Search found 2455 matches

by longinvest
Sat Oct 14, 2017 10:37 am
Forum: Investing - Theory, News & General
Topic: Vanguard's long-term outlook for TIPS
Replies: 92
Views: 6892

Re: Vanguard's long-term outlook for TIPS

Doc, I don't see how a price chart can be more important than a total-return chart in a multi-assets portfolio. I personally think that a price chart is of no interest whatsoever to an investor, regardless of whether he's in his accumulation phase or in retirement. The price or rolling return chart ...
by longinvest
Fri Oct 13, 2017 8:04 am
Forum: Investing - Theory, News & General
Topic: Vanguard's long-term outlook for TIPS
Replies: 92
Views: 6892

Re: Vanguard's long-term outlook for TIPS

2) I completely disagree with your second point of price (or rolling returns) vs. growth. The choice of which is better depends on what your objective is. If you are looking at your FI portfolio in isolation then the growth chart is appropriate. On the other hand if you are concerned with your over...
by longinvest
Wed Oct 11, 2017 1:32 pm
Forum: Investing - Theory, News & General
Topic: What is a “bond bubble”?
Replies: 35
Views: 3157

Re: What is a “bond bubble”?

I wouldn't listen to the CNBC noise. I would take time to learn about the mathematics of a bond fund, instead. Here's an exercise I did a while back to convince myself that a total-market bond index fund is nothing like a total-market stock index fund. I simply simulated what would happen if histor...
by longinvest
Wed Oct 11, 2017 11:55 am
Forum: Investing - Theory, News & General
Topic: What is a “bond bubble”?
Replies: 35
Views: 3157

Re: What is a “bond bubble”?

There's definitely a lot of concern about bonds: https://www.cnbc.com/2017/10/06/wealth-manager-warns-on-bond-markets-creating-the-biggest-financial-crisis-of-our-lifetime.html I mostly stay away from bond index funds. I don't want to take risk with the non-stock part of my portfolio. Stable value ...
by longinvest
Tue Oct 10, 2017 3:56 pm
Forum: Investing - Help with Personal Investments
Topic: Please define "cash"
Replies: 31
Views: 1923

Re: Please define "cash"

I didn't say cash was not a useful asset for portfolio purposes. I said or at least meant that calling out cash as an asset distinct from fixed income generally is not useful. I suppose technically we could put cash on the spectrum of lowest returning lowest risk fixed income which spectrum then ru...
by longinvest
Mon Oct 09, 2017 5:40 pm
Forum: Investing - Help with Personal Investments
Topic: Please define "cash"
Replies: 31
Views: 1923

Re: Please define "cash"

dbr, One aspect that is required to be cash is that the value of the "investment" in nominal dollars is fixed. Things that have that property are currency, savings accounts, money market funds, CDs, etc. This does not count any interest that might be used. Some people would argue about CDs because t...
by longinvest
Mon Oct 09, 2017 3:24 pm
Forum: Investing - Theory, News & General
Topic: bond "generalizations"
Replies: 4
Views: 447

Re: bond "generalizations"

Hi, I'm learning more and more about bonds and I would like someone to double-check my "generalizations" to see if I'm getting it or not! Thanks! None of the four generalization is true. The first problem is that "interest rates" is not a single rate. When discussing bonds, we should actually be di...
by longinvest
Mon Oct 09, 2017 11:45 am
Forum: Investing - Theory, News & General
Topic: Rebalancing - Personal Philosophies
Replies: 43
Views: 3452

Re: Rebalancing - Personal Philosophies

I use a semi-lazy rebalancing method which takes care of annoying concerns such as maintaining a portfolio balanced across multiple accounts and wash sales: Two-Step Rebalancing . While I certainly appreciate the level of detail presented, I have a feeling that anyone who qualifies as semi-lazy wil...
by longinvest
Mon Oct 09, 2017 11:07 am
Forum: Investing - Theory, News & General
Topic: Rebalancing - Personal Philosophies
Replies: 43
Views: 3452

Re: Rebalancing - Personal Philosophies

I use a semi-lazy rebalancing method which takes care of annoying concerns such as maintaining a portfolio balanced across multiple accounts and wash sales: Two-Step Rebalancing.
by longinvest
Mon Oct 09, 2017 10:03 am
Forum: Investing - Theory, News & General
Topic: What is a “bond bubble”?
Replies: 35
Views: 3157

Re: What is a “bond bubble”?

