What caught my eye this week.
Just when you thought pensions had been rehabilitated with the freedom to spend your savings how you like in retirement – and the laudable success of auto-enrollment nudging you there – along comes a conservative think tank ready to bugger them up again.
Not content with his faction bringing us the thermo-nuclear bungle that is Brexit, former Tory ‘leader’ Iain Duncan Smith’s Centre for Social Justice suggest the government withhold the state pension until 75:
The SPA [State Pension Age] should better reflect the longer life expectancies that we now enjoy and be used to support the fiscal balance of the nation.
The SPA in the UK is set to rise to 66 by 2020 (Pensions Act 2011), to 67 between 2026 and 2028 (State Pension Act 2014) and to 68 between 2044 and 2046 (State Pension Act 2007).
We propose accelerating the SPA increase to 70 by 2028 and then 75 by 2035.
There’s a lot to be written about this. For one thing, my co-blogger The Accumulator might have to revisit his fear-de-mongering article on why your pension won’t be plundered.
(Oops! Lucky it’s a Bank Holiday @TA!)
More seriously, the CSJ report shows its workings, and it’s hard to come away from it without thinking Something Must Be Done. I also personally happen to like the idea of working indefinitely, in some capacity, professional damp squib to the FIRE brigade that I am. I believe it’s probably healthier for most of us.
However I’d certainly expect to be easing up into my 60s. Perhaps a day or two a week by 70. I’d want to have options. I wouldn’t want politicians forever moving the goalposts away from me like some demented version of football devised by the Greek philosopher Zeno.
More darkly, as The Guardian points out there are pockets of the country such as Glasgow where male life expectancy doesn’t even hit the 75-year old mark. And life expectancy isn’t the same as healthy life expectancy, anyway.
An additional fear for the likes of us is that the age when we could access private pensions could also leap.
It’s already set to rise to 57 by 2028. Perhaps you’d be barred until 65 under the CSJ’s regime?
The alternative – wealthy types retiring in their 50s en masse to be served lattes on weekday afternoons by bitter septuagenarians – sounds almost worse.
Existential diversification
Of course this is only a proposal. It carries exactly zilch formal weight. Even Duncan Smith has said it’s not his policy, and he’s a Magneto for nonsense.
But I do think it’s a reminder that the rules of the game can and will change again and again.
In just the life of this blog we’ve seen it with everything from the pension lifetime allowance to the taxation of dividends to those who came here from the EU in good faith and lived here for decades being ordered to pay up for the right to stay.
Change is constant, which is why I’m as bemused when I hear people explain their entire strategy is 100% based on pensions as I was when old-time investors told me they eschewed using ISAs because their dividends were tax-free.
Political risk is hard to avoid unless you’re ready and able to move (and let’s not mention expats again this week, eh? 😉 )
But there are pragmatic approaches you can take, such as using various investment vehicles together (ISAs and pensions, at a minimum, and probably also property), keeping your hand in at earning to preserve your human capital, and trying to stay healthy for as long as possible.
As someone should have trademarked: Not everything that can be modeled to two decimal places on a FIRE spreadsheet matters. And not everything that matters can be modeled.
*If only Joe Root could say the same.
This thought-provoking guest post is by Andrew Henderson, the author of Nomad Capitalist.
Even when you have discovered the freedom of expat life, chances are that you will still need to process the transition.
It can feel a bit like a home-country detox.
This is more than just dealing with cultural shock. In many cases, you are learning to adopt an entirely new perspective and approach to life.
Living and traveling abroad has a way of changing the way you look at the world because you are suddenly exposed to a thousand different ways to do things that are done only one way at home.
It can be tempting to ask why something is done differently because what you know is all that you’re used to.
But when you detox yourself from the one-country, one-way-of-doing-things mindset, you will discover a world of possibilities full of better solutions, better lifestyles, and better options.
Investing is no exception to this rule.
Global potential
Learning to invest as an expat can change your entire investment strategy for the better. But only if you let it.
There are funds and companies in other countries that do things somewhat similar to what you’re used to, but as someone who has left my home country and fully given myself to investigating the entire spectrum of investment opportunities abroad, I know that there are better options.
In fact, there are so many options that it takes a bit more work to know which investments best fit into your personal strategy, especially compared to the ease of simply handing your money over to a mutual fund. If you’re not opposed to figuring that out, you can easily enjoy much higher returns.
