What does "won the game stop playing" mean in practice?

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Boatguy
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Joined: Fri Apr 19, 2019 7:54 pm

Re: What does "won the game stop playing" mean in practice?

Post by Boatguy »

watchnerd wrote: Thu Apr 22, 2021 3:57 pm
deikel wrote: Thu Apr 22, 2021 3:47 pm
I don't think so.

Safe Withdrawal rate of 4% assumes that (on average) there is a real return above inflation, an average inflation of 3-4 % and an average real return of 4-5% (annualized, inflation adjusted, dividends in true CAGR 7%)

OP was asking if a real return of 3% was 'winning the game' (3% return plus inflation, presumably the 3% withdrawn)

and Tomato chimed in suggesting 0% real is 'winning the game' which would mean you can withdraw without any true gains, just inflation adjusted portfolio

which is consecutively more conservative (nothing wrong per se), BUT usually means that it needs you more working years to get to such comfy place - which I would define as actually loosing the game, because you traded in life time hours for an unnecessary safety net.

4% withdrawal a la Bengen already was conservative in the first place
So your point is:

You disagree with Tomato's assertion that 'just inflation adjusted portfolio" is the definition of "winning the game".

Whether you disagree with it or not, Tomato's POV seems directionally consistent with Bernstein's framing.

When Bernstein says take 20-25X (or more if younger) and put it into something like a TIPS ladder to make your LMP -- he is basically saying you can mostly do without any true gains / just keep up with inflation for anything except discretionary spending.

This seems roughly aligned with Tomato's statement.

Yes, it's more conservative -- LMP / "Safety First" approaches are more conservative than Probabilistic portfolios.
deikel wrote: Thu Apr 22, 2021 3:47 pm which I would define as actually loosing the game, because you traded in life time hours for an unnecessary safety net.
As for "trading in life time hours for an unnecessary safety net":

Some of us enjoy our work, are passionate about it, and it gives us a sense of purpose and fulfillment.

Bernstein, being a doctor, might have felt the same.

I'm in the business world. Many my business heroes kept working well past when they could have just quit, for financial reasons, but they were passionate.
I’m in the business world as well, working for Megacorp, and I guess I’m in the vast minority of those who are almost 68 and still working full time and enjoying their job. I too am passionate about it, and frankly am extremely grateful that I still had a challenging and rewarding job to keep me busy during the pandemic (our company is still working from home). I could retire today, but choose not too…and I appreciate how lucky I am.
Wanderingwheelz
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Joined: Mon Mar 04, 2019 9:52 am

Re: What does "won the game stop playing" mean in practice?

Post by Wanderingwheelz »

smitcat wrote: Sun May 02, 2021 7:49 am
Wanderingwheelz wrote: Sun May 02, 2021 7:36 am
TomatoTomahto wrote: Wed Apr 21, 2021 9:23 am
H-Town wrote: Wed Apr 21, 2021 9:05 am And yet I see many long time posters said that they don't need a budget, don't care for, or will never do a budget. What happens to control what you can control? If you don't track your spending, don't be surprised that the x got out of control.
Guilty. But, if we save a good percentage of our income, what’s the upside of a budget? It might be different for us in that x isn’t out of control; it’s just that I don’t know what the long term x is.
As I become more affluent (aren’t we all these days?) I feel like for the first time ever I probably need a budget because it’s the only way I’ll spend enough money. If I don’t set a specific amount aside for travel a year then I likely won’t use all of it, for example. Am I the only one out there who feel this way? I do want to enjoy the fruits of my labor, rather than just watching account values moon, although there’s nothing wrong with that.

To me that’s the upside of a budget, one I’ve never needed before. Many of us here are natural savers far more than we are spenders. It’s hard to make the transition.
"I feel like for the first time ever I probably need a budget because it’s the only way I’ll spend enough money. If I don’t set a specific amount aside for travel a year then I likely won’t use all of it, for example"
If you are already living life the way you want to there is no reason to force yourself to spend more.
I think you misunderstood what I meant, which is okay.
3 Fund Portfolio. 70/30 AA. No mortgage. Simplicity is key.
smitcat
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Joined: Mon Nov 07, 2016 10:51 am

Re: What does "won the game stop playing" mean in practice?

Post by smitcat »

Wanderingwheelz wrote: Mon May 03, 2021 7:03 am
smitcat wrote: Sun May 02, 2021 7:49 am
Wanderingwheelz wrote: Sun May 02, 2021 7:36 am
TomatoTomahto wrote: Wed Apr 21, 2021 9:23 am
H-Town wrote: Wed Apr 21, 2021 9:05 am And yet I see many long time posters said that they don't need a budget, don't care for, or will never do a budget. What happens to control what you can control? If you don't track your spending, don't be surprised that the x got out of control.
Guilty. But, if we save a good percentage of our income, what’s the upside of a budget? It might be different for us in that x isn’t out of control; it’s just that I don’t know what the long term x is.
As I become more affluent (aren’t we all these days?) I feel like for the first time ever I probably need a budget because it’s the only way I’ll spend enough money. If I don’t set a specific amount aside for travel a year then I likely won’t use all of it, for example. Am I the only one out there who feel this way? I do want to enjoy the fruits of my labor, rather than just watching account values moon, although there’s nothing wrong with that.

To me that’s the upside of a budget, one I’ve never needed before. Many of us here are natural savers far more than we are spenders. It’s hard to make the transition.
"I feel like for the first time ever I probably need a budget because it’s the only way I’ll spend enough money. If I don’t set a specific amount aside for travel a year then I likely won’t use all of it, for example"
If you are already living life the way you want to there is no reason to force yourself to spend more.
I think you misunderstood what I meant, which is okay.
Certainly very possible - what did you actually mean?
Wanderingwheelz
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Joined: Mon Mar 04, 2019 9:52 am

Re: What does "won the game stop playing" mean in practice?

