Bogleheads.org

Bogleheads philosophy is to live below your means, but I don’t think most of us take that to mean you should have to wear jackets around the house.

I appreciate you Homer, because you do a great job balancing out all the doomers and preppers on this site .

(I also appreciate you, doomers and preppers).

homebuyer6426 wrote: ↑Tue Jan 31, 2023 9:38 am I always Ctrl-A Ctrl-C before posting anything long-winded online.

Yup, can’t believe any message board veteran *doesn’t* do this.

I recently went from dual-27 (1080p) to single-32 (1440p) and like it better. Less neck movement and I have room for everything.

A bucket strategy can save you from having to sell with the market 15% down in a year only to end up having to sell with the market down another 40% 2-3 years later (all numbers arbitrary for arguments sake).

That said I do personally favour spending more from fixed income in a down market, which normal market action will encourage anyway because usually (not so much last year) your FI drops less than your equities.

4) Retried, but realize it really is a hellscape of boredom and slovenly pursuits. They wake up one day and realize they really are living a meaningless life of ruin! I imagine there must be some in group (4), but we rarely hear from them. But, i suppose that must be mostly self selection. I would be interesting to hear some of their experiences. Nice to meet you! Not exactly as you describe it, but: I enjoyed what I did at its best. Towards the end I burned out. I was happy to recharge and grateful to have put myself in a position where I could do so. I considered myself soft-retired … open to the idea that this was it, but not locking myself into it. I feel that as a tech worker soft retirement becomes retirement if you give it long enou...

tesuzuki2002 wrote: ↑Wed Jan 11, 2023 8:14 pm Many people decline in health very shortly after retiring…

Keep active and keep using your brain!!

There have been alarm-raising headlines to this effect, but on further analysis it appeared they were mixing cause and effect (people who have to retire because of health issues tend to die earlier).

I'd say it's important to keep in physical shape and mentally occupied, whether you are working or not. For some people, work can be an impediment to the former.

2/ You want to donate a large amount. Nobody has really picked up this point but for someone who has lived below their means, working past financial independence is a good opportunity to do this. I am not sure about American tax law, but as a Canadian I get a pretty good tax write off for charitable donations such that I would get about 50% back up to a point. I live below my means as well; so, I hope that I have a life with a never-ending portfolio to help myself and others. It is easier for me to do what I am good at and finance a charity, rather than work for a charity if that makes sense. Yeah, that's what I meant. I respect people who work for worthwhile organizations, of course, but someone like me can arguably do more by working in ...

Mestk5593 wrote: ↑Wed Jan 11, 2023 2:46 am 2/ You want to donate a large amount.

Nobody has really picked up this point but for someone who has lived below their means, working past financial independence is a good opportunity to do this. I am not sure about American tax law, but as a Canadian I get a pretty good tax write off for charitable donations such that I would get about 50% back up to a point.

And the purpose of simulating a world in which every portfolio has a 10% home country bias (or 60%, or any other number except a globally cap weighted/time weighted portfolio) is....what, exactly? This is representative of how most investors manage their portfolios. In Canada, for example, many people are probably closer to 60% in Canada despite our 3% cap weight. The data can easily be run with a cap weighted global portfolio for equities. I would expect a marginal difference between that and the 10% domestic case that we have already run. Hi thanks for responding. Canada stock market represents about 3% of the global cap weighted equity market. (As opposed to the U.S., which is more or less around 50%). So, if Canadians are investing 60%...

1. The entire basis of the study fundamentally is that prior SWR studies cannot be relied upon for future projections, in large part, because they used U.S.-only data, which historically was "better than expected" in terms of market returns. Therefore, to get more accurate projections, more generally applicable SWR projections, and in some sense, more valid and more reliable SWR projections, one must look at global markets data, not just U.S. historical data. There are two separate papers involved here; one "Is the United States a Lucky Survivor" and argues that US returns have been "lucky". It finds that the realized historical risk premium on US stocks exceeds the expected premium by 2%. Ben then says that h...

