Thanks. Was that for 30 years? I think it will skew toward equities as the timeframe increases.
-ERD50
Yes, 30 year period.
Thanks. Was that for 30 years? I think it will skew toward equities as the timeframe increases.
-ERD50
I think overall and on average, equities will give larger average returns than 100% bonds, or bond heavy portfolios.Nice graph, but something it doesn't show is the much greater volatility of equities vs fixed income investments. I share your like for and (I presume) comfort with equities but not everyone has that comfort level.
I know very little about Treasury Bonds, but am guessing that most people whose portfolios rely mainly on these types of investments really like the fact that when they buy a CD or bond issue, they know exactly what return their investment will be earning. Contrast this to buying an equity or equity fund with which not only do you have little idea what your return will be over the next few years, you don't even know for sure whether you will have a net gain at all. Even for those equity investors who are relying on dividend payouts alone, those dividends can vary. This is scary stuff for some people.
P.S. - my professed comfort level with equities is, at least partially, imaginary. I only began portfolio withdrawals 2 or 3 years ago and am hoping to stick around on this planet for another 3 or 4 decades. At some point, I imagine I will get to live through at least one severe downturn while in the withdrawal phase, and we'll see how comfortable I am with equities then
Interesting chart, thanks. I knew the lines would cross just knowing statistics and asset allocation/market history, but didn't know exactly what it looked like - until now.
Not sure how this will come out in the post, but here's an Excel file showing success rates versus withdrawal rates for various portfolio equity percentages. All FIRECalc defaults except for withdrawal amount and equities percentage.
Basically, 0% equities looks pretty risky, with the worst success rate at any withdrawal rate above 2%. My 100% equities doesn't look bad at all. Depending on your WR, 80% to 100% equities looks good. Not that I'm recommending that for most people.....
To be clear, what was the non-equity portion of the portfolio in these graphs invested in?
The FIRECalc default, "long interest rate", whatever that is.