Search found 44008 matches

by dbr
Sat Mar 25, 2023 7:31 pm
Forum: Personal Investments
Topic: Withdrawl rate % change midway through retirement?
Replies: 13
Views: 1211

Re: Withdrawl rate % change midway through retirement?

Note that something resembling an actual planner distinct from an academic study would allow one to insert options for increasing or decreasing spending, increasing or decreasing cash income, or add or removing lump sums from the portfolio. Even a simple tool like FireCalc has those options on the "Other Income/Spending" tab and the "Portfolio Changes" tab. A typical example concerning other income would be starting Social Security some years after retirement. Note Safe Withdrawal Rate is not a plan but a set of studies that help one to understand how things work out in the balance between spending and a portfolio keeping up with the withdrawals. A real retirement would hardly want to be hamstrung by following a rigid wi...
by dbr
Sat Mar 25, 2023 11:43 am
Forum: Investing - Theory, News & General
Topic: How much cash are you holding at sub-optimal interest rates?
Replies: 37
Views: 2323

Re: How much cash are you holding at sub-optimal interest rates?

All of my cash is at low rates. There is so little of it that the rate on it is not relevant.
by dbr
Sat Mar 25, 2023 10:26 am
Forum: Investing - Theory, News & General
Topic: VXUS and yield
Replies: 7
Views: 842

Re: VXUS and yield

Issues of what yield is aside, yes it is roughly true that you will be paid out a dividend of about that amount of money. You could go to Portfolio Visualizer and look at the "income" over the years for a fixed dollar amount invested. For $10,000 invested in 2012 and taken out as a withdrawal the "income" has ranged from $312/year to $481/year. The CAGR over that period with dividends removed has been 2.49% and with dividends reinvested 5.50%. The 2022 income was $251 starting with a $10k investment for a ratio of 2.51%. Of course that $10k with the dividends withdrawn had fallen to $8136 by year end. On that price the ratio is 3.1%. Honestly, I would encourage thinking of the value of an investment being best tabulated ...
by dbr
Sat Mar 25, 2023 9:27 am
Forum: Investing - Theory, News & General
Topic: Risk of being out of the market
Replies: 53
Views: 5366

Re: Risk of being out of the market

Personally I view this as a foolish worry. Some days the markets go up 2%, some days go down, and a lot in between. If I had to guess I'd say over the last year the market has had more down days than up days although normally it is the other way. Are you talking millions where 1% would be $10K per million? Or 100K where 1% is $1K? This is one of the things where people remember missing out on profits and forgetting about losses. According to this one web site for the SP500 - https://einvestingforbeginners.com/stock-market-days-vs-percentage/ The percentage of stock market days up from ‘96 – 2016 was 53.3%. The percentage of stock market days down was 46.7%. Updating that further, the percentage of stock market days up (from 2016 – 2021) wa...
by dbr
Sat Mar 25, 2023 8:23 am
Forum: Personal Investments
Topic: Asking for Clarification [Wellington vs. Wellesley]
Replies: 9
Views: 966

Re: Asking for Clairification

I have been looking at Wellington and Wellesley for a few years. If one considers distributions Wellington pays higher than Wells but Welles is an income fund. What am I not understanding? are you sure about that? Wellington yield is 2.66% (sec yield, source: https://investor.vanguard.com/investment-products/mutual-funds/profile/vwenx#price) Wellesley yield is 3.28% (source: https://advisors.vanguard.com/investments/products/vwiax/vanguard-wellesley-income-fund-admiral-shares#overview) also dividends over 2022 were: Wellington: $1.22454/share Wellesley: $1.924/share it's possible that dividends for Wellesley were lower than Wellington years ago when interest rates on bonds were 1% or less prior to last year when they went from 1% to 4% ove...
by dbr
Fri Mar 24, 2023 1:10 pm
Forum: Personal Investments
Topic: Wellington VWENX for income in retirement
Replies: 58
Views: 4593

Re: Wellington VWENX for income in retirement

Your post prompted me to look at the numbers. In 2022 Wellington (VWENX) delivered $5.489825 per share to investors. Vanguard balanced index fund (VBIAX) delivered $1.121543 per share to investors Except that per-share income isn't relevant unless the share prices are equal. So what was the difference in dividend yield, per dollar (well, maybe per $50k dollars for example, since that's the Wellington share-class minimum)? The data on that is that 12/31/22 VWENX sold at $66.33. The 2022 dividends were $1.553/share and there was a cap gains distribution of $3.937. VBIAX sold at $39.65 on 12/31/22 with dividends of $0.765 and a capital gains distribution of $0.357. So the dividend yield based on year end price for VWENX was 2.34% Based on yea...
by dbr
Fri Mar 24, 2023 12:15 pm
Forum: Personal Investments
Topic: Wellington VWENX for income in retirement
Replies: 58
Views: 4593

