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401(k)s Will be Unthinkable in 50 Years

Started by Habbaku, April 04, 2019, 12:55:47 PM

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Habbaku

The medievals were only too right in taking nolo episcopari as the best reason a man could give to others for making him a bishop. Give me a king whose chief interest in life is stamps, railways, or race-horses; and who has the power to sack his Vizier (or whatever you care to call him) if he does not like the cut of his trousers.

Government is an abstract noun meaning the art and process of governing and it should be an offence to write it with a capital G or so as to refer to people.

-J. R. R. Tolkien

crazy canuck

Quote from: alfred russel on April 15, 2019, 11:40:56 AM
Quote from: Habbaku on April 15, 2019, 11:36:26 AM
Zing. Got me. Sorry I can't match your massive intellectual achievements.

You probably can't, but that is off topic.

Have you noticed that lately you have gone full Dorsey?

alfred russel

Quote from: crazy canuck on April 15, 2019, 12:19:24 PM
Quote from: alfred russel on April 15, 2019, 11:40:56 AM
Quote from: Habbaku on April 15, 2019, 11:36:26 AM
Zing. Got me. Sorry I can't match your massive intellectual achievements.

You probably can't, but that is off topic.

Have you noticed that lately you have gone full Dorsey?

Takes two to tango, and habbaku invited me to dance.
They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.

There's a fine line between salvation and drinking poison in the jungle.

I'm embarrassed. I've been making the mistake of associating with you. It won't happen again. :)
-garbon, February 23, 2014

The Minsky Moment

Quote from: alfred russel on April 15, 2019, 11:19:42 AM
Yeah but times are fat for us. Rerun that thought experiment with the german stock market in 1930.

Portfolio goes up

Nazis take power and expropriate Jewish assets

I flee the country as a refugee

With hindsight my porfolio choice was completely meaningless.

The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.
--Joan Robinson

Eddie Teach

Of all the things to argue about, investment strategies? /smh
To sleep, perchance to dream. But in that sleep of death, what dreams may come?

Camerus


Habbaku

Phil Ferguson, episode 300:

https://www.spreaker.com/user/8084919/300-ERtQBb

He covers financial stuff in the opening half of the show and typically interviews various (non-financial) people during the second half. I usually skip the second part unless there's someone really good on, but the financial topics he covers are usually insightful.
The medievals were only too right in taking nolo episcopari as the best reason a man could give to others for making him a bishop. Give me a king whose chief interest in life is stamps, railways, or race-horses; and who has the power to sack his Vizier (or whatever you care to call him) if he does not like the cut of his trousers.

Government is an abstract noun meaning the art and process of governing and it should be an offence to write it with a capital G or so as to refer to people.

-J. R. R. Tolkien

Monoriu

Quote from: Habbaku on April 15, 2019, 11:11:59 AM
Mono, an ultra-conservative portfolio isn't necessary to ensure that one doesn't run out of money.

A podcast I listen to recently did a thought-experiment wherein the hypothetical investor started with a nest-egg of $1 mil. split into roughly 60/40 stocks and bonds, and only assuming the portfolio was invested in a broad S&P 500 index and "all bonds" index to avoid getting too gritty. He began the portfolio just before the Dot Com Bubble bursting in order to avoid biasing against unreasonable expectations with stocks.

In order to prove his point, he then followed the portfolio to the modern day, withdrawing $40,000 each year from the portfolio. He ended the experiment in today's terms with a principal of $900,000 remaining in the portfolio. Even with two of the worst shocks in US stock history (and accounting for the rough corrections in a few spots as well), the principal was essentially only reduced by 10% in a 19 year period.

The reason the strategy worked is because of proper portfolio management--IE, selling stocks after years of high stock returns, selling bonds in years of high bond returns, and always keeping a reserve of cash at a variable level of 10-15% of the portfolio (IE, 2-4 years of expenses) to ensure against the need to sell assets at depressed prices.

In short: DG is right. Excess conservatism here will end up costing you a lot, and sheltering you from very little. Unless you think the world market is going to experience something doubly as bad as the 2007-2008 meltdown, the 4% rule is foolish as long as you have a good portfolio manager caring for your assets.

