My FIRE portfolio

[preben]

As I currently am now in the distribution/withdrawal phase I have made some adjustments to my base portfolio - mainly giving it a bit more value twist (the EFA I had got changed into VTRIX one of my other holdings+VEIPX instead of the VTI+IJJ combo) and pursued lower e/r (The shift from EEM to VWO).

10% in each:
VEIPX (vanguard equity income fund)
BRSIX (bridgeway microcaps)
VTRIX (vanguard foreign value fund)
VWO (vanguard viper emerging markets)

VNQ (vanguard viper reits)
PCRIX (pimco commodities)
VGPMX (vanguard mining/metals)

TIP (US tips)
PFUIX (pimco developed bond market)
PEBIX (pimco em debt)

The portfolio pays around 3% in div/interest and my base budget require 2%. The e/r is below 0.5%.

Only action I foresee is re-balancing and maybe some foreign reits when decent vehicle for same available.

Any changes in your portfolios? Cheers!

 

[yakers]

ben,

Looks good to me. My own financial life is a bit simpler in that I anticipate a pension and I have access to the Federal Govt TSP funds, specificly the G fund which kind of removes interest in bonds.

But if you can get 3% in dividends/interest and have an ER under.5%, whos to argure with that? Do you have all these funds through a broker or do get to do splendid spreadsheets every month from 10 sources?

 

[ESRBob]

Ben,
I love the categories, but you are being fairly aggressive the way you have things split up imho.

By putting 10% in everything, it makes it simple, but you've got some heavy exposure to some risky classes,.

My instinct is to lighten up a bit on some of the commodities, maybe 5% in each for a 10% total in you commodities/metal/mining cluster, and put the balance in more US stocks, which are, after all, 40% of the worlds stock market capitalization.

Likewise, 10% in emerging markets debt looks aggressive -- maybe put 5% there and pull 5% to some other more sedate asset class .

I never thought I'd think anyone's portfolio here was aggressive, compared to my own in weighting toward small, value, international, and non-stock/bond things like commodities and real estate, but yours makes even me a little skittish.

 

[unclemick]

Ben - you shouldn't post those things - makes my old mutli- asset class heart beat faster with memories of the 70's and 80's. Then again, if I were ex pat, I would lean that way - and if you are going to slice and dice - well by golly really do it.

At least 'that other guy' got out of Wellesley - wife and taxes.

First 11 years - 40% dividend stocks, 60% non - cola defined pension/duplex sold and ate) with trad IRA (85% of total) - 75% Lifestrategy (60/40), 10% REIT Index held in reserve.

12 th year of ER and up - looking at 13% div stock, 32% Lifestrategy/REIT, 32% early SS, 23% pension as ballpark income streams.

Still thinking - always a dangerous activity for me. May switch to Target Retirement - just to say I did something - or may wait 8 yrs until closer to RMD.

P.S. - Norwegian widow wise - the portfolio parts are ballpark 3% current yield, marketed to market.

 

[cute fuzzy bunny]

At least 'that other guy' got out of Wellesley - wife and taxes.

Great fund to own if you want 3.5-4% kicked out every year and another 3-4% a year in inflation offsetting capital appreciation. Bad fund if you dont like to pay taxes and/or you like the new qualified dividend tax levels.

 

[janiyer]

Will my money last in retirement

I have a calculator for computing how long the money one has will last in retirement. It is a spreadsheet which gathers data from you and computes when your balance goes negative. What is the best way to provide it to the audience

 

[OldAgePensioner]

Ben,
Yeah, drinking cheap beer helps keep the expenses down. I just paid $4.50 for a draught beer here in a Chicago pub. Thanks for sharing the portfolio, looks good and with yields higher than expenses you are bullet proof. See you and Lancelot soon.


janiyer,
I sent you a Private Message on this board, I would appreciate really appreciate a copy.

 

[OldAgePensioner]

Ben,
Have you ever looked into Thai equity market offerings?

 

[BUM]

Thanks Ben. Turnabout is fair play. Heres mine. Keep in mind I just started this process in earnest Jan.1. I'm slowly moving out of cash and I don't plan to draw off until around Q1'06. YTD +1.7% Age 54

Trad IRA

VEXMX 10%
VFINX 15%
VGSIX 10%
VIPSX 25%
VWELX 30%
PUTZ STOX 5%
CASH 5%

JOINT

VNYTX 20%
VEURX 5%
VWEHX 10%
PCRIX 5%
CASH 55%
PUTZ STOX 5%

No grand design except to ultimately be around:

60 - 70% bonds

40 - 30% US/Euro equities plus some commodities.

Living off (unexpectedly good) residuals for the next 9 -12 months. Taxman will be a problem as I have no withholding, only '04 refunds applied. I'll run a hypothetical Turbo Tax return and see if an estimated payment is in order. Comments welcomed.

 

[preben]

ESRbob; Thanks for your input. What is funny is that SOME find the portfolio very agressive (focus on the EM parts and the commodities) and OTHERS say that it is conservative (focusing on the 40% equity).
As for USA being 40% of the total equity market - I actually have 50% of my equity in the US, even more if you consider the reits part of that.
Here are the returns 98(when I started seriously investing)-04
98:-2% 99:18% 00:5% 01:5% 02:8% 03:39% 04:17%
98 was not pretty due to the Asien meltdown and commodities/gold. But it sailed through 00-02 and that with much less volatility.
While EM debt/PRCIX/VGPMX can all seem volatile the key is that many of my assets have very low correlation creating more stable returns.
Also; I am not a US-based investor and want currency diversification also. Also; the US attitude of almost everything foreign (especially emerging) being very risky does not ring a bell with a man of the world like me! 200 years ago EU was "emerging" and 100 years ago USA was "emerging" - this century belongs to Asia. I would certainly feel stupid leaving out/under weighing the new USA and EU!
I hold all with broker.
Thai stock market will be for my fun-money/strategic money only .
Bum; looks good also!
Cheers!