Re: Wellington VWENX for income in retirement

Your post prompted me to look at the numbers. In 2022 Wellington (VWENX) delivered $5.489825 per share to investors. Vanguard balanced index fund (VBIAX) delivered $1.121543 per share to investors Except that per-share income isn't relevant unless the share prices are equal. So what was the difference in dividend yield, per dollar (well, maybe per $50k dollars for example, since that's the Wellington share-class minimum)? The data on that is that 12/31/22 VWENX sold at $66.33. The 2022 dividends were $1.553/share and there was a cap gains distribution of $3.937. VBIAX sold at $39.65 on 12/31/22 with dividends of $0.765 and a capital gains distribution of $0.357. So the dividend yield based on year end price for VWENX was 2.34% Based on yea...
by dbr
Fri Mar 24, 2023 8:07 am
Forum: Investing - Theory, News & General
Topic: Bernstein on TIPS and T-bills
Replies: 99
Views: 9047

Re: Bernstein on TIPS and T-bills

"A bond fund manager recently related to me his difficulty in figuring out the role of TIPS in his portfolios. After fumbling for a reply, I realized that he was right: like Social Security, they don’t occupy a formal slot in most folks’ asset allocation. Rather, they’re an excellent, though still imperfect, supplement to Social Security. In the same way that most retirees don’t capitalize their monthly government checks into the bond component of their portfolios, TIPS should be kept mentally separate from the policy asset allocation as well." Yep. That's the paragraph I've sort of zoned in on as well. As a soon to be retiree I 100% agree with "...they're an excellent, though still imperfect, supplement to Social Security&q...
by dbr
Fri Mar 24, 2023 7:40 am
Forum: Personal Investments
Topic: Wellington VWENX for income in retirement
Replies: 58
Views: 4593

Re: Wellington VWENX for income in retirement

Is this a reasonable plan? What am I overlooking? Thanks. I think it might frustrate you to be selling stocks at a time when they're down 30% but bonds are up 10%. The recent correlation in performance won't always be the case. Separating the asset classes would let you choose what you want to sell. Of course, "up" and "down" is relative and nobody really knows what up or down should be compared to. There have been some discussion of what's "income" in this thread, and my take is that dividends from the fund are income, but capital gains aren't. The IRS has its own view of course but when you compare other fund yields to Wellington, I'd suggest only looking at dividends. I could add a couple of definitional co...
by dbr
Thu Mar 23, 2023 7:53 pm
Forum: Personal Investments
Topic: Wellington VWENX for income in retirement
Replies: 58
Views: 4593

Re: Wellington VWENX for income in retirement

In my IRA I have $445K in bond funds VWETX (long term investment grade) and VUSUX (long term treasuries) that I am thinking about exchanging for VWENX Wellington to generate more income (e.g. in 2022 VWENX would have generated $72K in dividends and cap gain distributions vs the $17K in dividends from VUSUX+VWETX). Is this a reasonable plan? What am I overlooking? Thanks. The idea that obtaining income by taking withdrawals from a set of investments requires that those investments deliver those withdrawals in the form of dividends and capital gains distributions is a fundamental misunderstanding of how investing works. It is reasonable to consider what the balance of stocks and bonds in your portfolio might be and what the duration of your ...
by dbr
Thu Mar 23, 2023 7:37 am
Forum: Investing - Theory, News & General
Topic: What is the benefit to the government for issuing inflation-protected securities
Replies: 75
Views: 5883

Re: What is the benefit to the government for issuing inflation-protected securities

It remains a mystery why these are not labeled TIIS Treasury Inflation Indexed Securities. Reading labels on potential investments one might purchase is bad investing because it leads to bad thinking, whether it is the "protected" in TIPS or the "retirement" and date in a target retirement fund, or the "growth" in a growth fund or "value" in a value fund.

The TIPS instrument does what it does given whatever circumstances an investor is in. "Protected" is not a property of investments anymore than "safe" and a lot of other nonsense.
by dbr
Wed Mar 22, 2023 7:36 am
Forum: Personal Consumer Issues
Topic: How not to get scammed when doing wheel alignment for $89 ?
Replies: 20
Views: 1880

Re: How not to get scammed when doing wheel alignment for $89 ?

We got 4 new tires after having the old ones for a few years. The wear on the old tires indicated a little bit of an alignment issue (not terrible though). So after getting the 4 new tires, we obviously want to get the wheels aligned. Why is it that when we take our car to get our wheels aligned for $89, they always tell us that we need an additional $500-$1,200 in repairs? Is there a way to get your wheels aligned without getting ripped off ? If you can find a local competent mechanic that are the kind that don't rip people off then you go there for a second opinion. Such places do exist but most likely are not equipped to do alignments. It is entirely possible there are suspension repairs needed. Those may even be the reason for uneven t...
by dbr
Tue Mar 21, 2023 2:59 pm
Forum: Personal Investments
Topic: Fidelity 401(k) fees
Replies: 13
Views: 1236

Re: Fidelity 401(k) fees

Just be aware that in a handful of states IRAs do not have the non-bankruptcy liability protection a 401k has.
by dbr
Tue Mar 21, 2023 1:28 pm
Forum: Personal Investments
Topic: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?
Replies: 77
Views: 7294

Re: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?

