Search found 2846 matches

by knpstr
Fri Dec 22, 2023 7:58 am
Forum: Personal Consumer Issues
Topic: Can I afford to splurge on a Tesla?
Replies: 92
Views: 9563

Re: Can I afford to splurge on a Tesla?

For sure this is fine, financially.
Not to mention the Model Y is EXTREMELY safe, beyond the "fun" of driving it.

Pay no attention to those who saying you don't have enough money to buy it, some people are misers.

In general, I'd argue you have too much in your HYSA and should be investing more in equities, if nothing else. For sure you want to keep some money ready in cash but between the two of you, you have $200,000 in HYSAs, that seems to be too much.
by knpstr
Tue Sep 07, 2021 6:27 pm
Forum: Personal Investments
Topic: Low need to take risk - low allocation to stocks
Replies: 39
Views: 4546

Re: Low need to take risk - low allocation to stocks

UpperNwGuy wrote: Mon Sep 06, 2021 4:26 pm Doesn't bother me. I have never considered Warren Buffet to be a model for the individual investor. His expertise is in running a large company that buys controlling interests in other companies. It really has nothing to do with Benjamin Graham.
He grew to that point (buying companies) by following Graham's security analysis techniques so successfully that he had so much money to do so. But I'm sure you know that already.

He could have stopped and retired into the sunset in his 30's if he wanted to do so. He was simply more ambitious.
by knpstr
Mon Sep 06, 2021 1:31 pm
Forum: Personal Investments
Topic: Low need to take risk - low allocation to stocks
Replies: 39
Views: 4546

Re: Low need to take risk - low allocation to stocks

UpperNwGuy wrote: Mon Sep 06, 2021 1:03 pm
dbr wrote: Sun Sep 05, 2021 2:36 pm There is always the advice of Benjamin Graham to never hold more than 75% or less than 25% in stocks.

It's really just common sense moderation of the middle.
I agree.
Although his best student does not follow that advice.
by knpstr
Sun Sep 05, 2021 6:28 pm
Forum: Personal Investments
Topic: Low need to take risk - low allocation to stocks
Replies: 39
Views: 4546

Re: Low need to take risk - low allocation to stocks

Volatility is FAR from the only risk.
If you plan on investing for a couple of more decades it is basically not a risk at all and actually helps someone while they DCA.
by knpstr
Sat Sep 12, 2020 11:01 am
Forum: Personal Finance (Not Investing)
Topic: Projected inflation rate and equity rate of return
Replies: 27
Views: 1841

Re: Projected inflation rate and equity rate of return

2010-2019 was supposed to be the "lost decade" of low returns. People were saying we were in for 4% returns on equities. Fast forward for the 10 years Jan. 2010 through Dec. 2019 well we had 13.43% nominal returns, 11.47% inflation adjusted (according to portfolio visualizer on VTI). 2010 to 2019 had a CAGR of about 13.3% for the total US equity market, so roughly 13% nominal annual growth. Average yearly inflation was sub 2% for that time frame. We averaged >10% yearly real growth in the last decade. Yes perhaps. I put into the website 2010 through 2019. Not to 2019, for VTI. I didn't make these numbers up but just put them in the website. I get that. I am saying that we didn't have 4% real returns from 2010 through 2019. Your o...
by knpstr
Fri Sep 11, 2020 8:57 am
Forum: Investing - Theory, News & General
Topic: Index Funds - Dangerous?
Replies: 46
Views: 4482

Re: Index Funds - Dangerous?

Hi guys, I ran across this video of a YouTuber talking about the dangers of index funds: https://youtu.be/W8ZfdKYpKbM He also mentioned that out of the top 5 companies in the sp 500 in 2009, only Microsoft right now is still there, the rest have declined. I thought that was a bit scary 😮 What are your thoughts on the video? Disclaimer: I didn't watch the video. But to respond to the "scary" thought. If the top 4 declined, and the index is higher today than 2009, that means the old top 4/5 were replaced with a "better" top 4/5. That's good news, not scary. Beyond that: The idea of "indexing" is that originally the DJIA index, now more so the S&P 500 index, was/is considered as the "standard" for &...
by knpstr
Fri Sep 11, 2020 8:03 am
Forum: Personal Consumer Issues
Topic: Cardio alternatives to treadmills?
Replies: 115
Views: 10210

Re: Cardio alternatives to treadmills?

