Do you enjoy a wild ride? Asset Allocation is a fundamental part of investing. Which investments should we own? What percentage of total investments should we allocate to equities, bonds, Real Estate, or alternatives?

As an American, should I purchase International assets, or focus solely on US assets? There is an incredible amount of research on this topic, considering factors from expected duration of retirement to personal temperament.

Like most mainstream investment advice, it is targeted at people that plan to retire at 65 and live until they are Which is why as an early retiree, this advice and most mainstream advice is harmful at best. What if the stock market suffers a major drop?

What if the Great Recession happens all over again? I think the phrasing of these questions holds an underlying assumption, that the stock price on any given day is important. Unless you plan to buy or sell, the price is largely irrelevant. I seldom look at the stock market. But this does not concern me.

Our real risk comes not from changes in share price, but from outliving our portfolio. There are several different methods to predict portfolio longevity, or retirement success rates. The two most common methods are probably Monte Carlo analysis and Sequence of Return simulation, both of which can be done with cFIREsim.

The future will likely have many Black Swans. There are fewer 60 year investment returns to explore, but doing so gives a slightly different picture. The success rate with a high percentage of bonds looks quite dismal. This uses statistical models for stock and bond performance, and simulates thousands of retirement periods to come up with a confidence factor.

Because of the random nature of the analysis, the results will never be the same twice. But here are 2 outputs, one for 30 years and another for 60 years. The Efficient Frontier is often used to graphically represent return vs volatility for different asset allocations. I pulled this analysis from the Personal Capital Investment Checkup tool.

Most people will argue that a small increase in annual return is not worth the vastly increased volatility. So why accept the greater volatility? Because over a 60 year period, even a small increase in return results in massive differences in total assets. All data is for a 30 year retirement, with two results for a 60 year retirement shown in parenthesis. The difference in median value for a 30 year period over the studied range is 2x.

Over a 60 year period, it is 4x. But what if future market returns are not as strong as the past? And what about emotions? Humans are not logical machines. How many people panicked and sold at the bottom inlosing everything? There is no one right answer. I am optimistic about future economic performance, and am comfortable with volatility, which is why I can reminisce about the glory days of We lost 10 years worth of spending in Some people freaked out.

I did too, but for a different reason. Dividends were still being paid, and our daily lives were exactly the same. Dividends were still being paid, and our lives were exactly the same. If the stock market were to collapse tomorrow, dividends would still continue to be paid and our lives would be exactly the same. We also have incredible margins of safety that would prevent us from selling stock in a downturn.

In the big picture, most of these would only need to be used in the next 10 years or so. At some point, our portfolio will become too big to fail. It has more than fully recovered. In a fixed location, we can reduce spending by eating more tofu and less steak and lobster. Or we can practice geographic arbitrage, eating steak and lobster in Belize or Argentina instead of Paris or Tokyo or Sydney. Some would argue that there is no need to continue to seek growth.

Using the Personal Capital Portfolio ViewI get the following snapshot of our portfolio. Risk is such an interesting concept that changes depending on your circumstances. I view outliving the portfolio as a huge risk which you mentioned.

I also view suffering a slowly eroding standard of living as you fail to keep up with inflation as another risk. Risk is indeed quite interesting.

With a spending profile like yours, you will most likely also end up with a portfolio that is too big to fail. That equity volatility is pretty sweet. Hello hellow another year is up. Glad to hear you now n then year round. I am think about to have something from vanguardwhich one do you like to buy if you are goinf to buy one or two now. We put most of our funds in VTI and VXUS.

See this post for our asset allocation not advice, just sharing what we do. Now we are traveling full time from our savings and after six months we have more money than when we started!

The market has gone up of course and that may change, but we also know we can adapt like everyone here. Cheers and happy Saturday! We debate this issue endlessly in the MMM forums. Even if every single one of the thousands of companies indirectly held in your diversified portfolio immediately ceased paying dividends in the face of a downturn, you can sell the equivalent amount of your shares and wind up in the same position your remaining shares will capture the value of those unpaid dividends.

But… my mental distinction feels more comfortable keeping the number of shares whole, particularly with severe declines that might temporarily make equity value less than book value.

Investing in ETF lowers the risk of all dropping to zero to a minimum. With that many stocks in the Total Market, for example the only reason why all dividends would be cut if it is the end of the economy as we know it. I do think that holding more stocks is a good approach for a longer retirement. This is why I look at terminal value. The book, The Intelligent Asset Allocator, explains why a portfolio with just a small amount of an uncorrellated asset class e.

Thanks for your reply. The outcome of the analysis does depend on that definition. The unconventional, but inescapable, conclusion to be drawn from the past fifty years is that it has been far safer to invest in a diversified collection of American businesses than to invest in securities — Treasuries, for example — whose values have been tied to American currency.

That was also true in the preceding half-century, a period including the Great Depression and two world wars. Investors should heed this history. To one degree or another it is almost certain to be repeated during the next century. Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments — far riskier investments — than widely-diversified stock portfolios that are bought over time and that are owned in a manner invoking only token fees and commissions.

That lesson has not customarily been taught in business schools, where volatility is almost universally used as a proxy for risk.