This is from an interview with Bill Bernstein: Bernstein recommends a rule of thumb, based on annuity payouts and spending patterns late in life, that you should have 20-25 times your residual living expenses (after pensions/Social Security) invested solely in safe assets. No stocks at all. This should be in TIPS, SPIAs, and short-term bonds. If you have more than that, that's your “risk portfolio” …: Source: https://www.whitecoatinvestor.com/bernstein-says-stop-when-you-win-the-game/ I do think we can get caught up in semantics. Are cash equivalents the same thing as safe assets? If a short-term bond fund’s NAV has not varied by more than 2% over 30 years, is that a cash equivalent? Or are cash equivalents only assets that can be sold at ...
by dbr
Tue Mar 21, 2023 8:05 am
Forum: Personal Finance (Not Investing)
Topic: Lifetime Income Illustration - Thrift Savings Plan
Replies: 9
Views: 1177

Re: Lifetime Income Illustration - Thrift Savings Plan

Back in the old days Financial Engines was used as a planner for investing to build a nest egg for retirement. It came free with my 401k. The objective and the outcome was presented in the form of annuitization (which hypothetically I would buy at retirement and was a estimate of where my 401k stood). They did not run a planner that would model retirement spending and prospects of success. The idea goes back to a standard view in finance that the obviously superior way to fund retirement is by holding an annuitized income stream. The reluctance of people to annuitize has been known as the annuity puzzle or the annuity paradox. I am not sure what inspired the near universal exploration of draw down models since the early nineties with Bengen...
by dbr
Tue Mar 21, 2023 7:47 am
Forum: Personal Investments
Topic: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?
Replies: 77
Views: 7294

Re: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?

Do you consider TIPs held to maturity a CASH Equivalent? As a generalization of course not because you are hostage to timing. Also the terms and conditions regarding the return offered by TIPS are about as opposite to cash as you can get in fixed income. If you really need cash TIPS would be a terrible substitute. In the context of Bernstein's advice TIPS held to maturity are far superior to cash because they are inflation indexed and you may be fortunate enough to obtain them with a positive real return guaranteed at maturity. I would not confuse the concept of an inflation indexed portfolio income stream with holding cash assets. The next closest thing to holding TIPS to maturity is an actual pension such as Social Security but SS has th...
by dbr
Mon Mar 20, 2023 10:21 pm
Forum: Personal Consumer Issues
Topic: Honda CRV or Suburu Forrester or other SUV
Replies: 125
Views: 14149

Re: Honda CRV or Suburu Forrester or other SUV

Circe wrote: Mon Mar 20, 2023 7:31 pm The only ones I liked were the RAV and the Outback. I had a 2006 Forester that was great and a 2016 Forester that I did not like because of how it handled. I now have an Outback. The Subaru batteries are bad (you get 2 free replacements!) but otherwise a pretty good car. Check out owners' forum where you can get questions answered.
A person may do better replacing those batteries with an AGM type from one of the battery companies. I use an Interstate MTZ-34 in the Outback. It does fit even though they say officially it does not fit.
by dbr
Mon Mar 20, 2023 6:39 pm
Forum: Personal Investments
Topic: VWIAX
Replies: 54
Views: 5279

Re: VWIAX

Let’s just concentrate on my VWIAX situation. If the market value of my holdings in VWIAX is $1,000,000 January 1 and I receive $58,000 in dividends during 2023 that $58,000 will not contribute a single dollar of additional growth to that $1,000,000 no matter the stock price into the future, correct or am I missing something? If on Jan. 1 your VWIAX is valued at $1m, the value of the fund should grow during the year to $1.058m to accommodate the dividends that have been accrued from the stocks and bonds it owns. When the dividends are paid by WI, your fund's value would decrease back to $1.0m. If you reinvested those dividends back into WI, its value goes back up to $1.058m. If you do not reinvest them, you have WI worth $1.0m and cash wor...
by dbr
Mon Mar 20, 2023 6:26 pm
Forum: Personal Investments
Topic: VWIAX
Replies: 54
Views: 5279