It depends on the type of bond. For Treasuries and CDs, where there is no diversification benefit from a fund, many prefer to buy directly. On the contrary, there's a lot of diversification benefit for a Treasuries fund over a single Treasury bond! While Treasuries have (practically) no credit risk...
by longinvest
Mon Oct 09, 2017 8:57 am
Forum: Investing - Theory, News & General
Topic: What is a “bond bubble”?
Replies: 35
Views: 3157

Re: What is a “bond bubble”?

in discussing a bond fund ...if something shakes investors psychology and they decide to all get out of VBTLX, can't we have share prices decoupled from the value of the underlying bonds? And if we add in the opposite prior to this...with prices being bid up, then followed by a drop, couldn't that ...
by longinvest
Fri Oct 06, 2017 4:48 pm
Forum: Investing - Theory, News & General
Topic: Withdrawals: Maybe Write Capital & Cash vs. Dividends & Capital Gains?
Replies: 9
Views: 385

Re: Withdrawals: Maybe Write Capital & Cash vs. Dividends & Capital Gains?

I think that it would be useful to clearly distinguish between: internal portfolio events: dividend and interest payments, buy and sell transactions, etc., and portfolio contributions and withdrawals: adding (contribution) and removing (withdrawal) money from the portfolio. It's usually pretty simpl...
by longinvest
Wed Oct 04, 2017 5:22 pm
Forum: Investing - Theory, News & General
Topic: Sequence of returns and retirement
Replies: 8
Views: 1012

Re: Sequence of returns and retirement

I'd consider flexible withdrawal methods such as our Wiki's VPW . " Variable percentage withdrawal (VPW) is a withdrawal method that adapts to the retiree's retirement horizon, asset allocation, and portfolio returns during retirement. It combines the best ideas of the constant-dollar, constant-perc...
by longinvest
Tue Oct 03, 2017 4:02 pm
Forum: Investing - Theory, News & General
Topic: How do you avoid bad market timing for lump sum investments?
Replies: 67
Views: 6724

Re: How do you avoid bad market timing for lump sum investments?

Dollar cost averaging (DCA) is a boiling frog approach. I disagree with it. If one is unwilling to accept the risk of his portfolio's target asset allocation by dumping everything into it, it would be illogical (and quite dangerous from a behavioral point of view) to do it over a longer time frame. ...
by longinvest
Sun Oct 01, 2017 2:14 pm
Forum: Investing - Help with Personal Investments
Topic: Proposing a standard for asset allocation notation: 60+15/25
Replies: 12
Views: 1245

Re: Proposing a standard for asset allocation notation: 60+15/25

How about (60/15)/(25/0) (domestic/international)stocks/(nominal/inflation-indexed)bonds ?

Mine is (25/25)/(25/25) (domestic/international)stocks/(nominal/inflation-indexed)bonds :)
by longinvest
Sat Sep 30, 2017 9:30 am
Forum: Personal Finance (Not Investing)
Topic: buy or rent and invest in a HCOL area
Replies: 10
Views: 827

Re: buy or rent and invest in a HCOL area

Be sure to do an "apples to apples" comparison where you look at renting a property that is the same as you would buy. I disagree. As an example, a young couple buying a house has to anticipate the possibility of needing more rooms for future children. The same young couple can easily rent a smalle...
by longinvest
Thu Sep 28, 2017 10:17 am
Forum: Investing - Theory, News & General
Topic: Bill Sharpe's preferred portfolio
Replies: 81
Views: 14898

Re: Bill Sharpe's preferred portfolio

Valuethinker, Thank you for all the elucidation which was interesting. I was in particular probing your comment about Canada's economy, stock market and natural resources prices. The Chinese commodity bubble is over, that's not where the risk lies in the Canadian economy right now (even for Alberta ...
by longinvest
Thu Sep 28, 2017 9:20 am
Forum: Investing - Theory, News & General
Topic: Which bogleheads have a "high need to take risk"?
Replies: 51
Views: 4458

Re: Which bogleheads have a "high need to take risk"?