Important context: "At their peak in late 1989, Japanese stocks carried a CAPE (cyclically-adjusted price-to-earnings) ratio of nearly 100" (source: https://www.thegoodinvestors.sg/making-sense-of-japans-epic-stock-market-bubble/) While I have my criticisms of CAPE, I will be ready to run for the hills from any market well before it approaches 100 :). Interestingly Fama claims Japanese CAPE wasn’t as high as claimed Accounting differences explain about half of the long-run disparity between U.S. and Japanese P/Es. For example, if Japanese firms used U.S. accounting rules, the Japanese P/E ratio would have been 32.6, not 53.7, in 1989. https://www.sciencedirect.com/science/article/abs/pii/0304405X91900066 Japanese valuations got h...

Important context: "At their peak in late 1989, Japanese stocks carried a CAPE (cyclically-adjusted price-to-earnings) ratio of nearly 100" (source: https://www.thegoodinvestors.sg/making- ... et-bubble/)

While I have my criticisms of CAPE, I will be ready to run for the hills from any market well before it approaches 100 .

NiceUnparticularMan wrote: ↑Tue Jan 03, 2023 4:28 pm Again you seem to be rebutting an argument I wasn't making.

Fair. I was probably assuming too much based on the overall frame of the thread. Apologies!

A good article about optimism and pessimism by the esteemed Morgan Housel: https://www.fool.com/investing/general/ ... smart.aspx

Anyone can see for themselves that we have spend most of the last 25 years above the peak valuation in the mid-60s. There's a clear inference once could make on this and it isn't that we should expect to regress to the Shiller PE ratio baseline of the 60s. They are in fact higher today too than in the mid-60s, but I was specifically referring to a year ago, when valuations peaked over 37. Neither in 1966 nor in 1929 had valuations gotten nearly that high. On January 1, 2000 the Shiller PE ratio was 43.77, so we might have anticipated terrible returns from that point. According to the following link, the S&P 500 has returned 6.29% nominal, or 3.85% real, since then: https://www.officialdata.org/us/stocks/s-p-500/2000#:~:text=Stock%20mar...

The worst ever five year return of the S&P500 is -6.6% per year. I assume the rest can be ignored? Just because a 40% crash didn‘t happen streched over 5 years yet, does it mean it won‘t ever happen? It could very well happen over the next 5 years. I just wanted to illustrate that you can have a decent real return and still fail with the 4% rule. I guess you can do that as a math problem as long as you remember how ahistorical such a thing would be. The closest we’ve had to a period like that was spiralling towards 1982 and it was followed by massive positive returns. I haven’t looked up 30 year rolling periods but do you know how your decent one stacks up? According to Ben Carlson the worst ever was 8% nominal: https://awealthofcommon...

Stef wrote: ↑Tue Jan 03, 2023 2:15 pm

NiceUnparticularMan wrote: ↑Tue Jan 03, 2023 1:26 pm

HomerJ wrote: ↑Tue Jan 03, 2023 1:10 pm Once you go below 3.33% SWR, you are now thinking along the lines of negative real growth for 30 years. You're basically saying 30 years of savings won't last 30 years.

I just want to note that is not quite accurate, due to the sequence of real returns issue.

This. Lets assume the following scenario:

Year 1: -10% (6% inflation)
Year 2: -10% (5% inflation)
Year 3: -10% (4% inflation)
Year 4: -10% (3% inflation)
Year 5: -10% (2% inflation)

Edit: correcting wrong info

The worst five year return of the S&P500 is -6.6% per year going back to 1973. Would have to check for earlier periods.

