Academy Login

Adjustments For A Conservative Return Assumption

Consider three scenarios: An individual investing a lump-sum amount for thirty years An individual saving a fixed percentage of a constant inflation-adjusted salary at the end of each year over a thirty-year accumulation period An individual withdrawing the maximum sustainable constant inflation-adjusted amount from a portfolio at the start of each year over a thirty-year […]

A Guide to a Conservative Return Assumption

A simple approach for building a financial plan is to decide on a rate of return for the investment portfolio and to plug that value into a spreadsheet to represent assumed asset growth. Historical data may be used to calculate historical average returns for different asset classes, which are then combined to create the overall […]

Planning For The Future – What About Bond Yields?

Adjustments for Current Bond Yields An important consideration is that current interest rates are lower than the historical averages. The historical average return is not relevant for someone seeking to estimate future market returns from today’s starting point. The general problem with attempting to gain insights from the historical outcomes is that future market returns […]

What To Do When Markets Plummet – Investor Behavior Gap

Another concern is whether investors are disciplined enough to stay the course with the investment strategy in order to earn the underlying index market returns. Studies on retirement spending from investment portfolios typically assume that retirees are rational investors who rebalance right on schedule each year to their rather aggressive stock allocations. They never panic […]

Making Your Investments Work For You: Things To Consider

Inflation We must remove inflation so the numbers allow for a better understanding of purchasing power growth. Real returns will be less because they preserve the purchasing power of wealth over time. Providing the discussion in terms of real returns allows us to plan for the assumption that future spending will grow with inflation. Even […]

How Much Should We Depend On The Stock Market?

Simple analyses, which look to historical returns as estimates for what retirees should expect in the future, tend to provide an incomplete picture that may overstate the potential for stocks relative to other strategies. We will investigate some of the adjustments that should be made to historical returns to obtain a better idea about the […]

Unpacking Today’s Market Returns

Today, March 9th, 2020, was a bad day for the financial markets. There are four main elements to this story that I want to pick apart…

Inflation, Deflation, Confiscation & Devastation- The Four Horsemen Of Risk

Noted financial advisor and historian William Bernstein makes a compelling case for stocks in his e-book Deep Risk: How History Informs Portfolio Design. In the introduction, Bernstein begins by offering an operational definition of risk. Risk is the size of real capital loss times the duration of real capital loss. This gets at the idea […]

The Case for Stocks

The case for using an aggressive investment portfolio with a high stock allocation to fund retirement expenses rests on the idea that it will probably work. Stocks are expected to outperform bonds, and if and when that happens, a retiree will be able to spend more from their asset base in retirement. For example, in […]

Modern Portfolio Theory – Part Two

This article is part of a series; click here to read Part One. Efficient frontier diagrams do not actually show the asset allocations of portfolios on the efficient frontier, but this information is also available. Exhibit 1.3 provides an example of ten portfolios on the efficient frontier shown in Exhibit 1.2. These range from the […]

Join us for a FREE webinar:

Travel in Retirement:

New Options and Opportunities

Hosted By

Dan Veto, CSA

Tuesday, July 23rd

1:00 - 2:00 PM ET

Reserve Your Spot and Register Today!