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Post by mnfish on May 26, 2022 14:08:01 GMT
I have been living on my investments since shortly before 2015. So, I looked back 7 years in my WFA statements and took my portfolio begin and end amounts, starting with 2015, and what I actually spent each year and made a simple spread sheet to see my results for each year. Then I went to PortVis and used 78% SPY, 15% BOND and 7% Cash, which is pretty close to my portfolio over the years, and used the same begin amount for 2015 and fixed withdraw amount each subsequent year to compare my results to a simple 2 fund portfolio. My withdrawals have averaged 4.9% with a low of 3.5% and a high of 8%. What a gut punch that was!
2015 Me -10.4% Spy/Bond +3.7%+
2016 Me +9.9% Spy/Bond +11.7%
2017 Me +3.9% Spy/Bond +12.1%
2018 Me -13.5% Spy/Bond -8.9%
2019 Me +16.4% Spy/Bond +18%
2020 Me +7% Spy/Bond +10.7%
2021 Me +17.2% Spy/Bond +14.3%
2022 as of Apr 30 Me -4.3% Spy/Bond -13.2%
The end result is that in 7 years Spy/Bond would have outperformed Me by 34.8%! The only piddly saving grace is YTD 2022 where I'm down 9% less than Spy/Bond.
Anybody care to share anything similar? How bad am I compared to another retiree?
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Post by Chahta on May 26, 2022 14:56:46 GMT
Kudos to you for taking the time now to examine this. This is exactly the type of post we need more of here to help each other. Managing a retirement vs accumulation portfolio is very different. IMHO
So it seems you are comparing a SPY/Bond portfolio to your own portfolio. Evidently you are not using B&H index type funds. Personally I would think it would be hard to take a consistent withdrawal buying/selling funds or using sector funds or trying to time markets. I do not live off my portfolio yet, other than my taxable account which I loaded with cash to start retirement in 2019 for fear of Sequence Risk.
I am having a similar problem settling into the bond portion of my portfolio. I turned to indexing for the bulk of my equities with 1 growth managed fund in my taxable account to collect CGs when possible. I do not sell equities other than to capture a gain in my taxable. Looking back the last 7 years I know I am in the black except 2018 down 4.9%.
I think we fall into a trap on these forums reading what others do and what is hot this month, then thinking we need to change. I know I am not a trader and would produce lousy results. I suggest looking at Christine Benz's model portfolios, Bob Brinker's model portfolios or looking at Bogle head portfolios. I started monitoring a 50/50 Wellesley + Wellington, the Benz and Brinker portfolios starting Jan 1, 2021 to see where I am along side of them.
Seems to me you have defined what you should be doing.
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Post by mnfish on May 26, 2022 16:06:18 GMT
Not that it matters, as my point was a simple 2 fund vs my way, but in 7 years I've spent 38.1% of my begin balance in 2015 and my port today is 28.5% higher than begin 2015. So I'm "in the black". However, SPY/Bond is 73% higher!
"My way" consists of mostly single stocks (some ETF), bond funds/ETF, some MLP's and mostly buy and hold (i.e., I've held ORCL since 1995, XOM & CVX since 2006, AAPL since 2012-13). This has certainly proved to me that, at least in the last 7 years, you can withdraw from low yielding stock and bond funds. Now, given what has transpired 2022 YTD and if that were to continue for years(?) maybe I will cut that performance gap.
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hondo
Commander
Posts: 148
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Post by hondo on May 26, 2022 16:16:55 GMT
Thanks for your post. Gives me something to think about. I have never run such a spreadsheet, but think that I will now.
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Post by anitya on May 26, 2022 17:11:31 GMT
Like others I track my portfolio in M* portfolio feature. It allows one to select an index to compare against. With an equity allocation ranging between 55-65%, I was able to track close to SP 500, making up for any shortage by losing less in down / dip markets. My investing behavior changed in 2021, and my portfolio fell considerably behind the index and I am yet to make up the difference in the current 2022 dip. Likely I will not able to make up the loss to SP500 since beginning of 2021, though I spent considerably more time than before on portfolio. I learned I should not change what is working, and making it more complicated (and knowing more) does not necessarily translate into better results.