Smesman, I'm curious: Whom of you feels like they need to go e.g. 90%+ stocks to meet some financial goal? I'm talking about bogleheads who have a limited investment horizon and think another allocation would be safer, but have decided to take on more risky assets. If the risk doesn't pay off, what ...
by longinvest
Thu Sep 28, 2017 8:29 am
Forum: Investing - Theory, News & General
Topic: Bill Sharpe's preferred portfolio
Replies: 81
Views: 14898

Re: Bill Sharpe's preferred portfolio

Valuethinker, Valuethinker, aj76er, Another way to look at this is that 75% of your money is invested in just 3% of the global economic output. What industries and/or sectors are going to drive the majority of your future returns? Shale oil? Other commodities? Yikes. What can I say? Our market is wh...
by longinvest
Wed Sep 27, 2017 8:41 am
Forum: Investing - Theory, News & General
Topic: Bill Sharpe's preferred portfolio
Replies: 81
Views: 14898

Re: Bill Sharpe's preferred portfolio

Valuethinker, aj76er, As a result, there's no way that I would adopt Sharpe's World Stock-Bond Portfolio . I simply won't invest 97% of my money abroad. Another way to look at this is that 75% of your money is invested in just 3% of the global economic output. What industries and/or sectors are goin...
by longinvest
Sun Sep 17, 2017 6:36 pm
Forum: Investing - Theory, News & General
Topic: The Difference Between Risk and Uncertainty
Replies: 41
Views: 2876

Re: The Difference Between Risk and Uncertainty

So far, the best definition of risk that I have read is the one given by Zvi Bodie in his book Risk Less and Prosper . The definition itself is short: Investment risk is uncertainty that matters. But, to better appreciate the nuances of this definition, here is the context (I underlined the essentia...
by longinvest
Sun Sep 17, 2017 4:27 pm
Forum: Investing - Help with Personal Investments
Topic: Bond return negative. CD or money market alternative.
Replies: 30
Views: 3204

Re: Bond return negative. CD or money market alternative.

Valuethinker, The closest we could come to is "because the Yield Curve normally has an upward or downward slope, the average bond yield in a fund is not likely to be a perfect estimate of the returns to the holder of that fund. " Is that a fair summary of your view? No, it isn't. Bond mathematics te...
by longinvest
Sun Sep 17, 2017 11:23 am
Forum: Investing - Help with Personal Investments
Topic: Bond return negative. CD or money market alternative.
Replies: 30
Views: 3204

Re: Bond return negative. CD or money market alternative.

Valuethinker, It isn't when you buy the bonds, or when they redeem, it's the average return available to you as an average of those bonds? Otherwise, you have to believe that interest rates are sustainably going *up* over the term of the fund, or sustainably *down*? First, let me insist: a 10-year p...
by longinvest
Sun Sep 17, 2017 9:21 am
Forum: Investing - Help with Personal Investments
Topic: Bond return negative. CD or money market alternative.
Replies: 30
Views: 3204

Re: Bond return negative. CD or money market alternative.

Valuethinker, Valuethinker, The long run return of a bond fund is best estimated by the average yield to maturity of the bonds in that fund. A bond fund is similar to a CD ladder. One wouldn't estimate the long-term return of a CD ladder with its average yield to maturity; that wouldn't make sense. ...
by longinvest
Sat Sep 16, 2017 4:05 pm
Forum: Investing - Theory, News & General
Topic: Investing in a Low-Return World: Howard Marks' 6 options
Replies: 44
Views: 4007

Re: Investing in a Low-Return World: Howard Marks' 6 options

ah ok, and by fixed growth trend you mean a rate? if so how do you estimate that rate? And for example if during the last 9 years the return for stocks has been very high, wouldn't this suggest that future rate will be lower? No, the growth trend is a rate which is unaffected by current market cond...
by longinvest
Sat Sep 16, 2017 3:45 pm
Forum: Investing - Theory, News & General
Topic: Investing in a Low-Return World: Howard Marks' 6 options
Replies: 44
Views: 4007

Re: Investing in a Low-Return World: Howard Marks' 6 options

This strategy has a small contrarian element to it which leads to saving a bit less when the market is up (and expensive), and a bit more when the market is down (and cheap) without having to guess anything about it. Thanks for sharing. It seems to me that your approach is still based on the expect...
by longinvest
Sat Sep 16, 2017 3:25 pm
Forum: Investing - Theory, News & General
Topic: Investing in a Low-Return World: Howard Marks' 6 options
Replies: 44
Views: 4007

Re: Investing in a Low-Return World: Howard Marks' 6 options

My choice is different: 7. Ignore prognostics about future returns. Plan (and regularly re-plan) based on current portfolio size, current income, current age, target retirement age, and a fixed portfolio growth trend based on asset allocation (unaffected by current market conditions). In other words...
by longinvest
Fri Sep 15, 2017 6:44 pm
Forum: Investing - Help with Personal Investments
Topic: Bond return negative. CD or money market alternative.
Replies: 30
Views: 3204

Re: Bond return negative. CD or money market alternative.