Re: VWIAX

So now I am beyond confused. I thought it was settled that dividends do not provide any real benefit. This information turns all that on its head. I am now being told if the fund pays $58,000 in dividends my holdings increase by $58,000. Both scenarios cannot be correct. What is settled is that sorting funds on the dividend yield does not predict a greater return. Some investments deliver a larger part of the return in dividends and less in share price increases that are in addition to dividends. Some investments can deliver the same return in capital appreciation and not in dividend. In the example above there was no capital appreciation after dividends and all the return was in dividends, obviously of great value. A different investment ...
by dbr
Mon Mar 20, 2023 5:35 pm
Forum: Personal Investments
Topic: VWIAX
Replies: 54
Views: 5279

Re: VWIAX

So now I am beyond confused. I thought it was settled that dividends do not provide any real benefit. This information turns all that on its head. I am now being told if the fund pays $58,000 in dividends my holdings increase by $58,000. Both scenarios cannot be correct. What is settled is that sorting funds on the dividend yield does not predict a greater return. Some investments deliver a larger part of the return in dividends and less in share price increases that are in addition to dividends. Some investments can deliver the same return in capital appreciation and not in dividend. In the example above there was no capital appreciation after dividends and all the return was in dividends, obviously of great value. A different investment ...
by dbr
Sun Mar 19, 2023 1:06 pm
Forum: Personal Investments
Topic: Leaving my Fiduciary Advisor
Replies: 41
Views: 2999

Re: Leaving my Fiduciary Advisor

FYI my investing is completely covered by VTI (total stock market US), VXUS (international stock index), SWRSX (intermediate TIPS fund), and the cash in the checking account. I use the Schwab TIPS fund because that account is in a Schwab brokerage link in the 401k and it is lower cost than the Vanguard fund.
by dbr
Sun Mar 19, 2023 11:52 am
Forum: Personal Investments
Topic: Leaving my Fiduciary Advisor
Replies: 41
Views: 2999

Re: Leaving my Fiduciary Advisor

The biggest issue that one has to weigh when considering whether to enter into an Advisory relationship or to stay in an Advisory relationship is the ongoing fees. I work in tax preparation and as I look at client 1099 statements from their brokerage, I am amazed at the fees that people pay. It really adds up, particularly when the portfolio balances get larger and larger. I actually am pro-Advisor and still believe that most people would benefit from an Advisory relationship. However, the ongoing fees can be pretty high and over time it is a big drag on returns. The question is whether the benefits received are worth the costs paid. You are paying $20,000 to $22,000 a year and that is a lot. I think you said you were paying 1.1% a year in...
by dbr
Sun Mar 19, 2023 11:49 am
Forum: Personal Investments
Topic: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?
Replies: 77
Views: 7294

Re: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?

Prudence may warrant keeping 2 or 3 years of living expenses liquid and readily accessible in an income producing account. In fairness "prudence" in terms of 2 or 3 years in cash in an "income producing account" has only been heard of frequently around here recently, really during the last year or so. An emergency fund as always been popular, but more in the sub-year range, even for retirees. And of course in the CFG we had all kinds of discussions about low-percentages of equities, but it was almost always bonds that were on the other side of that. If we see a few more consecutive years like 2022 your post would probably read 5 or 6 years of cash-like investments, and I'm not being critical at all, I'm just saying that...
by dbr
Sun Mar 19, 2023 10:52 am
Forum: Personal Investments
Topic: VBTLX vs VBILX bond fund comparisons
Replies: 12
Views: 2156

Re: VBTLX vs VBILX bond fund comparisons

Comparisons of Vanguard's bond funds VBTLX (0.5%) total bond vs VBILX(0.7%) have come up before. Currently, they both have the same Yield to Maturity but the VBIRX has a shorter duration. This seems to make the VBIRX a better deal. Your thoughts? Is there any guidance on how to split one's bond portion of a portfolio between the two? How did this question come up? In general the choices in bond funds lie on a line of credit risk (Treasuries zero to junk bonds high), duration (short, intermediate, and long), and nominal vs inflation indexed (TIPS). Trying to choose within the same rough credit, duration, and inflation risk is tilting at windmills. Probably picking the right duration (first), inflation index (second), and credit risk (third)...
by dbr
Sun Mar 19, 2023 9:24 am
Forum: Personal Investments
Topic: Vanguard PAS: Should I keep it or do the work myself? Portfolio allocations included.
Replies: 33
Views: 2680

Re: Vanguard PAS: Should I keep it or do the work myself? Portfolio allocations included.

No way would I hold an array of funds like that. VPAS should not do that to someone either. This does not mean the ultimate distribution of assets has anything wrong with it other than pointless complexity. Therefore you could continue to pay 0.3% and stay there if for some reason you like letting someone else run things. The one dilemma is with taxable investing. If you stay with those investments then over time they may accrue sufficient unrealized gains that it is expensive in tax costs to sell and change things around. You may be able to do that now at minimum costs or even harvesting tax losses to your advantage. How confident you are in understanding what to hold and how to hold it and to continue to manage on your own is for you to e...
by dbr
Sun Mar 19, 2023 9:16 am
Forum: Personal Investments
Topic: Are bank and brokered CD APY comparable?
Replies: 6
Views: 670

Re: Are bank and brokered CD APY comparable?

