Month: September 2024
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Predicting safe withdrawal rates for retirement
In the last few posts, we have shown some techniques for predicting nominal returns and real returns. We have also looked at simulating safe withdrawal rates in retirement with various stock / treasury bond allocations and lengths of retirement. Now it is time to put all of this together and develop a model for predicting…
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Safe withdrawal rates in retirement – an update to the Trinity study
The Trinity study is a famous study that looked at how much one could draw from savings in retirement while invested in stocks and bonds, without completely depleting the portfolio over a period of time. The safe withdrawal rate, as it was called, is the percentage of the invested savings that could be withdrawn in…
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Predicting long term real returns in the market
We have made attempts to predict long term nominal (before inflation) returns in the market with great success using the equity allocation of investors. However, in order to predict what safe withdrawal rate we can maintain in retirement, we need to be able to predict real returns (that is, returns after inflation). The reason for…
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Philip Fisher’s Common Stock Search
Warren Buffett credits Charlie Munger and Philip Fisher for guiding him away from investing in companies selling below book value and towards quality companies that grow slowly over time. Fisher describes the things he looks for in common stocks in his book Common Stocks and Uncommon Profits. Below is the list of 15 points to…
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Predicting inflation to estimate future real returns
In the previous set of posts on equity allocation of investors, we looked at predicting long term market returns on a nominal basis. What we actually want to be able to do is predict real returns after inflation. This will be an important capability to determine the maximum safe withdrawal rate in retirement. The Trinity…