I prefer to think of VPW is a well thought out withdrawal strategy, especially shown with this current forward test and all the associated protections built in as discussed by the community. This is an excellent case study. But it's not immune from disaster, depending on your definition. I think you might be missing the context of the exchange. VPW is still exposed to the risk of crap market returns, of course. There is no drawdown approach that guarantees success for every starting balance and set of returns. What longinvest is saying about SORR is that with VPW you are less concerned about what order those returns come in. This lines up with my own simulations. It still doesn’t mean it’s fun for you to have a bad SOR in retirement and fi...

And we know at retirement time if the valuation is outside historic norms. Although this can be tricky to really know. Like if CAPE/10 is 40, or 10, it's pretty safe to say that, but in a lot of other ranges I think it's more debatable. Larry Swedroe gave a talk a few years back explaining several reasons why CAPE/10's increase over time might have been justified by various factors. He argued that instead of CAPE/10 being compared to its historical mean (then 16.6) it should instead be compared to a baseline value of ~25. The factors were: better regulatory framework for equities, companies don't pay out as many or as generous dividends, better cash management and less corporate debt, more liquidity (lower bid/ask spreads, lower commission...

michaeljc70 wrote: ↑Mon Jan 02, 2023 8:06 am We've veered away from the topic of 2.7% SWR into valuations impact on retirement.

There probably should be an unofficial Bogleheads law that every investment theory thread, given enough posts, becomes about valuations.

michaeljc70 wrote: ↑Sat Dec 31, 2022 12:07 pm What data are you going to Monte Carlo if you don't use historical data?

That will be the next paper. It will use hypothetical data from Gondor, Narnia, and Tatooine.

Marseille07 wrote: ↑Sat Dec 31, 2022 11:32 am

lostdog wrote: ↑Sat Dec 31, 2022 11:27 am Are you hoping he says the 4% rule is fine for a U.S. only investor to support your U.S. only bias?

Ben has already acknowledged that the US supports a 4% SWR (someone also quoted 4.22% but I haven't verified).

I don't think Ben acknowledged that. The paper says that the US historical dataset support 4.22% using their methodology (this is on page 21, for a couple; numbers are higher for singles, and for men vs. women for unfortunate reasons), but that the "typical developed economy" dataset would support 2.26%, and the argument is that the US shouldn't expect to be special above that 2.26% simply because it has been special in the past. We can of course disagree with this .

I don't think working another 5-10 years is the takeaway from any of this. It's your second point about flexibility that I take away from it. Switching the thinking from SWR to 4% failure rates, the 4% rule fails somewhere around 17% of the time (~13% to ~22% depending on the parameters). You wouldn't get on a plane with a 17% chance of crashing, but you might be comfortable retiring with a 17% chance of having to adjust your consumption in a worst case scenario to avoid running out of money. Emphatically this. Regardless of what analysis we accept that leads to what historical withdrawal rate we think is most relevant, none of that is a guarantee about the FUTURE, so anything that isn't variable by design has a risk of being variable in i...

Well, I don't know any other way to describe it. You are presented with peer-reviewed academic data which you dismiss out of hand and then just arbitrarily imply a low probability to the 4% rule failing. It seems to me just another "US is exceptional" now and forever position regardless of what data is shown. What I'm telling you is that what you think you are reading ("imply", "seems to me") is coming out of your own head. So what is your position exactly then on the 4% rule? I'm sorry, your post could absolutely be in good faith but it also could be a prelude to a bunch of Internet bickering, and there has been plenty of noise in this thread already. I've made an effort in multiple posts to spell out my rese...

burritoLover wrote: ↑Sat Dec 31, 2022 8:06 am Well, I don't know any other way to describe it. You are presented with peer-reviewed academic data which you dismiss out of hand and then just arbitrarily imply a low probability to the 4% rule failing. It seems to me just another "US is exceptional" now and forever position regardless of what data is shown.

What I'm telling you is that what you think you are reading ("imply", "seems to me") is coming out of your own head.

