No. of Recommendations: 13
As I have pointed out in previous posts—I am not a MasterMind.
I think that any personality type can achieve ER. While a MasterMind might be initially drawn to SWR cuz they just love mulling over the cute graphs and reports, a non-MasterMind with a strong desire to ER will quickly get motivated to overcome any “ahem” math challenges to understand the SWR. The net result is the same.

Although I am very glad that I found the REHP and learned about the SWR, no offense to Intercst, but I think that it will play a small role in the plan that will allow me to be a successful ER.

From listening to those who have already retired, it seems that the SWR is just a starting point in your planning—some are spend less, some are spend more.

So the SWR is just a hypothesis but then when you think about there are so few sure things in life. Perhaps if I have learned anything from the events of late its that the institution that seems the most trusted is the most likely place for the next scandal will break out.

What I think is more important is to have a diversified approach to investing, constantly think ahead, and be willing to be flexible--have a plan “B” in your hip pocket.

The combination of chosen lifestyle, luck and the qualities of determination, creativity, and curiosity that have allowed me to be in the position to entertain such a rare dream as ER are the same that will ultimately allow me to remain retired. This isn't just the ravings of an mad optimist--I have been able to weather this bear market just fine, thank you very much and am still on track for ER.


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Patnbj:

Thanks for your post.

I've had a few e-mail conversations with TMFBogey as this debate has proceeded because I want to avoid violating any Motley Fool rules as to the extent to which a non-board founder may question conclusions of a board founder. I've noted in earlier posts that, while TMFBogey prefers open debate as an ideal, he also grants some deference to what he refers to as “board culture.” So I have tried to monitor whether my effort to get a discussion started on some investing ideas that have not been discussed on this board in the past disrupts the board culture in any way.

I believe that there are arguments that can be made that it does. Certainly most of the threads relating to this effort have been far less pleasant to read than the average RE board thread. Posts like yours, however, suggest something different, that there are people who come to this board who appreciate threads on Retire Early investment ideas that have not been discussed here previously. I keep a file of such comments that I refer to from time to time when I am having a debate with myself whether to continue the effort to encourage such discussions or to drop the idea.

Set forth below is a sample of some of the comments from posts I have entered in my file. Set A is a set of comments suggesting that the person posting likes the idea of a broader range of investment discussions. Set B is a set of comments suggesting that people participating in the debate have gained some insight or another from the effort. If people are enjoying the debate or learning from it, that suggests to me that it is not entirely disruptive to board culture to try to advance it.

I believe that we all would be learning a lot more if there were some way to make the debate less argumentative in nature. But even under current conditions it does not seem to me that the effort has been 100 percent a waste of time.

Please understand that I do not believe that any of the posters below agree with my views on investing. Most do not, or agree with some aspects of my views and not others. The point of the collection of posts is not to show that others agree with me, but to suggest that there are people other than me who would like to see a variety of investing options discussed on the board.

Set A: Posters Who Enjoy Broad Debate:

Vickifool Post #66931.

Vickifool thinks this was a worthwhile and useful thread. This board is a good place to discuss these things until you understand them. Much better than arguing religion or political jingoism, IMHO. Look at all the bandwidth that's been wasted on those topics lately.

I have had to stop and think, Now is Hocus right? You are certainly
convincing (good writer that you are) so I really had to look carefully at what you had to say and why it was, or was not, correct.

UCalgaryGeer Post #66959.

Thanks to everybody for a fascinating discussion; imagine my
shock when the top ranked posts on REHP suddenly started to be about retiring early! :)

FoolMeOnce Post 68454.

The REHP „safe withdrawal study speaks not at all to the issues involved in the accumulation stage and doesn't help a single soul to accelerate the process of achieving early retirement. All it does is prescribe a method which some individuals could use to help insure that they don't outlive their assets, once they are accumulated. This is not unimportant, but receives entirely too much focus here.

nnn12345 Post #66842.

HOCUS--IMHO, you have started one of the most interesting and stimulating discussions this board has seen in a long time. It would be a loss for this board to not have such discusions. Although the majority of posters may completely agree and be entirely comfortable with the premise of the 4% safe withdrawal rate, I for one simply find it to be a useful concept and tool which perhaps could be refined and improved if only challanged and questioned a bit. I hope that you will keep on posting your thoughts, comments, and provocative insight.

Dagrims Post #73316.

I'm enjoying this discussion, hocus, even if others may be tiring of it. I enjoy reading your posts and discussing these issues helps flesh out my thoughts and ideas much better. If you'd like to, feel free to email me privately to continue.

BobBluff Post #66725.

I very much appreciate this thread, especially the points brought up by hocus....we should not become fixed on the "one way to do it". Different folks have used different methods to achieve FIRE....

nmckay Post #66709.

I do think you're on to something about valuation that should be
addressed. Keep at it. This has been one of the best threads we've had in a while.

JWR1945. Post #73284

I am continually frustrated by the attacks and diversions caused by those who restrict retirement and investment discussions to a very limited range....The mechanical structure of investing that makes the Retire Early study so very valuable also limits its applicability. That should be an advantage. It should cause people to think and to extend the research rather than to apply it in a mindless, mechanical manner.

Post 69209

We can provide real help to real people by extending the applicability of the Retire Early Safe Withdrawal Rate studies. Seldom can they be extended to answer questions directly. But they can provide valuable insights for making sound decisions. People do need answers to questions that extend well beyond a very narrowly defined set conditions that are not clearly delineated.

FriendlyGirl Post #70633.

The universe of the safe withdrawal study is limited, this is true. The data is insufficient to include many asset classes that are open to and might prove useful to investors. But even for these people the safe withdrawal study can be some help, if limited.

Perhaps intercst's website could use a more extensive discussion of asset allocation and how you might go about determining it. I don't think everyone is served by having an optimized asset allocation.

Basically, I agree with you that we could expand the conversation.

mhtyler Post #70573.

I have let Hocus know that if he forms up a new group that is more
supportive of alternative retirment discussion that I'll be there, because as good as this group is, it doesn't appear that it will ever get beyond the mathematics of the efficient frontier...helpful though they are.