Before deciding where and how to invest overseas, I find it helpful to ask the following four questions:
- How committed am I to continue investing in my home country?
- Where am I going?
- What options are available to me?
- How will my expat journey affect my views on investment and risk tolerance?
It is important to answer the first question because many investment options are only available to residents of certain countries.
For example, in the US you can invest in everything from mutual funds to LendingClub. These companies often have offices in Europe and accept customers from countries like the UK, Germany, Singapore, and Hong Kong.
However, they may not allow you to invest if you do not have resident status in those countries.
Because of this, your expat lifestyle may be limited if you want to continue investing in your home country.
In contrast, you will not limit your investment options if you choose to be an expat. As you ask yourself the four questions above, it becomes easier to realize that if you are able to live somewhere else, why not invest somewhere else as well?
I call this geographic diversification.
On the ground diversification
One of the basic principles of a strong investment portfolio is to avoid putting all of your eggs in the same basket.
If you wouldn’t invest all of your funds into one stock issued by a single company, why would you make all of your investments in a single country?
Not only can you spread your risk through geographic diversification, you can also increase your investment options.
In countries like the US, regulation from the SEC gets in the way of some of the best investment deals. In the UK, the market is so developed that people have to get creative to invest and find cash flow, especially in today’s low-yield environment where you can no longer make money just parking your cash in the bank.
As a result, people turn to investment deals like student housing rentals that may sound great upfront – invest £100,000 a year and get 9-11% back – but then how do you sell that? How do you sell one room in a student apartment in an area that would lose its value if there weren’t any students?
Rather than struggle to find creative options to get mediocre yields in your home country, why not simplify things and just look elsewhere… especially if you are an expat?
Living somewhere else allows you to see the flaws in how people invest where you are from – even the flaws in what you’ve been doing.
You’ll begin to see that many people invest where they do simply because they think that those are their only options. And if you are not comfortable investing anywhere but the UK, those just might be your only options.
Fear of doing anything beyond what is right in front of you can leave you choosing between an HSBC bank term deposit or a student housing development.
Fear keeps you from seeing the possibilities.
But those who have embraced the expat life have already shown that they are comfortable outside of their comfort zone.
So let’s look at the possibilities that open up when you look beyond your home country.
Georgia on my mind
To begin, I recently opened a US dollar bank deposit account in the country of Georgia and I am making 4.5% just by parking my cash there.
In countries like Cambodia, you can make 6% doing the same thing. And in other places, you can make even higher returns.
For instance, bank deposits in Armenia are currently about 10%. I ran a recent comparison over the last four-year period on the Armenian dram and the currency fluctuation was less than 1% against the US dollar.
Imagine that you were to put your money in at 10% interest in a foreign currency. Suppose you lost less than 1% converting to the new currency and less than 1% converting it back and you lost less than 1% against your base currency. You would be down roughly 2.5%.
However, after four years, you would get 40% interest (10% x 4 years) by simply putting your money in a foreign bank account.
If you want to invest in real estate, things get even better.
If you were to stay home in the UK, you would easily pay £15,000 or more per square meter for a property in the city center with a yield of 4.5% max.
In cities like Tbilisi, Georgia or Phnom Penh, Cambodia, you can buy property in the city center for $1,000 or less per meter and make much higher returns.
These properties may not be perfectly renovated, but they are in great locations and are as much as 1/25th the price you would pay in London, 1/20th of what you would pay in Singapore, and 1/15th the prices in New York.
That is dirt cheap when it comes to international real estate.
You can find these low prices and higher returns in numerous places around the world. Even Colombia has deals like this; you won’t find them in the capital city of Bogota, but because Colombia is a much bigger market, it is still a great investment.
Market timing
In many instances, timing is key.
For example, you won’t find these prices now, but in the summer of 2018 you could find properties for $1,400 per meter in Istanbul. At the time, the Turkish lira was crumbling and many people were just walking away. Properties that were normally $3,000 per meter went down to $1500 per meter and people started panic selling.
That was the time to jump in.
Turkey has strong fundamentals – including a large population that reproduces – which means that even if some of your rental income is in lira for a couple of years and the lira gets battered, you will eventually come out on top.
Some might see an investment like this as a risk, but my personal expat journey has shown me the difference between perceived risk and actual risk. People often question my wisdom for even recommending real estate investments in a place like Cambodia, but my investments there made over 20% ROI in the last year.
Don’t take this as personal financial advice, but try getting that in the US!