So think of how our ancestors did it - barefoot - over longer distances. The path I walk is slightly undulating, but I just have an easier time staying in posture; but to think of it, I'm outside in a park with natural areas and trees as opposed to a treadmill inside staring at a wall or looking down at the dashboard. A lot of people on treadmills tend to look at the dashboard, or a phone/iPad, therefore looking down rather than staring straight ahead with a slightly hunched posture. The concrete surface is maybe not more natural, but walking outdoors on it is more natural to me than a treadmill going nowhere inside a house. Mount a TV on the wall eye level, open a window. When it comes to your LBP it isn't the lack of "fresh air and ...
by knpstr
Fri Sep 11, 2020 8:01 am
Forum: Personal Finance (Not Investing)
Topic: Projected inflation rate and equity rate of return
Replies: 27
Views: 1841

Re: Projected inflation rate and equity rate of return

SDLinguist wrote: Thu Sep 10, 2020 7:24 pm
knpstr wrote: Thu Sep 10, 2020 9:53 am 2010-2019 was supposed to be the "lost decade" of low returns. People were saying we were in for 4% returns on equities.

Fast forward for the 10 years Jan. 2010 through Dec. 2019 well we had 13.43% nominal returns, 11.47% inflation adjusted (according to portfolio visualizer on VTI).
2010 to 2019 had a CAGR of about 13.3% for the total US equity market, so roughly 13% nominal annual growth. Average yearly inflation was sub 2% for that time frame. We averaged >10% yearly real growth in the last decade.
Yes perhaps. I put into the website 2010 through 2019. Not to 2019, for VTI. I didn't make these numbers up but just put them in the website.
by knpstr
Thu Sep 10, 2020 3:52 pm
Forum: Personal Consumer Issues
Topic: Cardio alternatives to treadmills?
Replies: 115
Views: 10210

Re: Cardio alternatives to treadmills?

Not sure how walking on a treadmill would be less forgiving or less natural than "power walking" on flat concrete. Could be a shoe/arch problem translating to lower back pain. Flat surfaces, whatever material they may be, are not natural (the reason why shoes have arches built up in them) to be on all the time. The most "natural" way to walk would be barefoot (not "barefoot" shoes) on ground that has not been touched by grading. You'll have to watch out for sprained ankles and lacerations from twigs/sharp rocks/snake bites/etc. Plenty of undulations for your foot to conform to and for your lower leg ankle to compensate/stabilize. Chiropractors have been shown to be more cost effective in treating/reducing chron...
by knpstr
Thu Sep 10, 2020 9:53 am
Forum: Personal Finance (Not Investing)
Topic: Projected inflation rate and equity rate of return
Replies: 27
Views: 1841

Re: Projected inflation rate and equity rate of return

2010-2019 was supposed to be the "lost decade" of low returns. People were saying we were in for 4% returns on equities.

Fast forward for the 10 years Jan. 2010 through Dec. 2019 well we had 13.43% nominal returns, 11.47% inflation adjusted (according to portfolio visualizer on VTI).
by knpstr
Tue Sep 08, 2020 10:24 am
Forum: Investing - Theory, News & General
Topic: Is it really passive index if S&P actively excludes Tesla?
Replies: 160
Views: 14308

Re: S&P snubs Tesla

Helo80 wrote: Tue Sep 08, 2020 8:45 am Is Tesla an iPhone on wheels? Yes
The iPhone is essentially a ~$1T business. (roughly 50% more or less of apple's business)
Tesla would love to be an iPhone on wheels.

I don't think it has been proven to be such. Nearly all new vehicles are "iPhones on wheels" in my opinion. For example, we recently bought an Explorer ST and that has a LOT of tech in it.