JAFO31 Post #68952

FWIW, it [the debate you are proposing] would not bother me. I might even kibitz from the sidelines on occasion with questions, but I doubt that I would be a heavy or regular contributor.

path40a Post #73291.

I quickly realized that there was an on-going debate and some history between someone named intercst and someone named hocus. Both seemed to present thoughtful information, albeit from differing viewpoints (always good, IMNSHO). I then noticed that the tone of the discussion shifted to one which was quite combative, with perhaps an endgame intending to silence the less popular opinion. My fears were confirmed when Ms. Coy joined the board and was quickly attacked for expressing her ideas.

While I see nothing wrong in taking sides in a debate, I find the goal of silencing dissenting voices appalling. Surely there is more than one way to FI and RE!

inparadise Post #68951.

I am very open for new topics, and think that though the various threads triggered by your issues have been excessively long and cantankerous, some excellent points have been raised.

Post #68869.

There are situations and personalities where the SWR just won't always work, because the people won't be able to stomach the volatility of the approach. Hocus, (and correct me if I'm wrong, Hocus,) thinks among other things that this is an issue that should be brought up and explored, a warning to those considering the system if you will. I think he has a very valid point.

FoolMeOnce Post #68775.

I don't dispute any of your [referring to intercst] math exercises and never have. But you wear them like a protective cloak insulating you from the reality that the performance of 100% equity portfolios is little more than an interesting
intellectual exercise and teaching tool. You appear not to understand that in terms of application to real people, in a real world, such examples are useless, because they simply can't be put into practice by enough people to make them meaningful.

Daryll40 Post 68692.

I have read with interest the HOCUS-inspired look at equity-heavy
portfolios. I kinda fall somewhere in the middle. I have NEVER EVER been comfortable with a high proportion of equities and even when I started here, back in 1999 when the Dow was going to 36000 "tomorrow, I always felt uncomfortable with the exact Intercst approach....In the end, the answer to MOST things is "in the middle" as it is here.

nas90skog Post 68597.

So far the "Masterminds" have successfully driven away most of the real estate investors and who knows how many other "evil non-conformists". The techies frustration with humanists that intercst referred to is no doubt as equally frustrating to the humanists. Having served on the engineering side of things, I can certainly acknowledge and relate to the arrogance and self proclaimed superiority of the "techie" view of the world. It was not until I became more aware of the "human" side of the equation however, that life revealed a broader value and potential. For me personally, I "get" what Hocus is
trying to say.

[in response to an intercst asserion that he is “heartened” whenever FoolMeOnce or nas90skog find his posts repugnent] My recollections are that FMO has made a diligent effort to steer clear of petty bickering when he has presented his personal experiences in real estate investing. Why would you be put off by that type of person?...Sincerely appreciative of the work done by intercst, et al regarding FIRE management, but for me, its only part of the puzzle. And at times, the pompous arrogance that can permeate the board just becomes a bit
overwhelming.

holzgrafe Post 68887.

Perhaps it will help if people on all sides (note not "both" sides ;o)) spend a little more time attempting to define the issues they wish to discuss in a given thread...I do think that good boards have a focus, often set by the founder or the gurus, and that, while discussion and new insights are valuable, significant departure from that focus belongs on its own board.

Certainly the focus here is RE, not SWR as such, but it seems to me that discussions on this board should focus on how best to achieve investing efficiency. What I mean by efficiency in the accumlation stage is the most rapid accumulation of the necessary wealth and in the distribution phase the
maximum disbursable income consistent with longevity.

In both cases, the approaches espoused should be based upon
generally-agreed-upon constraints, and I think it is very important that those constraints should be explicitly stated. If the participants in a discussion cannot agree upon the constraints, the chances of the discussion going anywhere useful are pretty much nil.

We have the same sort of hassles on the MI board over a different subject, and it's really depressing how little communication is achieved on either side. It's like one philosophy is being expressed in English and the other in Chinese. I think that breakthroughs in communications are starting to appear on both boards, but it's a slow and frustrating process.

CatherineCoy Post 1942 on Real Estate Board.(making reference to efforts to discuss non-MasterMind straategies at RE board.)

Perhaps a public discussion forum is not the appropriate place for those who can tolerate no dissension--or take what dissension there is personally... The core group at the REHP seems to be quite set in their ways, a result, possibly, of having retired and now having no compelling reason at such a young age to remain flexible in their thinking.

For example, there's hardly a shred of support on the REHP for real estate as a road to early retirement. Maybe that's because the original board-opening requester is anti-real estate to the extreme, in my opinion. You'd think by now the board would have evolved to include this very important component of wealth. I do not see that happening because of the sometimes virulent reaction to anything but the party line.

Moghoper. Post 68894.

I think it was a tremendous debate. I think there are many people who agree with you - and while some do not, that should be ok in a debate. And while some have even gone to the point of being borderline abusive during the xpression of their opinions, I don't think this prevented you from posting your opinions.

Agree or not, this is as spirited as the board has been in some time.

Set B: Posters Who Have Learned From Debate Thus Far:

rkmacdonald. Post 68981.

In this case, I think it could be argued that this person's Personal SWR is actually 2% and not the Unemotional SWR of 3.7%. In fact, I wonder just how many people living right on the edge of the Unemotional SWR world really would have the personality and steel, to stay the course following a 1929 (or maybe a 2000) style market collapse. Is it possible that no real person actually has a Personal SWR that is as high as the Unemotional SWR!!

I wonder if there is some way to introduce a modifier to the
Unemotional SWR, that would predict the true Personal SWR for each individual based on their personality and risk tolerance?

Patnbj Post 68793.

There certainly are differences for those who attempt to ER with a
small portfolio. Let's compare two ERs who are both single with no kids. #1 has a portfolio of $2 million and #2 has $500k.

#1 has a lot more options than #2....

DaveLee Post 69080

Even the coarsest of stock valuation measures, if accurate, could
benefit stock market withdrawals by increasing the average price of shares sold over 5 to 6 year periods. (Some people call this market timing. I
do not.)....

