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Drawdown: safe withdrawal rates
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I recently added this to the first post:
Investment highlight: April 2017: You should have lower than usual equity investments at the moment because cyclically adjusted price/earnings ratios (PE10) are above average in some major markets, particularly the US. You might also favour lower PE10 markets with higher than their usual equity weights. I like P2P lending rather than corporate or government bonds for this. See Guyton's sequence of return risk reduction and Bengen's interesting timing thought in the last paragraph of his 2016 small cap paper.
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Hyperlink to Bengen seems to have missing colon after http1
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Bengen's interesting timing thought in the last paragraph of his 2016 small cap paper
On his page 1 he writes "1. Bonds rarely proved useful in portfolios seeking to maximize the safe withdrawal rate for a 30-year period."
The best substitute for bonds I know is annuity-equivalents bought by deferring the old-style State Retirement Pension, backed up by the 3A NIC top-up for the same SRPs. The former is still available to some codgers. Of course, you can't rebalance your allocation annually using those, but since their returns are so good that's a price worth paying for us, we decided.
I hope nobody in the UK assumes that his comments mean that they should fill their portfolio with AIM shares. Small companies in the US can be quite big by our standards.Free the dunston one next time too.0 -
I recently added this to the first post:
Investment highlight: April 2017: You should have lower than usual equity investments at the moment because cyclically adjusted price/earnings ratios (PE10) are above average in some major markets, particularly the US. You might also favour lower PE10 markets with higher than their usual equity weights. I like P2P lending rather than corporate or government bonds for this. See Guyton's sequence of return risk reduction and Bengen's interesting timing thought in the last paragraph of his 2016 small cap paper.On his page 1 he writes "1. Bonds rarely proved useful in portfolios seeking to maximize the safe withdrawal rate for a 30-year period."
The best substitute for bonds I know is annuity-equivalents bought by deferring the old-style State Retirement Pension, backed up by the 3A NIC top-up for the same SRPs. The former is still available to some codgers. Of course, you can't rebalance your allocation annually using those, but since their returns are so good that's a price worth paying for us, we decided.
Isn't there an issue with deferring state pension for couples in that should one of the couple die then the deferral benefit is lost?I think....0 -
How can one invest ones (non-sipp) pension fund in p2p?
AFAIK there are some platforms offering P2P-type opportunities which will accept a SIPP trustee as an investor. They're not the mainstream platforms though, and you would still have to convince your SIPP manager that it was a legit investment, which the bare bones cheap DIY SIPPs wouldn't go for.
Still, you don't have to do all your retirement planning inside a pension wrapper, there is IFISA (limited opportunities so far but more due to launch) or unwrapped options.Isn't there an issue with deferring state pension for couples in that should one of the couple die then the deferral benefit is lost?
Although if you hit state pension age before 6 April last year, the benefit of extra annual pension generated was inheritable by spouse (as well as the rate of return being higher). There are a number of such people who have simply taken their state pension as soon as they could and not deferred yet, but still could if they wanted to.0 -
Isn't there an issue with deferring state pension for couples in that should one of the couple die then the deferral benefit is lost?
Let me quote me: "annuity-equivalents bought by deferring the old-style State Retirement Pension". Old-style doesn't have this problem: I expect my widow to get 90% of my extra pension received for deferring.Free the dunston one next time too.0 -
James,
thank you for a fantastic resource.
I have tried to read the article in point 1 of the OP a couple of times but it's going over my head a bit.
Does anyone have anything a bit more basic/entry level I could look at first?Save 12 k in 2018 challenge member #79
Target 2018: 24k Jan 2018- £560 April £26700 -
How can one invest ones (non-sipp) pension fund in p2p?
BondMason withdrew from this market in 2018 or 2019.0 -
I have tried to read the article in point 1 of the OP a couple of times but it's going over my head a bit.
Does anyone have anything a bit more basic/entry level I could look at first?0
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