Search found 3906 matches

by longinvest
23 Mar 2024 10:58
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

The retiree's portfolio is entirely invested into the Vanguard Balanced ETF Portfolio (VBAL) , an automatically-rebalanced low-cost global balanced index One-Fund Portfolio with a 60/40 stocks/bonds target allocation which, as of February 29, 2024, was spread across 173 Canadian stocks (VCN), 3,731 U.S. stocks (VUN), 3,835 developed ex North America stocks (VIU), 5,775 emerging market stocks (VEE), 1,196 Canadian bonds (VAB), 11,079 U.S. bonds (VBU), and 6,792 global ex U.S. bonds (VBG) for a total of 32,581 global securities , approximating the (free float) Global Stock-and-Bond Portfolio with a moderate home bias . Here's a growth chart of VBAL and its 7 components from the start of this forward test until February 29, 2024 : https://lh3....
by longinvest
21 Mar 2024 18:49
Forum: Financial Planning and Building Portfolios
Topic: Aspiring Boglehead looking for advice on which funds and where to place
Replies: 7
Views: 417

Re: Aspiring Boglehead looking for advice on which funds and where to place

Newcire, I'm of the opinion that *BAL in all accounts, all lifelong, is good enough . Both types of assets, stocks and bonds, are risky but in different ways. As *BAL somewhat approximates the global stock-and-bond market portfolio, it can be considered as the investor's portfolio of risky assets . This portfolio can be used along with stable income like a salary during accumulation and pensions (including CPP and OAS, possibly delayed to age 70 to maximize their monthly amount) during retirement. Cash and low-interest debt can be used for buffering the mismatch between income and spending all lifelong. Effectively, employers don't increase the worker's salary for buying a car when that's due, and decrease it afterwards. They don't manage t...
by longinvest
16 Mar 2024 09:32
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

Here's how the VPW Accumulation And Retirement Worksheet calculated its suggested $5,920 portfolio withdrawal at the end of February 2024 . Detailed calculations are provided in the lower part of the Retirement sheet. Displayed amounts and percentages are rounded (see this post for explanations). https://lh3.googleusercontent.com/d/1u6jAeYTBUE6VPHuJKOcz6loiAz6_aps_ https://lh3.googleusercontent.com/d/1Zko0NIzrQG51oUFeY0nBaJlfgVPdURwI The retiree will get $1,358/month CPP payments in 1 years. That's ($1,358 X 12) = $16,296 /year. The percentage for a 1-year withdrawal schedule with a 60/40 stocks/bonds allocation in the VPW Table is 100.0% (called [ G ] above). As a consequence, ($16,296 / 100.0%) = $16,296 is kept aside (on paper) for CPP b...
by longinvest
13 Mar 2024 18:53
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

Turbo wrote: 12 Mar 2024 23:13 Longinvest,

I registered for one simple reason. To say thank you.
Turbo, thanks for the feedback and welcome to the forum!
by longinvest
09 Mar 2024 17:06
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

Forward test as of February 29, 2024 We continue our forward test . Here's a link to the previous entry . As of February 29, 2024, the retiree's investment portfolio and income cushion balances are: Investment portfolio (Vanguard Balanced ETF Portfolio (VBAL)): $900,444.13 Withdrawal cushion (at Oaken): $34,012.97 The retiree has a fixed $1,000 per month pension. The retiree is delaying CPP to age 70 to receive $1,357.70 per month (in 2024 dollars) and delaying OAS to age 70 to receive $970.14 per month (in 2024 dollars). At age 75, the retiree will also get a $97.01 per month (10%) OAS supplement (in 2024 dollars). We update the Portfolio Balance cell in the Retirement sheet of the VPW Accumulation And Retirement Worksheet . No other entr...
by longinvest
09 Mar 2024 17:05
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

Investment Portfolio and Income Cushion as of February 29, 2024

The February 2024 total NAV return of the Vanguard Balanced ETF Portfolio (VBAL) was 2.36% and the interest rate of the Oaken savings account was 3.40%.