I would end up with an equity allocation somewhere closer to 40 to 60% with fixed income instruments of mostly intermediate duration.

stoferj Post #73266.

What I've come to appreciate over the past couple years is the value of asset allocation. A lot of people think that if you've got a 30 year investment horizon you should be 100% in equities. Well that may very well work for some folks but I can't stand the volatility. I'm going to investigate building a portfolio that includes some real estate, bonds and hard assets as well as equities. I need a smoother overall return. This up 30% one year down 40% the next is too hard on the stomach.

FoolMeOnce Post #68738

Depending on how early you want to retire and
actual market performance, the middle of the road approach may actually get you to your starting nut quicker. It will certainly propel you in that direction more predictably.

An increase in savings rate may also obviate
the need to work for a longer period. With a high reliance of equities during the accumulation stage, even an increased rate of savings may not help much if the market turns against a portfolio heavily weighted in equities.

alfee2

This debate between the efficient-frontier advocates and the skeptics is fascinating....Harry Markowitz, the discoverer of modern mean-variance portfoio theory (i.e., the theoretical underpinnings upon which the Safe Withdraweal Study rests) who won the Nobel Prize in Economics for this work, apparently does *not* allocate his assets in accordance with the efficient frontier; he actually uses something like a naive 50-50 stocks/fixed-income split, because his goal is to "minimize future regret".

FoolMeOnce Post #69060.

Based on periods as long as 29 years, from my own simple models it is obvious that by judiciously diversifying into other asset classes it is possible to exceed the returns of the S&P 500 with less risk (as measured by standard deviation). By increasing returns while simultaneously holding the volatility down, I am confident that the maximum withdrawal rates can be increased significantly. A twenty nine year period includes the bear of 73/74, the crash of 87 and the recent unpleasantness, but is still not 130 years.

The question is should we constrain ourselves to asset classes for which more than a century of data is available or not? There is no good answer to this question beyone "more is better", but 29 years is good enough for me.

mhtyler

[in ressponse to an early retiree who revealed to the board that he has recently lessened his stock allocation in response to price drops] Far from reacting emotionally as another responder has said, it seems to me that you're simply reacting to the market. I'd expect your strategy to minimize your losses, but also temper your ability to see upside. I'm doing exactly the same thing, but I've reversed from 70/30 equity/fixed to 30/70.

My ultimate goal...and possibly yours too is to see that reverse
back again, but if you're newly retired (2yrs) as I am you may seek to minimize your risk rather than prove out all the fancy RE philosophy of this board on your way to the poor farm.

JWR 1945 Post 68582

It would be nice to know the effects of a more rational allocation of
the fixed income component. Currently, the fixed income component is mechanically reinvested and rebalanced every year. However, because the income of a fixed income investment is highly predictable (when held to maturity even when inflation is taken into account), fixed income investors can take advantage of locking in favorable yields for longer periods and investing in shorter term instruments when yields are low. In addition, an investor may choose among fixed investment classes whenever he rebalances his portfolio.

Post 69074

I also see great merit in extending the usefulness of the Safe Withdrawal Rate study. Right now there is (roughly speaking) only one question that it answers. That answer is always right if that one question is asked. More often the study gives the wrong answer because the wrong question is asked. Sometimes that answer is very close to the correct answer. If so, it is very useful. Sometimes that answer is not only wrong, but it is dead wrong. At the same time, it gives one a false level of confidence.

I prefer to think in terms of opportunities. If hocus had relied on a
single answer from the Safe Withdrawal Study, he would never have saved money. Lots of people are like that...if the only option for handling risk is to change from 25 times your desired withdrawal rate to some bigger number; retirement becomes an illusion...an unobtainable goal. But hocus has demonstrated that other options are available. I think that the applications of the Safe Withdrawal Study can be extended to make many more dreams come true. It answers only one question. But it can provide helpful information for a lot of questions.

Post 68916

The book [“Stock Cycles”] suggests that a there really is true Safe Withdrawal Rate...derived from the same data but using a different approach...that varies with market valuation.

We have a sensitivity study that shows that minor differences in
withdrawal amounts caused by small errors or differences in the details of the Safe Withdrawal Rate calculations result in large variations in the outputs...the number of years at an acceptable level of risk.....We have another sensitivity study that shows that it often takes about a decade before you know how safe your withdrawals are.

Post 67551.

What hocus really needs are the tools to spot any problems by himself and to spot them early enough to fix things. He needs something better than that familiar assurance...„trust me.

Post 67209

Great advances in science are made by studying the anomalies...the things that are not fully understood.

Post 66854

The fact that there were only three bad periods to start a retirement in the twentieth century indicates that you probably can vary allocations successfully as long as your actions are based on decade long variations and not one or two year changes. So far, it seems as if some changes in the percentage of stocks and in the type of cushion (commercial paper, TIPS, 5 year treasuries, long term treasuries) do make sense....

If you share hocus's concern about valuations, think of your investments in terms of two portfolios. The first is the basic growth account at the best allocations indicated by the studies and the other is your reserve account that lets you sleep at night. Maybe that can help clarify your thoughts. If the basic account goes nowhere for a decade...and it might...you will be able to handle it. Personal considerations are always the most important in any financial decision.
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hocus writes,

I've had a few e-mail conversations with TMFBogey as this debate has proceeded because I want to avoid violating any Motley Fool rules as to the extent to which a non-board founder may question conclusions of a board founder. I've noted in earlier posts that, while TMFBogey prefers open debate as an ideal, he also grants some deference to what he refers to as “board culture.” So I have tried to monitor whether my effort to get a discussion started on some investing ideas that have not been discussed on this board in the past disrupts the board culture in any way.

hocus,

The "board culture" of the REHP is that you can post whatever you want, but if you post anything looney, you'll likely be challenged on it. And if you continue to post lunacy, you'll be ridiculed for it. It's really not that hard to understand.