Thanks, Dave. So the APY assumes compound interest but if interest is paid outside of the CD before maturity the actual APY will be less than stated. It sounded like that was the case but I wasn't sure how it worked from a calculation standpoint. The result depends on what you do with the interest payments between payout and the end of the CD term. If you spend them, then the accounting could be that they are withdrawals. You could reinvest them in something and consider the asset to be the CD plus whatever holdings the interest is then invested in. In any case there is a difference between yield on a fixed income investment and your ultimate return on the money you invested when the process is complicated by cash flows during the term of ...
by dbr
Sun Mar 19, 2023 8:47 am
Forum: Personal Investments
Topic: Did I give my parents bad advice? VASIX
Replies: 27
Views: 3215

Re: Did I give my parents bad advice? VASIX

Markr867 wrote: Sun Mar 19, 2023 8:40 am
Absolutely understand, and I hope that they too have 15-20 more years (or more) to recoup their losses and make money on their investment. The fact that I inserted myself at all was because I felt that they were being taken advantage of by this neighbor and I didn't want to see them being swindled.
I think I would not use the language "recoup their losses." It is the nature of the beast that value of investment assets rises and falls yo unpredictable degrees at unpredictable times. You just live with the rise and fall. The enterprise is worthwhile because there is an underlying upward trend to be expected. Where that trend ends up is an uncertain proposition except that the expectation is that the average of it is good.
by dbr
Sun Mar 19, 2023 8:43 am
Forum: Personal Investments
Topic: Did I give my parents bad advice? VASIX
Replies: 27
Views: 3215

Re: Did I give my parents bad advice? VASIX

VASIX is appropriate for a conservative investment for people looking at a 15-25 year time line, which a person at age 70 probably would be looking forward to. An investment like that is not appropriate for a 2-5 year timeline. Put differently, you don't judge an investment like that by looking at performance over a timeline of only a few years. But the real question is what your parents want and expect from their investment. "Getting more return" is not the only objective in investing. In this case they may have understood the stocks but you were all unprepared for results in bonds, which in all fairness have been extreme. Bonds do by their intrinsic nature recover, but not so quickly as in a couple of years. And then the future ...
by dbr
Sat Mar 18, 2023 11:01 am
Forum: Personal Investments
Topic: What % cash in portfolio?
Replies: 144
Views: 13949

Re: What % cash in portfolio?

All assets you own are by definition part of your portfolio. You are entitled to your own opinions but not your own facts, i.e. you're not entitled to your own definition of words. You get to choose what's in and out. For example, some folks might set aside 300K house DP outside of portfolio. Nothing wrong with that, as they don't want to rebalance their house DP. Of course you can consider the management and results of any aggregation you want to think about. As you say there can be good reasons to look at one set of assets in a different context from another set of assets. It might be counterproductive to do that arbitrarily without attention to why you are managing that way. One of the peculiarities of my definition is that I count the ...
by dbr
Sat Mar 18, 2023 10:13 am
Forum: Personal Investments
Topic: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?
Replies: 77
Views: 7294

Re: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?

And yes, yes, yes, I understand sequence of return risks. I had them. 50% drop right after retiring. That is an interesting example. 2007 had one of the worst two year starts exceeded only by 1973 and 1930. Yet by 10 years in 2007 was above the worst 25% We have yet to see what is next for that retirement year. It is true that if one had skipped up to 2008, then in the first ten years one would be above the 75th percentile in outcome, even though 2008 had one of the worst first years. One should realize though, that this is not a matter of choosing to delay retirement to a better year. A person picking 2009 instead of 2007 will now have seen the money he has to retire on destroyed as much by 2008-2009 whether retired or not. It does say th...
by dbr
Sat Mar 18, 2023 8:56 am
Forum: Personal Investments
Topic: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?
Replies: 77
Views: 7294

Re: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?

If you're retired, which safe withdrawal rate (SWR) has allowed you actually to grow your nest egg, inflation-adjusted? This response will make me sound like a simpleton compared to the entries above, but all I did was review my spending for the 2 years prior to retirement to get a sense of what I'd need. Then, I set all the dividends in my taxable portfolio to go to my settlement fund. I've been using that money ever since. Every once in a blue moon I have to sell something, but it's rare. This has allowed my tax-deferred and Roth accounts to continue to grow. Even my taxable account has grown, but at a slower rate than it would have, had I not been taking the dividends. Regards, On the contrary there is a difference between models for di...
by dbr
Sat Mar 18, 2023 8:50 am
Forum: Personal Investments
Topic: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?
Replies: 77
Views: 7294

Re: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?