Post by Wanderingwheelz »

smitcat wrote: Mon May 03, 2021 7:07 am
Wanderingwheelz wrote: Mon May 03, 2021 7:03 am
smitcat wrote: Sun May 02, 2021 7:49 am
Wanderingwheelz wrote: Sun May 02, 2021 7:36 am
TomatoTomahto wrote: Wed Apr 21, 2021 9:23 am
Guilty. But, if we save a good percentage of our income, what’s the upside of a budget? It might be different for us in that x isn’t out of control; it’s just that I don’t know what the long term x is.
As I become more affluent (aren’t we all these days?) I feel like for the first time ever I probably need a budget because it’s the only way I’ll spend enough money. If I don’t set a specific amount aside for travel a year then I likely won’t use all of it, for example. Am I the only one out there who feel this way? I do want to enjoy the fruits of my labor, rather than just watching account values moon, although there’s nothing wrong with that.

To me that’s the upside of a budget, one I’ve never needed before. Many of us here are natural savers far more than we are spenders. It’s hard to make the transition.
"I feel like for the first time ever I probably need a budget because it’s the only way I’ll spend enough money. If I don’t set a specific amount aside for travel a year then I likely won’t use all of it, for example"
If you are already living life the way you want to there is no reason to force yourself to spend more.
I think you misunderstood what I meant, which is okay.
Certainly very possible - what did you actually mean?
There’s two reasons to keep a budget in my view. 1. You spend too much money. 2. You don’t spend enough.

I don’t mean spending money to accumulate more useless junk, just for the sport of it, either. Perhaps it’s to pay for your grandkids educations or to help fund a hobby you been neglecting for a long time.

Or, maybe it gets you the ocean view room rather than settling for the city view room, which to me is a good reason of keeping a budget too.
3 Fund Portfolio. 70/30 AA. No mortgage. Simplicity is key.
smitcat
Posts: 7644
Joined: Mon Nov 07, 2016 10:51 am

Re: What does "won the game stop playing" mean in practice?

Post by smitcat »

Wanderingwheelz wrote: Mon May 03, 2021 8:06 am
smitcat wrote: Mon May 03, 2021 7:07 am
Wanderingwheelz wrote: Mon May 03, 2021 7:03 am
smitcat wrote: Sun May 02, 2021 7:49 am
Wanderingwheelz wrote: Sun May 02, 2021 7:36 am
As I become more affluent (aren’t we all these days?) I feel like for the first time ever I probably need a budget because it’s the only way I’ll spend enough money. If I don’t set a specific amount aside for travel a year then I likely won’t use all of it, for example. Am I the only one out there who feel this way? I do want to enjoy the fruits of my labor, rather than just watching account values moon, although there’s nothing wrong with that.

To me that’s the upside of a budget, one I’ve never needed before. Many of us here are natural savers far more than we are spenders. It’s hard to make the transition.
"I feel like for the first time ever I probably need a budget because it’s the only way I’ll spend enough money. If I don’t set a specific amount aside for travel a year then I likely won’t use all of it, for example"
If you are already living life the way you want to there is no reason to force yourself to spend more.
I think you misunderstood what I meant, which is okay.
Certainly very possible - what did you actually mean?
There’s two reasons to keep a budget in my view. 1. You spend too much money. 2. You don’t spend enough.

I don’t mean spending money to accumulate more useless junk, just for the sport of it, either. Perhaps it’s to pay for your grandkids educations or to help fund a hobby you been neglecting for a long time.

Or, maybe it gets you the ocean view room rather than settling for the city view room, which to me is a good reason of keeping a budget too.
Seems very reasonable - we always have kept a budget to know where the funds go and how that changes over time. Anything can be improved and keeping a budget has been a very simple and quick way to have data available with which to make future choices easier.
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HomerJ
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Re: What does "won the game stop playing" mean in practice?

Post by HomerJ »

Wanderingwheelz wrote: Mon May 03, 2021 8:06 am There’s two reasons to keep a budget in my view. 1. You spend too much money. 2. You don’t spend enough.
I don't understand the 2nd one.

If I had extra, I could see spending more, but I certainly wouldn't feel the need to keep a budget.

Your ideas of funding a grandkids education or upgrading a room are good ones.

Those are one-off spending things that I wouldn't need to "budget" for.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
Wanderingwheelz
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Joined: Mon Mar 04, 2019 9:52 am

Re: What does "won the game stop playing" mean in practice?

Post by Wanderingwheelz »

HomerJ wrote: Mon May 03, 2021 1:16 pm
Wanderingwheelz wrote: Mon May 03, 2021 8:06 am There’s two reasons to keep a budget in my view. 1. You spend too much money. 2. You don’t spend enough.
I don't understand the 2nd one.

If I had extra, I could see spending more, but I certainly wouldn't feel the need to keep a budget.

Your ideas of funding a grandkids education or upgrading a room are good ones.

Those are one-off spending things that I wouldn't need to "budget" for.
I wouldn’t consider funding grandkids 529 plans over perhaps 30 years or more, depending on how spread out your grandkids are in age, “one-off”. My parents funded the grandkids 529s for most of that time and they only had 4 of them and they weren’t spread out in age all that much compared to many grandparent I know. I think they owned 4 or 5 different cars over the time period, for context, and two of the three grandkids are still in college and one hasn’t even started yet. There are at least some grandparents who budget for contributions from the time a grandchild is born to the day they graduate.

Hope that helps.
3 Fund Portfolio. 70/30 AA. No mortgage. Simplicity is key.
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