galeno
Commander
KISS & STC
Posts: 221
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Post by galeno on Apr 14, 2022 0:06:02 GMT
These are 4 UCITS ETFs that I follow.
SP500 (VUSA) PE = 19.7
TWSM (VWRD) PE = 16.0
SC Developed (WSML) PE = 13.6
EM (VDEM) PE = 11.1
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Post by Mustang on Apr 14, 2022 1:17:46 GMT
Yes, DCA is for amateurs but that is how most people build a retirement portfolio. Through 401k's or 403b's they invest a little each week from their paychecks. And their employers encourage them to do so by matching a part of their weekly investments.
Back to the original topic: Since I invest in managed funds the P/E ratio of my portfolio is around 17.
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galeno
Commander
KISS & STC
Posts: 221
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Post by galeno on Apr 14, 2022 1:35:28 GMT
"Back to the original topic: Since I invest in managed funds the P/E ratio of my portfolio is around 17."
Is your port 100% equity?
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Post by Mustang on Apr 19, 2022 10:37:24 GMT
"Back to the original topic: Since I invest in managed funds the P/E ratio of my portfolio is around 17." Is your port 100% equity? No. I think very few retirees with special circumstances should hold 100% equity. I'm pretty much a buy and hold investor. I am far from and expert but I like Markowitz's Modern Portfolio Theory (MPT) and the research of Bengen and the Trinity Study. MPT talks about the relationship between risk and return and the optimum portfolio allocation that produces the highest return for that level of risk. Another member posted a recent Ameritrade chart that showed the current minimum risk allocation is 33/67 stocks/bonds. This is basically a conservative-allocation fund. Adding more bonds lowers returns and increases risk. Adding more stock increases risk but also increases returns. Markowitz called the line showing that relationship the efficient frontier. For those that want a little more return without adding a lot of risk is the 60/40 allocation which is basically a moderate-allocation fund. These are guidelines not hard fast rules because both the minimum risk allocation and the efficient frontier change with market conditions.
Research by Bengen, the Trinity Study authors, and Wade Pfau's update of the Trinity Study (data from 1929-2017) all show that when using fixed withdrawals increased for inflation a portfolio having between 50% and 75% stock has the highest probability of success regardless of the withdrawal period. Higher allocations of stocks had lower probabilities of success. Higher allocations of bonds has a much lower probability of success especially over the longer payout periods. According to the research, the retiree has to alter the initial withdrawal to fit the length of the expected payout period, i.e 6%=15 years, 5%=20 years, 4%=30 years, and 3%=40 or more years.
I have been preparing my portfolio for withdrawals over the last few years. My primary goal is a livable, stable income. Simplicity is critical for management as I age and transition of management to my wife. And, withdrawals are not the same thing as spending. RMD are required withdrawals but nothing says you have to spend them.
I have only one 100% equity fund left and it is being phased out. It is only 3.5% of the portfolio. For simplicity I have gone to three balanced funds, two moderate-allocation (American Funds Balanced Fund and Vanguard Wellington) and one conservative-allocation fund (Vanguard Wellesley Income). ABALX has approximately 65% stock and is in our traditional IRAs. We will be using RMDs for withdrawals. VWENX and VWIAX have been paired together in our taxable accounts for an approximate 50/50 allocation. We will be using a slightly modified version of the 4% Rule taking the withdrawal from the fund with the highest previous end of year balance.
I believe in picking the best funds I can that fit my goals and then letting professional managers do the rest. For example, when Wellington's returns were starting to fall behind its managers added growth stocks. Currently. Wellesley Income reduced its proportion of bonds from 65% to 55% based upon predictions of poor future bond performance. An active trader would not like my strategy. It is boring. But, it is effective.
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Post by mozart522 on Apr 19, 2022 12:05:10 GMT
These are 4 UCITS ETFs that I follow. SP500 (VUSA) PE = 19.7 TWSM (VWRD) PE = 16.0 SC Developed (WSML) PE = 13.6 EM (VDEM) PE = 11.1 Sorry, but I can't agree. PEs outside the US are not the same as PEs inside the US. siblisresearch.com/data/pe-ratios-by-country/We justified P/Es well over 20 for years because rates were low and inflation was tame. Rates are rising and inflation is at a 40 year high, and the US market will likely need to contract to close to 15 in response. This contraction will be greatly aided by the FED IMO. Meanwhile, every day we get more news about supply chain issues and commodity shortages. Be careful out there. |
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Post by steadyeddy on Apr 19, 2022 23:43:04 GMT
"Back to the original topic: Since I invest in managed funds the P/E ratio of my portfolio is around 17." Is your port 100% equity? No. I think very few retirees with special circumstances should hold 100% equity. I'm pretty much a buy and hold investor. I am far from and expert but I like Markowitz's Modern Portfolio Theory (MPT) and the research of Bengen and the Trinity Study. MPT talks about the relationship between risk and return and the optimum portfolio allocation that produces the highest return for that level of risk. Another member posted a recent Ameritrade chart that showed the current minimum risk allocation is 33/67 stocks/bonds. This is basically a conservative-allocation fund. Adding more bonds lowers returns and increases risk. Adding more stock increases risk but also increases returns. Markowitz called the line showing that relationship the efficient frontier. For those that want a little more return without adding a lot of risk is the 60/40 allocation which is basically a moderate-allocation fund. These are guidelines not hard fast rules because both the minimum risk allocation and the efficient frontier change with market conditions.
Research by Bengen, the Trinity Study authors, and Wade Pfau's update of the Trinity Study (data from 1929-2017) all show that when using fixed withdrawals increased for inflation a portfolio having between 50% and 75% stock has the highest probability of success regardless of the withdrawal period. Higher allocations of stocks had lower probabilities of success. Higher allocations of bonds has a much lower probability of success especially over the longer payout periods. According to the research, the retiree has to alter the initial withdrawal to fit the length of the expected payout period, i.e 6%=15 years, 5%=20 years, 4%=30 years, and 3%=40 or more years.
I have been preparing my portfolio for withdrawals over the last few years. My primary goal is a livable, stable income. Simplicity is critical for management as I age and transition of management to my wife. And, withdrawals are not the same thing as spending. RMD are required withdrawals but nothing says you have to spend them.
I have only one 100% equity fund left and it is being phased out. It is only 3.5% of the portfolio. For simplicity I have gone to three balanced funds, two moderate-allocation (American Funds Balanced Fund and Vanguard Wellington) and one conservative-allocation fund (Vanguard Wellesley Income). ABALX has approximately 65% stock and is in our traditional IRAs. We will be using RMDs for withdrawals. VWENX and VWIAX have been paired together in our taxable accounts for an approximate 50/50 allocation. We will be using a slightly modified version of the 4% Rule taking the withdrawal from the fund with the highest previous end of year balance.
I believe in picking the best funds I can that fit my goals and then letting professional managers do the rest. For example, when Wellington's returns were starting to fall behind its managers added growth stocks. Currently. Wellesley Income reduced its proportion of bonds from 65% to 55% based upon predictions of poor future bond performance. An active trader would not like my strategy. It is boring. But, it is effective.
, excellent rationale and approach. |
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