Search found 2475 matches

by longinvest
Mon Dec 11, 2017 5:29 pm
Forum: Investing - Theory, News & General
Topic: After a 2- or 3-fund solution, the rest is withdrawals and world events
Replies: 17
Views: 1600

Re: After a 2- or 3-fund solution, the rest is withdrawals and world events

I'll repeat what I wrote on another thread: If you want my opinion, it's this: forget about SWR during retirement; it's a rough planning tool to help answer: how much do I approximately need to retire. If you want a stable income stream, just go and buy one. For lifelong income, SPIAs do exist and c...
by longinvest
Mon Dec 11, 2017 8:37 am
Forum: Investing - Theory, News & General
Topic: After a 2- or 3-fund solution, the rest is withdrawals and world events
Replies: 17
Views: 1600

Re: After a 2- or 3-fund solution, the rest is withdrawals and world events

Having to guess about future world events could cause anxiety. I would only consider 4% as a rough planning number to answer the question "how much do I approximately need to retire?"; I would never use it as an actual withdrawal method. Instead, I would plan to use a flexible portfolio withdrawal m...
by longinvest
Sun Dec 10, 2017 9:23 am
Forum: Investing - Theory, News & General
Topic: 2000-09 worst decade for large cap stocks in 109 years
Replies: 44
Views: 2927

Re: 2000-09 worst decade for large cap stocks in 109 years

I am amazed at the fear of TIPS (and why not I-Bonds?) displayed here. Personally, I can't put on the same level of risk a security which promises CPI-adjusted payments (coupons and principal) on specific dates and another which only gives me a minority vote and a right to my share of unknown future...
by longinvest
Sat Dec 09, 2017 8:11 pm
Forum: Investing - Theory, News & General
Topic: 2000-09 worst decade for large cap stocks in 109 years
Replies: 44
Views: 2927

Re: 2000-09 worst decade for large cap stocks in 109 years

Are bond prices free today ? Is there a law that prohibits me from selling a Treasury bond or another bond, in my possession, at the price I want to sell it to another investor? Was there in 1951 ? Here's a reply posted by Barry Barnitz in another thread: Hi: Please note that interest rates in the ...
by longinvest
Sat Dec 09, 2017 8:02 pm
Forum: Investing - Theory, News & General
Topic: 2000-09 worst decade for large cap stocks in 109 years
Replies: 44
Views: 2927

Re: 2000-09 worst decade for large cap stocks in 109 years

Thesaints wrote:
Sat Dec 09, 2017 8:00 pm
Are bond prices free today ?
Is there a law that prohibits me from selling a Treasury bond or another bond, in my possession, at the price I want to sell it to another investor?
by longinvest
Sat Dec 09, 2017 7:39 pm
Forum: Investing - Theory, News & General
Topic: 2000-09 worst decade for large cap stocks in 109 years
Replies: 44
Views: 2927

Re: 2000-09 worst decade for large cap stocks in 109 years

Nedsaid, First, for investors really worried about inflation, there now exist inflation-indexed bonds (TIPS) and inflation-indexed cash investments (I-Bonds). Second, I think it's important to deconstruct an investment myth: that nominal bonds are vulnerable to inflation. Things are not as simple as...
by longinvest
Thu Dec 07, 2017 5:55 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate from SPIA???
Replies: 41
Views: 2412

Re: Safe Withdrawal Rate from SPIA???

Pezblanco, The point of the exercise is to determine how many real dollars can you spend from an SPIA or a non-COLA adjusted pension during the time of your retirement. I.e. what constant dollar stream can be extracted from a GIVEN SPIA or non-COLA adjusted pension? The SPIA has already been bought...
by longinvest
Thu Dec 07, 2017 12:43 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate from SPIA???
Replies: 41
Views: 2412

Re: Safe Withdrawal Rate from SPIA???

Pezblanco, The point of the exercise is to determine how many real dollars can you spend from an SPIA or a non-COLA adjusted pension during the time of your retirement. I.e. what constant dollar stream can be extracted from a GIVEN SPIA or non-COLA adjusted pension? The SPIA has already been bought ...
by longinvest
Tue Dec 05, 2017 11:15 am
Forum: Investing - Theory, News & General
Topic: Why isn't a bond fund's predicted future return "simply" the predicted interest rate? Or is it?
Replies: 2
Views: 593

Re: Why isn't a bond fund's predicted future return "simply" the predicted interest rate? Or is it?