What differentiates Tesla is it being all electric.
The "self-driving" (while advancing) is still a bit of a gimmick at this point.
by knpstr
Thu Sep 03, 2020 4:15 pm
Forum: Investing - Theory, News & General
Topic: Bear Cub Smells Bubble
Replies: 406
Views: 36577

Re: Bear Cub Smells Bubble

Top 5 companies in the S&P500 now make up 25%, not concerning to anyone? Has happened during huge bubbles near the peak No. If I was a market timer I'd almost have surely sold very early this year when the pandemic was coming in full force, would still be sitting on the sidelines (pandemic is still "here" right, why buy now?). Vanguard says I'm up ~20% from this time last year. Buy and hold by DCA'ing every week, requires zero effort and as the peaks and valleys come I buy more shares low than I buy high. Simple and effective. Many many decades of investing to go in my life (God willing), so a correction/crash in the next few years is of no concern. Fair enough, lets see what happens in the next decade For people who can dive...
by knpstr
Thu Sep 03, 2020 6:52 am
Forum: Investing - Theory, News & General
Topic: Bear Cub Smells Bubble
Replies: 406
Views: 36577

Re: Bear Cub Smells Bubble

Top 5 companies in the S&P500 now make up 25%, not concerning to anyone? Has happened during huge bubbles near the peak Gambling 25% of one's worth (in the case of 100/0 investors) on five individual stocks is typically discouraged on this board. Gambling 25% of one's money on individual stocks period is discouraged. Yet when those 5 stocks are part of the SP500 it is accepted. This seems somewhat funny. Your first sentence makes an assumption that is false for many if not most. 100% of my net worth is not in my 100/0 portfolio. Other than that, the nature of index fund investing is the investor doesn't make any individual stock decisions, they just cast their lot in with the market at large and accept the results trying to do this at ...
by knpstr
Thu Sep 03, 2020 6:49 am
Forum: Investing - Theory, News & General
Topic: Bear Cub Smells Bubble
Replies: 406
Views: 36577

Re: Bear Cub Smells Bubble

nzahir wrote: Wed Sep 02, 2020 5:44 pm Top 5 companies in the S&P500 now make up 25%, not concerning to anyone?

Has happened during huge bubbles near the peak
No. If I was a market timer I'd almost have surely sold very early this year when the pandemic was coming in full force, would still be sitting on the sidelines (pandemic is still "here" right, why buy now?). Vanguard says I'm up ~20% from this time last year. Buy and hold by DCA'ing every week, requires zero effort and as the peaks and valleys come I buy more shares low than I buy high. Simple and effective.

Many many decades of investing to go in my life (God willing), so a correction/crash in the next few years is of no concern.
by knpstr
Wed Sep 02, 2020 3:22 pm
Forum: Investing - Theory, News & General
Topic: Bear Cub Smells Bubble
Replies: 406
Views: 36577

Re: Bear Cub Smells Bubble

Corona crisis: Fed pounces massively and very quickly with unprecedented action. They took massive steps incredibly quickly flooding the system with liquidity. My understanding is that this works in the short run, but it's just a bridge to economic recovery. If the economy doesn't recover at the end of this bridge, then we still fall down the cliff because this bridge can't be extended indefinitely - the Fed can't prop up the asset prices enough in the long run. We still need to get over this COVID recession within a reasonable amount of time. Hopefully, there will be a good vaccine soon. It's important to remember the only thing that was ever holding the economy back (this time) was the government ban on working. We came from a red hot ec...
by knpstr
Mon Aug 31, 2020 10:02 pm
Forum: Investing - Theory, News & General
Topic: Bear Cub Smells Bubble
Replies: 406
Views: 36577

Re: Bear Cub Smells Bubble

Stocks in ‘Euphoric Land’ With Nasdaq 100 Surging Past 12,000 https://www.bloomberg.com/news/articles/2020-08-31/stocks-in-euphoric-land-with-nasdaq-100-surging-past-12-000?srnd=premium "A sentiment gauge, Citigroup’s panic/euphoria model, which tracks metrics from options trading to short sales and newsletter bullishness, is having its longest run of extreme bullishness since the early 2000s. At around 1.1, the current reading is almost three times the level that denotes euphoria...Investors are willing to pay up for earnings, sending the S&P 500’s price-earnings ratio to the highest level in two decades...While a dovish Fed offers support to the market, it’s worth noting that similar readings in the panic/euphoria model historic...
by knpstr
Thu Aug 27, 2020 1:54 pm
Forum: Investing - Theory, News & General
Topic: Bear Cub Smells Bubble
Replies: 406
Views: 36577

