So amazingly helpful. Appreciate you, Ben! A few more questions:
I wouldn't recommend keeping a cash bucket and consuming from that to get through a bear market. Cash buckets can lead to haphazard asset allocation, not to mention a lot of confusion and arbitrary rules around when to dip in and when to replenish. Instead, keep everything in one bucket and adjust spending and asset allocation in line with the portfolio performance and expected return as calculated by TPAW. If the market drops, spending will decline. But if you are using 1/CAPE based expected returns (raw or regression based), expected returns will increase and your spending won't decline as much as the portfolio does. Stock allocation will increase if the equity risk premium has increased. The cash bucket doesn't help—it only causes confusion and mistakes.
1) In term of buying TIPS, I'm assuming you mean buying a TIPS ladder vs an ETF
2) If so, would one go about the practicalities of paying themselves a salary/having cash for monthly expenses by combining the interest payments with stock asset sales? I guess, I just always assumed folks need to keep a few years of cash on hand to manage expenses and then those funds would get topped up every so often.
3) It sounds like TPAW adjusts asset allocation over time based on market conditions/portfolio performance and glide path. Is there a way to see the projected glide path simulations? Additionally, would a user at some point hit "go" at which point they would log in every month to see their budget and needed allocation changes?
4) In regard to your comment about me using 1/CAPE and the spending budget not declining as much as the portfolio, is the same true if I'm using Regression Prediction (~5% expected returns)?
Statistics: Posted by mrshikadance — Mon Sep 16, 2024 11:12 pm — Replies 1004 — Views 278694