There are some properties in Australia and the UK that have had their total yield go down because they made 2% yield and their property price went down 5%.
I made 20% in Cambodia. I have had deals in Georgia that were in the double digits.
How much lower can these prices go for countries that are experiencing huge booms of tourists? Their markets are just starting to take off while developed countries like the UK leave investors scrambling for creative ways to make even a small return.
See the bigger picture
As an expat, if you can get over the fact that you’re investing in markets that you’re unfamiliar with, you can go back to the basics and buy core properties in amazing locations for low prices and wait while collecting some income.
Most people won’t do it because they are afraid. They think that the UK and the US are the only safe places in the world.
That is obviously not true.
Most people just don’t know how many possibilities are waiting for them out here in the rest of the world. Where I come from, many people have never left the United States. Almost 60% of Americans don’t even have a US passport, disqualifying themselves from international travel.
But as an expat you are already out in the world. You are different.
If you’ve been enjoying the expat life for a while now, you may have begun to notice the opportunities already. If you haven’t, just switch on your investment mindset wherever you go.
Good investments do not exist in a vacuum back home. For the globally-minded citizen, the best investments are just waiting to be found.
Andrew Henderson lives by five magic words: “go where you’re treated best”. The founder of Nomad Capitalist helps people to find the best places to live, bank, invest, incorporate, start a business, hire, date, and more. You can also read his book.
What caught my eye this week.
There was something (else) notable about the first TV interview with the three lads from Manchester who restrained a knife-wielder run amok in Sydney earlier this week.
In the initial broadcast, I noticed two were wearing Apple Airpods whilst talking to the camera.
I thought this pretty striking. The wireless headphones are popping up all over London in the same way the iPhone’s once iconic white earbuds did a decade ago.
Nevertheless I was surprised to see them in the TV interview. Mancunians have their own inimitable sense of self-presence, but still – wouldn’t you take your Airpods out before a once-in-a-lifetime appearance on live TV?
That was my first thought. But then Airpod users often say they forget they’re wearing them.
And unlike, say, the ill-fated Google Glass, people love to be seen wearing them. Even when being broadcast around the world!
This trivial observation suggests to me that wireless headphones are going to become ubiquitous. Even your gran in the Highlands will be wearing them within a few years.
And that’s relevant around here because it means a £169 purchase – and that’s with a £30 discount – every couple of years has been conjured up by Apple out of nothing.
Put that in your spreadsheet
Yes, yes, a couple of you will tell me you’re still getting by with a Tesco mobile on a £5 contract and a pager.
There are always outliers or laggards.
But the bigger point is that a lot of today’s silly luxuries become tomorrow’s essentials.
The iPhone of course is the ultimate example of this kind of household expense that nobody really saw coming.
An early retiree at the turn of the century might have budgeted for a mobile phone, sure, but not one that cost £1,000 or more.
And just a few years earlier in the mid-1990s there would have been no annual mobile bill in the forecast at all.
Of course, there might have been a car in the budget – whereas today’s young urban corporate escapee might make-do with Uber – and perhaps a video tape recorder to capture that round-the-world retirement trip at the cost of a couple of grand.
Swings and roundabouts.
Tomorrow’s world
When I first started reading personal finance forums 20 years ago, I was amused by all the inflation conspiracy theorists that abounded, and I still am. Tracking inflation is difficult enough without introducing a nationalised swindle.
However I now see that those who argued we all have our own personal inflation rates made a really good point.
Broadly, stuff (iPhones and Airpods aside) is getting cheaper while services are getting more expensive.
But guessing what stuff and what services you specifically will want to use in 20 years time is harder than it looks.
It’s another reason why personally I wouldn’t want to follow a ‘spending down all my capital’ plan in early retirement (though I accept many feel they have little choice).
Using your current spending is a decent proxy for a decade or two, but what if you’re retiring at 40? Do you really want to miss out on the space travel, the personal teleportation, and the by then-mandatory weekly enemas with your personal gut flora therapist?
Well, okay. But surely not the space travel and the teleportation?
On the other hand, perhaps the robot revolution will lead to super-abundance and a century of deflation.
Tough call.
Inflating expectations
In this context, the news that inflation is currently running a little over target…
Annual consumer price inflation rose to a three-month high of 2.1% in July from 2.0% in June, the Office for National Statistics said, bucking the average expectation in a Reuters poll of economists for a fall to 1.9%.