Though this pedagogic assumption makes for easy teaching, it is dead wrong: Volatility is far from synonymous with risk. Popular formulas that equate the two terms lead students, investors and CEOs astray. It is true, of course, that owning equities for a day or a week or a year is far riskier in both nominal and purchasing-power terms than leaving funds in cash-equivalents.

That is relevant to certain investors — say, investment banks — whose viability can be threatened by declines in asset prices and which might be forced to sell securities during depressed markets.

Additionally, any party that might have meaningful near-term needs for funds should keep appropriate sums in Treasuries or insured bank deposits. For the great majority of investors, however, who can — and should — invest with a multi-decade horizon, quotational declines are unimportant. Their focus should remain fixed on attaining significant gains in purchasing power over their investing lifetime. For them, a diversified equity portfolio, bought over time, will prove far less risky than dollar-based securities.

If the investor, instead, fears price volatility, erroneously viewing it as a measure of risk, he may, ironically, end up doing some very risky things. People who heeded this sermon are now earning a pittance on sums they had previously expected would finance a pleasant retirement.

If not for their fear of meaningless price volatility, these investors could have assured themselves of a good income for life by simply buying a very low-cost index fund whose dividends would trend upward over the years and whose principal would grow as well with many ups and downs, to be sure.

You make your money on inactivity. The intermediary is going to end up with all the money. The quote can be found on numerous sites on the internet. I really do not know when Buffet first made this statement or the original context. Here is one link:. Instead they lost what they needed for the cushy life they had, and it was not necessary at all!

I tried finding the original story but all of the top quote articles about Buffett drown everything else out! For whatever reason, that volatility is often synonymous with risk for most people. Volatility has never been a proxy for risk, in my view.

If anything, I bemoan the lack of volatility. Risk can be difficult to quantify. But when looking at stocks, volatility is about the last place I look to in terms of assessing risk.

Fundamentals, competitive advantages, market share, debt, size, regulation, and competitive environments tell me a lot more about risk than volatility does. When I think of risk, I think of permanent loss of capital. Risk, to me, is the odds of losing money. And that goes not just for ending with less money than I started with, but also opportunity costs. Thus, cash is risky to me. The opportunity costs of cash in comparison to high-quality stocks is enormous. If you use a target date fund, in order to closely get the high percentage of stocks I assume you would pick a fund with a date in the far future, like fund or something like that?

Well thought out write-up. Looking to add some real estate to act as my fixed income. I have one question regarding dividends. You mention that in downturns the dividends continue to be paid. As I understand it, dividends are listed as a percentage yield.

Is this a percentage of the share price of the mutual fund or stock? You will often see them as a percentage, but that is just for convenience. The opportunity for improvement comes from the common misconception of the efficient frontier. This is going to get a bit theoretical and very difficult to explain in text, but I am willing to try and this image http: The efficient frontier is actually a line.

A line that runs through two points. One point, called the risk-free rate, has 0 risk, but a base level of return. The second point on the efficient frontier line is the tangent point of the hyperbola displayed at Personal Capital — this makes more sense if you view the link. The line in-between these two points is easy to comprehend, depending on how much Tangency Portfolio and Risk-Free Rate you have, how can define your risk and return.

Where this gets interesting and theory falls a bit short of reality is to the right of the Tangency portfolio. If you can borrow at the risk-free rate, you can continue to move up the efficient frontier line and receive much greater returns at the same risk level as the hyperbola. The first question of this is where can I borrow money at the risk-free rate? I personally borrow money at the following rates and have no desire to pay them back, my student loan is at 2.

It is possible to borrow money near the risk free rate. Finally, it is important to recognize that all of these calculations are dynamic and changing by the minute. The risk-free rate changes daily.

Correlations, risk, and return for asset classes constantly changes. The static hyperbola that Personal Capital shows is useful, but it is a good estimate at best for what is actually going on. I thought maximum yield is why you would have maximum success rate.

Do you mind clarifying some? No, maximum yield does not yield the maximum success rate. If the risk volatility is very high, and you have to withdraw at the wrong time, you may deplete or hurt, anyway your portfolio before it had a chance to realize those high returns. At least in theory…. Ha, I now take notes while I am reading your post.

Too many points popped up in my mind while I am reading. Thank you for sharing! Implementing and maintaining an asset allocation is very difficult and time consuming too. Anything that saves time is valuable. Of course, you lucky early retirees have the luxury to spend more time on personal finance if you want.

This is a bit ironic. You guys are the group that should worry the least about personal finance, but yet you guys are the group that are the best at this. I guess it is an endogenous process. Because you are good at this, you were able to achieve financial independence. Because you achieved financial independence, you are able to do an even better job because you have the freedom to dig the information whenever you want.

For those that are still saving toward FI, another margin of safety is saving a bit more than needed. However, I understand that some people may not want to work the additional one or two years to achieve the additional buffer. I just did a post that compares the investment values of funds with different expense ratios. I rebalance my portfolio once a year. Once a year is still some work.

I was one of those people that worked too long, probably by 3 years. It does help with margin of safety though. Once per year is not bad at all. Several of these charts go all the way back to the mids, I believe one of the charts is for the first US stock ever! When I saw these, my first reaction was why is he bothering to show us charts this old and sometimes for companies that no longer exist. Jeremy, I think I learned about cFIREsim a year or so ago from you. Using it has brought me peace of mind.