Re: Bear Cub Smells Bubble

Ultimately interest rates and valuations are intertwined. And with the historic low interest rates we have today we should see historic high valuations. Except for Europe and Japan and much of the rest of the developed world markets, where interest are as low or lower than US rates, yet valuations are 1/3 to 1/2 those of US stocks. There are other factors. But if nothing else changed and Europe and Japan had higher rates than they do today, their valuations would (or should) go down accordingly. Interest rates and valuations aren't so closely related that x% interest rate must always equal $y valuation. So what is the rationale for Japan having high double digit valuations in the 1980s when interest rates were in the 4-8% range? And intere...
by knpstr
Thu Aug 27, 2020 6:52 am
Forum: Investing - Theory, News & General
Topic: Bear Cub Smells Bubble
Replies: 406
Views: 36577

Re: Bear Cub Smells Bubble

asif408 wrote: Wed Aug 26, 2020 3:26 pm
knpstr wrote: Wed Aug 26, 2020 1:06 pm Ultimately interest rates and valuations are intertwined. And with the historic low interest rates we have today we should see historic high valuations.
Except for Europe and Japan and much of the rest of the developed world markets, where interest are as low or lower than US rates, yet valuations are 1/3 to 1/2 those of US stocks.
There are other factors.
But if nothing else changed and Europe and Japan had higher rates than they do today, their valuations would (or should) go down accordingly.

Interest rates and valuations aren't so closely related that x% interest rate must always equal $y valuation.
by knpstr
Wed Aug 26, 2020 1:06 pm
Forum: Investing - Theory, News & General
Topic: Bear Cub Smells Bubble
Replies: 406
Views: 36577

Re: Bear Cub Smells Bubble

Where are you finding the data to make statements 6 and 7?

It seems more people are piling into stocks ever since pensions have been going the way of the dodo.
I don't doubt that at anytime people are day trading, but how do you know it is more so than usual?

Ultimately interest rates and valuations are intertwined. And with the historic low interest rates we have today we should see historic high valuations.
by knpstr
Tue Aug 25, 2020 3:18 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

smitcat wrote: Tue Aug 25, 2020 3:08 pm How do these numbers work?
"To recap: 20x income or 33x expected expenses whichever is higher is a nice rule of thumb for high earners with currently low expenses when ballparking a target amount for FIRE.
Since you cannot, having a 2nd sanity check isn't a bad thing to have."

How does the sanity check work with these numbers:
$600K gross income
$90K expenses

20 X $600K gross = $12 Million
33 X $90K expenses = $2.97 Million
Using the 'higher' number means they need $12 million in savings - how rediculous is that.
You never know, that family of 4 turn into a family of 24.
by knpstr
Tue Aug 25, 2020 3:15 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

If you want to use median income of family of 4 for your target of ideal expenses that is fine.... but you're still ultimately estimating expenses. Nope. It's not estimating expenses at all. It's having a desired income goal for retirement and just LBYM. Have 5 kids instead of 2? Expenses will be higher so you'll need to be more frugal. Have no kids? No financial worries and will likely have enough to leave behind to some charity. Or just blow the extra every year on living large. It's the same thing! In "retirement" you don't budget to "save for retirement" so income=expenses! If you want to estimate that you'll have a family of 4 just in case, that is fine, but your still estimating future.... expenses! In the same wa...
by knpstr
Tue Aug 25, 2020 3:04 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

It's not my number, it's from Sam. Reading the links to past blog posts it appears based largely on NW targets by age and happens to be the average NW target for age 60 and an expected 80% of final income for retirement expenses planning . I'm guessing on 80% part since he doesn't explicitly say anything about that other than: "If you’re used to making $50,000 a year for your working career, then you should be use to making a similar or less amount during retirement. Same goes for those who make more." So it's based on income because the basis of estimate is target net worth by age and income. Prior posts talk about NW. https://www.financialsamurai.com/how-much-should-my-net-worth-or-savings-be-based-on-income/ That's likely how ...
by knpstr
Tue Aug 25, 2020 1:34 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

