The Most Important Investment Decision You’ll Ever Make About Your Portfolio
When most people think about investing, they’re thinking about stuff that doesn’t really matter. They’re caught up in the minutiae: What fund should I own? How fast did the iPhone 7 sell out (and are people really going to be okay with no headphone jack)? What sector is going to take off this fall? But that’s not really what determines your portfolio’s fate. What really matters is your ratio between stocks and bonds.
Should You Keep International Stocks in Your Portfolio?
There will always be some asset class that does poorly. Over the last few years, one of those asset classes has been international stocks. They have underperformed US stocks each of the previous three years, and it’s looking like they’ll do it again this year. Given this underperformance, we’ve had some people ask why we […]
Should You Lower Your Distributions If Your Portfolio Underperforms The Stock Market?
Another optimistic assumption of classic safe withdrawal rate studies is that retirees are able to earn precisely the underlying index returns net of the risks. But three truths dispute that idea.
Should Your Portfolio Include Commodities?
When it comes to investing, a whole bunch of magical investment solutions seem to be floating around out there, but should you really do anything differently?
Does The 4% Rule Work Around The World?
From a global perspective, asset returns enjoyed a particularly favorable climate in the twentieth-century United States, and to the extent that the U.S. may experience reversion in the twenty-first century, present conceptions of safe withdrawal rates may be unsafe.
What Do Market Expectations Have To Do With Safe Withdrawal Rates?
Rather than asking for the probability of success associated with a particular withdrawal rate, we could calculate the highest sustainable withdrawal rate linked to a particular probability of success.
Does Asset Allocation Affect Withdrawal Rates?
One other important factor from William Bengen’s original study is asset allocation. In particular, he recommended that retirees maintain a stock allocation of 50-75%, writing, “I think it is appropriate to advise the client to accept a stock allocation as close to 75 percent as possible, and in no cases less than 50 percent.”
What Can We Learn from the Market Disasters of the 1970s?
Throughout history, when bad news and events touched the daily lives of investors and caused nest eggs to shrink, it’s been natural to ask, “Is this the end of investing as we know it? Have new developments changed things so much that the old patterns no longer apply?” These four stories should help illustrate an […]
Sustainable Retirement Spending and Market Returns
What happens to sustainable spending rates as the planning horizon extends, or
if we build in a constraint to preserve wealth and avoid portfolio depletion?
Business Owners: Did You Know You Are a Fiduciary?
Employer-sponsored retirement plans — such as 401(k)s or 403(b)s — are one of the primary sources of retirement savings for Americans. If you are an employer who has set up such a plan, you might not be aware of the responsibilities that come with your role as a plan sponsor.