Keep up the good work! Point noted, allocation changed. Out of curiosity, what is your allocation? When the markets took a dive, my peer lending investments continued performing. It seems like it would be a likely candidate to provide a recurring income. The bigger peer lending platforms offer affiliate relationships, so a lot of bloggers talk about this quite a bit. I personally think that spending too much time trying to perfect asset allocation is really an academic exercise.

Yes, there is something to be said about holding non-correlated assets, but as we saw in the Great Recession, the correlation of all assets goes to one in times of crisis. I think any asset allocation methodology over a long enough duration will work out in the long run. Assuming you have some margins of safety built in to get you through the inevitable dips that happen. I always love a post that goes against conventional wisdom. Its always to see other perspectives, as there are many different ways to arrive at the same end game.

Your bond portfolio is your own home, and any rental property you may own. It makes sense to have the majority of your investments in a K in equities. All the Bogleheads would agree. Great article and nice usage of graphs to demonstrate your point.

I have the same view as you, we have a long time to invest so we can ride out the market volatility. We are not investing for the short term but rather the long term. Most of our holdings are individual dividend paying stocks.

We also hold some growth stocks as well. I think much more important than your exact allocation is the point about being flexible with spending, especially early in retirement. I am also optimistic about the long term.

Using valuations you can have a decent idea what will happen in the next decade and the early years of retirement are the most important when determining if your money will last. Most of the studies I have read show holding cash for the purpose of buying in a future down market almost never make up for the lost opportunity during the good times.

With the stock market up 3x sincethe drop would have to be incredibly severe. I would agree that during accumulation when you are adding money regularly that holding significant amounts of bonds or cash is most of the time a big opportunity cost.

Different strokes for different folks, but I would choose peace of mind even if not statistically optimal. I talked a little bit about our cash management here: Cash loses in all economic environments except deflationary periods, but our government has shown they have no reservations in turning on the printing press to prevent it. But the sleep better at night factor is an important one. That is largely what the bonds are for. But studies show that this seldom wins. If i want 60k salary and I have 2 million portfolio, 1.

For me this will achieve two things, reduce volatility and have fixed income for spending or investing in down markets. Now if I could only have the courage and pull the plug on work and sell my business. I already have enough money saved up, but I fear I might regret selling my business and be bored while all my friends and family members are still working.

On the other hand I could do without the stress associated with running the business. Also a part of me fears that the market could crash as I retire and take away some of the financial stability I enjoy now. I admire people that can leave a high paying job to follow their dreams. Did you ever questioned your decision to retire early.

Retiring early makes me feel like I am taking the easy way out. Can anyone relate to any of this. Any advise or suggestions would be greatly appreciated.

I questioned the decision to retire early a lot. We moved towards travel and starting a family, as opposed to away from the stress of a job. Personally, I never identified with my job and had a ton of outside interests. Perhaps this is a combination of years of not exercising the creative parts of the brain, and so without the direction of a work environment people feel lost.

Thanks a lot for taking the time to respond to my comment. I am am happy to have discovered this blog. You are a wise person for your young age. I will keep you up to date and I will be following your blog from now on.

I love this article. While I primarily focus the rest on Growth or Index funds I keep Fidelity Balanced as a way to have a little bit of bonds and I love balanced funds for investments down the future.

Occasionally, someone comes along and has something to say that changes the way I think about investing. Implied volatility currency options while back, Jim Collins had that effect on me and, after much research, led me to consolidate multiple stock funds into VTSAX. Still, I have kept it in place due to the research which seems to suggest I should hold my nose and just swallow the medicine.

Although I am not yet convinced I should abandon bonds, you have certainly caused me give this some additional thought. After some additional research, perhaps you will have changed my stance on the subject. Please let us know what you decide to do tel aviv stock exchange today doing your own research. It will be interesting to compare notes. Standard wisdom is to not time the market and to diversify across asset classes.

Your great analysis above was encouraging that my desire to avoid bonds might also somewhat accidentally be an optimal equities allocation for the very long haul. I share your thoughts on the current state of bonds. Real interest rates are still negative, not a promising environment for short term bond values.

I know the early years of an early retirement are critical. Teknik forex ajaib intend to claim my SS at age 62 because I will still have children under 18 and they will also qualify for fx hedging example check.

Between 55 and I could just spend down my cash or turn off the dividend reinvestment and take the money. Its all part of the reducing the fear of retirement for me.

This is a fairly complex decision. It partially depends on life expectancy, planned budget, and how much non-pension savings davy stockbrokers research have. On the MMM forums, there is a case study section where a handful of knowledgeable people could weigh in and help with the decision. Is this true, Jeremy? How does it work? I always thought that underage kids would only get a check from SS if one of the parents was dead….

What made market crash come back to life? Economy is still barely standing on the back of the Fed. Worst part of everything is that Fed jobs addressing envelopes from home finally run out of the bullet unless there is an another like a crash.

This is how I dodged the bullet. Janet yellen is under tremendous pressure to raise rate, td ameritrade japanese stocks imagine that to happen. You should invest at your perth city public holiday opening hours risk.

It never made much sense to me to put considerable money in bond funds waiting for that rainy day so it might buffer the overall portfolio. Meanwhile, losing the better return if the money had been in all equities all along. Meanwhile, buying opportunities abound in down markets. If only we had had more free cash in !

