Exceeding the 4% withdrawal rate

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

If you start with 1 mil, a 100% equity portfolio with a 4% withdrawal rate gives you 10 million bucks (median) after 30 years. So no thanks on the TIPS. Maybe this is a strategy worth considering for extremely risk averse investors.

I don’t know what kind of assumptions you are making but cfiresim says the median for that portfolio is $2.5m with a 5% chance of failure.

However, if you assume inflation stays at 5% then your median ends under $600k and your failure rate nearly 30%.

If inflation is 7% your median end is $0 and you run out of money in a majority of situations.

So it’s not for extremely risk adverse investors, it’s for investors who are planning for a 30 year retirement and think one of the primary risks for a long self-funded retirement is inflation. My guess is many of them have identified how much money they need in current dollars to live in retirement and have accumulated enough money to provide for that level of expenses but they want to preserve their purchasing power to provide a secure retirement. I also expect many of them have additional funds invested in the stock market.

However if you are a 25 yo who has only known bull markets and is trying to build a nest egg not preserve one that has been built I can see it’s not for you.

I refuse to take financial advice from anyone who doesn't know that the term is "risk averse."

Feel free to put whatever weight on typos you want. I’m not trying to give financial advice to you, I’m just trying to explain why some people are interested in doing this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

If you start with 1 mil, a 100% equity portfolio with a 4% withdrawal rate gives you 10 million bucks (median) after 30 years. So no thanks on the TIPS. Maybe this is a strategy worth considering for extremely risk averse investors.

I don’t know what kind of assumptions you are making but cfiresim says the median for that portfolio is $2.5m with a 5% chance of failure.

However, if you assume inflation stays at 5% then your median ends under $600k and your failure rate nearly 30%.

If inflation is 7% your median end is $0 and you run out of money in a majority of situations.

So it’s not for extremely risk adverse investors, it’s for investors who are planning for a 30 year retirement and think one of the primary risks for a long self-funded retirement is inflation. My guess is many of them have identified how much money they need in current dollars to live in retirement and have accumulated enough money to provide for that level of expenses but they want to preserve their purchasing power to provide a secure retirement. I also expect many of them have additional funds invested in the stock market.

However if you are a 25 yo who has only known bull markets and is trying to build a nest egg not preserve one that has been built I can see it’s not for you.

I refuse to take financial advice from anyone who doesn't know that the term is "risk averse."

Feel free to put whatever weight on typos you want. I’m not trying to give financial advice to you, I’m just trying to explain why some people are interested in doing this.

I also refuse to take advice from someone who doesn't understand what a typo is. It ain't that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

If you start with 1 mil, a 100% equity portfolio with a 4% withdrawal rate gives you 10 million bucks (median) after 30 years. So no thanks on the TIPS. Maybe this is a strategy worth considering for extremely risk averse investors.

I don’t know what kind of assumptions you are making but cfiresim says the median for that portfolio is $2.5m with a 5% chance of failure.

However, if you assume inflation stays at 5% then your median ends under $600k and your failure rate nearly 30%.

If inflation is 7% your median end is $0 and you run out of money in a majority of situations.

So it’s not for extremely risk adverse investors, it’s for investors who are planning for a 30 year retirement and think one of the primary risks for a long self-funded retirement is inflation. My guess is many of them have identified how much money they need in current dollars to live in retirement and have accumulated enough money to provide for that level of expenses but they want to preserve their purchasing power to provide a secure retirement. I also expect many of them have additional funds invested in the stock market.

However if you are a 25 yo who has only known bull markets and is trying to build a nest egg not preserve one that has been built I can see it’s not for you.

I refuse to take financial advice from anyone who doesn't know that the term is "risk averse."

DP. You either think you are really funny and cracked a great joke (you did not) or you are a moron. Pick one.