Valuethinker, The long run return of a bond fund is best estimated by the average yield to maturity of the bonds in that fund. A bond fund is similar to a CD ladder. One wouldn't estimate the long-term return of a CD ladder with its average yield to maturity; that wouldn't make sense. CD investors k...
by longinvest
Sun Sep 10, 2017 7:40 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36001

Re: Michael Kitces 4% rule podcast on Madfientist

Dear Leesbro63, What Longinvest is missing is that it's often NOT true that spending equals more happiness. Isn't the goal of life and retirement to be happy? For many, continuing to accumulate security and perhaps a legacy for adult kids/grandkids/heirs/charity adds to happiness. In fact, ramping u...
by longinvest
Sat Sep 09, 2017 5:04 pm
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 739
Views: 225950

Re: Variable Percentage Withdrawal (VPW)

In the thread Variable Percentage Withdrawal -> Before retirement Age I answered a question by forum member KlangFool about how to use VPW for retiring at age 57: KlangFool, Let's assume the portfolio is 1.5 million and the full retirement age for social security is 67 years old. A) The annual expen...
by longinvest
Sat Sep 09, 2017 4:57 pm
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 739
Views: 225950

Re: Variable Percentage Withdrawal (VPW)

In the thread Safe Withdrawal Rate -> 2% or lower I wrote a few posts related to VPW. I wrote an explanation of what happens when actual returns differ from VPW's internal growth trend : I'm not proposing that one change the rate embedded in the VPW spreadsheet, but was was wondering what the long-t...
by longinvest
Sat Sep 09, 2017 9:19 am
Forum: Personal Finance (Not Investing)
Topic: Variable Percentage Withdrawal -> Before retirement Age
Replies: 35
Views: 3309

Re: Variable Percentage Withdrawal -> Before retirement Age

KlangFool, Let's assume the portfolio is 1.5 million and the full retirement age for social security is 67 years old. A) The annual expense is 60K B) And, the social security income with a couple = 30K at 67 years old. This couple retires at 57 years old. My understanding is (10 years X 60K = ) 600K...
by longinvest
Wed Sep 06, 2017 8:29 am
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

Gilgamesh, A floor and side portfolio viewed as an overall portfolio is nothing but a significant portion invested in individual treasury bonds, and the remaining in bond fund and equities (so called, side portfolio). This overall portfolio has a certain overall AA ratio. A fully-sufficient inflatio...
by longinvest
Wed Sep 06, 2017 8:03 am
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

AlohaJoe, Here's an example of VPW and two "variants" that use a different value than the VPW default. You can see that (on the left hand side) even though they start out with very different withdrawal amounts they eventually converge to very similar amounts (on the right hand side). https://cdn-ima...
by longinvest
Wed Sep 06, 2017 7:42 am
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

Victoria, 1. In my simulation, I have a much higher total inflation-adjusted income in the last few years of my projected lifespan. It is a feature of the model? No, this is an artefact of backtesting over a period with higher market returns. Using the default spreadsheet settings but selecting 1948...
by longinvest
Wed Sep 06, 2017 6:51 am
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

Jimmyq, How does VPW know the actual market return? Don't you input that every Year? No. One only multiplies the portfolio balance with the predetermined withdrawal percentage according to one's age and the portfolio's asset allocation for the upcoming year. The beauty of it is that using the size o...
by longinvest
Tue Sep 05, 2017 8:06 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

Victoria, I did read the entire Wiki article and downloaded the spreadsheet. As they say, don't invest in anything you don't understand. But understanding is different when you passively read something and when you actually have to implement it. When I saw the table, I knew that the implementation w...
by longinvest
Tue Sep 05, 2017 7:50 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

KlangFool, 2) My point of this thread is to show that if the portfolio size is much bigger (50X) than basic annual expense, the portfolio's AA does not really matter. I just hope that the hypothetical retiree didn't work an extra 10 years at a job he hated to accumulate such a gigantic portfolio. He...
by longinvest
Tue Sep 05, 2017 7:35 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

Victoria, Ok! Sorry...I must be confusing the suggestions some have made of redoing it each year like you suspected...thanks! P.S: VPW of course knows actual market returns with my balance at the end of the year...duh!...sry for such a silly question lol I was confusing it, too. That's why I wrote m...
by longinvest
Tue Sep 05, 2017 6:52 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

How does VPW know the actual market return? Don't you input that every Year? No. One only multiplies the portfolio balance with the predetermined withdrawal percentage according to one's age and the portfolio's asset allocation for the upcoming year. The beauty of it is that using the size of the p...
by longinvest
Tue Sep 05, 2017 6:38 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