Several posters here think I'm a lunatic because I'm a LTB&H investor in stocks and I'm careful to treat real estate as an expense to be minimized rather than an investment. That's fine, it doesn't bother me.

Maybe you need a thick skin to be a successful early retiree? <grin>

intercst

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intercst wrote:
The "board culture" of the REHP is that you can post whatever you want, but if you post anything looney, you'll likely be challenged on it. And if you continue to post lunacy, you'll be ridiculed for it. It's really not that hard to understand.

Several posters here think I'm a lunatic because I'm a LTB&H investor in stocks and I'm careful to treat real estate as an expense to be minimized rather than an investment. That's fine, it doesn't bother me.

Maybe you need a thick skin to be a successful early retiree? <grin>

Maybe we can get hocus to inititate a debate with himself and others here about the complexity of lunancy and its role in American society? And if the average middle class person can ever truely achieve real and lasting lunacy? <grin>

Thick skin to be a successful early retiree?? You know it chief!!
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I'm careful to treat real estate as an expense to be minimized rather than an investment.

Careful? More like an opportunity to showcase your mean streak--behind a <grin> of course. But that's OK, I've got a thick skin.

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Patnbj writes:
I think that any personality type can achieve ER. . . . .Although I am very glad that I found the REHP and learned about the SWR, no offense to Intercst, but I think that it will play a small role in the plan that will allow me to be a successful ER. . . . .So the SWR is just a hypothesis but then when you think about there are so few sure things in life. . . .What I think is more important is to have a diversified approach to investing, constantly think ahead, and be willing to be flexible--have a plan “B” in your hip pocket. . . . .This isn't just the ravings of an mad optimist--I have been able to weather this bear market just fine, thank you very much and am still on track for ER.

I like the way you think. Like you, I think very highly of Gillette Edmund's “How to Retire Early and Live Well”. I am a fan of diversification. All that is really necessary to retire early is a willingness to plan, live below your means and exercise a little common sense.

I would appear to be the anti-REHP poster boy. I appreciate the REHP Safe Withdrawal Study for what it is; an interesting intellectual exercise. Beyond that, I have little use for it since I feel it is basically unworkable for most people and doesn't apply to me personally. I invest in real estate. (Egad!) My primary source of retirement income will be an old-style defined benefit plan. (Gak!) I plan on retiring in a few years at age 55. Some people would consider this early retirement. Others would not. It makes no difference, since it the age at which I have always planned to leave paid employment. It certainly doesn't qualify me for the “Royal We” club or any other of the recently defined “clubs” which this board has a penchant for establishing or popularizing, such as the “I Hate Real Estate” club or the “Mastermind” club, etc.

Plan A: I decided early that I would devote my working years to public service. The federal government defined benefit plan is quite good as these things go. Retirement with an immediate annuity is possible at age 55 with 30 years service. Since I participated an a work study program with the Government while in college, I got an extra 4 years tacked on to my service time, even though I was not employed full time during that period. The result is that when I retire I will receive about 70% of my high three salary and maintain full health plan benefits. The pension is inflation-adjusted using the full CPI. I can enjoy my current standard of living on about 2/3 of this amount.

Plan B: I never owned a stock until about 8 years ago, preferring instead to invest in residential real estate. With the advent of 401K plans I ventured into the equities markets, since owning real estate in my 401k was not allowed. I also fully funded an IRA. At retirement, these assets will conservatively throw off a sum equivalent to what my pension will pay me. Since I can live on 2/3 of the proceeds from either Plan A or B, I have no fears of outliving my assets. I have learned to appreciate equities but they have, and forever will, constitute only a small portion of my investment assets.

This approach isn't for everyone. Working for the federal government has never been viewed as a means to get rich quick. The amount of ignorance and fear surrounding the field of real estate investment, limits widespread participation. However, it has worked for me. Observing the hysterical gyrations of the equities markets, for me, is just an entertaining diversion. It will have no impact on my ability to retire or my subsequent standard of living. I won't waste one minute fretting over safe withdrawal rates and sympathize with those who consider the current market environment a test to see how much pain can be absorbed before their retirement plan goes completely off the rails. It must be terribly difficult to have your future well-being tied to an investment class which moves violently about and with no more sense of direction than a drunk who has forgotten where he has parked his car.

I have enjoyed posting here about real estate, and while my efforts may not be appreciated by the members of the aforementioned clubs, I think that some of the “outies” have either enjoyed the posts or learned something from them. However, I welcome those who challenge my assertions. It forces me to re-examine my beliefs and sharpen my philosophy. Perhaps at least it is not too late for me to be a charter member of the “thick skin” club.

Regards,
FMO
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FMO - this is one LTB&H equity investor who thinks your post above might be the best one he's read on this board.

Gn
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FoolMeOnce wrote:

Plan A: I decided early that I would devote my working years to public service. The federal government defined benefit plan is quite good as these things go. Retirement with an immediate annuity is possible at age 55 with 30 years service. Since I participated an a work study program with the Government while in college, I got an extra 4 years tacked on to my service time, even though I was not employed full time during that period. The result is that when I retire I will receive about 70% of my high three salary and maintain full health plan benefits. The pension is inflation-adjusted using the full CPI. I can enjoy my current standard of living on about 2/3 of this amount.

This is also my "Plan A".
Both my wife and I work for the gov'mint and will be eligible for our defined benefit plan (me in 2005, her in 2006)at age 39. Although we both want to stay a few extra years to maximize our retirement income. The income we recieve will be about about 60% of our current income after taxes and, because we live well below our means, will be our safety net should everything else go down the tubes.

I do also invest heavily in the equities markets, both stocks and bonds and am interested in the SWR discussions. If nothing else, they have driven me to find answers that will work for us and our situation.

I truly love the discussions here (even the heated ones!) as they inspire me to work harder managing our plan effectively.

Thanks all,
Landog

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landog writes:
Both my wife and I work for the gov'mint and will be eligible for our defined benefit plan (me in 2005, her in 2006)at age 39. Although we both want to stay a few extra years to maximize our retirement income. The income we recieve will be about about 60% of our current income after taxes and, because we live well below our means, will be our safety net should everything else go down the tubes.

