thanks for the link
Come on MLA, we know that forecasting like this is a fools game. I’m sure a year ago the vast majority of these guys would have told us that interest rates couldn’t possibly go lower and, if they somehow do, equities will be plummeting.
Since 2010, the futures curve on interest rates has been fairly pessimistic. Lower for longer. Someone the narative discounted it. Variable mortgages were certainly the way to go five years ago. The “experts” said that was dumb, to support your point.
Unfortunately yes. For a family living on $40K a year, it’s basically free at less than $100/mo. Obviously something I’ll be watching over the years, and something I would vote to be changed (I should have to pay more than that), but certainly not something I’m going to pay more for if I don’t have to.
^Exchange insurance really has created an underclass. You don’t want it. I had the misfortune of my insurance being mistaken for exchange insurance. I was told, “we can’t see you here and we don’t know anybody that can.” I was at a specialist’s practice. Took a conference call with the insurance company to clarify the matter. They said, “Why are you bothering us. He doesn’t even need a referral,” in so many words.
all i know is that my wife’s pension plan decreased their expected rate of return to just over 5% nominal, from 8% 10 years ago. actuaries are starting to incorporate lower expected rates of return. plus, i’m not forecasting economic disaster, i’m just stating that the cost of capital and equity prices are related. it is extremely unlikely that we will see superior returns over the next 20 years based on low growth, low inflation and low fixed income yields. as such, below average returns is likely. will we experience, 3%, 5% or 7% nominal? all are below average. who knows.
There’s the key. It wasn’t that long ago that all the experts were saying that BRIC’s were going to take over the world’s economy.
personally i spend about 35k/year. i can easily cutback to live off 25k.
the median household income is 50k for a typical us family. half are able to do it. so you can do it too.
i’ve run a montecarlo simulations on a $2m portfolio with 50k distributions. 50 year time horizon. 50% bond 50% equity.
even on the worst 1% simulation, the portfolio ending value is 600k to 900k. the median is like $15m. the top 1% is like $107m
This was not adjusted for inflation though :). the bond allocation becomes unusable with a 3% assumed inflation. since 10yr rates are like 1.5%.
Sure, we could, but we don’t want to.
Are your assumptions normally distributed? That works in blackjack and petroleum production estimates, but never in the history of finance have such assumptions held up.
Haha this topic is depressing. I was excited when I paid off all my debt last year. Y’all are crazy rich.
Using monte carlo simulation to calculate return percentiles on linear portfolio with known probability distribution = hacksaw.
Working a desk job in front of three monitors eating processed food is a good way to ensure you incur those “unexpected medical costs”. An ounce of prevention is worth a pound of cure.
The Amish are actually pretty wealthy.
I didn’t know that you were going to live forever. I guess you’re immune to cancer also.
Anyway, my point is that medical costs are one of many things that can unexpectedly affect your savings. So it is worth having a capital buffer to avoid difficulties when things do not go as planned.
And my point, which you somehow missed was that working a cubical life is extremely unhealthy and will actuarially subtract years from your life while raising the probability of a myriad of life threatening complications. You don’t have to be a rocket scientist to understand that working hard in an office job to build a nest egg to protect against the heightened health risks incurred by working in an office job is idiocy. Maybe I won’t live forever and maybe everything won’t go as planned but as stated, an ounce of prevention is still worth a pound of cure.
If you can choose between being A) the guy that survived a life threatening disease with extensive procedures paid for by his wealth or B) the guy who avoided this with a healthy lifestyle you always go B. In other words, if I can have a high probability of 70 high quality of life years after retiring at 40 with $2M in my account or 90 low quality of life years having retired at 65 with $10M in my bank account and a legion of elevated risk factors propped up by chemo and artery stints, it doesn’t take a quasi ivy degree to know that the latter option is a sucker’s bet.
Whether we’re talking stress induced illness, quality of life issues, cardiac issues, bone and joint issues, hormonal issues, obesity, digestive diseases or cancer the risk levels associated with working a demanding office job in a heavily polluted city like NYC are well documented.
http://www.medicalnewstoday.com/articles/293314.php
http://www.businessinsider.com/18-ways-your-office-job-is-destroying-your-body-2013-2
http://www.scientificamerican.com/article/killer-chairs-how-desk-jobs-ruin-your-health/
https://www.mainstreet.com/article/6-serious-office-health-risks
http://www.dignityhealth.org/cm/content/pages/is-your-office-job-bad-for-bone-and-joint-health.asp
You can do much better at reducing downside risk in your life (outside of the health realm covered above) by simply getting out of high cost areas and limiting financial liabilities. The additional upside is that by not living in NYC, you’ll never have to know the widespread insanity of paying $400 for a two person dinner after watching a rat or several cockroaches run across the back of the restaurant (experienced both).
We practice Black Swan’s advice over here. 
It comes back to that same old rule, you can’t beat the market by doing what the market does…you just end up with market performance (which might be a low quality of life). The “American dream” isn’t really feasible. People believe they need these huge sums of money to retire. But they also believe they need to spend a lot on stuff they don’t need. Well that means living in the city, and working yourself silly, basically into perpetuity. Except in doing that, you blow all your money in the high priced city, eat crap food, give a bunch to bankers as interest, get sick from that unhealthy life, give a bunch to big pharma, drugs only makes you sicker, and then you’re done!
Or just don’t play the game, make up smarter rules.
I somewhat agree with you on most parts. Cubicles do tend to lead to improper life habits. But, NYC isn’t that polluted relatively compared to real cities with pollution problems like Beijing. http://www.numbeo.com/pollution/compare_cities.jsp?country1=China&city1=Beijing&country2=United+States&city2=New+York%2C+NY
True, true. I stand corrected (on a claim that I never made). NYC IS less polluted than Beijing… my error was in not setting the bar low enough. My point was that cities in general are polluted, but yes having been to Beijing and unable to see the top of a four story building because of the smog, NYC is a veritable paradise…