AUTHOR: David Powell on 12/1/2024 FIRST: Rick Connor on 12/1/2024 | RECENT: David Powell on 12/4/2024
Comments:
Love this one. Just two years into retirement, my biggest insight has been: We plan, God laughs. By the time we reach these wiser years most have experienced our share of the world’s creative randomness. Spending less than we can seems a simple mitigation for ourselves. Or could it be driven by an estate planning goal, to die with less worry for others, by leaving something for them to cope more easily in a surprising world?
It must be so nice to have a long planning horizon leading up to your start! Two suggestions:
Think about how you'll automate your retirement cashflow, and how big a cash buffer you'll want to keep at Vanguard (or wherever) vs. at your bank/credit union.
Take a moment to model whether Roth conversions would be useful, either in your own tax planning or in your estate planning. Consider your resilience to future federal or state income tax and estate tax changes. Jonathan has helpful tips in the HD Guide.
Why sell your principal for expenses? There is also no rule that says you cannot live solely off interest and dividends. The author has simply chosen to play a different game.
We hold 5-7 years of living expenses because past performance is never a guarantee of future, in dividend payouts or in market prices. Our world, including financial markets, is driven by randomness. Expected returns are heavily influenced by rare, "long tail" events. There is no way to predict what future crises will look like. And the lucky few who guess at one will not guess right at the next. Having said this, dividends tend to move far less -- up or down -- than prices. But as we saw with ex-US dividends during the pandemic, they can still drop more than long-term average declines for typical business cycle recessions.
While the Fed is very useful, I do wish for a sensible floor for their lending rate. In my opinion, the seeds of our next crisis are sown whenever they set that rate well below the U.S. GDP growth rate.
For my wife and I, the value of our stock index funds is the present value of all future dividends. For our kids the value is the market price on the day the last of us dies.
March 2020 was quite the Blue Light Special — for the broad market and any slice you’d choose, as was late 2008 to March 2009. They are few and far between.
Comments:
Love this one. Just two years into retirement, my biggest insight has been: We plan, God laughs. By the time we reach these wiser years most have experienced our share of the world’s creative randomness. Spending less than we can seems a simple mitigation for ourselves. Or could it be driven by an estate planning goal, to die with less worry for others, by leaving something for them to cope more easily in a surprising world?
Post: Self Defense
Link to comment from January 5, 2025
That seemed to be a unique outcome. Every other decline I looked at was different from the pandemic’s dividend drop with respect to US v ex-US.
Post: Dividends during bull or bear market
Link to comment from January 1, 2025
It must be so nice to have a long planning horizon leading up to your start! Two suggestions:
Post: 2025 Retirement Countdown by Dana/DrLefty!
Link to comment from January 1, 2025
Exactly. The yields you should care about are cost-basis dividend yields, not market price yields.
Post: Dividends during bull or bear market
Link to comment from January 1, 2025
Why sell your principal for expenses? There is also no rule that says you cannot live solely off interest and dividends. The author has simply chosen to play a different game.
Post: Dividends during bull or bear market
Link to comment from January 1, 2025
We hold 5-7 years of living expenses because past performance is never a guarantee of future, in dividend payouts or in market prices. Our world, including financial markets, is driven by randomness. Expected returns are heavily influenced by rare, "long tail" events. There is no way to predict what future crises will look like. And the lucky few who guess at one will not guess right at the next. Having said this, dividends tend to move far less -- up or down -- than prices. But as we saw with ex-US dividends during the pandemic, they can still drop more than long-term average declines for typical business cycle recessions.
Post: Dividends during bull or bear market
Link to comment from January 1, 2025
While the Fed is very useful, I do wish for a sensible floor for their lending rate. In my opinion, the seeds of our next crisis are sown whenever they set that rate well below the U.S. GDP growth rate.
Post: Don’t Expect a Repeat
Link to comment from December 22, 2024
For my wife and I, the value of our stock index funds is the present value of all future dividends. For our kids the value is the market price on the day the last of us dies.
Post: Sharing Lessons
Link to comment from December 14, 2024
March 2020 was quite the Blue Light Special — for the broad market and any slice you’d choose, as was late 2008 to March 2009. They are few and far between.
Post: Sharing Lessons
Link to comment from December 14, 2024
Does Bessent’s view, that new tariffs will not spark fresh inflation, overlook the role of credit creation and use in the economy?
Post: Trading Arguments
Link to comment from December 8, 2024