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Wow great podcast guest! Thank you!
He did some research on safe withdrawal rates in retirement.
I know that using a blind number (for example the 4% rule) is probably overly simplistic and that a smart person remains nimble and agile. My question is: for a doc looking at retirement in 4 years at the age of 50 with a net worth of around 7 M how would he approach it?
How would he minimize sequence of returns risk?
What asset classes would he recommend ?
What variables need consideration as one decides a “safe” amount to withdraw from a portfolio? Where do you pull the money from in a bull and where in a bear?
Sorry for the long response, thanks for a great guest!
Goes up and goes down, no one (not even EMD) can predict daily/weekly/monthly/yearly fluctuations.
Some folks just don’t know they cannot do it.
Some folks don’t know what they don’t know!
Yep index funds suck. Please borrow as much as possible and pick some stocks. Buy some crypto while you are at it.
Lordosis was sorta joking. with the original post. He followed it up with a JL Collins quote that is pure gold
Anne (as usual) is right and was nice. FLP (as usual) is right and was funny. Some others……..
If you can time it and pick winners don’t waste time with us. Go borrow a mountain of cash and secretly invest it. But don’t expect to win a lot of converts on a sight like this or bogleheads. We don’t believe the noise.
The beautiful thing about being a doc is that we have a steady reliable income stream. Docs don’t need to take huge risks. We just need to be “relatively” frugal, invest regularly when we get paid in index funds, and ignore it for years. More docs win with index investing than fancy complicated expensive (taxes, fees) active junk.
@lordosis, thank you! Awesomeness! Love JL Collins!
Yep the Vermont saxophone (VTSAX),
Put it in, leave it for 30 years. Done.
Obviously i own some bonds too and will pay down mortgage and add more bonds to AA with age, but no high kicks for me. I am Not Bruce Lee!
Still, if you got $ to invest. And it is money you don’t need for a long time, then stocks (VTSAX) is a great place to put that money, then turn off the noisemakers.
“overconfidence is the most prevalent cognitive bias”
on market timing:
“i don’t know anyone who can do it consistently. I don’t even know anyone who knows anyone”
I am guilty of sometimes buying on dips. It worked out nicely at end of last dec, but i know it is luck.
I have also bought at peaks.
The best time to buy = when you have some $.
The best time to sell = when you need some $.
You just received some $, so great time to buy!
18 years is plenty of time. I bet it will be higher than today, in 18 years, but who knows.
>15 years = plenty of time
I was busy at work and never looked at market. Pointless for me to look, that money is for 30 years from now.
You mean the monthly payment is not the only thing i should look at?
Anyone else think the Fed has lost grip on reality? I don’t know enough to understand exactly what parameters go into determining rates but they increased in dec ( after months of decreasing market)and decreased now (after months of increases). I heard Jack Bogle say: “two types of people exist: those who don’t know what interest rates will do and those that don’t know that they don’t know “ .
I should have predicted they would drop. I did just close on a home after all! LOL
When / what will happen to student loan rates? No clue. Live like a resident and pay them off and get that cancerous lesion = debt, out of your life.
Debt = risk. If you take more risk you will have a higher probability of increasing returns, but you also increase complexity and increase the chances of a miss calculation or missed prediction. Look at long term capital management; some pretty smart folks. To each his/her own. As i get closer to FI and wish to get off the hedonic hamster wheel, i don’t want increased risk. Also missing from this calculation is the evidence that people tend to feel less pain when they buy with debt and tend to spend more. The functional MRI study below is interesting:
I think this is where docs get in trouble. We are essentially kids when we get into medical school. The school then benefits from our eagerness and ignorance about money by encouraging us to borrow to pay for escalating tuition. We then become “debt numb”. It seems like monopoly money. We do rotations as med students and residents and we see attending docs who we admire buying all kinds of status artifacts and we assume that is the cool thing to do when we get done. When I finished in 2004 I had an attending tell me: “you need to buy a house, houses always go up in value and you should buy one right away”
I had 300k in student loans, was starting a new job in a different city and was trying to study for two different board exams. Was this really the best time for me to be house shopping? Sorry for the digression. But my point is this. I had 300k of student loans at 6% and a hundred questions regarding my life situation. The easy and appropriate use of my new attending income would be to simply pay down the debt, rent a cheap place and figure out if I liked the job and wanted to stay in that city, and where in that city would I want a house (commute etc.)
So, yeah, debt = leverage = risk. If you borrowed 50M at 3% and put it in the market for 20 years you would probably have much more than if you didn’t. But no bank will loan you 50M at 3% to put in VTSAX. Heck, they won’t loan it to you at 5% Why?
Agree with @maxpower. paying off debt is decreasing risk. Debt = risk. In my opinion, This is why our government gives all these tax incentives to borrow. It stimulates the economy but people need to be encouraged to do it because it is risky.
In general yes you would be “more likely” to make money over a > 5 year period by investing in VTSAX vs paying down a mortgage, but it is impossible to predict in advance for certain. For example, I have a mortgage. I am going to pay down extra on it instead of putting more money in my taxable account. I actually mailed a check to principal today. I could have put this into VTSAX in my taxable or I could have put toward the mortgage. I decided mortgage. I don’t want to retire with a big freaking mortgage. If the market had just dropped 20% then the money would have gone into VTSAX instead of the mortgage, but with record stock prices and a “possible” recession on the horizon I will: 1. max out IRAs, 2. Pay extra on mortgage 3. put some in taxable index funds.
I already have a ton in taxable index funds. What is the most optimal solution? Hard to say in advance. I have at least 7 years before it is dead, but If I get sad about not having a mortgage I could always go fill out all the freaking forms again…….oh wait……nah. Think I will fire up the grill instead!
Do it OP, looks like an awesome grill.
Will suck to put it together though probably.Click to expand…
I am going to pay $83 to have the amazon “pro” assemble it right after he carries the heavy thing onto my deck! I hope he has a partner to deliver this thing (heavy). Assembly time is listed as average time required 3-4 hours. For $83 that is a no brainer!