Safe Withdrawal Rates for Aussies — Part 5: Retirement Length

Posted by on 23 December 2018 in Safe Withdrawal Rate Series

In part 3 of our Safe Withdrawal Rate Series we set out to determine the optimal mix of Australian equities and Australian bonds that would allow us to withdraw the most from our retirement portfolios without running out of money.

We found that we could safely withdraw 4.00% of our retirement balance per year (adjusted for inflation) as long as the portfolios had at least 75% Australian equities.

We also noticed that portfolios with 75% equities and 25% bonds actually performed better than a 100% equities portfolio. This was our first indication that diversification can be beneficial, even if we diversify into a lower return asset.

Then in part 4 of the series, we extended our analysis to determine whether international exposure would be better for Australian retirees. We found that we can safely withdraw more when Aussie retirement portfolios were made up of Australian equities, U.S. equities and U.S. bonds. We don’t even need to buy Australian bonds!

One conscious limitation of all that previous analysis is that we assumed a 30 year retirement length. However, in reality many early retirees may be retired for 40, 50 or even 60 years. So in this article we will examine the effect of longer retirement lengths on safe withdrawal rates.

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Safe Withdrawal Rates for Aussies — Part 4: Portfolio Optimisation (Equities, Bonds, Domestic & International)

Posted by on 12 December 2018 in Safe Withdrawal Rate Series

In Part 3 of our Safe Withdrawal Rate series we determined the best mix of Australian equities and bonds to maximise the chance of a retirement portfolio lasting 30 years. We discovered that a mix of 75% Australian equities and 25% Australian bond was optimal.

But in reality, most of us Aussies invest in a mix of Australian and U.S. markets (and possibly some ‘whole of world’ markets).

So in this article, we are going to extend our previous analysis to look at an internationally diversified portfolio. We are going to determine how we should allocate our retirement portfolio across Australian equities, Australian bonds, U.S. equities and U.S. bonds.

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November 18 Net Worth Report: Weird Income Sources and Good Savings Habits

Posted by on 5 December 2018 in Net Worth Reports

Last month I showed you how the share market really hurt my progress. I barely added to my net income, despite saving quite a bit of money.

My focus for this month was to get back on track and grow my net worth as much as possible. And despite every house bill known to man hitting me this month, I was able to do it with a little help from my friend ‘airline compensation income’.

Sometimes bad events (like a cancelled flight) have silver linings (free money). Let me tell you what happened…

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