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Most liked posts in thread: What's your retirement asset allocation percentages?

  1. Zaxon

    Zaxon The voice of reason

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    Studies you want, then studies you shall have! This comes from the http://www.cfiresim.com/ calculator, a very popular site for calculating safe withdrawals.

    4% Rule
    • Capital on retirement 1.6 million
    • 4% first year withdrawal increased by CPI on subsequent years
    • Asset allocation: 60% stocks/40% bonds (that's the typical ratio used)
    • Over 30 years

    Zaxon's 5% Rule
    • Capital on retirement 1.6 million
    • 5% of AUM each year
    • Asset allocation: 90% stocks/10% bonds (that's my originally stated ratio)
    • Over 30 years
    Rate of Failure
    This means running out of money before 30 years.

    4% rule: 5% chance of failure
    upload_2019-11-12_2-45-32.png

    Zaxon's 5% rule: 0% chance of failure
    upload_2019-11-12_2-46-47.png

    Withdrawal Analysis
    All dollar amounts are inflation adjusted (in today's dollars).

    4% rule: $64k each year. OK. That's what we expected.
    upload_2019-11-12_2-48-24.png

    Zaxon's 5% rule: average of $82k increasing to $111k. Impressive
    upload_2019-11-12_2-50-16.png

    Total Payout

    4% rule: $1.984 million over 30 years
    upload_2019-11-12_2-53-27.png

    Zaxon's 5% rule: average of $3.127 million over 30 years
    upload_2019-11-12_2-54-28.png

    Conclusion
    • Is Zaxon's 5% rule safe? Yes, your portfolio will never go broke.
    • Which portfolio gives you the "richest" lifestyle? Zaxon: 3.12 million vs 4% rule: 1.98 million. That's a significant difference.
    • What's the drawback of Zaxon's 5% rule? Big swings in yearly payments, from low of $30k up to a high of $295k per year (taken from final third)
    • Is Zaxon's 5% rule better? Better for me? Yes. Better for those who want to maximize their return potential? Yes. Better for people who want stability? No. Better for the average man in the street? Probably not.
     
    Last edited: Nov 12, 2019
  2. sptrawler

    sptrawler

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    The problem is, life throws curved balls, especially when it comes to health and family
     
  3. Zaxon

    Zaxon The voice of reason

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    My planned asset allocation for retirement will be 90% stocks / 10% cash/bonds.

    My approach is to realize that when I retire, I'll still live for another 30+ years. Long investment horizons are what stocks are designed for.

    In the last 10 years of my life (or so), then I'll possibly convert everything into cash or bonds.
     
    aus_trader, lindsayf and Skate like this.
  4. sptrawler

    sptrawler

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    60% shares(Aust), 30% cash, 10% property. 60%in super 40% outside super.
    I will be reducing the cash by purchasing more LIC's/ETF's.
    The reason behind my decision, I guess I'm conservative and it was hard fought accumulating it so scared to death of losing it.
    But my investment confidence is improving, mainly do to the positive interaction and information/knowledge I'm gaining on ASF.
     
    aus_trader, Skate and qldfrog like this.
  5. tech/a

    tech/a No Ordinary Duck

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    Make sure you invest in assets that rise with inflation.
     
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  6. tech/a

    tech/a No Ordinary Duck

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    Saxon
    It is expected that you’d be investing when inflation is threatening

    If not then I agree

    I like property.
     
    aus_trader, Value Collector and Zaxon like this.