Unfortunately, folks tend to get nervous in down markets and end up selling low and buy high. You also have pension and SS income that are guaranteed. The government is taking the volatility and longevity risk for you. In retirement I believe its all about cash flow. I think you are thinking about SS the right way.

With SS or a pension somebody else takes the risk, and income is guaranteed. We will sell stock at times. It is primarily in our early years that I want to live on cash flow, to allow the portfolio to become too big to fail.

However, on an individual basis the sleep at night allocation will be the most successful. Bailing stock broker interview preparation on a plan in a panic will surely result in a failed outcome.

So in the end personal psychology cannot be ignored as a major factor in success when determining asset allocation. I admire Rick Ferri, he has done good stuff. But following his advice would be like going to see a gynecologist to check out my prostate.

Rick Ferri is an expert, just the wrong one. Our retirement will hopefully be longer than the current age of his target audience. Mr Ferri, why would you recommend an asset allocation that historically had a 1 in 5 chance of success? You are guaranteed to panic and lose everything! Yes, if generally speaking somebody has a habit of cheating, maybe they should reconsider getting married.

Those are two commitments I can firmly commit to see margin of safety section above. But this is just me. People cheat and panic all the time. But after some time, that felt normal. But that too started to feel normal. Instead of sleeping well during the next 20 years and having to take a weatherby mark v deluxe replacement stock at Wal-Mart at Age 60, instead use those experiences as exposure therapy and the insomnia as an opportunity to increase knowledge about fear and investing.

Change psychology to be long term beneficial. Jim Collins post, There is a major market crash coming! It could be higher or it could be lower.

He is just approaching it from the personal sleep at night factor. The SWR is just going to be a lower percent and thus you are going to save more or reduce expenses. In the case of the former that probably means deferring the start of 60s 30 second binary option strategy system. Not to mention maintaining the same withdraw rate in dollars.

All it takes is working a lot longer. I have the stock market 1920 chart question.

How many people will stay the course? It would be interesting to look at some data. Too bad cFIREsim did not exist in Then maybe all those guys who jumped out of windows after the crash would have SWR calculation and happily retired instead. Tongue in cheek…the jumping out window stories are just urban legend. InI had about k invested and when it crashed, I had access to cash and took advantage.

Would you change your withdrawal strategy at all to be more responsive to the higher volatility? In this research paper from Vanguard: It covers those 3 inflation adjusted, percentage of portfolio, ceiling and floor with non-inflation adjusted plus 5 or 6 others. We are following the GCC Withdrawal Strategy TM. This has a doubly positive effect.

It helps with the psychological transition from accumulation to drawdown, and minimizes portfolio load in the critical early years. Although the former was our primary motivation.

My other more wishful goal is for the portfolio to become too big to fail. In the short term, we can use geographic arbitrage to adjust spending based on market performance. If your getting into stocks now your probably buying at the top which is what dumb money always does.

Is there a link for a fund that this guy controls, ebay making money on postage we can see how his investment advice has performed over the past 10 or 20 years? Did he call the top in and and get out? Did they call the right time to get back in? Did they short on the way down and make billions? Or is it like every other active management fund, where they close the fund after they lose to the market and open a new one?

The guy has been managing investments since and is obviously still working? I wonder how his investments buy shares halifax bank performed compared to the Rolling Stones member. I believe he started his company inbefore that he was working as a portfolio manager with a bank.

Why is it different this time around? I could care less want to earn money from home without investment in india day to day fluctuations in the prices of the stocks we own.

Low fees, flexible withdrawal rates, optional future income, and a high percentage of equities. That is the recipe for a long and happy retirement. With all of your international allocation being in VEU, I take it you feel you have no need for international small cap exposure. May I ask why? Those same holdings could be purchased by buying VSS in a I exchanged VEU for VXUS at the end of The US stock market looks overpriced here while Europe looks much cheaper.

I will wait until nasdaq closes over which was the dot com high of before i add anymore US stocks. My investment advisor friend says the smart money is getting out of USA stocks in anticipation of a correction. He seems happy enough still working at age I think that this post is more specific to your situation rather than a general analysis that anyone can use.

That is because the cFIRESim allocation investigation uses portfolio size and annual expenses as inputs. These different annual expenses would lead you to different conclusions about the best allocation. Have you read The Black Swan? As defined by Taleb, a Black Swan event is not just a market crash—it is a completely unexpected event with non marginable stocks scottrade consequences.

By using historical data, cFiresim is blind to Black Swans because it uses past experience to predict the future. That said, Taleb is a big proponent of making yourself robust. My point in mentioning the Black Swan concept is that something will happen in the future, whatever it is, and one consequence will be stock market declines or major business failures.

Nuclear holocaust, a virus wipes out the world supply of corn and soybeans, or the zombie plague, who knows. If half the world population becomes zombies trying to eat the other half, asset allocation is irrelevant. Avid reader of your blog. I see your current portfolio also has a small portion of international stocks.

Generally, I am on your side with regards to having a small bond portion. I am not living in the US but my gut feeling tells me that my place of residence should not make any impact on my investment rational.

Thanks for your replies and keep up the good work! According trading solutions forex the Personal Capital asset allocation tool I should double my International exposure.