I presume that your retirement eligibility at the tender age of 39 means you are currently active duty military? If so, thanks for your service to our country. I have seen few mentions on this board of the fact that the military service affords a reasonable pension after only 20 years of service. Early retirement is also an option for certain civilian employees including air traffic controllers, firefighters and law enforcement personnel. I have known more than a few active duty military that were able to completely retire after twenty years by virtue of their government pensions and the fact that they bought (and subsequently converted to rentals) personal dwellings at each duty station. I once went on TDY with a Marine Corps fighter jock that bought a couple of houses in the Laguna Beach, CA area in the 70's. He is sitting real pretty right now. Good luck with your retirement plans.

Regards,
FMO
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The SWR study is based on certain assumptions:

* Your stock investments will be in the S&P500 index, or perform at least as well as same.

* Your bond investments are in long-term bonds and you live off the interest as opposed to trading bonds. (Bonds in a trading portfolio should be counted as part of your stock investment.)

* You have the discipline to stick with it through high & low.

If you fail to live up to any of those conditions, you will find that you have a lower safe withdrawal rate.

THIS IS NOT A FLAW IN THE STUDY.

On the other hand, if your stock investments signifigantly outperform the S&P500, you may be able to withdraw more safely. How confident are you of achieving this result? Remember that most professional fund managers don't make the grade.

The SWR has no provision for real estate because it isn't a national commodity like stocks and bonds are, or for any other sort of security because they don't have the history, indexes, and fundamental solidity. (You rarely HAVE to sell a stock for non-personal reasons, and the large majority of stocks will have value longer than you'll care about them; you eventually HAVE to "sell" a bond - when it matures - but both the price and the date of that required sale are known the day the bond is issued. Options, futures, etc. will either die worthless or require some action - not known precisely in advance, and in some cases it may even cost you more money - on a specified date. You can't buy an option and then hold it for ten years.)

Again, this is not a flaw in the study; it's merely a limitation upon the scope, and the SWR study says nothing about investments outside its scope.

Here's another flaw in the study as it exists: it assumes a single investment portfolio. Most people have somewhat different situations. But this flaw can be dealt with by acknowledging the income stream from portfolios you don't control, and breaking down any remaining income requirements into several categories depending on what's going on - and then breaking the investment portfolio you DO control into chunks to satisfy these needs and processing them separately.
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Plan A: I decided early that I would devote my working years to public service.

Does it strike anyone as odd that doing work that people are forced (by law) to pay for is called "public service", while doing work that people pay for voluntarily is not?
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warrl writes:
Does it strike anyone as odd that doing work that people are forced (by law) to pay for is called "public service", while doing work that people pay for voluntarily is not?

Not sure I like the implication of your comment. If you have something to say, why not come right out with it?

FMO
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warrl writes:
Does it strike anyone as odd that doing work that people are forced (by law) to pay for is called "public service", while doing work that people pay for voluntarily is not?

Not sure I like the implication of your comment. If you have something to say, why not come right out with it?

Just that I find the language somewhat odd. I'm also in so-called public service.

It's just that I figure I deserve that term less than the so-called cooks at McDonald's - and I deserve it more than a lot of government employees, because a large fraction of my work (and my paycheck) is involved with the receiving of utility payments for a couple of government-owned utilities - real and verifiable services that people DO voluntarily pay for, and pay for at rates that relate to their actual usage. (Unlike, say, marijuana-sniffing dogs.)
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intercst to hocus:

The "board culture" of the REHP is that you can post whatever you want, but if you post anything looney, you'll likely be challenged on it. And if you continue to post lunacy, you'll be ridiculed for it. It's really not that hard to understand.

One man's treasure is another man's trash. Your characterization of the board, while not hard to understand, is unfortunate. Who determines what is looney? Based on what I paid to participate on the board, I would like to have that decision mine to make and not have posters driven off. Were we all having these discussions at a cocktail party, I doubt that we would treat each other in the manner that some people do. If FMO or hocus were involved in a discussion that you became involved in and you persisted in imposing your views, it is likely that the discussion would come to an end in short order. If it were to move to another part of the room and reconvene, would you feel the need, upon seeing them, to get involved again?

Several posters here think I'm a lunatic because I'm a LTB&H investor in stocks and I'm careful to treat real estate as an expense to be minimized rather than an investment.

I don't think that anybody thinks that at all. What causes difficulty is when you persistently contend that anybody who doesn't follow your path or interprets data differently than you do is wrong. This may be through overtly persistent disagreement or the glib stealth death ray comment followed by the trademark "<grin>". You know...the art of diplomacy...telling someone to go to h__l while making them look forward to the trip.

That's fine, it doesn't bother me.

I would disagree. If it didn't, I doubt you would put so much energy in to trying to discredit an alternative opinion. Also, not recognizing that it may bother others may suggest something about your human relations principles.

Maybe you need a thick skin to be a successful early retiree? <grin>

Consider that you may be more thick headed in some respects than thick skinned. Let me elaborate.

As a FIRE who accomplished it through a systematic path in equities and LBYM and one who has a technical background, I think I can relate to how many of the board's posters interact with things, systems and people. Early in my career, I had sound technical skills, was analytical and worked hard to understand the best way to get things accomplished. Had I spent my adult life as one being, I likely would have been able to refine my powers of reason and logic to a greater degree and could have attained the "Mr. Spock" like status of a Telegraph or Intercst where everything must compute.

Alas, I got married some 26 years ago to a woman who was kind enough and patient enough to indulge my all-knowing and omnipotent view of the world. As I continually used my knowledge, technical skills and powers of reason and logic to educate her, we made progress. It was not without its frustration for me, as she just wasn't getting it as quickly as I would have liked. It led to its share of disharmony during the course of our years together.

Then we had kids. One, two, three and four. A great father I was going to be. Dedicated and loving. Always there to explain how the world worked, through my eyes, of course. I would set them down and have an inciteful conversation and use all of my powers of logic and reason to try and convince them of how they should go through life. They loved Dad's lectures. Yeah right.

