Early Retirement Extreme Forums

@ThisDinosaur -- A bond fund like TLT should be really similar to a ladder of individual treasuries between 20-30 years maturity.

@Classical_Liberal -- Thanks! From my perspective, the beauty of choosing a passive asset allocation is that it helps free up time for more video games. But if playing with the data is also fun, all the better!

ThisDinosaur wrote: ↑

Thu Mar 16, 2017 11:19 am

Definitely, during accumulation, that's the way to do it. Say you have a 50/50 target allocation, but there's a $500 difference between the two assets. You get 2K to invest this month, you put $1250 in the lesser and $750 in the greater. Otherwise you buy both and immediately have to sell one of them.

Swedroe's rebalancing advice:
http://awealthofcommonsense.com/2014/03 ... cing-rule/

Rebalancing in a taxable account(which involves trading costs and capital gains taxes) should only be done once you're living off of your portfolio OR the difference between two of your assets is way bigger than the amount you have to invest this month.

Slightly OT: I think this is really solid advice and it's also the practice that I follow. I like how it's completely mechanical and takes away any decisions about which asset to buy more of.

Aditionally, any proceeds from dividends can be lumped together with the contribution.

I like Swedroe's 5/25 bands as well. There's no need to fuss about a shift of a few percentage points.

So I wrote a long post, thought better of it, and decided to go the PM route for now. Sometimes my excitement outpaces my rational side. I'm sure I'll post it again sometime soon.

Tyler9000 wrote: ↑

Thu Apr 20, 2017 6:12 pm

oh hai

how hard would it be to create a calculator that'll judge portfolios not based on lump-sum investing, but on investing $X every year? this sort of forced DCAing would likely lead to a very different outcome for most portfolios over different periods, and more realistically models how humans would approach FI (unless they inherit large lump sums).

input variables could be as follows (imagining heatmap calculator):
portfolio (like on all the existing calculators)
working years

then instead of displaying the development of the portfolio from lump sum X to Y, each rectangle could show development of DCAing for that period.

it would probably be more of a modality in existing calculators than its own calculator? does this make sense to display?

It depends on the calculator. I think it makes sense for some more than others.

BTW, two already have this functionality. The Portfolio Growth calculator has the option to set a fixed amount of annual contributions, and the Financial Independence calculator assumes that you save a set percentage of your income every year.

Tyler9000 wrote: ↑

Thu Apr 20, 2017 6:12 pm

So I wrote a long post, thought better of it, and decided to go the PM route for now. Sometimes my excitement outpaces my rational side. I'm sure I'll post it again sometime soon.

No more false starts this time -- it's a done deal. I finally updated the site to study portfolios not only for US investors but also for Australia, Canada, Germany, and the UK. It was a ton of work to get there, but I'm pretty happy with the results.

https://portfoliocharts.com/2017/04/29/ ... ng-global/

Now maybe I'll have time to actually study international portfolios rather than just hunting down data.

Thank you!

Tyler, just when I think your site can't get any better.

Some quick bond-related questions. Will "international bonds" make its way back on there as an asset class? What about emerging market debt? Do all the asset classes become country-specific when you switch (gov't LTT, reits, etc. are for the selected country)?

Thanks.

Tyler, this is literally awesome. Chapeau!

ThisDinosaur wrote: ↑

Wed May 03, 2017 6:29 am

Some quick bond-related questions. Will "international bonds" make its way back on there as an asset class? What about emerging market debt? Do all the asset classes become country-specific when you switch (gov't LTT, reits, etc. are for the selected country)?

The trick with international bonds is that most index funds tend to be hedged. That makes modeling them a lot more complicated, and I decided to save that for a future project.

International stocks, commodities, and gold are all universal and are simply translated to local currency. Domestic stocks, bonds, and cash are country specific. So if you're studying the UK, for example, they represent UK stocks, UK gilt funds, and UK Tbills. And all returns account for local inflation.

Thanks Tyler. Best portfolio tool I've seen. I'm always positively surprised at the impact of adding gold to the mix.

Outstanding effort, thanks Tyler.

@Tyler9000 - Are you sure about those currency/hedging assertions?

It was my impression that international numbers (data) are of course in the local currency, but if you buy funds (in the US) that cover international securities, these funds mostly do not hedge the currency exposure unless explicitly stated(*). Consequently, this means international investing is often more a short-USD play than anything else.

(*) IIRC(?!) most funds don't. Managed funds may switch it on and off depending on where they think the USD is going.

The Vanguard international bond fund prospectus does specifically say it is hedged.

"The fund will attempt to hedge its foreign currency exposure, primarily through the use foreign currency exchange forward contracts, in order to correlate to the returns of the index, which is US Dollar hedged."

@Jacob -- Yeah, I phrased that really poorly. You're absolutely correct that most index funds are unhedged, and the calculators are built around that assumption. I should have said this:

The trick with international bonds is that many of the most popular international bond index funds are hedged.

For example, note that Vanguard doesn't even offer an unhedged option.

...

@Tyler, can the Portfolio Charts super fans get an update on the state of the site? Do you see it as being in "set it and forget it mode" now that you have a new part time job? Are you getting offers to buy it? Have the Bogleheads and MMM'ers started a petition yet to make you remove any portfolios that include gold?

Smashter wrote: ↑

Fri Aug 18, 2017 7:43 am

@Tyler, can the Portfolio Charts super fans get an update on the state of the site? Do you see it as being in "set it and forget it mode" now that you have a new part time job? Are you getting offers to buy it? Have the Bogleheads and MMM'ers started a petition yet to make you remove any portfolios that include gold?

Thanks for checking in!

Yeah, I've been taking a bit of a hiatus from writing new articles while I have some other things going on, but it's not in full "set it and forget it mode" by any means. I designed it from the start to be a little more tool than blog so that I could avoid getting caught in the publish or perish loop, and I guess I've just been taking advantage of that lately. I do have a few post ideas and also some new international data to play with, and I imagine I'll update things soon. Any special requests?

No purchase offers yet. Maybe I'll get there some day. And when it comes to gold, I've learned to enjoy being the bad guy who supports it with, like, data and stuff.

But it has no real returns and you can't eat it!!!

No special requests. I look forward to reading whatever you post as you get around to it.

Tyler9000 wrote: ↑

Tue Feb 07, 2017 12:59 pm

Fish wrote: I'd like to suggest an all-cash portfolio...

I'll have to think about how to message it, but I like the idea.

I discovered your blog post on cash when Rocky mentioned it in his journal.

Thanks for taking the time to write that. For me the most interesting and counter-intuitive part was learning that cash (in a savings account, not under a mattress) historically could sustain a 30-year retirement at a 4% SWR, though with guaranteed capital depletion. This result seems very unlikely under current conditions, but it is helpful context to augment my personal experience with money, which starts in the mid-2000s.