We use account balances as of January 31, 2024 and apply February 2024 growth on investments and interest on savings.
  • Investment portfolio (Vanguard Balanced ETF Portfolio (VBAL)): ($879,683.60 X (1 + 2.36%)) = $900,444.13
  • Income cushion (Oaken savings account): ($33,921.59 X (1 + (3.40% X (29 / 366)))) = $34,012.97
by longinvest
04 Mar 2024 19:29
Forum: Retirement, Pensions and Peace of Mind
Topic: Single premium immediate annuity (SPIA)
Replies: 95
Views: 3894

Re: Single premium immediate annuity (SPIA)

Quebec wrote: 04 Mar 2024 14:53 Very much a commodity, the only nuance is what is the rating of the provider. Yes, there is Assuris, but I would still want to check the insurer's AM Best financial strength before I just pick the highest payout from a list.
As long as monthly payments from the same issuer are no more than $5,000 ($60,000 per year), I see no reason to worry the insurer's rating. I'd pick the highest payout.
by longinvest
04 Mar 2024 17:05
Forum: Retirement, Pensions and Peace of Mind
Topic: Single premium immediate annuity (SPIA)
Replies: 95
Views: 3894

Re: Single premium immediate annuity (SPIA)

Through Assuris, your income is 100% protected up to $2,000 per month. If your income is over $2,000 per month, they protect your annuity policy by guaranteeing that you will retain at least 85% of your monthly income benefit." This is obsolete information. Assuris protection for a monthly payout annuity is $5,000 or 90% , whichever is higher . See Assuris - protection - payout annuity for details: Assuris Protection If your life and health insurance company fails, Assuris guarantees that you will retain up to $5,000/month or 90% of your promised monthly income benefit, whichever is higher. What if I receive quarterly, semi-annual or annual benefit payments? For quarterly benefit payments, the Assuris protection is up to $15,000 quart...
by longinvest
02 Mar 2024 09:48
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

The month of March 2024 has 5 weekends. I'll get back to my regular posts next weekend. The consumer price index (CPI) is volatile from month to month for a number of reasons like seasonality in its basket of goods. Using 12-months average CPI allows for adjusting the amounts and charts of this forward test to the erosive impacts of inflation without introducing artificial monthly volatility. Here's a chart of CPI and average CPI during this forward test up to January 2024 ( February 1st, 2024 , in the chart, because the January 2024 value was used to adjust February 2024 income to inflation in last week's post ). The CPI line starts 11 months earlier to include all values on which average CPI is based. From June 2019 to January 2024, on a ...
by longinvest
24 Feb 2024 11:55
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Growth of the Vanguard Balanced ETF Portfolio (VBAL) and its components
Replies: 151
Views: 103019

Re: Growth of the Vanguard Balanced ETF Portfolio (VBAL) and its components

Here's a growth chart of the Vanguard Balanced ETF Portfolio ( VBAL ) and its 7 components from January 31, 2018 (6 days after inception) to January 31, 2024 . The target allocation of VBAL is 60/40 stocks/bonds. Its target stock sub-allocation is 30/70 Canada/ex Canada. Its target bond sub-allocation is 60/40 Canada/world. That's a 18/42/24/16 Canadian stocks/ex Canada stocks/Canadian bonds/world bonds target allocation. I think that a One-Fund Portfolio consisting of VBAL in all accounts (RRSP, TFSA, non-registered, etc.) is good enough for any Canadian investor willing to accept average market returns, regardless of age and portfolio size. As of January 31, 2024 , the weights of the 7 components were: Vanguard FTSE Canada All Cap Index E...
by longinvest
24 Feb 2024 11:32
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

Using average CPI calculated in this and previous posts, here's an inflation-adjusted chart of this forward test and additional information expressed expressed in January 2024 dollars:

Image

Inflation-adjusted initial portfolio balance: $1,169,658

Inflation-Adjusted Historical Annual Retirement Income
  • 2019: $89,094 (annualized) -- $44,547 in 6 months, starting retirement in July
  • 2020: $88,484
  • 2021: $91,404
  • 2022: $88,315
  • 2023: $82,291
  • 2024: $81,305 (annualized) -- $13,551 in 2 months
by longinvest
24 Feb 2024 11:30
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

Statistics Canada has published the consumer price index (CPI) for January 2024. We're interested to calculate an average CPI to associate with our forward test at the end of January 2024. Here are the last 12 CPI values: Month CPI 02/2023 154.5 03/2023 155.3 04/2023 156.4 05/2023 157.0 06/2023 157.2 07/2023 158.1 08/2023 158.7 09/2023 158.5 10/2023 158.6 11/2023 158.8 12/2023 158.3 01/2024 158.3 We take note that the average CPI for the last 12 months at the end of January 2024 was 157.475 . Last year, we calculated that the average CPI for the last 12 months at the end of January 2023 was 151.958 . The trailing 1-year average inflation at the end of January 2024 was ((157.475 / 151.958) - 1) = 3.63% . The chosen Oaken savings account has ...
by longinvest
24 Feb 2024 11:06
Forum: Financial Planning and Building Portfolios
Topic: The Global Stock-and-Bond Portfolio
Replies: 52
Views: 84216

Re: The Global Stock-and-Bond Portfolio

I didn't publish an update for January 31, 2024 because the FTSE Canada All Cap Index factsheet doesn't contain data.