If you're retired, which safe withdrawal rate (SWR) has allowed you actually to grow your nest egg, inflation-adjusted? And how about the future? Do you have any plans to change your SWR? A quibble is that you mean your withdrawal rate. SWR, the withdrawal rate that is safe, is a calculation you don't choose. Asset allocation? I'd like to compare your experience with my plans for an SWR. Of course, in my planning, the withdrawal rate has to be adjusted upwards when required minimum distributions kick in, and that makes portfolio growth particularly difficult, as it is supposed to, I suppose. I guess I'll repeat that an RMD is a distribution of money from one account to another and is not a portfolio withdrawal. The effect it does have is t...
by dbr
Sat Mar 18, 2023 8:43 am
Forum: Personal Investments
Topic: [VTI/VTSAX continue their downward spiral]
Replies: 20
Views: 3072

Re: [VTI/VTSAX continue their downward spiral]

Between 2001 and now you got a CAGR of 7.5%. Between 2011 and now you got a CAGR of 11.7%. From 2011 to 2020 a CAGR of 14%. Along the way you had to endure drawdowns of 51% in 2009, 37% in 2002, 25% in 2022, 21% in 2020, 15% in 2018 with rapid recoveries in between. The total stock market was very good to investors that have held it over the last 2-3 decades and who retired in those times. You could have eschewed stocks and gotten a CAGR of 3.5% in total bond, better than inflation by a tad but not so good for a successful retirement. This is not to suggest that volatility does not matter nor that stocks can have secular periods of poor returns. It does mean there is a balance between stocks and bonds and that investing is a risky long game.
by dbr
Sat Mar 18, 2023 8:29 am
Forum: Personal Investments
Topic: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?
Replies: 77
Views: 7294

Re: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?

This is mostly dependent on when you retire. Retired folks that are still participating here mostly retired after the GFC of 2008, so have had a much more pleasant ride than folks that retired in 1929 or 1966, meaning you won't learn anything from this question. A couple other resources to check out: Go to EarlyRetirementNow and download the SWR toolbox, which is a Google sheet with historical series and SWR calculations on a monthly basis back to 1871. Or check out FireCalc, which is an online calculator that is quick way to see how your starting values would fare if various historical returns played out in the future. Good data sources. Note those approaches like the original work by Bengen and the Trinity study are all tabulations of ac...
by dbr
Sat Mar 18, 2023 8:09 am
Forum: Personal Investments
Topic: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?
Replies: 77
Views: 7294

Re: Retirees: Which safe withdrawal rate allowed you to grow your portfolio?

If you're retired, which safe withdrawal rate (SWR) has allowed you actually to grow your nest egg, inflation-adjusted? And how about the future? Do you have any plans to change your SWR? Asset allocation? I'd like to compare your experience with my plans for an SWR. Of course, in my planning, the withdrawal rate has to be adjusted upwards when required minimum distributions kick in, and that makes portfolio growth particularly difficult, as it is supposed to, I suppose. Thanks. Experience for retirees starting in 1871 to today is tabulated here: https://engaging-data.com/visualizing-4-rule/ You can enter a starting portfolio value, asset allocation, amount of annual spending and number of years you want to look forward. The output will be...
by dbr
Fri Mar 17, 2023 11:47 am
Forum: Personal Investments
Topic: TBills vs CDs vs Ibonds vs Cash
Replies: 11
Views: 1240

Re: TBills vs CDs vs Ibonds vs Cash

JiggsJazzCar wrote: Fri Mar 17, 2023 10:26 am For a youngish investor with the stomach for risk and the need to grow your principal is there any reason to not just do the 3 fund portfolio and forget it?
At least with the part of your portfolio that you wouldn't need for 7 years or more?
I would agree with that. All the buying and holding CDs, bond this, bond that, etc. is perfectly fine if that is what a person wants to do, but it is not necessary or even necessarily better. And, yes, if you have a need to recover a specific amount on a specific date or to be sure a fixed amount will always be there exactly then you choose investments that meet that definition.
by dbr
Fri Mar 17, 2023 10:20 am
Forum: Personal Investments
Topic: TBills vs CDs vs Ibonds vs Cash
Replies: 11
Views: 1240

Re: TBills vs CDs vs Ibonds vs Cash

I am trying to understand the treasury products a bit more. I have done some reading and I have some Ibonds for now. After some research I think the Ibonds and Tbills are what interests me the most. From what i can make out, here is what i can summarize - I-bonds are some what of an alternative to holding plain cash. you r going to be at inflation rate or slightly better with I-bonds I bonds are effectively real asset cash. This means they behave like cash except the asset real value is maintained instead of the nominal value. There are some conditions that are not cash like, namely the one year no withdrawal period and the five year interest penalty, and there is a not cash like benefit in the 30 year tax deferral of interest income. I bo...
by dbr
Fri Mar 17, 2023 10:11 am
Forum: Personal Investments
Topic: Rick Ferri and Three Fund Portfolio - Rebalancing?
Replies: 11
Views: 2229

Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

I don't think "lazy" means that you just go away and forget everything for 20 years. That would be a Rip van Winkle portfolio which is not recommended except in the case of bourbon where the 23 yr is recommended. It doesn't make any sense to use an asset allocation method of managing investments and then not rebalance. How often to rebalance is a different question to which the 5% bands approach is reasonable. As to practical, it is a big mistake to not stay involved with your accounts to be up to date on access, on changes that might come down from the management, and to verify there is no mistake, hacking, or other untoward event. There are even reports of very rare instances of people's assets escheated as abandoned assets if t...
by dbr
Fri Mar 17, 2023 8:41 am
Forum: Personal Investments
Topic: Sector Weightings differ from the Market
Replies: 62
Views: 3460

Re: Sector Weightings differ from the Market

So is the conclusion that these nefarious warnings are popping up because Vanguard can't figure out what is even in their funds?
by dbr
Fri Mar 17, 2023 8:39 am
Forum: Personal Investments
Topic: AA and the G Fund
Replies: 24
Views: 1854

Re: AA and the G Fund

G fund is a fine choice.

A decision between 70/30 and 80/20 is not a meaningful choice and what fixed income your pair with either asset allocation is not a meaningful choice.

If there is a theoretical indication of best pairing for 70%+ stocks it would be long Treasuries. But obtaining a true diversification benefit needs a high returning, high risk partner like long bonds and not a lower risk if efficient partner.

I rather imagine G fund and an 80/20 portfolio will be fine for you if 70/30 and total bond was fine. So would 70/30 with the G fund and 80/20 with total bond.
by dbr
Fri Mar 17, 2023 8:30 am
Forum: Personal Investments
Topic: When to use Money Market Accounts?
Replies: 17
Views: 3174

Re: When to use Money Market Accounts?

Three months expenses is penny-ante or will be before long. Of course you can place that or some of it in a money market fund. The longer term significance of where you keep that little bit of assets is nil. By the same token not being FDIC insured or some other nuance is also nearly irrelevant. I am fortunate to be retired with reasonable assets and it doesn't bother me in the slightest to have a couple or three months spending in a checking account that pays nothing. The arrangement is a convenient way to manage in and out flow of cash with minimum bother. An emergency fund might be just as conveniently separated into a savings account or a money market fund whether it pays anything or not. Once you get to 20%-25%-30% of your assets in &q...
by dbr
Fri Mar 17, 2023 8:02 am
Forum: Personal Finance (Not Investing)
Topic: Medicare Supplement Choice - Think I made a serious mistake!
Replies: 7
Views: 1663

Re: Medicare Supplement Choice - Think I made a serious mistake!

ForestWolf wrote: Thu Mar 16, 2023 4:46 pm My question is -- can I call the broker early tomorrow to cancel this new policy?
You can call the broker and find out what can be done.

As far as I know any medical insurance policy can be cancelled at any time. What you will have after you do that is a different question. Do you mean you still have a different Medigap policy or that you will now need to make a different choice to buy. You will have to ask if you are still in the enrollment period, whether you will need medical underwriting or what.

The use of a broker is to assist you through these things.
by dbr
Fri Mar 17, 2023 7:52 am
Forum: Personal Investments
Topic: VWIAX
Replies: 54
Views: 5279

Re: VWIAX

Wellesley is about 65% bonds. Most of the dividends paid out would be interest paid on bonds held. Are we saying that dividends from a bind fund are worthless? Or are we just talking about the portion of dividends derived from dividends paid by the stocks held? I'm so confused Dividends are part of the return whether stocks or bonds. Dividends per se are certainly not worthless. A consideration is that the payment of a dividend forces you to make a choice what to do with it. If you reinvest the dividend then your assets will continue to grow in proportion to what fraction of the return in that period of time is carried by the dividend. If you don't reinvest the dividend in something in your portfolio, them you have made a withdrawal and yo...
by dbr
Thu Mar 16, 2023 3:26 pm
Forum: Personal Investments
Topic: VWIAX
Replies: 54
Views: 5279

Re: VWIAX

That’s not being picky. That’s a big deal. The act of issuing and reinvesting dividends offers no value no matter what occurs with share price at no times into the future. Why doesn’t every article regarding dividends just say just that? “Dividends are a worthless accounting calculation that offers no value to the shareholder”. Instead dividends are presented as a big deal. Don’t get it. OK I am going to violate my rule and add some reasons both good and bad someone might like dividends. 1. They think dividends are free money and the dividend investment grows as fast as the non-dividend investment while also paying dividends that the other investment does not. This is stupid and most investors who like dividends don't think this. Occasiona...
by dbr
Thu Mar 16, 2023 1:40 pm
Forum: Investing - Theory, News & General
Topic: Dividends and tax drag question (amateur mathematics warning)
Replies: 6
Views: 723