Over time, a long time, I gradually became aware that for all my effort, I was putting a distance between myself and those closest to me. Mostly because by so frequently correcting them, I was telling them that I didn't trust them. It was very hard, repeat very hard for me, but I gradually started to let go and let them figure it out for themselves. There were times when I had to stand there knowing full well that they were headed for trouble. Not surprising to everyone but me, they usually figured it out without my help. Just so my self esteem wasn't totally crushed, they were kind enough to occasionally tell me that Dad's way worked or the way they had tried it didn't, or they even began to ask for my input. And sometimes, they taught me things through solutions they came up with that I hadn't even considered.

As we speak, our relationships have never been better. I have no doubt that the Mrs. and the kids have benefitted much from my knowledge. It has not always been a fun education for them. Dad could be pretty hard nosed sometimes and I have apologized to them for that. Not abusive, just tougher than I needed to be. In truth, they have taught me much more, and they have done it without saying so much as a word to me. They simply lived their lives as best they could and trusted that Dad would figure it out sooner or later..... We are all different and have our own paths to find and follow. That is not only OK, it is preferred

So what does this have to do with the board? I think that when you go through life as one, it is difficult to learn the art of compromise. It is hard to let other people find their own way. It is hard to accept that you can't convince someone of the error of their ways. You labor under the mistaken belief that with just the right set of data and the right argument, you can change someone's take on life. 20 years ago I would have agreed with that. Now I know, after many years of close family relationships that it simply does not work that way and efforts to make it work usually only lead to disharmony; the type of disharmony that more frequently permeates this board.

Some of you guys act like a precocious only child that is dissatisfied whenever a discussion goes in a way that you don't like. I have worked with some pretty competent leaders in my day and a common thread in all of them was that they trusted the people that they worked with. They knew that there would be mistakes made and people would go off on paths that would ultimately fail. They gave input and let the people work through the process. They didn't disparage them for their failures and allowed them to take credit for their successes knowing in the end that they were helping to create another crop of strong leaders.

There was a time when I found my greatest sense of satisfaction in working with inanimate objects. They were predictable and controllable. With a wife and 4 kids, it was a challenging lesson to learn that when one tries to approach people in the same way that you approach things, it will lead to disharmony. I think that there are posters here who do that regularly and don't even realize it. Worse yet, they may realize it and just don't care. I think the board suffers for that attitude.

Do I think it will change? I am not confident. I have an acquaintance who participates in a message board for people suffering from a terminal cancer. The participants engage in many faceted discussions about treatments, trials, side effects, etc. Recently a patient remarked about the depression she was feeling. Posters offered advice and support in a variety of ways. One even offered her prayers. To make a long story short, this was offensive to some of the more logical and reasoned posters who wanted to stick to statistics and protocols. It turned into a battle that eventually led to the board having a cooling off period. For pete's sake...these people are all dying and they still end up in a battle because some of the engineers didn't want feelings or spirituality brought to the board. Some things still defy my understanding.

I don't think the potential of a message board is achieved when ridicule is part of its charter. Critical analysis yes, but when it becomes clear that there is a unsolvable difference of opinion, responsible posters will simply agree to disagree and step away while they allow the discussion to continue. Some of you may argue that will foster or allow illogical thinking. So what? If you are so sure you are right, truth will ultimately prevail and the posters will come around to your point of view on their own. I understand that this may be a foreign concept to some of the more argumentative types, but in my experience, truth usually prevails whether I argue for it or not.

Anyway, that's my take. I came here 3 years ago because it was an interesting, educational and informative atmosphere that also had a spirit of community. It would be nice if some of the leaders of the board could get us back in that direction.

nas90skog
when one's philosophy of life is "My way or the highway", they usually end up dying alone.






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Wonderful post! The thoughts you express mirror many of my own life's lessons, and your post articulates them better than I ever could.
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nsa90skog wrote:
Anyway, that's my take. I came here 3 years ago because it was an interesting, educational and informative atmosphere that also had a spirit of community. It would be nice if some of the leaders of the board could get us back in that direction.

So....what's stopping you chief? <grin>
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warrl states:
Here's another flaw in the study as it exists: it assumes a single investment portfolio. Most people have somewhat different situations. But this flaw can be dealt with by acknowledging the income stream from portfolios you don't control, and breaking down any remaining income requirements into several categories depending on what's going on - and then breaking the investment portfolio you DO control into chunks to satisfy these needs and processing them separately


This is exactly what I have done. Here is my portfolio:

70% Efficient frontier strictly adhering to the stock/bond mix and rebalancing each year.
20% REIT stocks
10% Condo in San Francisco

The 70% in the efficient frontier will pay for all my basic needs: shelter, food, electricity, health insurance, and cable. The rest will pay for “luxuries.”

Because of the swr data I can sleep very well at night knowing that all my basic needs will be covered. No such data exists (120+years) for the REITS so if I lost my condo (earthquake) and the REIT's went to 0 (or did not keep up with inflation) I would still not have to go back to work.

I am very happy with my asset allocation. And have stayed true to it during this bear market.

Leolo
Retirement in 56 months
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Who determines what is looney?

The reader.

If ONE reader thinks something is looney, and says so, the author will probably get some support.

If pretty much everyone who cares to post in the thread thinks it's looney, then either the author is doing a very poor job of saying what he intends, or it's probably looney.
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If pretty much everyone who cares to post in the thread thinks it's looney, then either the author is doing a very poor job of saying what he intends, or it's probably looney.

warrl:

If I understand properly, you are saying here is that it should not be intercst the board founder who decides what views are loony and are to be ridiculed, but a concensus of the board. I don't believe that you and I are in agreement on the merits of the Safe Withdrawal Rate study, but I think that we are largely in agreement on this process issue.

My belief is that ridicule is appropriate on a public message board only in the rarest of circumstances. If someone tries to make a point, and does not succeed in convincing too many peope, I don't see that there's a need for ridicule of the poster. I can see a possible exception to the general rule, hwever, where someone is posting irrespnsible positions and doing so in a continuous, ongoing, disruptive basis.