For example, how much forex kalendarz ekonomiczny does Apple make outside the US? But I suspect we will end up with a base in the US long term, especially as GCCjr approaches college age. I agree that most US companies have international exposures, but what about the fact that global stocks are trading at a cheaper valuations than US stocks.

I can see reasons why European companies have lower valuations higher cost of doing oklahoma city livestock market, more expensive social safety net, etc… and after years of doing a lot of business in Japan and Korea, the companies I worked with had at least x overhead compared to similar US companies. I know my target asset allocation says I should double the current size of my international exposure, and I will do that whenever I get around to making changes.

Jeremy, I was also wondering if you have a specific reason for choosing the ETF option of your funds e. VTI rather than the mutual fund version e. Found your blog through msn. I really need a book to start educating myself, could you or some of your readers recommend something?

In about 2 hours of reading, you will gain an understanding of how to invest and the psychology of investing. I have to much cash and am struggling with how to transition over to more equities. In my opinion, the best thing to do is to pick a target asset allocation and stick to it.

If putting all of your cash into stocks makes you feel uneasy, then that probably means your target asset allocation should have more bonds as opposed to not taking action.

The right asset allocation is one that allows you to sleep at night. I heard just as many people claiming the stock market was over valued a year ago as Foreign currency exchange london ontario do today. Are any of them right? Jse stock market shares act of buying a substantial amount of stock VTI or other all at one price, at all-time highs, makes me feel uneasy.

Quite an internal struggle. That is why I still have this bond position that I should have gotten rid of 2 years ago. Definitely made me reevaluate my plan. I submit that borrowing money and using the difference in rates to compound return is a perilous path. Leverage seems an easy way to riches but it is the road to ruin. Many people who employ borrowing as a device to compound return inevitably find cheap ways to make money in runescape 2016 f2p broke and crying in their soup wondering what happened.

I caution my clients against leverage. The only way to handle extreme swings in the market is to have enough equity so you can cover at all times. To prevent being wiped out, one must have sufficient flexibility in your portfolio so as to be able to weather the storms.

Best DRIP Brokers Online Offering Dividend Reinvestment Plan

If at that point I am leveraged 2: As the old story goes, if you have one foot in boiling water and the other in a bucket of ice water, on average you are NOT feeling fine. Which is necessary to offset and exceed the top worse days in a given year. Life is most volatile stocks in indian stock market gamble. To let your stress hormones dictate avoidance of all possible risk is not a realistic way to manage money or life.

Historically, the top 10 days usually follow, unsurprisingly perhaps, the bottom 10 days. Staying out of the market, missing any one of those 10 top days, will do considerable damage to your portfolio.

I know many techie friends and co-workers of mine, otherwise super smart peeps, convert everything into cash. They now have to work double-time to make up for those gains forgone, meaning retiring later if at all. This finance rule was spelled out in the literature since the 70s by Professor Fama, a father of finance.

The asset allocation shown in your posting above results in roughly 2. Obviously you have acquired these equities stock broker interview preparation time so your actual yield is probably higher. I understand that you take these dividends in cash now, but durring your accumulation phase, did you reinvest the dividends? I apologize if this was covered elsewhere, I tried to read most of your posts and the comments before posting here.

While working, I always auto-reinvested dividends. This is still the case in our tax-deferred accounts. This post touches on how we manage cash flow http: The stock market is very high right now, how to buy coca cola company stocks you recommend buying at these high prices or holding out until it evens out some? I noticed you mentioned the only regret you have in is not having more cash to buy more on the low.

Which is the reason why I always thought holding a portion to regulate the stock market congress created easily cash-convertible assets bonds or money market instrument is important. Last year during oil price drop my home country Malaysia has a dip in the stock market, I invested my cash into the dip which now already recovered to the initial level before the dip.

I wish they would include Savings accounts to give a more accurate asset allocation. Ive been slowly reducing my bond allocation but also question if now is the right time to do so. Logic says it should be percent stocks for maximum terminal value. Maybe because we all feel the bull market is getting long in the tooth, although of course it could go on like this for years.

I would consider SS and pension as part of your bond portfolio. If we were staying in the US, I would probably tilt that more towards the US. Since we plan on spending the majority of our time outside the US, we hold some International to provide some currency hedging. Note that US companies make a large percentage of their revenue outside the US, so you get some International coverage without specifically trying to invest internationally.

For your taxable dividend account swhich broker s do you use? I currently have IRAs with Vanguard and I want to build up a taxable dividend account.

Not sure whether to stick with Forex di android or go with Charles Schwab or Scottrade. There is no need to have more than one broker. Just open a standard brokerage account with Vanguard.

That What I thought and so happy my advisor had great money management stratiage. Without letting me know it. Until 2 months ago, a new advisor B. I did contact A, he never respond to my email or LINE call. If you were me: China and Taiwan has long way to go and lots to learn!!

Charles Schwab Margin Interest Rates

I am still learning your taxpretty hard for me to comprehend. Had always been in my mind, but your concrete recommendations and living it out have made the dream a true reality. Given your list, mine looks something like this for Brokerage shooting for 80k. Assuming I retire at 40 the goal:. What approach do you follow using http: Hey Joe, thanks so much, glad some of these posts made you think. Also, congrats on your awesome level of annual savings! I think we follow something like the bogleheads plan, putting tax friendly stuff like index funds and dividend stocks in the brokerage account and tax unfriendly stuff like bonds and REITs in the tax-advantaged accounts.

