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This was outdated in 2008, let alone today. Bengen had raised the figure to 4.5% in 2005 by incorporating small cap stocks, and today his figure is even higher:One of the primary questions clients want answered is: What is the safe maximum withdrawal rate? Once again, Bengen has done some of the seminal work on this topic and has currently settled on a withdrawal figure of 4.15 percent for a portfolio with 63 percent in stocks.
Kitces, Financial Advisor Success Podcast!, Oct 13, 2020Bill [Bengen]: [I]n 2005, while I was working on my book, I introduced small cap stocks, U.S. small cap stocks, which really juiced everything. The return – they didn't have a perfect correlation with large cap, so that juiced it from 4.15% to almost 4.5%. ... And that's when I came up with that number.
...
Michael [Kitces]: And so, what do you think about as the number in the environment today?
Bill: I think somewhere in 4.75%, 5% is probably going to be okay. We won't know for 30 years, so I can safely say that in an interview.
In a nutshell, this is why I (and some other posters here) focus on total return, not yield.Clients think that because they are retired, the way to get income is through dividends and interest. Such thinking arises from what my partner Deena calls the “paycheck syndrome,” and it is nonsense. ...
... if clients depend on income largely from their bond portfolios, then when interest rates go up, they feel rich. But what is actually happening to the value of their portfolio? It is going down. When interest rates go down, they feel poor, but the portfolio value is going up. The strategy runs counter to financial reality. ...
People need real income. They need real cash flow, not nominal cash flow, and they do not get that real cash flow from an income portfolio.
He goes on for several paragraphs with examples and ways to address his concerns.[T]here is nothing new about it. ... I think it has been misused and overused. ...
I see several problems ... First, the increased number of guesses that Monte Carlo allows does not mean more accuracy. Second, Monte Carlo devalues the goal-setting process. Third, Monte Carlo probabilities are all or nothing. If Monte Carlo says I have a 70 percent chance of success, what does the remaining 30 percent mean? Starvation? Finally, Monte Carlo offers no insight into the unexpected, such as a Katrina event or the subprime crisis.
https://www.advisorperspectives.com/articles/2020/04/20/bucket-strategies-challenging-previous-researchThe first bucket strategy was developed by financial planning pioneer Harold Evensky in 1985. This was a two-bucket approach with a cash bucket holding five years of retirement spending, and a longer-term investment bucket consisting mostly of stocks. When the stock market performed poorly, withdrawals were taken from the cash account to avoid selling stocks in a down market, and when the stock market did well withdrawals were taken from the investment bucket, and investments from this bucket were also sold to replenish cash.
Thiel’s unusual stock purchase risked running afoul of rules designed to prevent IRAs from becoming illegal tax shelters. Investors aren’t allowed to buy assets for less than their true value through an IRA. The practice is sometimes known as “stuffing” because it gets around the strict limits imposed by Congress on how much money can be put in a Roth.
PayPal later disclosed ... in an SEC filing ... that Thiel’s founders’ shares were among those the company sold to employees at “below fair value.”
Victor Fleischer, a tax law professor at the University of California [asserted that] buying startup shares at a discounted $0.001 price with a Roth ... would be indefensible.
Congress has done the opposite for inherited IRAs by eliminating the stretch provision for heirs. All inherited IRAs (including Roth IRAs) must be fully distributed within 10 years. This at least forces this $5 billion Roth account to be liquidated 10 years after the death of the Account holder.The problem is no one in Congress thought about putting an upper limit on Roth IRA withdrawals when they wrote the law
When someone inherits property and investments, the IRS resets the market value of these assets to their value on the date of the original owner’s death. Then, when the heir sells these assets, capital gains taxes are applied based on this reset value. The result is a situation – often considered a tax loophole – that allows investors to pass assets to their heirs virtually tax-free.
https://kiplinger.com/retirement/estate-planning/602701/biden-hopes-to-eliminate-stepped-up-basis-for-millionairesIf President Biden gets his way, many wealthy Americans will no longer be able to pass stocks, real estate, and other capital assets to their heirs when they die without paying capital gains tax. He wants to do this by changing the tax rules that allow a "step up" in basis on inherited property. This proposal, along with others designed to increase taxes on the wealthy, is included in Biden's recently released American Families Plan – a $1.8 trillion package that includes spending on childcare and education, guaranteed paid family and medical leave, tax breaks for lower- and middle-income Americans, and more.
Seeing that you have the Rational options fund, fyi, they have a non-ag'y mortgage fund too, RFXIX I shares, which is relatively new but has about the same total return profile so far as EIXIX. Just found it so no due diligence dive into it yet on my part.Was looking for a HY bond fund that had held up decently ("defensive?") in 1Q 2020. Found EIXIX with a 5.5% SEC Yield. $2,500 min at VGD (TF). May be my newest addition.
I've purchased founders shares, though they usually turned out to be worth about what I paid for them, i.e. nothing. Is there "anyone [else] here who ... could have invested in" founders shares in 1999?Mr. Thiel purchased his founders’ shares in PayPal through his Roth IRA during PayPal’s formation.
This reads as more of an "envy" write. No law was broken, and anyone here who is or was an excellent investor could have invested in their choice in 1999.ProPublica reported that in 1999, Thiel, the co-founder of Paypal Holdings Inc., placed 1.7 million shares of then-private PayPal into his Roth Ira. They were valued at $0.001 per share, meaning the contribution was under the $2,000 limit at the time.
https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bankUsing stock deals unavailable to most people, Thiel has taken a retirement account worth less than $2,000 in 1999 and spun it into a $5 billion windfall. To put that into perspective, here’s how much the average Roth was worth at the end of 2018: $39,108.
Which seems to bring us back to the thread AMG to Acquire Parnassus Funds:-Easterly, an asset management holding company that owns stakes in third-party investment management businesses and assists them with strategic growth, announced today it has acquired an equity interest in James Alpha Advisors, LLC, a boutique asset management firm specializing in Global REITs and liquid alternative portfolio solutions for institutional and individual investors. ...
As a result of the investment, Easterly has assumed operational control of the firm. ...
[Darrell Crate, Easterly’s Managing Principal] helped to build an asset management powerhouse as Chief Financial Officer of Affiliated Managers Group (NYSE: AMG), established Easterly in 2009...
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