It's not my number, it's from Sam. Reading the links to past blog posts it appears based largely on NW targets by age and happens to be the average NW target for age 60 and an expected 80% of final income for retirement expenses planning. I'm guessing on 80% part since he doesn't explicitly say anything about that other than: "If you’re used to making $50,000 a year for your working career, then you should be use to making a similar or less amount during retirement. Same goes for those who make more." So it's based on income because the basis of estimate is target net worth by age and income. Prior posts talk about NW. https://www.financialsamurai.com/how-much-should-my-net-worth-or-savings-be-based-on-income/ That's likely how h...
by knpstr
Mon Aug 24, 2020 1:23 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

How does your income rule work with these numbers then..... "20x income isn’t perfect but for high earners it’s safer than 25x expenses." How does that work for a couple with these %'s then? - 45% gross is taxes - 35% gross is savings - 20% of gross is expenses while working - 15% of gross income when retired Sorry, your question made no sense and doesn't appear related to the quoted text in any manner so got no answer and will continue to get no answer as asked. To recap: 20x income or 33x expected expenses whichever is higher is a nice rule of thumb for high earners with currently low expenses when ballparking a target amount for FIRE. If you're trying to catch me in some weird corner case don't bother. 20x income is a double c...
by knpstr
Mon Aug 24, 2020 6:39 am
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]

nigel_ht wrote: Sun Aug 23, 2020 10:50 pm $30K a year off $1M is not way to much money. Neither is $60K with $2M.
What I was saying is $1M is in all likelihood way too much money if you just want $30K a year and adjusted for inflation.

The idea that 3% is some kind of wildly high withdrawal rate is nonsense. It is ultra-conservative already.
by knpstr
Mon Aug 24, 2020 6:36 am
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]

It is all just opinions.I say live your life financially in a way that you sleep well at night.Whatever you are comfortable with risk wise is personal. I really do not see the problem with being more cautious with your projections when choosing to retire at a young age.I am 68 and have had 4 major unexpected life events in the past 3 years.Our current pandemic should be a warning to those who believe they have a good grasp of projecting out 40 or 50 years of life. My experience in life tells me most people believe what they want to believe,especially if it is about something they want. Overly conservative for sure, but I sleep well. I think 3 pct is great for a normal retirement age and probably just fine for a younger retirement. There is...
by knpstr
Sun Aug 23, 2020 7:36 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]

You can disagree without making up ridiculous things that were not said or implied. But that is ok. I think it is a reasonable thing for a young retiree to figure what they think they need to last for 40 ,maybe 50 years and add a cushion. I guess it is easy for some to predict 40 years of spending,expenses and every other unknown. Agree or not,the ideal would be to retire with enough money to live on fixed income.The reality for most is that is not possible.My main point has been if you make a CHOICE to retire at a young age, do not base it on the stock market HAVING to do wonderful things for obvious reasons. Like I said,Bernstein has a great opinion on this which I agree with. If my son wanted to retire at 45 and said he can do it using ...
by knpstr
Sat Aug 22, 2020 7:29 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]

hoops777 wrote: Sat Aug 22, 2020 4:42 pm
randomguy wrote: Sat Aug 22, 2020 3:06 pm The thing is most people aren't close to the buzzer. They are still 1-1.5 quarter from the end of the game for most people. The prevent D approach works until it doesn't.... Obviously all analogies have limits but with 20-40 year time frames it is really hard to know if you have won the game or if you just have a good lead.
Thus the reason to make sure you have a lot more money than you thInk you need before you empty the bench at a younger age.
Yup. So whatever money you think you may need at 100% fixed income, double it. And once you double it, that is the new number you think you need, so double it. And once you double it, that is the new number you think you need, so double it, etc
by knpstr
Fri Aug 21, 2020 9:31 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

zaboomafoozarg wrote: Fri Aug 21, 2020 8:35 pm That seems pretty close to the audience of this forum over the last 10 years :D

Of which I am admittedly one. This place has helped me make and save money, but the more I get the more I worry.