[Anonymous]

Your expected return is the same as with nominal Treasuries. You will come out ahead if inflation is higher than expected, and behind if inflation is lower than expected. Expected correlation with the market and overall portfolio volatility would be higher. Your best hedge against inflation are equities, IMHO.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

This actually is what they are suggesting but right now the markets aren’t taking them seriously. If the markets ever do it will costs us all billions in borrowing costs but probably won’t result in actual Treasury defaults.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

This actually is what they are suggesting but right now the markets aren’t taking them seriously. If the markets ever do it will costs us all billions in borrowing costs but probably won’t result in actual Treasury defaults.

The US dollar is our biggest export; The safe haven status of Treasuries is our biggest asset. Those are the only reasons why we were able to borrow to the extend we did which in turn supports all of our lifestyles. Any damage to either, the US goes down the sh*thole with associated financial disruption to everyone, especially the poor and LMCs. The Republicans will never do this. If they did, they will not win anything for a very long time after..

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

This actually is what they are suggesting but right now the markets aren’t taking them seriously. If the markets ever do it will costs us all billions in borrowing costs but probably won’t result in actual Treasury defaults.

The US dollar is our biggest export; The safe haven status of Treasuries is our biggest asset. Those are the only reasons why we were able to borrow to the extend we did which in turn supports all of our lifestyles. Any damage to either, the US goes down the sh*thole with associated financial disruption to everyone, especially the poor and LMCs. The Republicans will never do this. If they did, they will not win anything for a very long time after..

Some Republicans just do not understand what they are doing. Some think they can threaten the Dems with destroying the US economy because they expect the Dems will cave and give concessions on other things (like cutting social security)— it’s essentially taking the economy hostage. It’s very possible group 2 loses control of the situation and the US economy is damaged to a greater or less degree.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

This actually is what they are suggesting but right now the markets aren’t taking them seriously. If the markets ever do it will costs us all billions in borrowing costs but probably won’t result in actual Treasury defaults.

The US dollar is our biggest export; The safe haven status of Treasuries is our biggest asset. Those are the only reasons why we were able to borrow to the extend we did which in turn supports all of our lifestyles. Any damage to either, the US goes down the sh*thole with associated financial disruption to everyone, especially the poor and LMCs. The Republicans will never do this. If they did, they will not win anything for a very long time after..

Oh, I see what the problem is. You have come to a rational conclusion, and expect that the House GOP caucus will do the same. They haven't shown any evidence that they will, though. They haven't even shown that they have the ability to do so.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

This actually is what they are suggesting but right now the markets aren’t taking them seriously. If the markets ever do it will costs us all billions in borrowing costs but probably won’t result in actual Treasury defaults.

The US dollar is our biggest export; The safe haven status of Treasuries is our biggest asset. Those are the only reasons why we were able to borrow to the extend we did which in turn supports all of our lifestyles. Any damage to either, the US goes down the sh*thole with associated financial disruption to everyone, especially the poor and LMCs. The Republicans will never do this. If they did, they will not win anything for a very long time after..

Oh, I see what the problem is. You have come to a rational conclusion, and expect that the House GOP caucus will do the same. They haven't shown any evidence that they will, though. They haven't even shown that they have the ability to do so.

Do you know anything about TIPS in the secondary market or do you just ramble on about political nonsense?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

https://www.washingtonpost.com/opinions/2022/11/21/republicans-house-debt-ceiling-treasurys/

Quote: "In October, House Minority Leader Kevin McCarthy (R-Calif.) warned that Republicans are planning to use the debt limit as leverage to demand spending cuts, potentially including Social Security and Medicare."

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

This actually is what they are suggesting but right now the markets aren’t taking them seriously. If the markets ever do it will costs us all billions in borrowing costs but probably won’t result in actual Treasury defaults.

The US dollar is our biggest export; The safe haven status of Treasuries is our biggest asset. Those are the only reasons why we were able to borrow to the extend we did which in turn supports all of our lifestyles. Any damage to either, the US goes down the sh*thole with associated financial disruption to everyone, especially the poor and LMCs. The Republicans will never do this. If they did, they will not win anything for a very long time after..

