I’m not making any assumptions.
I’m simply reporting on what happened factually over a particular time period to highlight the significance of the sequence of returns issue.
I’m not making any assumptions.
Sure.If they'd kept it in cash, they'd be running out around now.
Which index did you use?I’m not making any assumptions.
I’m simply reporting on what happened factually over a particular time period to highlight the significance of the sequence of returns issue.
I’m not making any assumptions.
MSCI World (EUR), net returns, with assumed ARF total expenses of 0.5%.Which index did you use?
If you want to plan for retirement based on imaginary figures, that’s up to you.So the reason they exhausted their fund is not because of sequence of returns, but because they took their fund value at face value and spent accordingly while wilfully ignoring the world changing around them.
You do remember what all those cautious Irish folks did in the subsequent years, right???Markets went mad in the few years up to 2000, so anyone who started drawdown on 1 January 2000 would have realised that the amount emerging was far more than they were expecting only a short time previously, and they would probably have taken a cautious approach.
Just so everyone is on the same page of the teach yourself investing manual.Lots to reply to!
First of all, @Sarenco and @conor_mc have said that if @SquirrelChaser and I are so confident about knowing when markets are about to tank, then why not go into cash, etc.?
Of course, no-one knows in what direction the market is going to move at any time. We're always worried that it might fall, but sometimes we're more worried than at other times. It doesn't mean you exit the market. You're just that bit more cautious.
As to the comment about Irish investors' lack of caution in relation to property investment, so why should we expect anything better for shares, I suppose that's where the adviser adds value, by reminding retail investors that markets can fall, and may fall precipitously. At times, the risk is higher, at times it's lower.
There's been lots of talk about 60:40 and 80:20 portfolios. I have never seen a good explanation for why either is reasonable.
@Marc says that a 100% equity portfolio is as mad as a 100% cash portfolio. As everyone know, my portfolio has been 100% equities practically from when I started saving for my own retirement in 1996 (with a few small exceptions years ago). I don't think I'm mad. Yes, I suffered badly in 2007/08 but I also experienced the recovery. I also suffered in early 2020 with the Covid scare but I came through it. I hope the long-term results (which I know should include the period pre-2010 but I don't have them to hand) support this belief. @Marc says it's all luck. How long would the experience have to be to convince him that it's not luck?
I repeat my conviction that a 100% growth ("equity") strategy is best for a committed long-term investor, who'll be investing for a long number of years and drawing down for a long number of years. No-one has shown why I'm wrong.
I'm afraid that @Marc's graphs leave me cold. I think part of the reason is that I don't have a clue of the underlying assumptions. For example, is there an assumption of an ERP? If so, how much? Does he allow for auto-correlation? Auto-correlation is insignificant at short durations but it's very important at long durations. Pension investing is about as long as it gets so some autocorrelation should be assumed, even implicitly, especially when modelling the more extreme possibilities, which is where he focuses a lot of his attention. What expenses are assumed in his various graphs (i.e., the expenses the retail investor will have to bear, not just investment management fees)? My regular analyses of my portfolio allow for all expenses. GIGO - garbage in, garbage out.
Finally, I think there's a slight misunderstanding between @Sarenco and @SquirrelChaser in relation to the word "drawdown". They are using two very different meanings for the word.
What about the great AI bubble of 2023-2024?There are people more knowledgeable than me who are saying that this dot-com boom is a bubble that’s about to burst
If I were heavily into AI type stocks, I would now be more worried than usual. As readers of my investment updates know, though, I'm not into them (and have stopped trying to short them after my disastrous experience with Tesla) and I'm not an adviser so I haven't kept up to speed on them, so I'm probably not the best person to ask.Of course, no-one knows in what direction the market is going to move at any time. We're always worried that it might fall, but sometimes we're more worried than at other times. It doesn't mean you exit the market. You're just that bit more cautious.
Engrossed here too. Significant ARF investment decision coming for my wife next year so this is fascinating ….although I can’t shake the feeling that I’ll be more confused and indecisive than I was at the start!I'm with @Louisval. I'm in the front row watching Pele,Maradona,Best, Cruyff, Puskas, Messi and Ronaldo playing 3-and-in. I've no idea who'll win but it's engrossing. I have some skin in that type of game but as Malcom Tucker says I'm like Stephen Hawking at the match....very close to the action but unlikely to score a goal.
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