Do you really think one 30 year period starting in 1968 that had the lowest SWR to-date for the US can be the worst that can occur and is a permanent floor going forward? Of course not, and nothing in my post suggested that I did, but simply allowing for the possibility that a future SWR could be worse than 1968 (I actually thought it was 1966 but whatever) does not mean a) that we should assign it a high probability (how likely is the risk), b) that we should assign it a high probability soon (what is the relevant timing), c) that we can predict how much lower than 3.8% would actually work (what is the impact of the risk), and that the inclusion of historical international data gives us meaningfully more insight into this. That is just ho...

I think completely ignoring what people can gain from something is rather dangerous. It is pretty common when someone posts something favorable in these forums about purchasing a LT care policy, life insurance policy, annuity, etc. and we know that person sells such policies we make note of that. This is a true statement, in the abstract. It's also true that Ben has earned a pretty solid reputation, at least in Canadian circles, for providing free and impartial personal finance insight for years through his Youtube series and the Rational Reminder podcast. His job at PWL Capital is Head of Research. For people with the context of his past work, the idea he would publicize a study to increase his firm's AUM isn't credible. Since you only he...

vineviz wrote: ↑Fri Dec 30, 2022 11:00 am This graph shows the difference for a 1966 US retiree with a 4% inflation-adjusted withdrawal rate and 50/50 stock/bond portfolio.

To be clear, I was referencing a scenario where a 2.7% WR would be relevant, not 3.8%. You can still disagree, but this will help you disagree with the right thing.

burritoLover wrote: ↑Fri Dec 30, 2022 10:24 am Do you really think one 30 year period starting in 1968 that had the lowest SWR to-date for the US can be the worst that can occur and is a permanent floor going forward?

Of course not, and nothing in my post suggested that I did, but simply allowing for the possibility that a future SWR could be worse than 1968 (I actually thought it was 1966 but whatever) does not mean a) that we should assign it a high probability (how likely is the risk), b) that we should assign it a high probability soon (what is the relevant timing), c) that we can predict how much lower than 3.8% would actually work (what is the impact of the risk), and that the inclusion of historical international data gives us meaningfully more insight into this.

I'm going to guess that many here poop-pooing the 2.7% don't have anywhere near 50% ex-US and probably none at all in most cases. The economy of the future could eventually look quite different from today (stating the obvious!) but it's hard to envision a scenario in the next 2-3 decades where the US stock market tanks to portfolio-wrecking proportions where ex-US somehow saves you. This seems possible to the extent that economies are decoupled and there are other just-as-strong capitalist markets to take over the mantle of #1, which doesn't seem to be where we are today. I do agree with the principle that we should not expect the future to look like the past, but when coming up with possible futures I think scenario-based thinking is prob...

The conspiracy thinking isn't a good look. Anyway, the math is the math, so the question is whether you buy the methodology that went into making the inputs; either the belief that US returns (or the "luck factor") must mean regress, or the inclusion of the most disastrous data sets and the suggestion they could be relevant to the US going forward. I think you can be skeptical about both of these things in good faith. This also isn't really new ground, although the specific number crunching that led to the specific number was new. Wade Pfau has previously published historical SWR numbers for non-US countries that were quite pessimistic (except for Canada, go us). Pfau's data has been out there for a while. It's not clear to me why...

Did I miss something here? In the seven pages here, did someone actually look and see what the portfolios look like from his team? It looks like a slice and dice portfolios that they charge you for that approaches total market, but has too many slices based on what you/they think may happen with asset allocation. The AUM is baked in there. Anyone? They use Dimensional Funds for their clients I believe, but Ben has posted model portfolios in the past that DIY investors can use. The last one I remember seeing looked like this for the equity portion: XIC 30% (Canadian equities) VUN 30% (American equities) AVUV 10% (American SCV) XEF 16% (International developed) AVDV 6% (International SCV) XEC 8% (Emerging markets) Keep in mind that Ben is Ca...

whodidntante wrote: ↑Thu Oct 20, 2022 10:40 pm My next fridge will be roughly the same one I bought after I graduated college and earned, well, not much. It will have a freezer on top, and a refrigerator on the bottom. Nothing on the door and no way to spit out ice. It's more efficient and breaks less. And when it does break, you take that puppy to the dump and reload.