Gilgamesh, VPW, also requires market tracking (world) and withdrawal adjustment based on that...but longinvest does that "behind the scenes", so the end user doesn't have to do anything. VPW only requires a very approximate general long-term trend for bonds and stocks. This is not a prediction of fo...
by longinvest
Tue Sep 05, 2017 6:12 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

KlangFool, 2) My point of this thread is to show that if the portfolio size is much bigger (50X) than basic annual expense, the portfolio's AA does not really matter. I just hope that the hypothetical retiree didn't work an extra 10 years at a job he hated to accumulate such a gigantic portfolio. He...
by longinvest
Tue Sep 05, 2017 5:44 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7944

Re: Safe Withdrawal Rate -> 2% or lower

KlangFool, Folks, Someone else is discussing portfolio construction for a very safe withdrawal. But, does that make any sense if your withdrawal rate is 2% or lower? Won't simple 60/40 portfolio works? There must be a gap in my thinking. For example, if the social security cover 50% of a person's re...
by longinvest
Mon Sep 04, 2017 3:57 pm
Forum: Investing - Help with Personal Investments
Topic: Any way to "translate" a fixed pension/annuity to an inflation adjusted one?
Replies: 23
Views: 1626

Re: Any way to "translate" a fixed pension/annuity to an inflation adjusted one?

#Cruncher, When retirement comes and one begins collecting the $10,000 nominal pension, it makes no sense to try and keep track of a hypothetical side portfolio. Instead, if one's estimate of longevity, inflation, or real return changes dramatically, one should just re-translate the $10,000 nominal ...
by longinvest
Mon Sep 04, 2017 2:59 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36001

Re: Michael Kitces 4% rule podcast on Madfientist

Paul, What's going on here? LPMs have a 20% failure rate The problem with LMP is that it underestimates the costs substantially. It does this by constructing unrealistic scenarios and not actually matching liabilities. https://medium.com/@justusjp/liability-matching-portfolios-have-a-20-failure-rate...
by longinvest
Mon Sep 04, 2017 2:35 pm
Forum: Investing - Help with Personal Investments
Topic: Any way to "translate" a fixed pension/annuity to an inflation adjusted one?
Replies: 23
Views: 1626

Re: Any way to "translate" a fixed pension/annuity to an inflation adjusted one?

Itstoomuch, I forgot to tell you about his wife, age 50, who will happen to survive to age 105... That's good know, so for 55 yo, the alternatives are what? Of course, there's the imperfect scenario presented above, trying to self-construct inflation increments for the fixed pension. It might work o...
by longinvest
Mon Sep 04, 2017 12:29 pm
Forum: Investing - Help with Personal Investments
Topic: Any way to "translate" a fixed pension/annuity to an inflation adjusted one?
Replies: 23
Views: 1626

Re: Any way to "translate" a fixed pension/annuity to an inflation adjusted one?

^ sure. LoL Annuitant receives into checking account $10,000 annual lump sum or $833/mn. I'm spending mine on junk food and toys. I've saved for too long to not enjoy some of the benefits. :sharebeer The fixed (non-COLA*) pension payment of someone retiring early at age 55, in a 2% inflation world,...
by longinvest
Mon Sep 04, 2017 12:10 pm
Forum: Investing - Help with Personal Investments
Topic: Any way to "translate" a fixed pension/annuity to an inflation adjusted one?
Replies: 23
Views: 1626

Re: Any way to "translate" a fixed pension/annuity to an inflation adjusted one?

You may want to compare that to the simplicity, in nominal dollars , of the approach I've proposed. My approach can be summarized as: At the beginning of each year , receive a nominal $10,000 pension payment, and: Add $3,600 of it to a dedicated portfolio. Set aside the remaining $6,400 into a savin...
by longinvest
Mon Sep 04, 2017 9:45 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36001

Re: Michael Kitces 4% rule podcast on Madfientist

Gilgamesh, Longinvest Is there any issues in using rolling TIPS ladder. I know one cannot predict exact returns, but if one assumes zero return and use TIPS solely for inflation protection. Note to readers : We are discussing two distinct types of ladders, rolling and non-rolling . I'll assume that ...
by longinvest
Mon Sep 04, 2017 8:51 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36001

Re: Michael Kitces 4% rule podcast on Madfientist

Justin, I guess I don't understand what portion is taken from the stable income versus the VPW. The wiki says your "base income" should come from the stable portion, which is the TIPS/CD ladder or an annuity. But it doesn't say what "base" means...is that the total of your required spending? The mai...