…seems neither here nor there, especially as anything could happen come 31 October.
With a sensible Brexit deal the pound could rally overnight and imported inflation fade away. Alternatively, with a bonkers no-deal, we might see a run on sterling and all kinds of craziness. Or perhaps just a damp squib either way.
So the Bank of England does face a bit of a dilemma.
But in the longer-term, in a world of accelerating change, we all face a bigger one.
Further reading:
Long time readers may remember that as I’ve written on Monevator many times, a few years ago I began repositioning my main SIPP towards income-centric investment trusts.
Mostly, this meant selling various passives and some funds, and replacing them with investment trusts.
This isn’t the place to reprise the merits or otherwise of that strategy.
Previous articles by me have:
- Argued the case for investment trusts as one solution for retirement income.
- Made the case for active management in deaccumulation.
- Explained the traits I look for in such trusts.
For me it boils down to a combination of in-built diversification, (mostly) reasonable charges, and a proven investment model that in many cases goes back over a hundred years.
To which I might add that in some cases, investment trusts also offer access to asset classes that would otherwise be problematic for ordinary investors.
These days, for instance, my own portfolio features large-scale industrial and warehouse properties in the form of Tritax Big Box, and solar and wind farms in the form of Bluefield Solar Income and Greencoat UK Wind.
Terra incognita
Whatever their merits, investment trusts have historically faced an uphill struggle for mindshare among investors.
The financial press, for instance, has traditionally fêted open-ended funds, for reasons not unconnected to the amount of advertising that such funds undertake.
When soliciting interviews with active managers, the same logic applies.
Investment advisors, too, were slow to tout the attractions of investment trusts. The arrival of RDR back in 2014 and the demise of a number of cosy commission-based arrangements has changed that a little, but more needs to be done.
And – it has to be said – the venerable nature of a number of investment trusts hasn’t helped to bring about a nomenclature that appears investor-friendly to modern eyes.
The Scottish Mortgage investment trust, for instance, is nothing to do with mortgages, and the last time I looked it had no investments in Scotland. To be blunt, the name does little to hint at index-beating major investments in Facebook, Google-owner Alphabet, Tesla, Amazon, Alibaba, Tencent, and other digital illuminati.
Put another way, investment trusts can be something of an unknown for many ordinary investors, with relatively few sources of worthwhile information.
New, better, bigger
Hence, back in 2015, I created a Monevator-published table of income-centric investments trusts, which became something of a popular resource.
Further updated in 2016, it was actually in the process of receiving a 2017 refresh when, as they say, real life got in the way. 1
And somehow, here we are in 2019.
The 2019 table, updated at long last, contains a small number of improvements. Three, to be precise.
- It includes many more investment trusts – roughly twice as many.
- I’ve included a number of ‘specialist’ trusts, as well as property-centric trusts, not least because these asset classes now figure fairly prominently in my own investments.
- Following reader suggestions, trusts are categorised and grouped together: UK-centric, global and international, specialist trusts, and property-centric trusts.
Click through to view the cloud-hosted investment trust table in a new window.
The small print
There are four observations to make on the 2019 bunch of trusts.
The first is that among those trusts that featured in the 2016 list, costs are down: 18 trusts had a lower reported ongoing charge; four were the same; and two appeared to have slightly increased it.
Second, of the trusts listed, 24 feature among my own investments, with two more earmarked for purchase soon.
Third, to be included in the table trusts had to be a member of trade body the Association of Investment Companies, which means that a number of REITS that would otherwise make this list have been excluded. Among my own investments, for instance, are Primary Health Properties, Empiric Student Property, and Tritax Eurobox. These do not feature in the table.
Fourthly and finally, the SIPP in question which holds these trusts is now significantly larger, after two other pension investments have been rolled-up into it in order to cut costs and improve performance.
There’s still a fairly hefty five-figure sum in funds, but for me at least, the strategy of moving into income-centric investment trusts is delivering the goods.
Naturally this information is only provided as a starting point for Monevator readers doing their own research: If you invest in any of them, on your head be it!
Of course I hope it’s useful, and look forward to any comments. It’d be especially interesting to see an outline of the portfolio of any readers using investment trusts in retirement, if you’d care to share?
See all The Greybeard’s previous articles.