 

[unclemick]

Ah yes - once in ER.

Defense, defense, defense

1. slice and dice with low correlation asset classes so the the zigs and zags damp each other out. New kid on the block.

2. the old pie chart upping bonds/fixed % as you 'age' damping volitility so you are not extracting money on dips. The method I saw most (1966 - present) and still see a lot.

3. the old timey - take the div/interest and reinvest cap gains - the extreme form 100% div stocks.

Like the CSI tv series theme song - who are you.

Heh, heh, heh - 75% Boglehead(pie chart), 10% Bernstein(mini slice via REits), and 15% old timey (Norwegian widow div stocks).

Theoretical purity is not one of my strong points.

 

[mikew]

Ben
Can I ask you how you are able to hold US onshore funds like vanguard equity income fund?
From what I have read on the boards you are a non-resident alien in terms of US taxes. There are some funds I would like to buy but vanguard told me non-US residents can’t hold onshore funds only ETF’s.

 

[OldAgePensioner]

Can someone help a novice understand some terms.

For instance VEMMX shows:
Yield = 0.98% Q: Is that above expenses and inflation?

When posters here are using "pays", "returns" or "yields" are we talking about above inflation/CPI?

 

[charlie]

I always mean "nominal" rates. To get the "real" rate, you need
to subtract current CPI.

Cheers,

Charlie

 

[preben]

Some US brokers that accepts non-resident aliens will allow you to buy through them.
I am aware that Vanguard also have an offshore department (based in Ireland) but fees are higher.
Cheers!

Ben
Can I ask you how you are able to hold US onshore funds like vanguard equity income fund?
From what I have read on the boards you are a non-resident alien in terms of US taxes. There are some funds I would like to buy but vanguard told me non-US residents can’t hold onshore funds only ETF’s.

 

[preben]

Returns is everything (div/interest/capital gains) after the fund expenses. This is what you see as fund returns in www.morningstar.com and yahoo etc. Also called the NOMINAL return. When one just says "return" it generally mean this return.

Inflation is normally not factored in - but if one does, it is normally refered to as REAL return.

When you look at a fund/stock yield in morningstar/yahoo etc. it normally refer to the dividend or interest only (not capital gains). This is after the funds expenses but before your taxes.

Hope helps! Cheers!

Can someone help a novice understand some terms.

For instance VEMMX shows:
Yield = 0.98%   Q: Is that above expenses and inflation?

When posters here are using "pays", "returns" or "yields" are we talking about above inflation/CPI?

 

[cute fuzzy bunny]

Wow, $4.50 for a draft beer. I havent had a beer out in 5 years. I'm paying $4 a six pack for sierra nevada at sams club.

BUM - never own any investment with the word 'putz' in it. Someone is trying to tell you something...

 

[ESRBob]

Ben,
Now that I see you are not US-based your portfolio makes more sense. It is truly a world portfolio, and it is hard to find an American who could go there, but I do think you're on firm ground. Nice performance through 200-2002, btw!

Still, emerging markets, (and i've been a fan since before anybody but Mark Mobius,), have their glory days, and then they have their periods of real heartbreak. Maybe we'll break out of that cycle, but if not, we're due for some heartbreak. Things have been really good there in recent years.

 

[preben]

A draft beer in standard bar about $10 in my Scandinavien home country - similar bar in Thailand around $2 (supermarket around 50 cents) - so for every beer I drink I EARN $8! I then simply drink 10 per day corresponding to a $2400/mth income (deduct aspirin costs). Maybe I should write a book based on my fuzzy math?

ESRbob; you are right that I have focused on a world allocation - I have personally lived, travelled and worked in most of the key emerging markets and while I might be wrong, I have faith that most of them will be developing well. P/Es of EM still much lower than the developed world also as their recent good performance was more of a reversion to the mean after the 97/98 Asian crash.

Cheers!

 

[mikew]

Some US brokers that accepts non-resident aliens will allow you to buy through them.
I am aware that Vanguard also have an offshore department (based in Ireland) but fees are higher.
Cheers!

Thanks for the information Ben. I will check with Charles Schwab to see if they’ll let me buy the funds. I’ve seen the offshore vanguard site. I stopped reading once I got to the $100,000 minimum per fund.

I just paid $4.50 for a draught beer here in a Chicago pub.

A beer in a bar here in Kyoto is about $5.00. Nice to see the US catching up.

 

[Dawg52]

Here is a link to a fund I own(prwcx) and one that has been discussed previously on this board.

http://yahoo.smartmoney.com/fundscreen/index.cfm?story=20050624&afl=yahoo

 

[wabmester]

200 years ago EU was "emerging" and 100 years ago USA was "emerging" - this century belongs to Asia. I would certainly feel stupid leaving out/under weighing the new USA and EU!

I like the way you think. We're all long-term investors here, and long-term equity returns are simply a function of GDP growth. Personally, I like Asia ex-Japan a lot for the long-term.

 

[Mr._johngalt]

.   We're all long-term investors here.

Not me!

 

[OldAgePensioner]

Ben,
Thanks for the explanation.

I like the idea of saving money by drinking cheap beer. A book on how to do that might make a lot of cash. "How To Earn Millions Drinking Beer".

Put me down for 6 copies.

Skol

 

[Spanky]

Personally, I like Asia ex-Japan a lot for the long-term.

ISHARES PAC EX-JAPAN (EPP) has been a solid performer for the last few years.