One of the drawbacks of depending on free information, sometimes, is its unreliable availability.
by longinvest
21 Feb 2024 09:49
Forum: Retirement, Pensions and Peace of Mind
Topic: Decumulation? Really?
Replies: 94
Views: 5661

Re: Decumulation? Really?

As far as I know, multiplication is commutative. Maybe Mordko will be able to enlighten us about his new brand of mathematics.

Until then, here's some relevant reading about VPW, multiplication, and SORR (adding to the post I previously linked to): viewtopic.php?p=738624#p738624
by longinvest
21 Feb 2024 07:29
Forum: Retirement, Pensions and Peace of Mind
Topic: Decumulation? Really?
Replies: 94
Views: 5661

Re: Decumulation? Really?

cjay62 wrote: 21 Feb 2024 07:02 Even simpler is to just use the function PMT(A,B,C,D) each year to calculate a withdrawal amount based on current portfolio value, where:
A = expected annual real return net of fees
...
I disagree. Using the VPW table is significantly simpler.

VPW is also immune to sequence of returns risk (SORR). In contrast, the PMT function with changing expected returns every year is exposed to SORR.

Anyway, the track record of gurus to predict future returns with their expected returns is awful.

I'm just trying to imagine a less financially-inclined surviving spouse looking for CAPE* in Google, to enter it into a financial calculator or a spreadsheet, and getting this. :wink:

* Cyclically adjusted price-to-earnings ratio.
by longinvest
19 Feb 2024 18:43
Forum: Retirement, Pensions and Peace of Mind
Topic: Decumulation? Really?
Replies: 94
Views: 5661

Re: Decumulation? Really?

kcowan wrote: 19 Feb 2024 08:01 Congratulations longinvest. I echo the others that VPW is a significant tool for planning and executing a long retirement.
Thanks Kcowan!
by longinvest
19 Feb 2024 07:11
Forum: Retirement, Pensions and Peace of Mind
Topic: Decumulation? Really?
Replies: 94
Views: 5661

Re: Decumulation? Really?

ghariton wrote: 18 Feb 2024 21:55 I take inflation very seriously. Nominal returns can be useful for entertainment purposes, but at the end of the day, my standard of living requires taking inflation into account.
We share a similar concern. In my private spreadsheet, I use smoothed CPI but with a lag so that I don't need to wait for Statistics Canada to publish last month CPI to calculate inflation-adjusted portfolio performance. It's simple and practical. All charts in my spreadsheet are inflation adjusted to help me avoid the money illusion. When I look, I see that my portfolio balance (which reflects the impact of contributions) is smaller than at the end of 2021.
by longinvest
18 Feb 2024 18:14
Forum: Retirement, Pensions and Peace of Mind
Topic: Decumulation? Really?
Replies: 94
Views: 5661

Re: Decumulation? Really?

ockham wrote: 18 Feb 2024 16:58 To Longinvest, with your retirement, I'm thinking you can close down the "VPW forward test" thread, and replace it with a "VPW actual test" thread. We're no longer talking a hypothetical retiree in the lab, it's now a real retiree. :thumbsup: Congratulations.
Thanks Ockham!
by longinvest
18 Feb 2024 16:27
Forum: Retirement, Pensions and Peace of Mind
Topic: Decumulation? Really?
Replies: 94
Views: 5661

Re: Decumulation? Really?

AltaRed wrote: 18 Feb 2024 16:12 I cannot speak for others but I think they are saying over longer periods of time than just 2 years, and they are using nominal rates of return (I know I am in both cases)... CAGR 5, 10, 15 year periods for example.
I suspected this.

My comment about the (inflation-adjusted) size of my portfolio had to do with the idea that my upcoming retirement isn't triggered by portfolio size. I discussed this a few years ago.
AltaRed wrote: 18 Feb 2024 16:12 And I will add my congratulations to your upcoming retirement!
Thanks AltaRed!
by longinvest
18 Feb 2024 15:31
Forum: Retirement, Pensions and Peace of Mind
Topic: Decumulation? Really?
Replies: 94
Views: 5661

Re: Decumulation? Really?

I'm retiring on June 1st, in less than 4 months. Pretty hard to believe that retirement is only weeks away. Congratulation on your impending retirements! Thanks Afulldeck! I'm retiring on June 1st, in less than 4 months. Congratulations! Thanks Bylo! And doubly so that despite the portfolio size you can start early. Despite positive returns in 2023, VBAL (60/40 stocks/bonds) hasn't yet recovered back to its December 31, 2021 value (with reinvested distributions) in inflation-adjusted terms, nor has VEQT (100% stocks): 2022 & 2023 (2 years) - Cumulative inflation (CPI): ((158.3 / 144.0) - 1) = 9.93% - Cumulative growth of VBAL (nominal): (((1 + -11.45% ) X (1 + 12.69%)) - 1) = -0.21% - Cumulative growth of VEQT (nominal): (((1 + -10.92%...
by longinvest
18 Feb 2024 10:55
Forum: Retirement, Pensions and Peace of Mind
Topic: Decumulation? Really?
Replies: 94
Views: 5661

Re: Decumulation? Really?

