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Old 06-10-2018, 05:35 PM   #41
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In nominal terms, yes. In real terms, you aren't guaranteed of that at all.

I've stated this before: If I could "guarantee" my net worth today in real terms with some risk free investment, I would jump on it in a nano-second.

We'll do just fine in real terms.
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Old 06-10-2018, 06:18 PM   #42
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We'll do just fine in real terms.
Maybe. Probably. Guaranteed? No way.

Here's a chart of CD rates adjusted for inflation: http://3.bp.blogspot.com/-3dP1aZcWpK...story-real.jpg

The story is worse than the chart portrays, because interest on CD's is taxable. If you are in a 20% overall tax category, then a 4% CD is really yielding 3% after taxes. If inflation is running 4%, then you are losing 1% annually (compounded).
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Old 06-10-2018, 07:51 PM   #43
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I’m right there with you; we had pretty much the same experience. But, I have to admit that I feel more vulnerable now, since we FIREd in 2014 and don’t have the luxury of a paycheck to fall back on now.

I’d like to hear how others plan to handle the “White Knuckle Times” that are coming.

ETA: Maybe this should be a separate thread. If the Mods agree, feel free to start with Marko’s Post & create one.
My view: The white knuckle times are short in duration. The last quarter of '08 was hell but by March '09 we were seeing daylight. IMO, "almost the worst" happened but in the end it wasn't the end. Predictions of 'several years' never materialized and here we are now.

At the end of the day (God, I hate that expression!) I think most of us are in the market for income to cover our expenses. With that, it doesn't matter as much to me if my NW is up or down but how much income I can extract from it.

If you have X years socked away in cash or near cash to cover a dry spell, I think that's all you need to weather a lengthy downturn. Personally I rely on dividends which tend to stay fairly steady and I've set aside a healthy reserve of dividends over the years. If you have to sell equities for your expenses, you don't want to do that in a downturn and cash makes a nice bridge.

I'm at 55/40/5 and plan on staying the course.
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Old 06-11-2018, 09:42 AM   #44
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tacman - what is the interest rate we are talking about here?
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Old 06-11-2018, 09:56 AM   #45
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Originally Posted by copyright1997reloaded View Post
In nominal terms, yes. In real terms, you aren't guaranteed of that at all.

I've stated this before: If I could "guarantee" my net worth today in real terms with some risk free investment, I would jump on it in a nano-second.

Have you looked at TIPS ladders? Or matching strategies in general?

My retirement plan tries to avoid anything involving white knuckling outside of the occasional roller coaster or white water raft trip.
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Old 06-11-2018, 07:06 PM   #46
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Have you looked at TIPS ladders? Or matching strategies in general?

My retirement plan tries to avoid anything involving white knuckling outside of the occasional roller coaster or white water raft trip.
Yes, and I have about 9% of my total assets in TIPs and other inflation adjusted holding (e.g. Savings Bonds). Was a little higher before the ISM (Sallie-Mae inflation-linked bonds) got called.

I just wished I put a lot, lot, lot more money in TIPS back when they were yielding close to 4% real.

Even with that, there are still risks associated with TIPS. Namely single country risk, and risk that the inflation hedge for them doesn't match my personal inflation.

But thanks for the suggestions, I would be interested in matching strategies that people come up with (beyond the obvious TIPS and when to take social security).
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Old 06-11-2018, 08:46 PM   #47
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To the OP.

You might want to consider "outsourcing" some of the decision making to Vanguard... For many years I have had 100% of my Roth IRA in the Vanguard Managed Payout fund (VPGDX). I have now also added it to my taxable account, as it is actually pretty tax efficient.

I've criticized this fund before, but take that with a grain of salt, as I have and continue to own a lot of shares in it.

Anyway, I am happy to outsource some of the decision making to someone else and that's what I find useful with this fund. VPGDX is a balanced fund that tries to pay out 4% per year in monthly increments, while offsetting inflation and maintaining the principal. Despite the fund launching at possibly one of the worst times ever, it has accomplished its mandate. So, I don't see why that wouldn't continue into the future.

VPGDX is kind of neat in that it invests in a lot of stuff I have no clue about like "alternative strategies" and commodities. This is a modern portfolio theory based approach where they try to minimize volatility and maximize the return by tossing in a bunch of asset classes that behave differently from each other. Also some factor based tilting to low volatility and value.

Anyway, IMHO its a good idea to hedge your bets by letting other people make some of the decisions. Another popular choice around here is the Vanguard Wellessley Income fund (there is a global version available now as well).

Here is a link to VPGDX if you are interested:

https://investor.vanguard.com/mutual...le/VPGDX#tab=0
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Old 06-11-2018, 09:44 PM   #48
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But thanks for the suggestions, I would be interested in matching strategies that people come up with (beyond the obvious TIPS and when to take social security).
The best info I've found are posts on Bogleheads by a poster named Bobcat2, plus the info in their wiki. One of our strategies was to have a fixed rate mortgage offset with non-COLA pension income. A couple of our pensions will not go up with inflation but then neither will the mortgage. When the mortgage is paid off the future value of the non-COLA pension income may be reduced by inflation but it will still be extra disposable income to us since we will no longer have a mortgage payment. In California we also have Prop 13, which limits our property tax increase each year.

If we can get even a zero real return, our maximum safe withdrawal rate should be 3.33% (100 / 30 years = 3.33%). Five year TIPS are paying more than zero these days. They are at .7% as of this writing, so 3.33% or even higher maximum SWR is looking pretty doable between our TIPS portfolio and other investments.
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Old 06-12-2018, 11:58 AM   #49
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Was a little higher before the ISM (Sallie-Mae inflation-linked bonds) got called.
Not to nitpick, but ISM matured in January of this year. It was not called.
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Old 06-12-2018, 06:43 PM   #50
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Not to nitpick, but ISM matured in January of this year. It was not called.
Thanks. January was so long ago.

[Note to self: You have too many individual holdings.]
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