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Post by FD1000 on May 26, 2022 20:44:03 GMT
My usual 2 points: 1) You can look only at performance 2) For many, just like me, risk-adjusted performance is more important. I retired at the end of 2018. For the 3 years 2019-20-21: my portfolio, which was about 10/90 (stocks/bonds): average annual performance was 14.5% with SD=2.06 (SD was 2.1 for 1-3-5) years. That translates to Sharp Ratio > 5. BTW, I never lost more than 1% from any last top in the last 5 years and specifically in Q4/2018, 03/2020 and YTD. All documented in this ( link) with actual copy of my results at the end. IMO, controlling risk/volatility is the most important aspect of investing. I have done it thru switching to better performing funds and in the last several years by selling to cash (read link). My usual advice is KISS 1) Own limited number of funds, max 5 2) Own 2-3 managed and 2-3 indexes. 3) Indexes are easy. SPY/VOO/VTI/BND 4) Managed allocation=VWIAX,PRWCX...bonds=DODIX 5) Very small amount in cash 6) Minimal trading. Good luck |
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Post by Chahta on May 26, 2022 21:22:10 GMT
It looks possible you are income investing versus total return investing causing a lack of performance.
When investing in stocks it seems that 20-25 at 4-5% each for single stock risk is required.
I realize that your average withdrawal was 4.9% but the 8% is too much. The 4.9% is a little high as well.
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Deleted
Deleted Member
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Post by Deleted on May 26, 2022 22:01:58 GMT
Past performance has zero predictive value, so what the hell is it good for?
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Post by ignatz on May 27, 2022 6:09:25 GMT
2015 Me -10.4% Spy/Bond +3.7%+ 2016 Me +9.9% Spy/Bond +11.7% 2017 Me +3.9% Spy/Bond +12.1% 2018 Me -13.5% Spy/Bond -8.9% 2019 Me +16.4% Spy/Bond +18% 2020 Me +7% Spy/Bond +10.7% 2021 Me +17.2% Spy/Bond +14.3% 2022 as of Apr 30 Me -4.3% Spy/Bond -13.2%
I just used a calculator on the above 2 columns....Me and SPY/bond
10,000 dollars on 12/31/14 becomes 12362 using the Me column.
10,000 dollars on 12/31/14 becomes 15530 using the SPY/bond column.
Roughly 24 percent growth on Me versus 55 percent on SPY/bond. More than double.
CAGR for Me: 2.94; CAGR for SPY/bond: 6.19. More than double.
Does that correspond to your calculations and understanding?
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Post by alvinthechipmunk on May 27, 2022 8:53:14 GMT
I use Morningstar's tools. I wouldn't know a spreadsheet from a lactating shrew on the lawn. The M* benchmarks never line-up with what I own. And my performance against the benchmark(s) is therefore predictably horrible. In retirement, but I'm still actively investing, with the heirs in mind. Wife still works. The attempt to cut back on expenses in retirement is fruitless--- because I'm MARRIED. Anyhow, we'll get the car paid off, and maybe, at some point in the future, wifey (in cahoots with a girlfriend from back East) will actually decide that the new and rather fancy house we've built in an Asian shit-hole country does not need any more stupid additions or improvements. (Just got it built, and then BOOM: typhoon. Thankfully, the damage was not serious.) And as with all those shit-hole countries, everyone depends on charity from the "rich" American relatives. When boxes full of stuff get sent to subsidize the extended family back there, it always includes basic, ridiculous stuff--- like laundry detergent. ("You might live in a shit-hole country, if you can't even manage to both feed yourself AND buy laundry soap!!!") Voters over there just lately proved once again that they are as totally stoopid as US voters...
For these reasons, the thing I compare investing results against is MYSELF.
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Post by mnfish on May 27, 2022 10:53:17 GMT
It looks possible you are income investing versus total return investing causing a lack of performance. When investing in stocks it seems that 20-25 at 4-5% each for single stock risk is required. I realize that your average withdrawal was 4.9% but the 8% is too much. The 4.9% is a little high as well. Chahta - My total yield is 2.3% so not really. The percentage is down because the account value is up. In 2015 my total yield was 3.4%. The reason I have a high % of AAPL & ORCL is that I've just held them for so long. I have sold enough of both of them to get back my original investment long ago. Both have split numerous times.