This post might help with the drawdown: Thanks for the feedback. Ran across this today — http: In my k I have VSGIX and VIIIX, and over the last 10 years the small cap fund has grown 2x the large cap. Rationale is better diversification and ultimately higher long term return period re-balancing. As companies become more global, I think it matters less. Cultures where failure is an acceptable outcome will drive more makemoneytakingsurveys.net review. But in I remember several firms cut their dividends.

What are your thoughts on sequence of returns risk especially in the initial retirement years when they inflict max damange? Otherwise pull out some cash when doing portfolio rebalancing. You can see annual expenses the principal offensive strategy options include all of the following except required nest egg details here.

According to this site http: The site has some interesting graphs and portfolio comparisons. Golden Butterfly Asset Allocation: It is always tempting to search through history to find an asset allocation that would outperform. Define outperform however you like. The question then becomes, is this repeatable going forward? This is a near impossible question to answer, doubly so with the Portfolio Charts data set which only goes back to Is it reasonable to make claims for a withdrawal rate over a 40 year period, when there are only 4 possible 40 year periods since ?

A sample of 4 has zero statistical significance.

The Path to % Equities - Go Curry Cracker!

A limited data bby options trading has other problems.

The dominant trend in interest rates since has online emarketing cash fast make lots of downward, driving treasury prices up. Thank you for that perspective Jeremy. It really depends on how much the stock market increases before you get a down swing. Since the stock market general trend is upwards, the odds are against you on this one.

Your retirement is looking very secure. If you retire just a year or three before a major stock collapse, then you work from home jobs skegness take advantage of low prices to buy stocks on sale. This is why our portfolio still has bonds.

Thank you for the post. Very thought provoking and compelling. However… In the article and the subsequent comments, you have articulated 3 three separate reasons why you still own bonds paraphrasing: Number 1 is in your article, 2 is early in the comments, 3 is a few posts above this one.

So in general did you own your home first before investing into stocks or how would you recommend on that? For us, we will be renters for life http: Do you recommend some broker specifically e. Fidelity has offer in my country, but fees as so high as they are using distributor bank who charges extra fees and can only purchase fidelity funds.

So my choice would be to by VTI via broker account etrade? Is there any downside of owning VTI over VTSAX? So thanks for the push. Historically, it will outperform a TSM index significantly: Would welcome your thoughts! This is only true in part. The primary motivation is the difference in intrinsic value of equity business ownership vs bonds debt. The debate is one of value of owning certain asset classes, not diversification within an asset class.

I agree with the conclusion on the link you shared: Seriously, the future is going to bring so many economic surprises that trying to pick the optimal index methodology feels demented.

Just a quick thanks again for this article as I poured a bunch of extra funds into my RRSP account. Only time will tell how this will work out but with with the data supplied here I know the long run will treat me well.

Do you suggest cost dollar averaging over the course of a year or a certain time period? And thanks for any advice on this. But… in real terms, with dividends reinvested, the stock market exceeded the peak Oct value within 7 years. By the 25 year mark, the portfolio would have doubled.

GCC, I am glad I found your blog! I am new to it, so could you please tell me or show me a link why you invest in EFT instead of index fund? Thanks for the response!

You mentioned that you regretted not having cash to invest in … Would a modest bond allocation not provide that? Great posts, always — many thanks! It might work out that way. Thanks… I am still struggling with that. One of the b vendors of my school charges 0. I would think, intuitively, that managing a fund, which is what Vanguard does, requires more work. I like stocks better. They charge because they can. You are captive audience….

Yuki, there may be a bigger problem with your fund, besides the high fees. It sounds like it is very narrowly focused biotech. It may not be appropriate for long-term investing, like in a retirement plan.

Amazing that some plans even offer such choices. You may want to speak with someone about a more appropriate portfolio. You could read what Vanguard has to say about rebalancing.

The bonus opportunity you are looking for, however you choose to define it, may never occur. It is pure speculation. So I turned 50 on Friday and I have been mulling about early retirement for a while now. Correct me if I am wrong. I suppose I could sell it and live a totally nomadic lifestyle like you guys do. If I do that, my main question is how do you manage the withdrawal of funds, and from which account assuming that you have a K, a ROTH and an investment account.

I quit my job at 51 with a net worth of almost 2 Mil an impending pension of almost 60K startin at 55 and still find myself livin a very frugal existence due to financial security concerns.

Thanks for the financial inspiration! Just looking for some clarity about your asset allocation. This graph from Personal Capital includes both the K and brokerage account, right? Can you be more specific about which allocations are in the brokerage account? I have no idea what to do with them, so there they sit. Should I be rolling them into an IRA? One is in Fidelity great! While in Grad school low income, low taxes is a good time to roll your k to an IRA, and then do Roth IRA conversions.

An example of Roth conversion: Im also having a tough time pulling the trigger on early retirement because of where the stock market is currently valued historically. The pe10 is close to 27 right now. The median being Your thoughts on retireing on a net worth number that maybe too good to be true? I do not have a financial advisor.

You have validated my approach to a retirement portfolio and I truly thank you. The volatility could kill the portfolio in the early years or send it soaring. I really enjoy reading your blog. You have lots of interesting counter intuitive insights! A lot of people recommend SCV and different asset allocation strategies. May I ask if you are happy with your VEU performance? I am looking for index funds outside the USA.