Around every corner lurks a black swan just waiting to decimate me.
Mo money, mo problems.
by knpstr
Fri Aug 21, 2020 9:29 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]

You are 100 pct correct. I purchased a couple myga’s and there is some risk there. I have some GO muni’s, same there. I have a good amount of IBonds which have, I guess, no risk minus the end of the world.I have a lot of CD’s that have reinvestment risk, which is why I bought the myga’s to help with. Risk is everywhere in varying degrees. Figure out your needs and make your choice. The real problem now is not FIRE it is retired people who are being forced to take more risk. Yes. Also one must define what risk is, since Warren Buffett, for example says, for an investor with a long-term investment horizon (10+ years), that bonds are far riskier than stocks. Seems to me it is less a question of taking on "more risk", and more a ques...
by knpstr
Fri Aug 21, 2020 6:42 am
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]

Yes. Be able to live on fixed income investments. I am talking about a person who has a CHOICE to retire.With today’s fixed income return it is a lot more difficult of course. As I said earlier, better make sure you have a lot more money than you think you will need. Put it under the mattress amount of money or hope that stocks perform well and do not have a lost decade or more. I am in the minority of course, but I look at the world of today and I do not put much faith into historical returns. I completely understand the majority of people need to invest in stocks and hope for the best. I like William Bernstein and his won the game philosophy. Just make sure the game is won and there is no chance for a Hail Mary or a 3 at the buzzer. The ...
by knpstr
Thu Aug 20, 2020 3:15 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]

hoops777 wrote: Thu Aug 20, 2020 3:02 pm Certainly not needing to draw 3 or4 pct of your portfolio and choosing to retire early, choosing being the key word.
I would say having your expenses covered so that you can live a comfortable life without having to depend on the stock market. I understand that I am being ultra conservative and that is my choice. I personally would not fill comfortable retiring early knowing that stocks have to return x amount or I am in trouble. I also understand historically my view is not correct and 99.9 pct here disagree which is fine.
What do you mean "without depending on the stock market?". Do you mean with no stock investments and all money in bonds?
by knpstr
Thu Aug 20, 2020 2:45 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]

hoops777 wrote: Thu Aug 20, 2020 2:34 pm
marcopolo wrote: Thu Aug 20, 2020 1:36 pm Does the uncertainty ever go away?
At 70, you may still have 20+ years to live. As you say, who knows what can happen? Should one just keep working until they die?
Never said that. I retired unexpectedly but happily at 65.
My point is the younger you are the more risk you take retiring early so make sure you are you are fianciallly bulletproof before you do it. Trying to do it arguing if you can pull it off with a 3.5 or 4 pct withdrawal rate at 45 is not that. Just my opinion.
In the presence of an uncertain future, what does it mean to be "financially bulletproof"?
by knpstr
Thu Aug 20, 2020 2:19 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

If you don't know if $97.5k is the right number, then How can you possibly know if your $3M is even close to the right number? What if your expense end up double that amount? How does considering income help in any way? It doesn't. Thinking in terms of income just adds more steps to getting to your expenses. He is in a mental block. One can arbitrarily decided that it is better to have 20x income instead of 33x expenses when 20x income > than 33x expenses. Well "duh". If 20x income = 40x expenses, then 40x expenses is "safer" than 33x expenses. That much is obvious. Is it necessary for 40x? Maybe, maybe not. Ultimately it all boils down to WR which is how much you spend out of your nest egg. That means your expenses. Ba...
by knpstr
Thu Aug 20, 2020 1:17 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]

... Point being, argue all you want but the best laid plans are subject to so many unknowns the more you extend the years. So before you decide to quit that job because some calculator says you can, just make sure you have way more money than you think you need. Generally speaking this is what those calculators do, they give a "success rate" and those with high success rates show that in all likelihood a person is going to end up with WAY more than they started with (obviously success is not guaranteed). Beyond that, if extremely large expenses come up, you may have to cut back on other luxuries for a while, just like people we all do while we are still working and something comes up. That's called life adapting to new situations...
by knpstr
Thu Aug 20, 2020 12:14 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

Everyone knows their spending can change year to year. You aren’t making any sense. It doesn’t matter how much you earn, it matters how much you spend. I agree. He has himself trapped in some kind of confused thinking. Or maybe I'm not confused and just believe differently based on life experiences? Nah. Easier to just insult someone else and feel superior. Do you actually know what your expenses will be in 30 years? Because I don't think most folks will sucessfully gauge that any more accurately than they can gauge what the market will be doing in 30 years. First of all, it's the same thing. From, 20x income one can figure how many Xx expenses they have. It is the same thing worded differently. For example, if you have a 40% savings rate ...
by knpstr
Thu Aug 20, 2020 8:52 am
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

geerhardusvos wrote: Thu Aug 20, 2020 8:24 am
nigel_ht wrote: Thu Aug 20, 2020 6:52 am 20x income isn’t perfect but for high earners it’s safer than 25x expenses.

