Search found 735 matches

Return to advanced search

Re: Why not 100% Stocks?

I think this is right on in general. The typical answer Swedroe gives to the contradiction of having ability but no need is that less risk is the trump card. Part of the explanation is that the marginal utility of wealth is diminishing and that risk is typically underestimated. Agreed. Willingness ...
by longinvest
Mon Oct 20, 2014 4:36 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 19684

Re: Why not 100% Stocks?

That's why I like the Need, Ability, and Willingness to take risk approach to selecting one's investment portfolio Asset Allocation. You could rationally chose to be 100% in stocks (in your investment portfolio) if you have the the ability to do so (through owning your house and having a pension, fo...
by longinvest
Mon Oct 20, 2014 1:23 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 19684

Re: Considering a more aggressive AA than age = bonds

I think that the most important is to stick to one's AA, whatever it is (fixed, glide, agressive, conservative). What can really harm a portfolio is to continuously change AA (other than sticking to a preselected glide). Our emotions tend to make us consider a new AA just at the wrong moment, like a...
by longinvest
Sat Oct 18, 2014 9:47 am
 
Forum: Investing - Help with Personal Investments
Topic: Considering a more aggressive AA than age = bonds
Replies: 41
Views: 3239

Re: TBM too much treasury?

We applaud diversity and tilting in equities but many are satisfied with just one somewhat diversified bond fund . When 10 yr CDs are paying 1% more than a 10 yr Treasury maybe some diversity or tilting is warranted. Not just CDs but tilting to more corporates, TIPs, etc. "somewhat diversified...
by longinvest
Sat Oct 18, 2014 8:53 am
 
Forum: Investing - Help with Personal Investments
Topic: TBM too much treasury?
Replies: 64
Views: 3645

Re: TBM too much treasury?

If it's not OK to exclude junk bonds from TBM, I guess it shouldn't be OK to exclude penny stocks (and preferred shares) from TSM... TBM is a nominal investment-grade bond fund with maturities over 1 year (e.g. excluding cash). As such, it excludes non-nominal bonds (TIPS) and non-investment-grade b...
by longinvest
Thu Oct 16, 2014 3:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: TBM too much treasury?
Replies: 64
Views: 3645

Re: Bill Sharpe on the 4% SWR rule (he thinks it's silly)

There are two parts: 1- Planning retirement. 2- Withdrawing from portfolio during retirement. I really like the (backtested and forward projected) Safe Withdrawal Rate as a planning tool, for estimating the required size of a retirement portfolio. On the other hand, I think that SWR fails as an actu...
by longinvest
Thu Oct 16, 2014 1:01 pm
 
Forum: Investing - Theory, News & General
Topic: Bill Sharpe on the 4% SWR rule (he thinks it's silly)
Replies: 51
Views: 4590

Re: It's a good day to adhere to your IPS

My IPS says to rebalance and contribute on fixed dates. Between rebalance and contribution dates, I don't touch the portfolio.

Unfortunately, I am unable not to peak.
by longinvest
Thu Oct 16, 2014 9:41 am
 
Forum: Investing - Theory, News & General
Topic: It's a good day to adhere to your IPS
Replies: 19
Views: 1762

Re: Poll: which portion of the chart shows higher volatility

As usual, Nisi, you found an entertaining way to reveal the absurdity of some financial statement. Awesome!
by longinvest
Thu Oct 16, 2014 9:18 am
 
Forum: Investing - Theory, News & General
Topic: Poll: which portion of the chart shows higher volatility?
Replies: 26
Views: 1426

Re: The Role of Life Expectancy

I think that it is useful to know that (almost?) nobody makes it to 120 years old. So, a very healthy person with healthy habits, a family history of high longevity, and a high fear of running out of money can still put a cap on the number of retirement years to fund. An very wealthy person could fu...
by longinvest
Thu Oct 16, 2014 9:07 am
 
Forum: Investing - Theory, News & General
Topic: The Role of Life Expectancy
Replies: 25
Views: 1644

Re: Bill Sharpe on the 4% SWR rule (he thinks it's silly)

Here's the $64 question. What approach should replace the 4% Rule? Obviously, it should not be a constant withdrawal strategy such as the 4% rule. But just as obviously, it shouldn't be just a seat-of-the-pants approach either. One of the objectives of the 4% solution was to replace hunches and int...
by longinvest
Thu Oct 16, 2014 8:33 am
 