My parents gave me their basic fridge when I bought my house in 2006 because they wanted an excuse to upgrade. I still have it. They are on their second since and had a repair guy tell them that nothing new is built to last.

I did not watch the video, so I have no comment in regard to that context. That's exactly why this discussion has gone off the rails. So many posters are ranting without actually understanding the issues. The video is only about 13 minutes long. Those who haven't watched it can't make informed comments. Instead they seem to be triggered by the 2.7% figure and go on misinformed rants. I watched the video when it came out. I like Ben Felix. I was not convinced. The main problem with the video is that it frames withdrawal rate as if the risk is a linear function depending on the amount withdrawn. It isn't. When you incorporate scenarios where markets suffered catastrophic failures (e.g. went to 0), then a 2.7% WR would not have saved you. Som...

fingoals wrote: ↑Fri Dec 23, 2022 11:12 pm I appreciate you sharing your concerns and thoughts. Perhaps, I was not clear enough in my original post with regard to my concern. It is not so much about avoiding any drops in my portfolio in scenarios that I have mentioned or minimizing potential losses (though, since they would be temporary, considering my investment horizon, it's not that big of a deal), but rather (or, at least, also) about seeking tactical advice on AA that would help in maximizing my portfolio returns in such challenging economic environments.

My tactical advice would be to have rebalancing bands for your asset allocation (+/- 5% for example) and rebalance if you hit a band. That should cover you for any rises/drops significant enough to warrant a change.

wmd36 wrote: ↑Fri Dec 23, 2022 5:54 am I was hoping to get some insight as to how Berkshire may fit into some people’s portfolio mix? I don’t really know much about the company . Buffett seems to have produced some good returns over the years.
What are the downsides to owning this stock? Could one make a case for having it as a major core holding ?

As much respect as I have for Buffett, you are exposed to single-stock risk the same as any other security and there isn't a Bogleheads case for having it as a major core holding.

So this is a little awkward about Lastpass: https://techcrunch.com/2022/12/22/lastp ... ts-stolen/

I'll say what I'm doing, and it quite possibly falls short, but I'm comfortable with it.

I use a strong password generator for each site. There is now one in Chrome that does this fine, but before that there were reputable sites you could use on the Internet. They get generated using client-side code so you're OK. I then let Chrome save the password for each site.

For Google itself I use a strong passphrase ... I generally recommend passphrases over passwords as they can be much longer and yet easier to remember.

PharmerBrown wrote: ↑Thu Dec 22, 2022 3:39 pm So, at what point does it become luck? And when you make money and it's not luck, what is it?

Probably insider trading.

What if I change my portfolio from 60/40 to 80/20 tomorrow and it works out, is that luck. There is a rigidity here that anytime anyone acts like they know something, they're lucky when it pans out. Because nobody can know nothin....ever.

"A Random Walk Down Wall Street" came out in 1973.

Appreciate your honesty and accountability. I agree it’s good to show things can go multiple ways, even when buying with conviction.

e5116 wrote: ↑Thu Dec 22, 2022 11:18 am OP clearly has done much better than if they had typical Boglehead investments throughout their investing lifetime. Is this "lucky"? Maybe. I'd say it's more that OP took more risk and it paid off.

Another word for that is ‘luck’ … but I am happy for him, and happier he cut out in time.

It seems the entire side-discussion around vineviz's scenario is missing the point, unless people are suggesting it means you don't need a glidepath or some other form of risk-hedging at all. Like whether you need to work 5 extra years or 10 or 4 or 8 or 7.776, it's still a price you end up paying that you may not have wanted, and may not be able to, because you didn't take steps to add certainty to your timetable. The only difference is that the shorter the expected duration, the less chance you will suffer further setbacks while waiting for the market or your expected lifespan to get back to where you wanted it. It's also an expected additional duration and not a guaranteed additional duration, so someone in year six of "extra workin...

