guarantee you'll get from the stock market is that it will always "jiggle." There is no guarantee that it'll go up in the long term, much less keep up with inflation. If you don't believe me, ask anybody who invested in the Japanese market over the last 20 years.
I'm not sure I follow your deflation prediction. If the dollar weakens, imports will be more expensive, which will fuel inflation. Our massive debt means more treasuries will be issued, which will also fuel inflation. I agree that we're likely to see both a decreased demand for US treasuries and an increased supply. That means treasury prices are likely to fall and yields to rise.
Now we're just misinterpreting one another. When people talk about stocks for the long run, they're almost always talking about the US market, and their "proof" is the US market's performance over the last 120 years or so.
>>Clinicians claim that a flawless indicator of early-stage Alzheimers, but less intrusive than a cerebral autopsy, is the loss of the ability to hear a spoken word and to then verbally spell it backwards.
I Don't get it...if you can't hear it, how are you supposed to spell it backwards? Does that mean all deaf people have Alzheimers?
) but it requires some new neural circuitry. I suppose any of us with Alzheimers in the family could do worse than to practice this one!I don't think Roger was claiming that anyone could predict life expectancy, nor was he promoting a spend-down to zero. I believe he was just putting forth a very simple formula which would produce a conservative withdrawal rate relative to FIRECalc (2% for 50 years, 2.5% for 40 years, 5% for 20 years, etc.). I'm sure he will correct me if I'm wrong.
Good question, but gimme a break.I Don't get it...if you can't hear it, how are you supposed to spell it backwards? Does that mean all deaf people have Alzheimers?
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