Forum: Investing - Theory, News & General
Topic: Bill Sharpe on the 4% SWR rule (he thinks it's silly)
Replies: 51
Views: 4590

Re: Bill Sharpe on the 4% SWR rule (he thinks it's silly)

Makes sense to me. That's why I much prefer VPW as a spending model during retirement. But, I do think that SWR is very useful for planning (e.g. 1/SWR = Target).
by longinvest
Mon Oct 13, 2014 6:43 pm
 
Forum: Investing - Theory, News & General
Topic: Bill Sharpe on the 4% SWR rule (he thinks it's silly)
Replies: 51
Views: 4590

Re: What is your best estimate of the SWR (Safe Withdrawal R

See my reply in red, below. My answer: None of the choices. With a 60/40 portfolio, I would spend 5.0% of the portfolio in the first year (at 65 years old). The next year, I would spend 5.1% of the remaining portfolio (at 66 years old). And so on, according the the VPW withdrawal schedule for the s...
by longinvest
Sun Sep 28, 2014 10:20 am
 
Forum: Investing - Theory, News & General
Topic: What is your best estimate of the SWR (Safe Withdrawal Rate)
Replies: 77
Views: 3994

Re: What is your best estimate of the SWR (Safe Withdrawal R

Have a look at: ⋅  Variable percentage withdrawal in the Bogleheads Wiki. ⋅ The related explicative thread: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=120430 So you retire at 65 in 1969 and spend the first 15 or so years of your retirement spending less and less re...
by longinvest
Fri Sep 26, 2014 6:02 pm
 
Forum: Investing - Theory, News & General
Topic: What is your best estimate of the SWR (Safe Withdrawal Rate)
Replies: 77
Views: 3994

Re: What is your best estimate of the SWR (Safe Withdrawal R

My answer: None of the choices. With a 60/40 portfolio, I would spend 5.0% of the portfolio in the first year (at 65 years old). The next year, I would spend 5.1% of the remaining portfolio (at 66 years old). And so on, according the the VPW withdrawal schedule for the selected asset allocation (60/...
by longinvest
Fri Sep 26, 2014 4:41 pm
 
Forum: Investing - Theory, News & General
Topic: What is your best estimate of the SWR (Safe Withdrawal Rate)
Replies: 77
Views: 3994

Re: Variable Percentage Withdrawal (VPW)

Mike, The increasing percentage is a natural side-effect of spending a percentage of "current portfolio". Let me illustrate with a simple example. Imagine that you wanted to spend 10 dollars in 5 days. You could say that you will spend $2 per day. Or, you could say that you will spend: &sd...
by longinvest
Wed Sep 24, 2014 3:29 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56194

Re: Variable Percentage Withdrawal (VPW)

morph wrote:I've been trying to download that file for days :-( Can someone fix or send in a PM?

Mike


Hi Mike, I have added a new download link (Dropbox) on the VPW Wiki Page. Hopefully, one of the two links will work.
by longinvest
Wed Sep 24, 2014 2:04 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56194

Re: What evidence would prove the Boglehead mentality wrong?

You would have to define what the 'Boglehead mentality' actually is...because different people have a different opnion of what that would be. The Bogleheads mentality might not be defined, but the OP was probably referring to the Bogleheads investment philosophy , which is defined: 1 Develop a work...
by longinvest
Fri Sep 19, 2014 3:45 pm
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 212
Views: 15237

Re: Bond Index Conundrum

If an organization issues too much debt, its bond rating will fall and the interest rate demanded by the market will rise. TBM only includes investment-grade nominal bonds, in market weight. As a bond loses value (due to downgrading) its market weight is reduced accordingly. This is quite similar to...
by longinvest
Thu Sep 18, 2014 9:24 am
 
Forum: Investing - Theory, News & General
Topic: Bond Index Conundrum
Replies: 16
Views: 1952

Re: An Efficient Frontier for Retirement Income

A big problem of this study is that it is based on an inflexible withdrawal model, like all other SWR studies. You might want to also give a look at the flexible VPW withdrawal model.
by longinvest
Thu Sep 18, 2014 9:12 am
 
Forum: Investing - Theory, News & General
Topic: An Efficient Frontier for Retirement Income
Replies: 4
Views: 714

Re: What evidence would prove the Boglehead mentality wrong?