Nisiprius, The implication would seem to be that (assuming no credit risk, no defaults, no calls, and--biggy, a perfectly flat yield curve) if the interest rate is X% for all loan terms and remains level at 6% X% , then any bond fund whatsoever must produce a total annual return of X% per year. Ques...
by longinvest
Tue Nov 28, 2017 10:22 pm
Forum: Investing - Theory, News & General
Topic: The impact of expenses - a call for creativity
Replies: 19
Views: 1266

Re: The impact of expenses - a call for creativity

I would express expenses as a percent of returns, instead of percent of assets (as commonly done). For example, a nominal return of 7% represents an inflation-adjusted return of 5%. A 2% expense ratio sends 2%/5% = 40% of the real return into the pockets of the fund provider and financial adviser! A...
by longinvest
Sun Nov 26, 2017 7:04 pm
Forum: Investing - Theory, News & General
Topic: Bonds Are Riskier Than People Think
Replies: 137
Views: 11774

Re: Bonds Are Riskier Than People Think

  1. The longer one holds an inflation-indexed bond, like a Treasury Inflation Protected Securities (TIPS), the less risky it becomes.
  2. An inflation-indexed bond fund is just a collection of inflation-indexed bonds.
by longinvest
Sun Nov 19, 2017 4:48 pm
Forum: Personal Finance (Not Investing)
Topic: What we don't know
Replies: 42
Views: 2894

Re: What we don't know

So exactly what do we we definitely know? We do know the following for sure: ... If "active" and "passive" management styles are defined in sensible ways, it must be the case that before costs, the return on the average actively managed dollar will equal the return on the average passively managed ...
by longinvest
Sat Nov 18, 2017 4:41 pm
Forum: Investing - Theory, News & General
Topic: Is holding bonds now dangerous?
Replies: 155
Views: 13782

Re: Is holding bonds now dangerous?

Dangerous but not as dangerous? :confused (As all stock) Over periods less than around 20 years, bonds have been less volatile in terms of real returns. Over longer periods, bonds have been more volatile than stocks. See Siegel's fantastic book Stocks for the Long Run for analysis on this issue. Di...
by longinvest
Thu Nov 16, 2017 6:09 pm
Forum: Investing - Theory, News & General
Topic: The 4% rule DOES fail but still makes sense!
Replies: 195
Views: 14956

Re: The 4% rule DOES fail but still makes sense!

There was no need to cut spending in 1972 despite the market crash. You could have taken out 4.5% and been fine. VPW cutting spending was an over reaction.That is the whole flaw in the system. It is easy to go conservative and never run out of money. But that isn't a free choice. You give up spendi...
by longinvest
Thu Nov 16, 2017 5:03 pm
Forum: Investing - Theory, News & General
Topic: The 4% rule DOES fail but still makes sense!
Replies: 195
Views: 14956

Re: The 4% rule DOES fail but still makes sense!

Randomguy, The main difference between the 1946 25/75 and the spreadsheet default 1972 50/50 backtest withdrawal stream shapes is the ending. 1946 ends up low while 1972 ends up high. I call this "the luck of the draw". Knowing in advance how the portfolio will fare over the next 35 years requires a...
by longinvest
Thu Nov 16, 2017 3:32 pm
Forum: Investing - Theory, News & General
Topic: The 4% rule DOES fail but still makes sense!
Replies: 195
Views: 14956

Re: The 4% rule DOES fail but still makes sense!

Grok, I'm curious what folks think about this article. https://www.manning-napier.com/Corporate/Insights/ResearchLibrary/Article/tabid/308/Article/97/Endowments-and-Foundations-A-Closer-Look-at-Spending-Rules.aspx It's more geared to endowments. But it shows that the standard 4% rule (the article us...
by longinvest
Thu Nov 16, 2017 2:30 pm
Forum: Investing - Theory, News & General
Topic: The 4% rule DOES fail but still makes sense!
Replies: 195
Views: 14956

Re: The 4% rule DOES fail but still makes sense!

VPW is far too aggressive at cutting spending as a result of market conditions which is why you tend to end up with huge sums at the end . (I'll comment the underlined statement later in this post) I don't share this opinion. If I look again at the 1946 25/75 stocks/bonds bactest, I have trouble se...
by longinvest
Thu Nov 16, 2017 9:02 am
Forum: Investing - Theory, News & General
Topic: The 4% rule DOES fail but still makes sense!
Replies: 195
Views: 14956

Re: The 4% rule DOES fail but still makes sense!

Willthrill81, My biggest problem with the variable percentage withdrawal (VPW) plan espoused by many is that it increases your spending as you age. This is simply an artefact of looking at some (but not all) backtests. In other words, someone might get this impression of increasing withdrawals when ...
by longinvest
Sat Oct 28, 2017 3:37 pm
Forum: Investing - Theory, News & General
Topic: How do I compute year to date returns?
Replies: 10
Views: 1155

Re: How do I compute year to date returns?

How do I exactly calculate year to date returns? ... Suppose I have a portfolio of 100K on Jan 1 which grows to 110K by June 15th. Suppose also that during the year I earn 5k, invest it on march 1st, and sell on April 1st. This investment rises from 5 to 6k. On March 1st, the portfolio (apart from ...
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: 7515

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: 7515

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: 3448

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: 3448

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: 2178

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: 2178

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: 487

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: 3884

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: 3884

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: 3448

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: 3448

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: 446

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: 1110

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: 7095

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: 1365

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: 919

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: 84
Views: 16549

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: 4791

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: 84
Views: 16549

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: 84
Views: 16549

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: 3080

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: 3400

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: 3400

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: 3400

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: 4193

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: 4193

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: 4193

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: 3400

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: 38370

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: 740
Views: 229830

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...