33x sounds like “enough” but not if your expenses double.
Everyone knows their spending can change year to year. You aren’t making any sense. It doesn’t matter how much you earn, it matters how much you spend.
I agree. He has himself trapped in some kind of confused thinking.
by knpstr
Thu Aug 20, 2020 7:29 am
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

nigel_ht wrote: Thu Aug 20, 2020 6:52 am 20x income isn’t perfect but for high earners it’s safer than 25x expenses.
This is true so long 20x income > than 25x expenses.

I'd argue tracking expenses is much more indicative what you'll "need", however if nothing else it "standardizes the language". So 20x income is effectively meaningless by itself because of that income how much do you need to spend? You need to estimate it and that is to say estimate your expenses.

That is to say the safety comes from the margin of how much you have versus how much you need. You need to know (estimate) how much you need, that is to say you need to estimate expenses. And therefore it is common to say X times expenses.
by knpstr
Wed Aug 19, 2020 9:27 pm
Forum: Investing - Theory, News & General
Topic: Is picking and choosing indexes a bad idea?
Replies: 8
Views: 1146

Re: Is picking and choosing indexes a bad idea?

Yes, it would be "anti-bogle" to try to market time individual indexes hoping to buy low then sell them high, like some do with individual stocks. Market timing is market timing no matter the security. It is a bad strategy. Not if rebalancing is the goal, in which case buying low and selling high is the point of the exercise. Many people choose to hold partial indexes of the whole index (e.g., SP500 index and extended market, or large, mid, and small indexes, instead of Total Market...or Total Market and Total International instead of Totla World) because they want to hold different proportions than the fill index, and they benefit from rebalancing. Yules Yeah, the OP isn't talking about re-balancing a portfolio here. He is askin...
by knpstr
Wed Aug 19, 2020 3:33 pm
Forum: Personal Consumer Issues
Topic: Anyone noticed La-Z-Boy quality has declined?
Replies: 31
Views: 11736

Re: Anyone noticed La-Z-Boy quality has declined?

sport wrote: Wed Aug 19, 2020 10:21 am We have a La-Z-Boy rocker recliner we bought in 1971! The upholstery and mechanism are still in excellent condition. We paid $99 for it at a department store warehouse sale.
Interestingly, prices are about the same. $99 in 1971 is equivalent to $644 today.

We bought two la-z-boy rocker recliners in leather recently and they were $680 each (including tax and delivery).

Super comfortable chairs.
by knpstr
Mon Aug 17, 2020 6:44 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

oldfort wrote: Mon Aug 17, 2020 6:28 pm Well, regardless 61 years is a lot less than 200 years, so if anything, you've vindicated my original point. It's nonsensical to pretend the money will or should last 200 years.
You said the same thing the OP of this side discussion said.
Well done.
by knpstr
Mon Aug 17, 2020 6:12 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

Assume 3.5% inflation and a 0.5% withdrawal, you have an effective withdrawal rate of 4%. If the money is literally under a mattress, it's gone in 25 years. 25 years might be the length of an average retirement, but it's nowhere near 200 years. 0.5% is ridiculously conservative for any diversified portfolio. Expecting money literally under the mattress to last 200 years is absurd in the other direction. I realize you are arguing for the sake of argument, but just to correct your mistaken math: The effective withdrawal rate is not 4% of the overall portfolio, the adjustment is 0.5%+adjusting for inflation on that amount every year. Plugging into Excel a $200 portfolio assuming 3.5% inflation and .5% WR you will have 60 years of withdrawals ...
by knpstr
Mon Aug 17, 2020 3:48 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

oldfort wrote: Mon Aug 17, 2020 2:35 pm $1 under the mattress in 1920 would be worth less than ten cents today in purchasing power. Pretending inflation doesn’t exist is totally nonsensical.
"If you stick the money under a mattress, a 0.5% withdrawal rate lasts for 200 years. Even if you account for inflation, it sounds overly conservative."