I'm 26 and hopefully should have a long time of investing ahead of me. The benefits of holding a mix of stocks and bonds index funds in a passive investing style is relatively new relative to the length of developed human history. While unlikely, it's entirely possible that at some point during my ...
by longinvest
Wed Sep 17, 2014 8:19 am
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 212
Views: 15237

Re: The dangerous practice of rebalancing...

YDNAL, Thanks for giving me the opportunity to illustrate the complete reasoning of my post (that was cut out from the citation in your above post). I'll rephrase your question: Given that L is willing to live with a post-correction non-rebalanced portfolio of $250,000 stocks + $500,000 bonds = $75...
by longinvest
Sat Sep 13, 2014 1:36 pm
 
Forum: Investing - Theory, News & General
Topic: The dangerous practice of rebalancing...
Replies: 191
Views: 14376

Re: The dangerous practice of rebalancing...

If someone does not intend to rebalance after a stock correction, my opinion is that this person has an inappropriate asset allocation (AA) with too much stocks in it. Investor L (longinvest :) ), who is 65yo and retired, hast $1M in savings split 50% Equities and 50% Fixed Income. 1. L determined ...
by longinvest
Sat Sep 13, 2014 12:53 pm
 
Forum: Investing - Theory, News & General
Topic: The dangerous practice of rebalancing...
Replies: 191
Views: 14376

Re: The dangerous practice of rebalancing...

If someone does not intend to rebalance after a stock correction, my opinion is that this person has an inappropriate asset allocation (AA) with too much stocks in it. Let me explain how I came to that conclusion: If one is willing to hold a smaller proportion of stocks in his portfolio after a corr...
by longinvest
Sat Sep 13, 2014 11:49 am
 
Forum: Investing - Theory, News & General
Topic: The dangerous practice of rebalancing...
Replies: 191
Views: 14376

Re: Are there any real total bond funds?

Vanguard's Total Stock Market doesn't include penny stocks, either, so it is not truely a total stock market fund. Are you going to ask for one, too?

TBM includes investment-grade nominal bonds. It doesn't include junk and inflation-protected bonds.
by longinvest
Fri Sep 05, 2014 9:27 pm
 
Forum: Investing - Theory, News & General
Topic: Are there any real total bond funds?
Replies: 65
Views: 3057

Re: Let me get this straight about SCV & factor diversificat

There's been much discussion about factor investing, which is advocated by Larry Swedroe. In many comments, he has argued that one should not put all one's eggs in one factor basket, but diversify invest across factors: beta, value, size, and momentum. Am I correct that he advocates a high tilt tow...
by longinvest
Fri Sep 05, 2014 8:32 am
 
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 153
Views: 9256

Re: Let me get this straight about SCV & factor diversificat

Almost any small group of stocks will be more diversified in terms of the number of factors because of the way factors are defined. Factors, except for beta, are defined such that the market always has a zero loading, so it's almost a tautology. SCV might out-perform the total market. It might even...
by longinvest
Thu Sep 04, 2014 9:12 pm
 
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 153
Views: 9256

Re: Surprising AA findings - comments?

So, are we having another 100% stocks thread, yet again?

Just in case you cared about my opinion: I think that 100% bonds and 100% stocks are both riskier (but in different ways) than a mixed portfolio of stocks and bonds.
by longinvest
Wed Sep 03, 2014 12:14 pm
 
Forum: Investing - Theory, News & General
Topic: Surprising AA findings - comments?
Replies: 12
Views: 719

Re: Surprising AA findings - comments?

It would make sense for 100% bonds to have trouble pacing inflation over long periods. It is a well known fact that adding at least 20% stocks in a portfolio usually improves returns (and even lowers volatility). This seems to be confirmed by your numbers. I also see in your numbers that you could h...
by longinvest
Wed Sep 03, 2014 11:59 am
 
Forum: Investing - Theory, News & General
Topic: Surprising AA findings - comments?
Replies: 12
Views: 719

Re: Surprising AA findings - comments?

VA_Gent wrote:Drawdown= percent below the high water mark.
Underwater= Still in drawdown
CAGR= GEOMEAN of annual real returns

High water mark = highest withdrawal so far?
by longinvest
Wed Sep 03, 2014 11:28 am
 
Forum: Investing - Theory, News & General
Topic: Surprising AA findings - comments?
Replies: 12
Views: 719

Re: Surprising AA findings - comments?