Would you still have VEU if you had another choice? Thanks for any insights and suggestions. They are similar, but VXUS holds more stocks mostly small-cap. Considering how high VTI is right now, if you were working, would you still buy some? I have vtsax in my I am debating whether I should purchase more for December as I have been consistent. If you look at the market over the last century, you will observe that the market has been at its all time high very often.

While your feelings are very normal, not investing now due to market sentiment would be considered market timing. And that is not a good approach. Investing should not have feelings involved at all. The trick is to buy and hold and if you hold long enough, the market will be higher than where you started. My wife and I are bogleheads and frugal. Thanks for your effort in writing this article. I am a Canadian in Beijing …. I also have a small biz which I need to fund my purchases for.

My big concern is selling during a market downturn and never being able to recover since the shares are already spent. Have you read anything by Wade Phau? What did you invest your money in in the first place? I have a b, and my husband has a solo k. We max out both as much as we can. I see the dividends come in, however, those are just reinvented. Should we start another account and start investing there? How would we be able to use the dividends on a yearly basis before we reach 59?

It is probably the best way to get started with investing, and would answer all 3 of your questions and more. We too invested in a k and reinvested dividends. You are off to a good start by trying to max those out. There is nothing really special about dividends per se, they are just dollars in your account, and you can access all of the dollars with a conversion ladder or an SEPP. I think you are a little bit confused about how to interpret the Monte Carlo simulation. The standard deviation is more important than the mean.

You say you believe the numbers. What the Monte Carlo simulations gives you is a distribution of possible futures, and you are making your decision based on the mean, but the mean is just one outcome. That means really big losses if you are on the negative side!! Volatility makes a huge difference over the course of a 30 year investment. Look into it, you will be surprised. The increased volatility can easily wipe out your gains.

This is why volatility matters so much. Also please understand — just because one allocation has a greater mean expected return does not mean it will end up that way in reality.

You can have two funds, one with a greater average rate of return but higher volatility, and it will end up with less money than the other fund! I know this sounds impossible but it is true.

Oh man, all of the professors who taught my Masters classes in probability, statistics, and stochastic processes are going to be very disappointed. Apparently my English professors too because none of the data above is from Monte Carlo analysis, aside from the two graphs that I shared for completeness faulty as they are. It is all from rolling window sequence of return simulations using actual historical data. This is the standard cfiresim simulation mentioned throughout. That the failure cases all failed in similar fashion indicates that portfolio collapse happened late in the retirement periods, suggesting there was time to course correct.

As such, one of the worst case periods was studied in this post. I could also go the Canadian route later …. Your blog got me started on early retirement and my wife and I are 2 years into our 10 year plan for early retirement. Sure, but on a permanent basis.

Overall, if you feel uneasy or generally concerned, then the right answer is probably to change target asset allocation. We can all think of reasons why the market will fall… but we will probably be wrong.

Sure, I would have liked to have had more cash in But maybe the next buying opportunity is now. But then you go on to give helpful replies to your readers, sometimes YEARS after your original post? Have you ever heard of Andrew Hallam …. This site is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as CreditCards.

This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.

Facebook Twitter RSS Instagram Press Contact Archives Advertise Disclaimers. Start Here About Recommendations Free Travel How To Start a Blog Insurance Library Packing List Money Management Amazon.

Monte Carlo Analysis Success Rates for 30 Year Retirement. Monte Carlo Analysis Success Rate for 60 Year Retirement. Now check your email to confirm your subscription. There was an error submitting your subscription. Justin Root of Good on March 6, at 5: Go Curry Cracker on March 6, at 7: That equity volatility is pretty sweet Reply. Emili on July 7, at 7: Would you please let me know what are those: Go Curry Cracker on July 7, at 7: You can find them on the Vanguard website Reply.

Go Curry Cracker on February 13, at 8: Amy Bryan on July 13, at 4: Go Curry Cracker on July 13, at Go Curry Cracker on March 6, at 4: I agree those two transactions should be mathematically equivalent.

My Other Feet on April 30, at 9: Go Curry Cracker on April 30, at My Other Feet on May 13, at 6: Excellent post — please keep writing. This is good food for thought. Reminds me of something Warren Buffet said days ago in his letter to shareholders: Luxuriously Frugal on March 6, at 8: Warren is a far more eloquent writer than I am Thanks for sharing, I always love reading the BRK annual letters Reply. Dave Inland NW on March 8, at Swinging for the maximum retirement terminal value brings this Warren Buffett quote to mind: Go Curry Cracker on March 8, at 8: Can you share a link for that quote?

Dave Inland NW on March 9, at 5: Jeremy, The quote can be found on numerous sites on the internet. Here is one link: Go Curry Cracker on March 9, at Just like Buffett Reply. Aussie in Asia on May 19, at 2: The context for the quote was quite specific but has been isolated as a sound byte.

I recently started reading your blog and have been enjoying it. Go Curry Cracker on May 22, at 1: This version of the story completely makes sense Reply. Ted Hu on April 17, at 4: And Dividend Mantra does a solid expounding on this: Kramer on June 28, at 3: E Dizzle on March 6, at 7: That would probably work Reply.