Re: Dividends and tax drag question (amateur mathematics warning)

If identical in every way means that they have the same total return, the NAV of the low dividend fund will grow at a faster rate - so less dividend means more capital gain. Tax may have to be paid on that extra gain eventually. (You could donate appreciated shares or leave them with step-up in basis on your death. You might also get into the 0% LTCG bracket in retirement.) Deferring the taxes is worth a bit compared to paying every year. The cost gap is narrower than your example. I agree it gets tricky to understand the tax cost taking into account the variations in timing. This seems to be analogous to thinking of the gains in NAV as being tax deferred liability but the dividends are taxed now. You are right that to really bring this in...
by dbr
Thu Mar 16, 2023 1:34 pm
Forum: Personal Investments
Topic: Sector Weightings differ from the Market
Replies: 62
Views: 3460

Re: Sector Weightings differ from the Market

rkhusky wrote: Thu Mar 16, 2023 12:46 pm
dbr wrote: Thu Mar 16, 2023 8:28 am I would take such messages as garbage and also as an insult.
Why an insult? Vanguard doesn’t know all my holdings, so their portfolio alerts are irrelevant, but hardly insulting.
That is how I see it. Other people don't.
by dbr
Thu Mar 16, 2023 12:36 pm
Forum: Personal Investments
Topic: VWIAX
Replies: 54
Views: 5279

Re: VWIAX

VWIAX is my main retirement vehicle. It’s performance over the last 50 plus years is hard to fault. Only seven or eight down years. The dividend payout is significant. I roughly estimate that that I will get back via dividends almost exactly what I will be taking out at least this year. I know this may be a mute point in my situation where it all pre tax $. Regarding dividends. I am still cloudy regarding their benefits with my situation where all the funds in VWIAX are pre tax. One question I have is will there be a benefit once VWIAX stock price returns to historical highs? In other words I am reinvesting all dividends back into VWIAX and taking monthly $ to live on. The shares I take will be replaced more or less via this dividend reinv...
by dbr
Thu Mar 16, 2023 8:28 am
Forum: Personal Investments
Topic: Sector Weightings differ from the Market
Replies: 62
Views: 3460

Re: Sector Weightings differ from the Market

Not all stock funds are weighted at the market other than a total market fund itself. That would be true if you feature a value fund or a growth fund or a dividend fund of some kind. Here is VVIAX: Basic Materials 2.30% Consumer Discretionary 5.10% Consumer Staples 10.80% Energy 7.80% Financials 20.10% Health Care 19.00% Industrials 13.90% Real Estate 3.10% Technology 8.00% Telecommunications 3.90% Utilities 6.00% Here is VWUAX: Communication Services 9.80% Consumer Discretionary 19.00% Consumer Staples 3.00% Energy 1.30% Financials 4.00% Health Care 14.70% Industrials 5.50% Information Technology 41.00% Materials 0.40% Real Estate 1.30% Why they take it upon themselves to warn you is beyond me. I would take such messages as garbage and als...
by dbr
Thu Mar 16, 2023 8:00 am
Forum: Personal Investments
Topic: Better new investment right now - high interest CD or index fund?
Replies: 8
Views: 1336

Re: Better new investment right now - high interest CD or index fund?

If by index fund you mean investing in stocks, then a better answer is to think through what allocation you want between stocks and bonds, buy that allocation, and stay there. It is really hard to position investments for what you guess future returns are going to be. There are also bond index funds. It could be a reasonable question whether or not you want to hold fixed income in CDs or in bond funds. An opportunity available in bond funds or in individual bonds not available in CDs is for the instrument to be inflation indexed. That may or may not be helpful to your plan. A good baseline for stock index funds is total market index funds, US and International. You can begin and end there and ignore the other couple of tens of thousands of ...
by dbr
Wed Mar 15, 2023 3:53 pm
Forum: Personal Investments
Topic: Rebalance by Exchanging Stock Funds for TIPs fund -- now?
Replies: 5
Views: 577

Re: Rebalance by Exchanging Stock Funds for TIPs fund -- now?

If so, can you say more about that? Is the "buy-low-sell-high" mantra not part of the BH ideology? "Buy low, sell high" is a logically self fulfilling strategy and thus just circular reasoning or proof by assuming the conclusion. The real problem is how to buy low and sell high, and that problem is a whole different kettle of fish. BH should be taken as helpful practical advice, neither a mantra or an ideology. As such lots of thoughts can be discussed on the merits. Probably a common thought here is the idea of setting an asset allocation suitable to your objectives and staying with it over long times, rebalancing if necessary. People can and do propose alternate investment constructions or tactics which can be conside...