The pandemic has been a financial bonanza for early retirees over the past two years. Even this year’s inflation and that unpleasantness in the Ukraine hasn’t put a dent in it for Q1 2022.
2021 Update Real-Life Retiree Investment Returns
https://retireearlyhomepage.com/reallife22.html
intercst
There is no question that investors can do very well in a good year. Now if we could figure out how to make every year a good year.
Better build some reserves as some years are not good.
pauleckler writes,
There is no question that investors can do very well in a good year. Now if we could figure out how to make every year a good year.
Better build some reserves as some years are not good.
That’s the beauty of “long-term buy & hold” (LTB&H) and “stocks for the long run”. Over an investing lifetime, the down years tend to get lost in the round-off. Just maintain a reasonable asset allocation and “minimize the skim” of trading costs, fees and commissions.
https://retireearlyhomepage.com/reallife22.html
The Harry Dent portfolio now stands at twelve times its initial balance. Note that’s “twelve times its initial balance” after 28 years of 4% SWR annual withdrawals and 50% stock market declines in 2000 and 2008. Astounding.
intercst
folks should remember that “past performance” may never come again.
Howie52
Life has a tendency to surprise. Sometimes the surprises are upbeat and wonderful.
Sometimes the surprises are somewhat static.
But sometimes surprises are nasty and terrifying.
Although there are few things people can do to plan for the whole gamut - every so often a
person does need to think about “what if”. A SWR, 50% of a SWR or insurance may not be answers
for everyone but living within your means is an approach.
https://www.fidelity.com/viewpoints/retirement/how-much-do-i…
2021 Update Real-Life Retiree Investment Returns
https://retireearlyhomepage.com/reallife22.html
intercst
Nice work!
As Boomers and parents of Millennials, they remain the two most important demographic groups we study regarding investing. Still find myself somewhat in the pro-Harry Dent camp in terms of technology, health care, and financials for capturing the strong trends from these two large groups. Luckily, technology and health care are the two largest sectors represented in the index funds with financials carrying a ranking of 4th in terms of percentages, so indexers get to capture the Harry Dent tilt by default - or without really trying. 
BB
That’s the beauty of “long-term buy & hold” (LTB&H) and “stocks for the long run”. Over an investing lifetime, the down years tend to get lost in the round-off. Just maintain a reasonable asset allocation and “minimize the skim” of trading costs, fees and commissions.
How well did this work, in inflation adjusted “real” terms, starting in 1929? 1966?
Daryll44 writesHow well did this work, in inflation adjusted “real” terms, starting in 1929? 1966?
Have you researched what the commissions/fees/trading costs and bid/ask skim all were in both of those periods?
BB
BruceBrown writes,
As Boomers and parents of Millennials, they remain the two most important demographic groups we study regarding investing. Still find myself somewhat in the pro-Harry Dent camp in terms of technology, health care, and financials for capturing the strong trends from these two large groups. Luckily, technology and health care are the two largest sectors represented in the index funds with financials carrying a ranking of 4th in terms of percentages, so indexers get to capture the Harry Dent tilt by default - or without really trying.
That’s the lesson I’ve learned from this as well. It’s not necessary to trade individual stocks. Just buy a broad index fund or maybe a sector fund if you really believe in an industry like Tech or Drugs. Then spend your time one something else.
The only thing you’ll miss is the ability to control your tax liability at an individual stock level. Mutual funds are going to pay dividends and capital gains distributions whether you need them or not.
intercst
intercst:“The only thing you’ll miss is the ability to control your tax liability at an individual stock level. Mutual funds are going to pay dividends and capital gains distributions whether you need them or not.”
I’ve found that my few sector funds tend to spin off , on occasion, large cap gains…including foreign funds - like Asia Fund, fund for EU stocks, etc.
The SP500 index spins off little cap gains - just when a stock is added/deleted and has to be sold. I out of 500. Or if for some reason, a company spins off a subsidiary, and that has to be sold as not part of the SP500 index.
Some years you can have some cap gains - varies.
Of course, for those not trying to keep our taxable income at so low levels to qualify for ObamaKare…it’s not a critical issue.
t.
How well did this work, in inflation adjusted “real” terms, starting in 1929? 1966?
Those were the 30 year payout periods where the 4% rule worked as designed to allow you to survive for 30 years with at least $1 at the end of the payout period.
I suspect most of the folks who attempted to “stock trade” or “market time” their way out of trouble actually made the situation even worse.
intercst
<<How well did this work, in inflation adjusted “real” terms, starting in 1929? 1966?>>
Those were the 30 year payout periods where the 4% rule worked as designed to allow you to survive for 30 years with at least $1 at the end of the payout period.
'29, '66 and a few others were the few start years when the 4% rule as originally conceived would not have worked.
Try it in FIRECalc.
e.g. 50% stocks, no skim:
“For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 4 cycles failed, for a success rate of 96.7%.”
Good enough, I think.
“For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 4 cycles failed, for a success rate of 96.7%.”
But if you reduce the withdrawal rate to 3.7% you get 0 cycles failed.
What that means is that instead of starting with $1,000,000 and withdrawing $40,000 you start with $1,081,081 (1/0.037 x $40,000) and withdraw the same $40,000, and off you go.