The whole point of going financially independent is not to count on somebody.  I don't want to count on my family or the government.  I don't see why I should shift responsibility of my financial well-being to someone even less reliable, like portfolio managers.  It has been more than 10 years since the 2008 financial crisis.  I sometimes still see people camped outside banks.  The people (who were once rich enough that the banks assign portfolio managers to them and) who listened to their portfolio managers, put 100% of their assets into one single risky structured product, lost everything, and demanded their money back.  I am not talking about shady operations.  These are big huge international banks, and this is the kind of advice they give.  No, these people aren't remotely trustworthy.  And no, nobody cared about these campers. 

https://en.wikipedia.org/wiki/Accumulator_(structured_product)

Monoriu

Quote from: The Larch on April 15, 2019, 11:16:02 AM
It really shows that this forum has become basically middle-aged that a thread about retirement investments has been so active.  :P

One of my conversation starters when I was in primary/grade school was retirement.  It didn't work very well  :blush:

Camerus

Quote from: Habbaku on April 15, 2019, 04:03:11 PM
Phil Ferguson, episode 300:

https://www.spreaker.com/user/8084919/300-ERtQBb

He covers financial stuff in the opening half of the show and typically interviews various (non-financial) people during the second half. I usually skip the second part unless there's someone really good on, but the financial topics he covers are usually insightful.

Thanks!

Habbaku

Quote from: Monoriu on April 15, 2019, 05:24:43 PM
The whole point of going financially independent is not to count on somebody.  I don't want to count on my family or the government.  I don't see why I should shift responsibility of my financial well-being to someone even less reliable, like portfolio managers.  It has been more than 10 years since the 2008 financial crisis.  I sometimes still see people camped outside banks.  The people (who were once rich enough that the banks assign portfolio managers to them and) who listened to their portfolio managers, put 100% of their assets into one single risky structured product, lost everything, and demanded their money back.  I am not talking about shady operations.  These are big huge international banks, and this is the kind of advice they give.  No, these people aren't remotely trustworthy.  And no, nobody cared about these campers.

There is literally zero in my posts that would suggest that I am encouraging you to run off to a portfolio manager who thinks burying 100% of your assets into a single security or derivative is a good idea.

My encouragement is and always will be to go to a fiduciary who is legally and ethically obligated to serve your interests. Trusting a huge, international bank without researching what legal obligations they have to you is usually a bad idea. I don't have any idea what sort of protections might exist in Hong Kong, but it doesn't sound like there are many from what you're saying.
The medievals were only too right in taking nolo episcopari as the best reason a man could give to others for making him a bishop. Give me a king whose chief interest in life is stamps, railways, or race-horses; and who has the power to sack his Vizier (or whatever you care to call him) if he does not like the cut of his trousers.

Government is an abstract noun meaning the art and process of governing and it should be an offence to write it with a capital G or so as to refer to people.

-J. R. R. Tolkien

Monoriu

There are no protections whatsoever.  The banks insist that they don't provide any financial advice to me when they tell me to put all my money into this and that product.  What you describe doesn't seem to exist here. 

Habbaku

Yikes.

Well, I don't think there's anything to stop you from utilizing a CFP that's from the USA or Canada. :unsure:
The medievals were only too right in taking nolo episcopari as the best reason a man could give to others for making him a bishop. Give me a king whose chief interest in life is stamps, railways, or race-horses; and who has the power to sack his Vizier (or whatever you care to call him) if he does not like the cut of his trousers.

Government is an abstract noun meaning the art and process of governing and it should be an offence to write it with a capital G or so as to refer to people.

-J. R. R. Tolkien

Monoriu

Quote from: Habbaku on April 15, 2019, 08:21:08 PM
Yikes.

Well, I don't think there's anything to stop you from utilizing a CFP that's from the USA or Canada. :unsure:

I don't think it works.  Totally different environment.  Different tax regimes, different investment regulations, different laws.  No Social Security here. 

Habbaku

My recommendation was that you leave Hong Kong.  :P
The medievals were only too right in taking nolo episcopari as the best reason a man could give to others for making him a bishop. Give me a king whose chief interest in life is stamps, railways, or race-horses; and who has the power to sack his Vizier (or whatever you care to call him) if he does not like the cut of his trousers.

Government is an abstract noun meaning the art and process of governing and it should be an offence to write it with a capital G or so as to refer to people.

-J. R. R. Tolkien