- My friend is now fully recovered from his heart attack and subsequent coronary bypass, and now regularly trounces me at our weekly exercise class.[↩]
The standard story is that when equities collapse we should be saved by our bonds. Like a financial Clark Kent, this hitherto unassuming asset class takes off its glasses, reveals its cape, and soars above the chaos, lancing losses with laser beam glances.
The so-called flight to quality – when capital deserts risky equities to take refuge in high-grade government bonds – worked during the meteor strikes of 2008-09 and 2000-02.
But – oh big surgery-enhanced buts – it doesn’t always work.
UK equity and gilt returns since 1899 reveal that bonds are not always enough. Our portfolio defences need to be multi-layered like a castle, with walls, moat, archers on the ramparts, and pots of boiling oil ready to meet the potential threats.
How often do bonds rise to the occasion?
UK equities have ended the calendar year with a loss 43 times between 1899 and 2018 according to the Barclays Equity Gilt study, the go-to source for UK returns data.
That’s a timely reminder that you can expect to see an annual loss on your allocation to UK shares around one year out of every three.
So how often have UK government bonds (or gilts) proved an effective remedy for that portfolio pain?
For each year that ended with a loss for UK equities, gilts:
- Rose 28% of the time.
- Fell by less than equities 37% of the time.
- Lost more than equities 35% of the time.
Two-thirds of the time you’d have been better off holding some gilts versus 100% equities during a down year – but even our safe haven bonds would have made things worse a third of the time.
Not ideal.
Do gilts save their best for darker days?
When equities lost 10% or more in a single year, 1 gilts:
- Rose 25% of the time.
- Fell by less than equities 65% of the time.
- Lost more than equities 10% of the time.
This is more like it! Gilts made a bad situation worse in only 10% of major market corrections. Nine times out of ten owning gilts cushioned the blow.
When equities lost 20% or more in a single year, gilts:
- Rose 40% of the time.
- Fell by less than equities 60% of the time.
- Gilts have never underperformed equities in this scenario.
UK equities have lost more than 20% in a year on five occasions. Gilts didn’t do worse in these years but the airbag left you in a body cast three times. Double-digit inflation was running amok in each case – 1920, 1973, and 1974. Gilts got trampled like a traffic cop trying to halt King Kong.
To put some gory numbers on the UK’s biggest horror show:
- UK equities lost -71% between 1973 and 1974.
- UK gilts fell by 50% between 1972 and 1974.
You’d struggle to live on those crumbs of comfort.
As mentioned, gilts did register gains during the Dotcom Bust (2000 – 2002) and the Global Financial Crisis (2008 – 2009). Not by enough to fully cancel your losses if you held a 50:50 equity/bond portfolio, but enough to help you pay the bills and buy equities during the fire sale.
Just add cash
The problem is our memories are short and the textbook performance of quality government bonds during the last two meltdowns can easily blind us to the fact that gilts haven’t worked one third of the time.
Can we solve the problem if we diversify into other defensive assets as well as gilts?
Cash has lost value in real terms every single year since 2008. That dismal record might easily stop us digging deeper to learn that cash scored better annual returns than UK equities and gilts in 27 of the 43 drawdowns – or 63% of the time.
Note: The Barclays Equity Gilt study uses UK Treasury bills 2 as a proxy for cash.
Cash looks worth holding because:
- Gilts and equities were both down 72% of the time in a losing year. But adding cash meant that you’d have at least one asset in positive territory 51% of the time.
- Cash outperformed bonds 65% of the time when equities lost more than 10% over the year.
- Cash outperformed bonds 80% of the time when equities lost more than 20% over the year.
- Cash beat bonds during all three of the supply shock years – 1920, 1973, and 1974. Cash was still down in real terms, but by much less than equities or gilts.
Index-linked gilts for anti-inflation
Might we improve our portfolio’s resilience with index-linked gilts?
These inflation-resistant government bonds (called ‘linkers’ by their fans) have only been around since 1983, which is a pity because they would have been more popular than flares in the 1970s.
- UK equities have had ten down years since ’83.
- Linkers only outperformed conventional gilts twice. And linkers were still in the red both years, just marginally less so than gilts.
- Linkers ended down when equities lost over 10% in 1990, 2001, 2008, and 2018.
Index-linked gilts did register a small gain in 2002, when equities lost 24.5%. But all told they’re no replacement for conventional gilts as a safe haven.
With all that said, linkers are the only asset class regularly cited as offering useful protection against high and unexpected inflation.
Don’t expect equities, property, or most commodities to help when inflation is off-the-hook. Gold might assist, but not reliably so.