VA_Gent, could you explain what you mean by: drawdown, underwater, CAGR (of what)?
by longinvest
Wed Sep 03, 2014 11:22 am
 
Forum: Investing - Theory, News & General
Topic: Surprising AA findings - comments?
Replies: 12
Views: 719

Re: Variable Percentage Withdrawal (VPW)

Just in case there was any ambiguity: I intend to use VPW. If I am lucky, I'll have way more than planned during retirement. If I am unlucky, I might only get what I planned for. It would take a pretty disastrous scenario for me to get much less than planned over a long period. Yet, even then, I sho...
by longinvest
Wed Sep 03, 2014 6:53 am
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56194

Re: Variable Percentage Withdrawal (VPW)

FYI, I personally use:

myNumber = (myYearlyGenerousExpenses - floor) / 3.5% + buffer + YearsUntilFloor * floor

for my 50/50 portfolio. I expect to be able to cut into the "generous" part without feeling deprived.
by longinvest
Wed Sep 03, 2014 12:01 am
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56194

Re: Variable Percentage Withdrawal (VPW)

Up until now, I've been using a SWR of 3% to forcast my number... myNumber = myYearlyExpenses / 3% I was all excited about having a new formula til I attempted to to adjust it for a 50% loss on a 50/50 stock / bond AA .75 (50% loss on 50/50 s/b AA) * .041 = .03075 right? Or, roughly 3% Seems I'm ri...
by longinvest
Tue Sep 02, 2014 11:45 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56194

Re: Variable Percentage Withdrawal (VPW)

Ken, I like Cut-Throat's rule of thumb. Personally, I am very much in favor of, first, building a solid floor using delayed Social Security, and using a CD or TIPS ladder to bridge the gap between retirement and Social Security, and, second, build on top of that using VPW. I have very low confidence...
by longinvest
Tue Sep 02, 2014 10:52 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 478
Views: 56194

Re: Variable Percentage Withdrawal Spreadsheet vs Firecalc.c

Ok, thanks. I tried using their "constant percentage withdrawal of remaining portfolio balance" option instead but it still seemed to show a lot of low years for withdrawal amounts. It would be nice if they had the 1/n widthdrawal option. You can get 1/n withdrawals with VPW by changing o...
by longinvest
Fri Aug 29, 2014 10:36 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal Spreadsheet vs Firecalc.com
Replies: 5
Views: 687

Re: Does anyone have 'Lazy Portfolios'?

I invest lazily in a Three-Fund Portfolio . Here is why I do so: Investing in Total Markets Are we hypocritical in choosing when it is and isn't okay to use past performance as a factor in our portfolios? I think that the article I referred to makes a pretty good theoretical argument for investing ...
by longinvest
Fri Aug 29, 2014 10:24 pm
 
Forum: Investing - Theory, News & General
Topic: Does anyone have 'Lazy Portfolios'?
Replies: 85
Views: 6676

Re: What are you up YTD?

How do you factor in recent contributions? Considering I only started saving 3 years ago, a significant percentage of my portfolio was invested after 1/1/14. My assets that were invested before 12/31/14 are up 7.4% (90/10 AA), but the money I invested on 7/1/14 isn't up very much. Search Bogle Wiki...
by longinvest
Fri Aug 29, 2014 6:23 pm
 
Forum: Investing - Help with Personal Investments
Topic: What are you up YTD?
Replies: 141
Views: 11772

Re: Does anyone have 'Lazy Portfolios'?

I invest lazily in a Three-Fund Portfolio.

Here is why I do so: Investing in Total Markets
by longinvest
Fri Aug 29, 2014 5:38 pm
 
Forum: Investing - Theory, News & General
Topic: Does anyone have 'Lazy Portfolios'?
Replies: 85
Views: 6676

Re: Variable Percentage Withdrawal Spreadsheet vs Firecalc.c

VPW spends a percentage of current portfolio every year. This leads to higher withdrawals when markets soar and lower withdrawals when markets dip. VPW's success rate is 100%, by design. Firecalc works differently. Firecalc asks for an initial withdrawal amount. Every year, Firecalc adjusts this wit...
by longinvest
Fri Aug 29, 2014 5:21 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal Spreadsheet vs Firecalc.com
Replies: 5
Views: 687