Is that what we have in regard to the debate re Safe Withdrawal Rates? The opening post to the "Coin Toss" post, in which I laid out my argument against the Safe Withdrawal Rate study, received over 80 recs. Does that level of support mean for you that the argument has achieved non-loony status, that the idea that the study does not do what it purports to do is no longer to be subject to ridicule on the board? I'm asking a genuine question here.

What I see as the problem with the procedural guideline you put forward here is that it's possible for a consensus of the board to have more than a single opinion on a single issue. I don't believe that there is one other poster on the board with my exacts views on the Safe Withdrawal Rate study. But there seem to be quite a few who share one or two thoughts that I have put forward somewhere in the course of the debate or who at least like to hear those views communicated so that they can think the question over a bit for themselves.

For intercst and some others, my criticisms of the study are clearly in the loony-and-therefore-to-be-Ridiculed category. I believe that, while I may not have fully persuaded anyone yet, I have made a strong enough case so that the big red "R" that is stamped on each discussion I try to have on the subject should be removed at this point. The board consensus at this point is strong support for the study but a measure of support for the idea of discussing its drawbacks as well.

As someone who I believe is a strong supporter of the study, it would be a big help in my effort to get this debate out of the "to be ridiculed" category if you were to come forward and say that, while you personally think the study is just fine, you also believe that sufficiently substantial criticisms have been put forward at this point that board leaders should cease treating this particular topic as one in the "to be Ridiculed" category.

Any chance that you could offer me some help in that regard?
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Who determines what is looney?

The reader. If ONE reader thinks something is looney, and says so, the author will probably get some support. If pretty much everyone who cares to post in the thread thinks it's looney, then either the author is doing a very poor job of saying what he intends, or it's probably looney.

This whole "rec" thing is a study in mass psycho-dynamics. I haven't seen this feature in any other discussion board anywhere. I wonder who thought of it. Does anyone know?
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If pretty much everyone who cares to post in the thread thinks it's looney, then either the author is doing a very poor job of saying what he intends, or it's probably looney.

warrl:

If I understand properly, you are saying here is that it should not be intercst the board founder who decides what views are loony and are to be ridiculed, but a concensus of the board


That would be accurate if I had said "the readerS". But I only said "the reader".

If Intercst is the reader at the moment, then Intercst is the determiner of what is and is not looney.

If you are the reader at the moment, then you are the determiner of what is and is not looney.
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That would be accurate if I had said "the readerS". But I only said "the reader". If Intercst is the reader at the moment, then Intercst is the determiner of what is and is not looney. If you are the reader at the moment, then you are the determiner of what is and is not looney.

Ok, warrl. I appreciate your responding to the question.

I saw your initial comment as being phrased with a bit more ambiguity. Yes, you used the singular and not the plural. But you added a comment that, if most readers of a post do not find it loony, "the author will probably get some support" but that "If pretty much everyone who cares to post in the thread thinks it's looney, then either the author is doing a very poor job of saying what he intends, or it's probably looney. "

That's what prompted me to wonder whether there comes a point at which one particular poster's views of what is loony, and that poster's insistence in engaging in campaigns of ridiicule against posters who he views as loony, become so far removed from the consensus of the board that board members need to step in and ask that poster to evaluate whether perhaps he has lost his sense of perspective.

The second post in this thread is a post I put up showing that a great number on this board, while not in agreement with my views on the Safe Withdrawal Rate study, do not see those views as loony and do not see any need for them to be ridculed on the board. But one poster feels strongly that they are looney and that they do indeed need to be ridiculed.

It seems to me that if that one poster would be willing to bow to the board consensus, the threads here could become far less combative and far more productive. If there are any others who think that a change in the way of doing business around here might be in order at some point, I hope that they will come forward with any constructive suggestions.

Since we pay to read and participate here, I believe that the board as a whole has the right to say what sorts of views will be expressed here and what sorts will not. No one poster has that right (that's my view, I'm not entirely sure whether Motley Fool agrees or not). So if there are posters trying to block you from having access to ideas about early retirement that you think might help your planning efforts, you should ask in respectful but direct terms that they stop doing so.

The Motley Fool motto is "Educate, Amuse, Enrich." I don't think you would see nearly so many people coming to the discussion board of a site with the motto "Insult Newcomers, Engage in Nasty Off-Topic Debate, Ridicule All Who Disagree."
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hocus wrote:
The Motley Fool motto is "Educate, Amuse, Enrich." I don't think you would see nearly so many people coming to the discussion board of a site with the motto "Insult Newcomers, Engage in Nasty Off-Topic Debate, Ridicule All Who Disagree."

Hocus, you get kicked around because you wear a "kick me" sign on your back. Your ideas and posts are SO looney, ridiculous, and idiotic that it is irresistable to give you a verbal kick every time you walk by.

Your advice on FIRE is completely and totally worthless and counter productive. Anybody that listens to you deserves whatever happens to him.
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Your ideas and posts are SO looney, ridiculous, and idiotic that it is irresistable to give you a verbal kick every time you walk by.

Galeno, if it wasn't an ad hominem attack to say so, I'd say that you're the master of the ad hominem attack. Why, for just your hurtful 9/11 invective alone, YOU should be booted off this board permanently. But I don't run this place, so I don't get to say.

However ...

What hocus is saying (in my interpretation) is that intercst doesn't run this place, either. He may have initially requested that this board come into existence (the title "founder" is a bit grandiose), but beyond that, a public discussion board is, by its very nature, a place for dissenting opinions.

And I think hocus objects to dissenting opinions being driven off in a passive-aggressive way, through mean-spirited bogus "polls," subject line insults and below-the-belt parting shots (although, I admit, even when I'm the intended target, some of 'em are darn clever). And, of course, there's the ever-present <grin>, designed to mollify the more squeamish observers while he goes in for the kill.

hocus just takes an awfully long time to get to his point. As an aspiring writer, his work will get edited heavily if it's ever to be published. What he thought was a well-turned sentence will end up on the cutting room floor. But that will be for him to discover. It's for me or you to skim--or not. I get the gist of what he's saying and I think his posts are pretty thoughtful.