I'm retiring on June 1st, in less than 4 months. Unlike the star investors of this thread, my portfolio is currently smaller than it was at the end of 2021 in inflation-adjusted terms, despite regular monthly contributions. This retirement was planned a long time ago using the VPW worksheet (and it predecessor spreadsheets). The worksheet takes into account my relatively small work pension (due to early retirement) which will be reduced at age 65 (due to QPP integration). It also accounts for claiming QPP at age 72 and OAS at age 70 (with a 10% increase at age 75). The main part (based on years of contributions) of my work pension isn't indexed to inflation and the rest is only partly indexed to inflation. As a consequence, I prudently sele...
by longinvest
17 Feb 2024 18:38
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

The retiree's portfolio is entirely invested into the Vanguard Balanced ETF Portfolio (VBAL) , an automatically-rebalanced low-cost global balanced index One-Fund Portfolio with a 60/40 stocks/bonds target allocation which, as of January 31, 2024, was spread across 172 Canadian stocks (VCN), 3,747 U.S. stocks (VUN), 3,839 developed ex North America stocks (VIU), 5,781 emerging market stocks (VEE), 1,187 Canadian bonds (VAB), 10,733 U.S. bonds (VBU), and 7,117 global ex U.S. bonds (VBG) for a total of 32,576 global securities , approximating the (free float) Global Stock-and-Bond Portfolio with a moderate home bias . Here's a growth chart of VBAL and its 7 components from the start of this forward test until January 31, 2024 : https://lh3.go...
by longinvest
10 Feb 2024 16:53
Forum: Financial Planning and Building Portfolios
Topic: The All Stock Portfolio?
Replies: 17
Views: 1218

Re: The Global Stock-and-Bond Portfolio

Some people seem quite confident that global bond holders must be, as a group, stupid. Let me explain. If bonds are trading at too high a price, smart bond holders should take advantage of the situation to sell their bonds, which should cause bond prices to drop until they sufficiently compensate smart buyers, on the other side of bond trades, for the risks they carry. If prices don't drop, it has to be due to stupid buyers on the other side of trades paying too much. Eventually, smart buyers must have exited the market, leaving the entire bond market in the only hands of stupid holders.

It's interesting to see some people believe that the holders of $63,658,105 million CAD (the capitalization of global bonds) are all stupid.
by longinvest
10 Feb 2024 08:49
Forum: Retirement, Pensions and Peace of Mind
Topic: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)
Replies: 608
Views: 130501

Re: A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test)

Here's how the VPW Accumulation And Retirement Worksheet calculated its suggested $5,854 portfolio withdrawal at the end of January 2024 . Detailed calculations are provided in the lower part of the Retirement sheet. Displayed amounts and percentages are rounded (see this post for explanations). https://lh3.googleusercontent.com/d/1Gj366svbM19Wd7z7cqkH40pnmmEhO4Mr https://lh3.googleusercontent.com/d/1qBKmwt7OJUxDXHWLq3TF92jSQU-zLmXR The retiree will get $1,358/month CPP payments in 1 years. That's ($1,358 X 12) = $16,296 /year. The percentage for a 1-year withdrawal schedule with a 60/40 stocks/bonds allocation in the VPW Table is 100.0% (called [ G ] above). As a consequence, ($16,296 / 100.0%) = $16,296 is kept aside (on paper) for CPP br...
by longinvest
05 Feb 2024 09:41
Forum: Retirement, Pensions and Peace of Mind
Topic: CPP and QPP Calculator
Replies: 143
Views: 26462

Re: CPP and QPP Calculator

adrian2 wrote: 05 Feb 2024 08:38 As far as I can remember, YMPE was always a multiple of $100.
But, the 107% amount is a new ceiling. The base $68,500 YMPE remains fundamental to CPP calculations. I didn't know that this additional ceiling would be truncated. As I wrote, the truncation to a multiple of $100 will soon be implemented in the calculator.

For someone worried about it (if any), the calculator's current $95 difference is 0.12% of $73,200, only affecting "part 2" of enhanced CPP. In other words, the difference in CPP payment, for someone earning $73,295 ($95 more than the effective ceiling) in 2024 and planning to claim CPP in 2025, is approximately $0.06/month less than currently calculated.