Re: The Three Fund Portfolio

* Automatic rebalancing within each fund. This is one of the benefits that Taylor sites for the 3 Fund Portfolio. If I use the 3 Fund Portfolio, wouldn't I simply rebalance between those three funds?. How could rebalancing "within each fund" have anything to do with my own yearly rebalanc...
by longinvest
Thu Aug 28, 2014 6:59 pm
 
Forum: Investing - Theory, News & General
Topic: The Three Fund Portfolio
Replies: 906
Views: 365556

Re: 100% stock AA-> At what age to add bonds?

I will go back and emphasize: The reason for our success is our savings rate while we were accumulating, not our Asset Allocation before, or after, retirement. L. I agree with Leeraar. It is having enough savings that enables one to have choices in retirement. There are many roads to a comfortable ...
by longinvest
Tue Aug 26, 2014 9:54 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3870

Re: The Worst Investment You Can Make: Buying a Home

Victoria, While I agree with most (if not all) of what you wrote, so far, I also think that you underweight the risks of renting. I might well be that you were lucky not to experience these risks, but they are very real. I have faced some of them in my life, and they led me to ownership (not my firs...
by longinvest
Tue Aug 26, 2014 11:46 am
 
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 16440

Re: 100% stock AA-> At what age to add bonds?

I would add a note to the effect that the graph, above, does not use (0,0) as a coordinate on its bottom-left corner, but (7,8). For many people, this can be quite misleading as it hides the magnification applied to the displayed curve. It would show as a small curve in the upper-right corner of a ...
by longinvest
Mon Aug 25, 2014 6:52 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3870

Re: The Worst Investment You Can Make: Buying a Home

Greenie wrote: Renting might free you of some obvious homeowner expenses but you really want to deal with landlords?


Great post!
by longinvest
Mon Aug 25, 2014 3:40 pm
 
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 16440

Re: 100% stock AA-> At what age to add bonds?

Do a web search on "Efficient Frontier" and then contemplate the graphs / cartoons you might find. For example: http://www.youngresearch.com/wp-content/uploads/2012/08/Efficient-Frontier.jpg This is a graph of expected return (y axis) vs risk (x axis). If you like, you can use something l...
by longinvest
Mon Aug 25, 2014 3:34 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3870

"Don't Be Scared of Rising Interest Rates"

http://news.morningstar.com/articlenet/article.aspx?id=661823 This article analyses how portfolios perform when interest rates rize or fall (historically for periods of 6 months). Its findings on the short-term impact of even large variations are interesting: We find the returns of the conservative ...
by longinvest
Sun Aug 24, 2014 10:20 am
 
Forum: Investing - Theory, News & General
Topic: "Don't Be Scared of Rising Interest Rates"
Replies: 4
Views: 1095

Re: Is the Aggregate Index Too Heavy in Treasuries?

WIthin investment-grade bonds, the only glaringly obvious omissions are municipals, which are something like 10% of the market, and TIPS, which are something like 3-4%. So I think it represents 85% of the total investment-grade market, which is more than the S&P represents in the stock market. ...
by longinvest
Sat Aug 23, 2014 10:16 am
 
Forum: Investing - Theory, News & General
Topic: Is the Aggregate Index Too Heavy in Treasuries?
Replies: 63
Views: 3511

Re: Is the Aggregate Index Too Heavy in Treasuries?

Does the TSM and TISM include penny stocks? If not, why should TBM include junk bonds?
by longinvest
Sat Aug 23, 2014 10:06 am
 
Forum: Investing - Theory, News & General
Topic: Is the Aggregate Index Too Heavy in Treasuries?
Replies: 63
Views: 3511

Re: Smooth perpetual withdrawal from risky assets [endowment

Siamond and cjking, From my first post on this thread (see the bolded part): We will have to work under some constraints, though: ⋅  The assumed portfolio will be a normal Three-Fund Portfolio . (No annuities, no TIPS ladders, etc.) ⋅  The strategy should not impose undue constra...
by longinvest
Thu Aug 21, 2014 6:35 pm
 
Forum: Investing - Theory, News & General
Topic: Smooth perpetual withdrawal from risky assets [endowment fd]
Replies: 93
Views: 8128
Next

Return to advanced search