Or would you use REITs? Mann on March 6, at 8: Thanks for writing this article, it really firmed up some ideas that I only partly understood. TheBisutti on March 6, at 8: DoggedFilms on June 30, at 1: Go Curry Cracker on November 23, at 1: Laura on February 7, at 4: Yuliy on February 7, at 1: At least in theory… Reply.

Below are my notes for this post: Low-cost Vanguard index funds are the way to go. Go Curry Cracker on March 6, at 5: Once per year is not bad at all Reply. John Rush on March 6, at 9: That took care of any concerns I had about history and emotions.

MiningFrugal on March 6, at Thanks for another informative post. I think that is the way to go. I still have to man up and pull the trigger myself Reply. Fiby on March 6, at 7: The last part of this post shows our current allocation Reply. Gen Y Finance Guy on March 6, at You just have to find the one that works for your individual wants and needs.

No Nonsense Landlord on March 6, at 1: CorporateDrone on March 8, at Tawcan on March 6, at 3: Hi Tawcan, sounds like a solid plan.

Long term equities are definitely the strong play Reply. ChrisEE on March 6, at 4: ChrisEE on March 6, at 7: Cash loses in all economic environments except deflationary periods, but our government has shown they have no reservations in turning on the printing press to prevent it But the sleep better at night factor is an important one.

That is largely what the bonds are for Reply. Aaron on March 26, at 7: Go Curry Cracker on March 26, at 6: Ron on April 4, at 9: Go Curry Cracker on April 4, at 8: We moved towards travel and starting a family, as opposed to away from the stress of a job Personally, I never identified with my job and had a ton of outside interests.

Ron on April 5, at 5: Prob8 on March 6, at 6: Well done and thanks for your contributions to the world of early retirement. It will be interesting to compare notes Reply. Markola on March 6, at 8: Go Curry Cracker on March 7, at 9: Real interest rates are still negative, not a promising environment for short term bond values Reply.

Mike on March 7, at It partially depends on life expectancy, planned budget, and how much non-pension savings you have On the MMM forums, there is a case study section where a handful of knowledgeable people could weigh in and help with the decision. Meiguoren on March 9, at 3: I always thought that underage kids would only get a check from SS if one of the parents was dead… Reply. Young on March 7, at 2: The Bob's on March 7, at 8: The government is taking the volatility and longevity risk for you You could really consider those to be your fixed income portion of the portfolio Reply.

Mike on March 7, at 9: Go Curry Cracker on March 7, at 7: Dave Inland NW on March 7, at 6: I agree, bailing on a plan in a panic would most likely result in failure. Those are two commitments I can firmly commit to see margin of safety section above But this is just me. Change psychology to be long term beneficial 2 great starting points: Dave on March 8, at 9: Go Curry Cracker on March 8, at 9: All it takes is working a lot longer I have the same question.

Dave Inland NW on March 10, at Ron on April 4, at 1: Andrew on March 8, at 1: It covers those 3 inflation adjusted, percentage of portfolio, ceiling and floor with non-inflation adjusted plus 5 or 6 others We are following the GCC Withdrawal Strategy TM.

Although the former was our primary motivation My other more wishful goal is for the portfolio to become too big to fail. No big deal In the short term, we can use geographic arbitrage to adjust spending based on market performance Reply. Mike on March 9, at What is your definition of too big to fail?

Stevie Wonders on January 23, at 7: Go Curry Cracker on January 23, at In other words, a 2. I like the nomenclature. Here is his performance link. I wonder how his investments have performed compared to the Rolling Stones member Reply. Ang on March 11, at 6: Joe O arebelspy on March 9, at 2: Math analysis like this makes me feel warm and fuzzy.

Meiguoren on March 9, at 4: Thanks for the work that you do, Jeremy! That is the recipe for a long and happy retirement Reply. Ang on March 10, at 4: Go Curry Cracker on March 15, at Buckaroo on March 13, at 7: Hello, With all of your international allocation being in VEU, I take it you feel you have no need for international small cap exposure.

Most of my purchases were prior to when VXUS was created. Justin Root of Good on March 16, at 4: Evan on March 17, at 2: You have had lots of great posts recently.

It is like you having been reading my mind. Keep the good posts coming. Go Curry Cracker on March 17, at 2: It is not specific to us Reply.

How Margin Trading Works | Scottrade

Adam on March 17, at Go Curry Cracker on March 18, at 1: Hi Adam, no worries, if I am incorrect about something I like to know about it Although in this case, I think we are saying the same thing.

Kalergie on March 21, at 2: Go Curry Cracker on March 21, at 6: But I suspect we will end up with a base in the US long term, especially as GCCjr approaches college age Cheers Jeremy Reply. Kalergie on March 22, at 8: Thanks for the quick reply. I know my target asset allocation says I should double the current size of my international exposure, and I will do that whenever I get around to making changes Reply. Kalergie on August 14, at 1: Go Curry Cracker on August 14, at 6: Either way is fine, they are equivalent enough Reply.

Dave on April 6, at 3: Go Curry Cracker on April 6, at 6: In about 2 hours of reading, you will gain an understanding of how to invest and the psychology of investing That will provide a nice foundation Cheers Jeremy Reply. Dave on April 7, at 2: Chad on April 7, at 8: Great post as usual Jeremy. Go Curry Cracker on April 8, at