That is the trade-off being made, potentially having to work 5 extra years to get to the same place in exchange for higher expected (average) returns. And I'm sorry to be a broken record, but contained within that risk is the risk that you won't be able to work those 5 extra years for one reason or another. We all have our stories eventually. In my case, it was a coworker who had a stroke in his early 50s. He has recovered, but his career is over. Some have pointed out, it's not like you have to shrivel up and die at that point... there are things you can do about it, but they probably weren't your Plan A or B or C (and maybe something you can do about it beforehand, with insurance). So in all of these posts that are effectively saying &qu...

NYCaviator wrote: ↑Thu Dec 15, 2022 7:37 pm Curious how people use autopay. I like the idea of having to manually pay bills to make sure nothing is out of the ordinary, but autopay seems like it would save quite a bit of time.

Every bill I can. I still have to pay my vehicle registration manually and got burned this year when the invoice never arrived (and I didn’t think of it). I’m happy for anyone I trust to have a bill with to take the money when due.

I haven't read any posts here, but just answering the title, what else makes sense? Logically, one doesn't go to sleep one night with a high risk tolerance and wake up the next morning with a much lower risk tolerance, so extrapolating that means it is a gradual shift from higher to lower risk tolerance. This excludes any windfalls. Obviously a significant windfall changes things. Very well put. Honestly it’s just people who like to argue rhetorical points. This is not a subject that is under any serious debate. Obviously we don't wake up one day and change but we plan our strategy. I think it's extremely common that we become very risk adverse the day we decide to switch to our retirement portfolio. So I'd like to modify your statement a ...

Triple digit golfer wrote: ↑Sun Dec 18, 2022 1:48 pm I haven't read any posts here, but just answering the title, what else makes sense? Logically, one doesn't go to sleep one night with a high risk tolerance and wake up the next morning with a much lower risk tolerance, so extrapolating that means it is a gradual shift from higher to lower risk tolerance.

This excludes any windfalls. Obviously a significant windfall changes things.

Very well put. Honestly it’s just people who like to argue rhetorical points. This is not a subject that is under any serious debate.

You don't always get to choose when you retire.

That's true even if you think you're special and will get to choose.

If somebody isn't willing to listen to that, they're not obligated to, and hopefully that risk will not hit them.

At some point it will become certain, either by your decision or by something that happens to you. The glidepath or any similar de-risking mechanism is intended to help you be in control of the decision.

roguewarrior0 wrote: ↑Thu Dec 15, 2022 2:50 pm Surprisingly, I have not had any urge to jump back into individual stocks with everything seemingly on sale.

If enough things are on sale that should be ok for your VTI as well.

organmaster98 wrote: ↑Mon Dec 12, 2022 3:26 pm This is why I don't use the 4% rule with my clients.

They deserve so much better!

What are your thoughts?

This is the key part of the message and you can ignore the rest.

The point is to drive engagement and get people to like (or even comment disagreeing) to increase the reach and find new contacts.

Most LinkedIn posts that end in "What are your thoughts?" or "Agree?" or similar are trash and it's better for all of us never to post them here.

The money you got from selling the 10 units, which should be a lot more than the 3% of the value you were getting as a distribution somehow. But you have no more units you can sell. When you spend the proceeds from the sale, then what? 10 - 10 = 0. Well, at some point the thought experiment has to move into the real world. What happened to the proceeds from the sale? It was all spent and none of it was reinvested in anything else? You're comparing a dividend strategy to an intentional 0% growth strategy? Whatever rental income assumption you make, in order to make a proper analysis of alternative approaches, it has to include that you are selling the units for whatever price would be justified by the amount of income it can generate, that ...