When I did this I just looked at my year end statements and looked at "Withdrawals" for the year. The 8% was in 2021 and I did take out $57k to buy 30 acres of land, so call it an "alternative investment", which I still own. So, factoring that in my withdrawal was 4.64%. |
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Post by mnfish on May 27, 2022 11:02:41 GMT
ignatz, Yes - "my port today is 28.5% higher than begin 2015. So I'm "in the black". However, SPY/Bond is 73% higher!" @django, Obviously I agree. Read "This has certainly proved to me that, at least in the last 7 years, you can withdraw from low yielding stock and bond funds. Now, given what has transpired 2022 YTD and if that were to continue for years(?) maybe I will cut that performance gap.
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Post by Fearchar on May 27, 2022 15:09:31 GMT
I was retired, but have been lured back to the dark side....  My Mom however, is and has been retired for many years. During some of this time period, my father was still alive and he paid the college tuition for 5 grandchildren. He also paid for more tuition before 2015. So, here is portfolio performance during that time period. | Year | Portfolio Gain/Loss | Cumulative | | 2015 | -2% | 98% | | 2016 | 10% | 108% | | 2017 | 25% | 135% | | 2018 | -8% | 124% | | 2019 | 39% | 172% | | 2020 | 16% | 200% | | 2021 | 21% | 242% | | 2022 YTD | -20% | 192% |
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Post by retiredat48 on May 27, 2022 16:28:51 GMT
mnfish ,...Hi That you select the SPY as the workhorse benchmark, has recency bias, done in hindsight. That is, it did very well the last decade, due to the rise of a very few companies such as AAPL. The top ten companies (mainly high tech type) dominated the index...and the capital structure of the index. It could very well be that in the next decade, the S&P 500 may lag...maybe even severely. Like, I consider a bet better than 50/50, is that TESLA will not sell above its previous high (max) share price, ten years from now! An index of dividend paying stocks...or dividend growth stocks...or VALUE stocks may be far better. But looking backwards, then choosing the benchmark, is not always that useful. Lastly, how many people had a SPY500/BND, two fund portfolio?? Few. Especially few if you used a professional advisor. It was not the way balanced portfolios were constructed or marketed. And BTW with that Vang'd BND component, I think this allocation will lag next 5-10 years. Good day. R48
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Post by steadyeddy on May 27, 2022 18:05:25 GMT
mnfish ,...Hi That you select the SPY as the workhorse benchmark, has recency bias, done in hindsight. That is, it did very well the last decade, due to the rise of a very few companies such as AAPL. The top ten companies (mainly high tech type) dominated the index...and the capital structure of the index. It could very well be that in the next decade, the S&P 500 may lag...maybe even severely. Like, I consider a bet better than 50/50, is that TESLA will not sell above its previous high (max) share price, ten years from now! An index of dividend paying stocks...or dividend growth stocks...or VALUE stocks may be far better. But looking backwards, then choosing the benchmark, is not always that useful. Lastly, how many people had a SPY500/BND, two fund portfolio?? Few. Especially few if you used a professional advisor. It was not the way balanced portfolios were constructed or marketed. And BTW with that Vang'd BND component, I think this allocation will lag next 5-10 years. Good day. R48 , was there a period where S&P lagged the rest of the US stock market? |
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Post by Capital on May 27, 2022 18:10:37 GMT
Tomorrow is another day.