There is the original comment that started this back and forth. Hope that helps you out.

There are also no people that retired in 1920 still living. So that seems to be the more pressing "problem" with our 200 years worth of expenses.
by knpstr
Mon Aug 17, 2020 2:24 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

How can you completely ignore taxation? If taxes eat 1% each year, then your effective withdrawal rate is 1.5%: 0.5% to you plus 1% to Uncle Sam. How would taxes eat 1% If you are only spending 0.5%? That would be some crazy high effective tax rate! Assuming your money is all in taxable accounts, you pay taxes on interest and dividends, even without realizing any capital gains. Actively managed mutual funds can generate a lot of capital gains. Your tax rate is your tax rate on income, not spending. If my mattress is generating taxable income, then I think my wife and I need to have a conversation... A hypo where money is literally under a mattress is ridiculous, unless you're part of the Soprano family. Again, that's the point. That even m...
by knpstr
Sun Aug 16, 2020 8:27 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

Stock indices do not equal the world economy. The indices do not represent all businesses or production, and in fact are very top heavy. Only a handful of firms need to fail for the indices to fail to provide the return investors may need from them, which I would consider a failure. Additionally, the indices could fail to provide needed return merely by being overvalued at the time the investor invests. Moreover, a change in governance could result in indices going to zero without production going to zero. Although this is not a likely scenario, it has happened before and disproves your assertion that "That means the whole world went out of business and is no longer producing anything". In stock indices as businesses fail/decline...
by knpstr
Sun Aug 16, 2020 7:44 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

If stocks don’t go up in the long term, what are you doing on this forum? I am following Step 4 of the Bogleheads investment philosophy: Diversify . So you are diversifying away from the most powerful and primary Boglehead asset (equity index funds)? How do you expect this to be received by Bogleheads? The forum's namesake and many prominent posters have suggested portfolios with 20-50%+ in assets other than equity index funds. It has been received fine. Edit: let me note that I have >60% in US and non-US equity index funds because they are the best show in town as far as liquid investments go, but I think the risks are real, and they may underperform or fail over my investing life. I think it's important for us to be honest about the risk...
by knpstr
Sun Aug 16, 2020 6:13 pm
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

So with your assumption that technological advancements will continue, you think a 4.5-5% withdrawal rate will be good? Again, can you provide data on why you think the safe or perpetual withdrawal rates will go down with these continued incredible technological advancements created by public companies ? Emphasis mine -- this is the one bad assumption that changes the whole analysis. Of course I cannot provide any data as to what will happen in the future, but I think it likely that the bulk of new innovations will come from privately-held ventures, sole proprietors tinkering away in their garages, and open source community projects. Some of the disruptors will profit, others won't, but publicly traded firms are more likely to be the disru...
by knpstr
Sun Aug 16, 2020 3:17 pm
Forum: Personal Investments
Topic: Talk me out of Covid 19 timing
Replies: 119
Views: 9695

Re: Talk me out of Covid 19 timing

Shouldn't the fact that you want to be talked out of it be evidence enough to you that you shouldn't do it?
by knpstr
Sun Aug 16, 2020 9:36 am
Forum: Investing - Theory, News & General
Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Replies: 419
Views: 32350

Re: The 0.5% Rule (SWR)

What's the point? Why even plan if that ends up being the result? It's as ludicrous as Suzy Orman saying you need 6$million to retire. Seriously if you get below 3% then people are just gonna blow it off, spend it all on cruises, claim SS early and hope for the best, move back in with the kids, [political comment removed by admin LadyGeek] . Financial Samurai agrees with Suzy Orman. https://www.financialsamurai.com/suze-orman-is-right-you-need-5-million-or-more-to-retire-early/ He's doing early retirement in the San Francisco Bay area without cutting back. If that's not your profile, it might not be for you. Actually, he wouldn't agree anymore according to article in OP. His article you linked above assumes 3-5% SWR, he now says 0.5% SWR. ...