Paul Grangaard's Books

[moguls]

Anyone read "The Grangaard Strategy: Invest Right During Retirement" by Paul Grangaard? I see he's got another book "Plan Right for Retirement With the Grangaard Strategy" out this month.

I saw mention of his book in today's paper. Would be interested if anyone on this board has read either of them and their opinion.

Moguls
(still figuring out this ER stuff)

 

[ats5g]

Moguls,

I've recently read "The Grangaard Strategy". I thought the pages where he details how to go about building a bond ladder were very good.

However, I had some problems with the pages "showing" that stocks are safe long term investments (e.g. that the risks of stocks decreases as time increases). This is a commonly held myth that should not be accepted without some further research.

Any specific questions about the book?

- Alec

 

[moguls]

Thanks for the feedback. No specific questions. I picked up a copy today.

Moguls
(Still getting use to this ER thing)

 

[unclemick]

Congrats! Now you have time to read the book and give us a synopsis. B. Dalton had nothing by Grangaard when I started Christmas shopping in the mall yesterday - in ER you get to do things during non-rush hours - after ten years I still get the jollies watching the morning rush hour crossing the lake in the distance from the back deck.

 

[unclemick]

P.S. - I did buy the Warren Buffet Way and Your Money or Your Life. Ten plus years into ER perhaps a little late but intend to read them anyway.

 

[renferme]

I have read Graangard's book and got pretty excited about his philosophy. Then I put a few posts here about it, and it was pretty much ripped by several posters. Here's what they don't like and I can't dispute them. You have 2 ladders, 1 for income and 1 for growth. So, probably about 50 - 50 in each. The growth ladder is stocks, the income ladder is, maybe, bonds. You use up the income ladder over a 10 year period. Meanwhile the growth ladder grows and grows for 10 years. And after 10 years, you have more than you started with. BUT, during that period, you gradually build your stock allocation from 50 percent to 100 percent. So, you never re-balance your portfolio.
Seems dangerous doesn't it ? His idea may be good theory, but what if you run into bad times from year 6 thru 8? Like we did from 2000 thru 2002. You'd lose a lot of money and would not have time to recoup.
What's the answer? what should you do ? what should I do? DON"T KNOW. But I do want to be conservative, more so that Graangard. And I do like the 4% rule .... only withdraw 4% per year.

 

[moguls]

Just finished the book. I found it to be an interesting read, but didn't take away much of value.

First of all his analysis relies on much higher expectations for growth than I'm comfortable with. He's looking for 10% from large cap stocks and 12% from small caps. Even with an estimated 3% inflation rate, this lets him use a 6% initial withdrawal rate in his example.

I'm not comfortable using much more than 7 - 8% combined growth for stocks. And 6% is way beyond my comfort level for a safe initial withdrawal rate.

Grangaard recommends 10 years expense buffer made up of various fixed income investments. His reasoning for 10 years is that if you sell stocks more frequently than that (on average), you're leaving significant growth on the table and therefore will end up with a much smaller portfolio when you die. He outlines an example of a 5yr and a 10yr withdrawal strategy to support his claim.

I personally like the longer expense buffer, but in many cases this may result in such a large portion of one's portfolio in fixed income investments that there's too little left to be invested in stocks to generate the necessary growth.

Moguls
(still getting used to this ER lifestyle)

 

[Michael]

Today's low dividend yield, and high P/E ratios may reduce future long term returns on the S&P a bit below the historic norms.