Yesterday was the other day
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Post by retiredat48 on May 27, 2022 19:25:40 GMT
mnfish ,...Hi That you select the SPY as the workhorse benchmark, has recency bias, done in hindsight. That is, it did very well the last decade, due to the rise of a very few companies such as AAPL. The top ten companies (mainly high tech type) dominated the index...and the capital structure of the index. It could very well be that in the next decade, the S&P 500 may lag...maybe even severely. Like, I consider a bet better than 50/50, is that TESLA will not sell above its previous high (max) share price, ten years from now! An index of dividend paying stocks...or dividend growth stocks...or VALUE stocks may be far better. But looking backwards, then choosing the benchmark, is not always that useful. Lastly, how many people had a SPY500/BND, two fund portfolio?? Few. Especially few if you used a professional advisor. It was not the way balanced portfolios were constructed or marketed. And BTW with that Vang'd BND component, I think this allocation will lag next 5-10 years. Good day. R48 , was there a period where S&P lagged the rest of the US stock market? The market has historically been defined by the Dow j. Average, and the sp500. So yes, year to date the Dow is down 9%, beating the down 16% S&P500. There are surely other times the Dow has beaten the S&P. There are also times the intl market beats USA. And during the decade of 2001 and on, Emerging Markets beat the s&p. I’m not sure the historical index for the total market of all stocks. R48 |
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Post by ignatz on May 27, 2022 20:30:35 GMT
mnfish ,...Hi That you select the SPY as the workhorse benchmark, has recency bias, done in hindsight. That is, it did very well the last decade, due to the rise of a very few companies such as AAPL. The top ten companies (mainly high tech type) dominated the index...and the capital structure of the index. It could very well be that in the next decade, the S&P 500 may lag...maybe even severely. Like, I consider a bet better than 50/50, is that TESLA will not sell above its previous high (max) share price, ten years from now! An index of dividend paying stocks...or dividend growth stocks...or VALUE stocks may be far better. But looking backwards, then choosing the benchmark, is not always that useful. Lastly, how many people had a SPY500/BND, two fund portfolio?? Few. Especially few if you used a professional advisor. It was not the way balanced portfolios were constructed or marketed. And BTW with that Vang'd BND component, I think this allocation will lag next 5-10 years. Good day. R48 , was there a period where S&P lagged the rest of the US stock market?
For the 20 years 2001 to 2021 inclusive:
CAGR SP 500 over those 20 years: 9.52
CAGR Fidelity SP index fund over those 20 years: 9.46
CAGR Vanguard Total Market fund over those 20 years: 9.81
Total Stock Market beat the Fidelity SP fund in 12 of the 20 years.
There has been only 1 year in the last 20 when the difference between Fidelity SP fund and Vanguard Total Market has been greater than 3%. That was in 2003, when the difference was 3.06 in favor of the total market.
Divergences from the SP are much more common as you move away from US large toward mid, small, foreign, or sectors. But many of them have under-performed both the SP and Total Market in the last 20 years. For instance, the EAFE CAGR is only 6.33. However, the Russell 2000 has held up pretty well....a 9.36 return, albeit with much more yearly variation.
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Post by FD1000 on May 27, 2022 21:00:54 GMT
Past performance has zero predictive value, so what the hell is it good for? Not so fast. A great manager can help you a lot. Past risk-adjusted performance can repeat itself. Does PRWCX ring a bell? All I need is to find ONE fund that does it. VWIAX also beat a diversified global portfolio WITH SIMILAR volatility per risk-adjusted performance. If the past doesn't matter, then you should buy and hold and be extremely diversified forever. |
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Post by FD1000 on May 27, 2022 21:16:40 GMT
mnfish ,...Hi That you select the SPY as the workhorse benchmark, has recency bias, done in hindsight. That is, it did very well the last decade, due to the rise of a very few companies such as AAPL. The top ten companies (mainly high tech type) dominated the index...and the capital structure of the index. It could very well be that in the next decade, the S&P 500 may lag...maybe even severely. Like, I consider a bet better than 50/50, is that TESLA will not sell above its previous high (max) share price, ten years from now! An index of dividend paying stocks...or dividend growth stocks...or VALUE stocks may be far better. But looking backwards, then choosing the benchmark, is not always that useful. Lastly, how many people had a SPY500/BND, two fund portfolio?? Few. Especially few if you used a professional advisor. It was not the way balanced portfolios were constructed or marketed. And BTW with that Vang'd BND component, I think this allocation will lag next 5-10 years. Good day. R48 , was there a period where S&P lagged the rest of the US stock market? Already answered it. You can see how SC,EM made much more than the SP500(total loss of 10%) in years 2000-2010 for SP500(SPY) vs VSMAX(Small cap index) + VEIEX (EM index) ( link). |
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galeno
Commander
KISS & STC
Posts: 221
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Post by galeno on May 28, 2022 12:10:09 GMT
The OP is WHY we became Bogleheads in 2006.
And why we simplified our port to 2 UCITS ETFs. One for world stocks. The other for world bonds.
Keep it simple and stay the course. KISS & STC.
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