Is retiring early an accomplishment? Well, certainly. But it's more akin to losing weight than abolishing slavery or finding a cure for polio. You do it for yourself. hocus clearly would like to do this for himself or he wouldn't be visiting this site. He just questions the methods presented to do so. A firm "get to the point, hocus" would be more helpful to all than attempting to silence dissenting opinion through insults and antagonism.
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CatherineCoy said:

Is retiring early an accomplishment? Well, certainly. But it's more akin to losing weight than abolishing slavery or finding a cure for polio.

If ever there has been a comment that some on this board should stand in front of a mirror and repeat, this is it.

arahFool
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<<CatherineCoy said:

Is retiring early an accomplishment? Well, certainly. But it's more akin to losing weight than abolishing slavery or finding a cure for polio.

If ever there has been a comment that some on this board should stand in front of a mirror and repeat, this is it.

arahFool >>



Becoming financially independent is a lot easier than losing flab, in my experience.



Seattle Pioneer
Who will be going out for his 2nd 3 mile walk shortly
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A person wants to prevent himself from dying of heart disease. He reads articles, does the literature search and comes to the conclusion that he must become a highly trained athlete. He dedicates himself to it for many years and benefits in a variety of ways. As he ages, his ankles go , his knees wear out and his back gives him trouble. As he does further research, he finds data that depicts human nature. It shows him that in spite of all the hype, very few people can pursue an aggressive exercise regimen beyond a certain age. He thinks, if I had known that in the beginning, perhaps I would have taken a more balanced approach to things.

A person wants to prevent himself from dying a financial death. He reads articles, does the literature search and comes to the conclusion that he must LBYM, be a LTBH'er of passive index funds, and never deviate from a 75/25 mix if he wants a 4% withdrawal for 30 years. One day he is sitting there looking at his portfolio that has declined 50%. He runs across some data that depicts human nature. It shows him that in spite of all the hype, very few people can pursue an aggressive portfolio mix through large market drops. He thinks, if I had known that in the beginning, perhaps I would have taken a more balanced approach to things. It is hard for me to understand why Hocus takes so much heat for wanting to work towards the end of including data that depicts human behavior. I see nothing in his approach other than that. Obviously others see more to it than that.

I understand that we are all responsible for our own decisions and must bear the consequences. Risk tolerance is not something that is inherent but something that is learned. It is unfortunate that some have to lose 50% of their portfolio to learn that they do not have the same risk profile as Intercst, for example. Statistical depiction of human behavior is pretty basic stuff. If one were to take the SWR study and include a curve that showed how likely it was that a cross section of the population were able to adhere to its tenets, it would allow people to make more informed decisions going forward. If they knew that 40% of the people backed out of the market when it encountered a 50% drop (just #'s I am pulling out of a hat) I have no doubt that a number of them would identify with that group, and to prevent that, would adjust their allocation to be more conservative and reduce their SWR goals. They wouldn't have the potential of blue sky returns, but they would certainly reduce their chances of retiring in hell.

I get the feeling that some people want to use their FIRE accomplishment as a means of status that separates them from the downtrodden masses. Human nature. There are some who want to find a way to spread the lessons of FIRE in some way shape or form, to the masses in hopes that they can benefit.

I find it unfortunate that people of means and gifts can be so thoughtless towards each other and on top of it, find it funny. Again, human nature. It is, I remind myself, nothing more than a message board.

And Galeno.....save your trash talk. I have also been here since 1999 and don't recall one insult or snide comment you have uttered that brought with it any more creativity or wit than those I remember scratched into the walls of the bathroom stalls during my days in middle school. I occasionally enjoy a battle of wits, but will not duel with an unarmed man. Why am I reminded of the wimpy little emperor played by Joaquin Phoenix in Gladiator.

nas90skog
the egos on the bus go round and round







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"A person wants to prevent himself from dying of heart disease. He reads articles, does the literature search and comes to the conclusion that he must become a highly trained athlete. He dedicates himself to it for many years and benefits in a variety of ways. As he ages, his ankles go , his knees wear out and his back gives him trouble."
nas90skog


That was me back in 1993. I was getting in shape. I dropped about 80 lbs. All my friends were telling me that I should start lifting weights and I would look like Arnold Schwarznegger. So, me being the idiot that I was, listened to them. I also started doing the stairmaster. About three months later I woke up one morning and it felt like someone had taken a knife and stuck it in my right hip. It was awful. So I went to the Doctor and he X-Rayed me and said I had calcium deposits all around my hip sockets. He also said I had bone spurs up and down my spine. He said if one of those break off I'll be in real trouble. I also have a messed up neck, hemmorhoids, inguinal hernia, sore kidney, and the lumbar region of my back hurts me every day. I take "Bextra" a Cox II inhibitor that helps some but I stil hurt. Those people who don't hurt, great for them - but don't tell me how to live my life. I won't tell them what to do and they shouldn't tell me what to do. My brother is thin muscley and wiry and he has bad hips. So does my other "thin" sister. We got it from my mom who had bad hips. It's got to be genetic. My brother's daughter, who is only 34, told me her hips all read hurt her. - Art
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What hocus [or anyone, for that matter] really needs are the tools to spot any problems by himself and to spot them early enough to fix things. He needs something better than that familiar assurance...trust me.

hocus, I'll ask my friend at GHR Systems if the spreadsheet I'm envisioning can be produced at a reasonable cost. Unless I just don't understand the concept at all, I think that's what you need, don't you?

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I'll ask my friend at GHR Systems if the spreadsheet I'm envisioning can be produced at a reasonable cost. Unless I just don't understand the concept at all, I think that's what you need, don't you?

What we need, Catherine, is an expression of community support for the post that Galagan recently put up.
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What we need, Catherine, is an expression of community support ...

You have very little community support, hocus, that's the problem. Face it, you gotta hire someone to do the dirty work.
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