Early Retirement Extreme Forums

Maybe I can add some nice embossed Win95 buttons in the next update.

and just reversing the shadows makes the buttons look clicked... mind blown!

Just FYI ... some of the calculators are taking 20+ seconds to load on my mac. It's not a big deal, but maybe a Patience, Obi-Wan notice on each page would preempt complaints?

Hmm... it's working fine for me. I know MS OneDrive occasionally has regional server issues, so maybe give it a little time to sort itself out. There shouldn't be anything new in there that would account for slower performance on its own.

Haha, so I'm the one who needs the patience reminder. As you said, maybe it's just coincidence that my neck of the interwoods happens to be slow the day I'm trying out the new interface. I'll let you know if it doesn't improve in a week or two.

Looks good, though.

it takes ~5-10 seconds to load a calculator for brute, but it always has taken some time.

"Please step away from the monitor and wait while the system is calibrating local spacetime curvature..."

Yeah, PC is loading very quickly this morning so it was definitely me yesterday. Sorry for doubting the technical capabilities of the all-powerful T9000.

Am I mistaken, or did the old version have an option for REITs/real estate outside the US?

They were always US REITs, and the calculator simply translated the numbers to local returns just like it does now. The new label just makes it more clear to avoid any confusion. That said, a good global REIT fund is also dominated by US holdings so the numbers will be reasonably accurate for that as well.

how about a way to select average/median outcomes instead of the worst outcomes for the SWR calculations?
right now the calculator seems to use (as far as brute understands) the absolute worst run for any given portfolio to calculate the SWRs. this seems to favor very conservative/pessimistic portfolios heavy in gold and cash. brute would love to pick something else - clearly also not the best case, but maybe average or median make sense?

That would be quite easy to create. You merely have to input your acceptable failure rate(*). Firecalc does this, already, as an output. SWR is of course defined for 0% failures.

(*) Or code it so you generate a graph of WR vs failure rate. Those could be plotted too. The shape of various portfolio curves might be interesting/enlightening to look at.

Another suggestion: possibility to select specific sectors. Or just an option for "Non-cyclical stocks" that includes health care and consumer staples?

@ Brute & Jacob -- I'm really careful about presenting information that I think could be misinterpreted by over-eager investors, and there's some nuance to how sampling methods can skew the results with something like this. I'll have to think it through to make sure the output communicates the right message, but I really like the idea.

In the meantime, you can play with this indirectly using the Portfolio Growth calculator. Negative numbers in the contribution field count as an inflation-adjusted withdrawal. When the lowest line hits zero for a certain timeframe that's the SWR, and when it ends on the original portfolio value that's the PWR. So you can adjust the withdrawals and watch how the distribution of outcomes moves around.

@ Liberty -- I know Fama French does have some of that data, but I'll have to educate myself on the different sector fund definitions before I can realistically apply it. Sounds like a good project.

Tyler9000 wrote: ↑

Sat May 19, 2018 6:23 pm

In the meantime, you can play with this indirectly using the Portfolio Growth calculator.

that's how brute got to this. he was seeing similar (5.5%ish) SWRs for two completely different portfolios, one of which was 75% hedge, and the other 100% volatile equity. it makes sense that the worst cases are similar, but in the growth calculator, the equity portfolio tended to trend much, much higher in average (and obviously good) cases.

...

Thank you Tyler9000 for bringing this wonderful website to the masses. I've been playing arund with it lately in an attempt to design my own asset allocation. I have a few questions, issues and comments I'd like to share with everyone.

I'm from Norway and many of the assets are US-specific. How should I account for this when designing my portfolio assuming I will never move and live abroad?

I like the concept of The Golden Butterfly and Permanent Portfolio and similar portfolios that offer less volatile returns. The problem with these portfolios in my case is that I'm struggling to find suitable assets that can replace the ones quoted on the site.

Bonds/treasuries
I'm struggling to find a sensible way to purchase long term bonds. I could purchase domestic long term bonds but I can't find 30-year bonds. Only 10. Is that still long term? The other "low-transaction-cost" option is buying shares in bond funds but most of these offer a mix of short, Intermediate and long term bonds and they have a mix of government and corporate bonds. Some of these funds are domestic, others invest internationally. I also found a fund investing in international government bonds. Most of such funds require obscene amounts of capital if you want to invest, but I found one suited for small investors. Still, its a mix of short, medium and long term bonds.
Lets say I wanted to replicate The Golden Butterfly. How should I go about including bonds in that portfolio?

Real estate (RE)
I currently own real estate and manage it myself. This asset is not exactly liquid. But I came up with the idea that for rebalancing purposes I can adjust the mortage each year. This will adjust my equity in this asset class. So for example, after a run of good years in RE I can increase the mortage and put the excess cash into other asset classes in my portfolio for effective rebalancing. During downtimes in RE I would have to pay down extra on the mortage. Is this a good/bad idea?

Also, I've found that the returns I get on RE are better than the general market for RE in my area/country. Iow, I don't expect my own returns to match whatever data comes out in the official statistics for this market. This is based on 4 years experience and could be down to pure luck, but I believe it's not just luck because I can convert time and social capital for money in this asset class, which I'm willing to do. I see RE as a high risk/reward asset in my case. Would you agree?

One of the downsides with investing in RE this way, is that it's difficult to allocate less than say 25% to it because of my (small) target net worth, although ideally I'd allocate maybe 10%. I don't want to leave RE out of my portfolio because of the great returns I'm getting, at the same time my desire is to replicate something looking like the Golden Butterfly. Which assets are sensible to reduce in order to include more RE in a less volatile portfolio? I'm thinking less stocks because both stocks and RE in my case are both more volatile and correlated with each other. But then both gold and RE is a good hedge against inflation, so maybe replace gold with RE?

Current idea for allocation (which is far from current reality):
Cash/savings 13%
Bonds 10%
Gold 10%
Commodities 10%
Other 1%
Real estate 25%
Stocks 31%

Is it fair to say that...

- Gold and commodities play the same role in that both seem volatile over the long term and are uncorrelated with other assets? And that therefore, instead of allocating 20% to gold, I might as well have 10% in each further reducing volatility? Any downside to this idea apart from more transaction costs?

- Cash holdings are higher than what is typically recommended (I think) but we have some arrangements that can make cash yield more than what is typical elsewhere. I see it as an asset most similar to bonds then, agree?

Any critical comments to the above mentioned allocation are most welcome.

On rebalancing:

I'm thinking to rebalance 1 or 2 times per year. But I also want to rebalance in cases where my allocation to stocks deviate e.g. 10% from my target (should I think in terms of percent, or percentage points?). Is there a downside to combining both of these rebalancing techniques apart from hassle and transaction costs?

The tricky thing about commodities is that unlike gold and REITs, the instruments you own are complex and subject to decay.

https://portfoliocharts.com/portfolio/com/

But who knows, maybe the global grain glut reverses. Gold and REITs aren’t edible.

I agree with Mister Imperceptible. I'm not a fan of commodities due to the lack of an internal rate of return. Unlike a bond that pays interest coupons or a stock that is backed by assets, earnings, and dividends.