Talking of gold…
Gold for chaos insurance
Gold is famously uncorrelated with equities or bonds. It sometimes works when nothing else does.
We can take a look at whether gold improved a portfolio’s return during every UK equity market drawdown since 1970, thanks to the amazing Portfolio Charts.
There were 15 down years between then and now. Gold, equities, gilts, and cash all sunk together only twice – just 13% of the time.
Gold improved the portfolio return two-thirds of the time.
It did a spectacular job in the stagflationary 1970s. But it’s impossible to know how connected that performance was to the ending of US political controls on the yellow metal in 1971.
Gold also put in a good shift at the height of the Global Financial Crisis. It returned 90% between November 2007 and February 2009.
What’s less well remembered is that gold fell 30% in October 2008, swirling in the same toilet bowl as everything else. Year-end returns can only tell us so much about what it’s like to be a forced seller in the midst of a crisis.
There are many reasons to be wary of gold. It’s not a good inflation hedge for small investors and it has a long-term track record of low returns and high volatility – the opposite of what we want in an asset class.
But gold’s reputation as a safe haven holds up, on balance. Passive investing champion Larry Swedroe sums up the evidence:
As for gold serving as a safe haven, meaning that it is stable during bear markets in stocks, Erb and Harvey found gold wasn’t quite the excellent hedge some might think. It turns out 17% of monthly stock returns fall into the category where gold is dropping at the same time stocks post negative returns.
If gold acts as a true safe haven, then we would expect very few, if any, such observations.
Still, 83% of the time on the right side isn’t a bad record.
An asset that counterbalances falling equities 83% of the time is pretty remarkable in my view.
Gold may help you avoid being a forced seller of shares
Cash and gold do not feature in my personal accumulation portfolio because the evidence shows they’re a long-term drag on returns.
Instead, I’ve backed myself to ride out any crisis and to not panic sell if my portfolio heads south for a few years.
Living off your portfolio in retirement is a different ballgame, however.
A deaccumulator must sell to live. 3 If a bear market lasts several years then ideally I’d have at least one asset class in my portfolio that’s above water when I need money. At worst, I’d want an asset that I can sell for a marginal loss.
The nightmare is selling equities at a loss over a protracted period and torpedoing the long term sustainability of your portfolio.
Retirement researchers have found that the dreaded sequence of returns risk hurts us most during the period that starts five years before you start living off your investments until about 10 to 15 years into your retirement. 4
That period is the red zone for any retiree. Avoiding too much damage to your portfolio during that time is mission critical.
Which leads me to think that cash and gold should join my deaccumulation portfolio alongside conventional gilts and linkers to provide defence in depth when I’m most vulnerable.
Since 1970 there have only been two out of 15 total losing years for equities where all these asset classes ended the year down together.
I doubt I’ll hold more than 6% of my asset allocation in gold. In the deaccumulation red zone I could probably squeeze two years of living expenses out of that. The ever-excellent Early Retirement Now has also mentioned a couple of times that small allocations to gold (5-10%) can mitigate sequence of return risk.
Gold would be a one-shot weapon for me – fired off to protect my other assets from a worse loss. I’d be unlikely to replace it once used because I’ve only got to make it through that first decade or so. I remain firm in my belief that gold is an expensive insurance policy over the long term.
I feel similarly about cash. Again, I can see myself holding a couple of years supply to get through the height of sequence of returns risk.
One of the odd advantages of being a small investor is that I can probably do better than the Treasury bills rate by keeping cash squirrelled in the UK’s best buy bank accounts – refusing to let it rot when bonus interest rates evaporate. I’ve certainly done alright with cash in the last decade using that strategy.
The critical takeaway is that we need to diversify our defences so that the high watermark of a crisis does not flood our equity growth engines. History tells us not to rely purely on equities and conventional bonds to protect our portfolios.
Take it steady,
The Accumulator
- There are 20 instances between 1899 and 2018. Okay, okay, I admit I rounded a -9.6% and a -9.8% to -10%.[↩]
- Short-term government debt with maturity dates of 12-months or less.[↩]
- Editor’s note: Ahem. Presuming they’re not following a ‘living off the income’ strategy, which requires a larger starting pot of capital.[↩]
- Peak vulnerability to sequence of returns risk can even last up to 20 years in the deaccumulation stage if you’re a precocious FIRE type looking forward to 60 years in retirement.[↩]