Oh, I see what the problem is. You have come to a rational conclusion, and expect that the House GOP caucus will do the same. They haven't shown any evidence that they will, though. They haven't even shown that they have the ability to do so.

Do you know anything about TIPS in the secondary market or do you just ramble on about political nonsense?

What, precisely, is nonsense?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

https://www.washingtonpost.com/opinions/2022/11/21/republicans-house-debt-ceiling-treasurys/

Quote: "In October, House Minority Leader Kevin McCarthy (R-Calif.) warned that Republicans are planning to use the debt limit as leverage to demand spending cuts, potentially including Social Security and Medicare."

You have made my point. There is no discussion of not paying us obligations. Your article talks about cuts to social security and Medicare which will not happen but should.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

https://www.washingtonpost.com/opinions/2022/11/21/republicans-house-debt-ceiling-treasurys/

Quote: "In October, House Minority Leader Kevin McCarthy (R-Calif.) warned that Republicans are planning to use the debt limit as leverage to demand spending cuts, potentially including Social Security and Medicare."

You have made my point. There is no discussion of not paying us obligations. Your article talks about cuts to social security and Medicare which will not happen but should.

Sigh. I guess I have to lay it out step by step.

First, failing to raise the debt limit will result in the US government defaulting on its obligations. Got it so far?

Second, what I wrote is, "It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way." Still with me?

OK, here's where it all ties together. If the Democrats don't agree to cuts in social security and Medicare, the GOP will refuse to raise the debt ceiling, thereby resulting in the US government defaulting on its obligations. Which is, again, exactly what I said, and which you said was "silly and uninformed."

I would accuse you of being deliberately obtuse, but this kind of stupidity is so prevalent in MAGA ranks that I'm not at all sure it's not just your natural state of being. Plus, I doubt you know what obtuse means.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I guess I am skeptical of any investment tips that promise more than commonly accepted returns. these things remind me of cryptos.

These are backed by the full faith and credit of the US govt— could not be any safer.

What makes it work is he’s not seeking crazy returns, ”just” a inflation-indexed guaranteed income stream, and the spike in interest rates has made older bonds cheap (and has increased interest rates on newer bonds).

Tell me you don't pay attention to politics without telling me you don't pay attention to politics. It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way.

This is silly and uninformed. No this not what they are suggesting.

https://www.washingtonpost.com/opinions/2022/11/21/republicans-house-debt-ceiling-treasurys/

Quote: "In October, House Minority Leader Kevin McCarthy (R-Calif.) warned that Republicans are planning to use the debt limit as leverage to demand spending cuts, potentially including Social Security and Medicare."

You have made my point. There is no discussion of not paying us obligations. Your article talks about cuts to social security and Medicare which will not happen but should.

Sigh. I guess I have to lay it out step by step.

First, failing to raise the debt limit will result in the US government defaulting on its obligations. Got it so far?

Second, what I wrote is, "It is an *express component* of the new GOP House majority to refuse to honor US government obligations if they don't get their way." Still with me?

OK, here's where it all ties together. If the Democrats don't agree to cuts in social security and Medicare, the GOP will refuse to raise the debt ceiling, thereby resulting in the US government defaulting on its obligations. Which is, again, exactly what I said, and which you said was "silly and uninformed."

I would accuse you of being deliberately obtuse, but this kind of stupidity is so prevalent in MAGA ranks that I'm not at all sure it's not just your natural state of being. Plus, I doubt you know what obtuse means.

NP. Nobody cares about your never ending political grievances. If you want to spin your wheels talking about nonsense, go post in the political section.

This is a conversation about a investing and a sustainable withdrawal strategy. If you don't know anything about Bill Bengen, Trinity study, bonds, TIPS, etc., this isn't the conversation for you.