Short Takes: Skewering Market Pundits, Poor Market Timing, and more

Here are my posts for the past two weeks:

Do You Pay Investing Fees?

Is Your Allocation to Stocks Too High?

Here are some short takes and some weekend reading:

The Reformed Broker tears a strip off market pundits who make extreme predictions.

The Irrelevant Investor explains that the S&P 500 has gone up at 18.08% per year for the last 7.5 years, but investors in SPY (an S&P 500 index fund) earned only 11.82% because of poor market timing. Over the entire period, this is a difference of about a factor of 1.5 in invested assets, although the author is being somewhat misleading saying the difference is 115%. The article is very interesting despite this blemish.

My Own Advisor has decided on a goal of being financially independent by age 50. I’d say his plans look more reasonable than many early retirement enthusiasts. I’ve seen people hoping to retire in their 30s assuming their current spending level will not change in the future. Some margin for potentially higher future spending is needed. How can a 30-year old know how he’ll want to live at age 60?

Robb Engen has decided to push back his planned date of financial independence to age 45. I never had a target date for becoming financially independent; I just worked at it steadily. Each of us finds motivation in different ways.

Million Dollar Journey explains how he saves money on family vacations.

Comments

  1. Robb BennettAugust 17, 2016 at 2:39 PM

    Robb Engen keeps pushing his retirement date further and further away into the future. Even at 45, his assets will not be sufficient to pay for his retirement, unless he spends more than 5% - 6%/year. He needs to push his target date to 50, just like Mark

    ReplyDelete
    Replies
    1. Michael JamesAugust 17, 2016 at 6:27 PM

      @Robb: I haven't see enough detail about Robb Engen's plans to have an opinion about how realistic retirement at 45 is. However, just about everyone I know who sets a date ends up delaying that date. Perhaps this makes it easier to keep plugging along, just like a runner who says to himself, "just keep going to the next corner," and then tries to continue to the following corner.

      Delete

Post a Comment

Popular posts from this blog

Short Takes: InvestorLine’s HISAs, 24-Hour Trading, and more

I recently moved some cash into BMO InvestorLine’s high-interest savings accounts (HISAs) that are structured as mutual funds.  Their designations are BMT104, BMT109, and BMT114, and they purportedly pay 4.35% annual interest (which they can change whenever they like).  However, the way they report the monthly interest payments is so baffling that I wasn’t able to sort it out in my first 15 minutes of trying.  A further complication is the following text in the HISA description: “The Bank may pay, monthly or quarterly, compensation to your Dealer at an annual rate of up to 0.25% of the daily closing balance in the BMO HISA.”  I couldn’t find any evidence of such a charge, but I haven’t been invested for a full quarter, and I can’t yet say that such a charge isn’t buried somehow in the confusing reporting.  I have more digging to do before I can recommend these HISAs. Here are some short takes and some weekend reading: Preet Banerjee explains the dangers of Robi...
Read more

My Asset Allocation

I’ve resisted discussing my asset allocation for some time, but now is finally the time to describe it and the reasons behind it. I’m not holding it out as a model portfolio; I believe it’s suitable for me and not necessarily anyone else. With that warning, enjoy the discussion and feel free to ask questions or take some pot-shots. The main reason why I haven’t discussed my asset allocation in detail before now is that I don’t want readers to treat it like a model portfolio and follow it blindly. Everyone’s situation is different. The need for variation in asset allocation from one investor to the next usually isn’t huge, but there is no one-size-fits-all portfolio. A secondary reason for keeping my asset allocation to myself is that I can’t be sure I’ll never change it. For example, I recently made the minor change of switching from an ETF of small-cap stocks to an ETF of small-cap value stocks . I don’t have any plans to change my current allocation, but I may think differe...
Read more

Updated Currency Exchange Method at BMO InvestorLine

There is now a more recent update of the method I use for exchanging currency at BMO OnvestorLine . I recently changed the procedure I use to convert large sums between Canadian and U.S. dollars at BMO InvestorLine. The method I use saves a lot of money compared to using the InvestorLine foreign exchange system. The latest change I made eliminated an annoying interest charge that I had to ask to be reversed. Most people don’t realize how expensive it can be to exchange currency. The extra charge banks and brokerages add gets hidden in the exchange rate. To see this extra charge, start by taking a sum in Canadian dollars, say C$10,000, and finding out how many U.S. dollars you can get. Then see what this U.S. amount would get going back to Canadian dollars. Many people might guess they’d get their original C$10,000 back, but they’d be wrong. In a recent test I did at BMO InvestorLine, I’d get back C$9754, for a loss of C$246 in two currency exchanges. That’s $123 per excha...
Read more

Archive

Show more