Blog Archives

Revisiting Risk and Reward (Part 2)

A previous blog article explored income-centric risk and reward definitions, more suitable to retirement than the usual academic definitions. Corresponding quantitative analysis of some simple US portfolios was provided.

This article extends this investigation by taking the perspective of investors located in various developed countries (a form of ‘out of sample’ testing).

Posted in Asset allocation, international stocks, Market history, Market statistics, Portfolios, Retirement

Revisiting Risk and Reward

Financial literature from academics has been strongly influenced by the ground-breaking work of Harry Markowitz and William Sharpe, and the concept of risk & reward for a multi-asset portfolio. Although brilliantly innovative, this work is often misused, equating risk with (portfolio) volatility and reward with (portfolio) returns, and applying such principles without acknowledging the fundamental differences between investors and speculators, or accumulators and retirees.

This article will explore risk and reward from a perspective more suitable to retirement, and perform corresponding quantitative analysis of some simple portfolios.

Posted in Asset allocation, Market history, Market statistics, Portfolios, Retirement, Value premium

CAPE and Safe Withdrawal Rates

Michael Kitces wrote an intriguing article in 2008, which notably quantified the (empirical) relationship between the Cyclically Adjusted PE ratio (aka CAPE) and safe withdrawal rates (SWR) of subsequent retirement cycles. This blog article extends this study, adding ten more years of data (i.e. up to 2017), and then ponders about the practical applicability of such findings.

Posted in Market history, Market statistics, Retirement

More about the recent Japanese crisis

This article is a follow-up to the “short study of the recent Japanese crisis” which was published on this blog a few days ago. The study was actively discussed on the Bogleheads forum. Various interesting questions were raised that weren’t directly addressed by the original write-up, and triggered the author to do more research about domestic tilts (or lack thereof), variable withdrawals, and past performance of the stock market in Japan.

Posted in Asset allocation, Market history, Retirement

Monitoring Your Retirement Goal – the Funded Ratio

This is a guest post from Bogleheads® forum member Bobcat2. Definition Funded ratio – The ratio of a pension plan’s assets to its liabilities. A funded ratio above 1.0 indicates that the pension plan is able to cover all payments it

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Posted in Retirement

U.S Department of Labor proposes new fiduciary standard for retirement savings

The U.S. Department of Labor has issued  its Conflicts of Interest Proposed Rule, a proposal which seeks to establish a fiduciary standard for investment professionals rendering advice to retirement savers. The proposed regulation was published in the Federal Register on

Posted in Retirement

The myRA

Note: A Treasury press release from July 2017 set out the reasons for why the myRA program is ending. As noted in that statement, “The U.S. Department of the Treasury today announced that it will begin to wind down the

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Posted in Retirement

Inheriting an IRA if you are not a spouse

If you inherit an IRA (traditional or Roth) account there a number of guidelines and  key deadlines that you should be aware of.  Sound decisions can maximize the value of the account, both for yourself and for your beneficiaries. We

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Posted in Retirement

The SIMPLE IRA transfer option

If you work for an employer who provides  you with a  SIMPLE IRA retirement plan, you should be aware of the transfer options you are permitted to use. According to IRS provisions it is possible for an individual employee to

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Posted in Retirement

There’s a spreadsheet for that

Taking charge of your finances is a life-long skill well worth learning. From keeping within a budget to managing your investments and loans; understanding a few basic concepts will put you in the driver’s seat. You need a tool to

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Posted in Investing, Investment Theory, Personal finance, Retirement
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