Bimahs & Managing
(Retirement) Goal During Rotation &
This TectonicLiving & Market
Shifts
Stipulating
ENOUGH(sm) is aligning means with
meaning to count© and thus derivatively Enough is managing goals primarily
rather than assets which is secondary (but means)
Per a game
changing study 80% of the value of the S&P 500 stocks is now in patents,
trademarks, trade secrets
And subject to
- Required
income needs – at the gotta, and oughta but not niceta levels
- Probability
of achieving the goal(s) per Monte Carlo or like analysis of upper and
lower accepted probability of making one’s goals – are subject to
adjustment particularly spending relative to desired probability
A Retirement Portfolio Idea Subject To The Above
Musts before
consideration of allocation
·
2-7 years of cash and near cash (remember Joseph and 7 fatter
cows and 7 lean emaciated cows) –to minimize whipsawing the portfolio during large
up and down swings in the market – resulting in panics – buying at the highs
and selling at the lows not to mention the resulting anxiety.
Hopefully the home is
free and clear – allowing the fallback if necessary to a maximized reverse
mortgage annuity for income
Thereafter:
·
20% in tech mutual funds, etfs, etc
·
20% in health mutual funds, etfs
·
20% in value mutual funds, etfs
·
40% in dividend increasing stocks/mutual funds
The concept:
·
Tech – yes, the valuations are out of sight but tech and rapid
obsolescence is the new normal
·
Health – yes, regardless fears of regulation, everybody wants to
go to heaven – nobody wants to die – even regulators (health actually is part
‘tech’)
·
20% Value – there is and will be rotation from tech and health
and back again
·
40% Dividend increasing stocks, mutual funds, etfs – these are
the new bonds.
Now relative to the old
4% rule and increases for inflation – the % of withdrawal is subject to the
aforementioned. Decreases would occur when the amount withdrawn becomes as a percentage
5% on the remaining assets (i.e. let’s say the portfolio goes down from $1
million to $800,000.) Thus, to bring the percentage back to 4%, the withdrawal
amount might require a drop to $32,000 in income. An increase can occur if a
20% gain from the baseline $1 million to $1,200,000. Thus, the 4% (or $40,000)
is now but 3.33% so the amount could go to $48,000.
In addition, might run
the Monte Carlo analysis with the decreases and or increases from the baseline
amount (in the above example $1,000,000) to increase or decrease spending based
to the probability one would accept i.e. 85% causes a reduced level of income
spending if that is the lower threshold for success/adjustment or increase the
income of the probability is 99% to get to 95% as an acceptable probability).
Alternatively, test
different spending amount scenarios – to see the the probability of success –
and what % range is acceptable
A Story About Going Up and Going Down
The President of
the Temple/Shul often sits on the Bimah (the elevated podium/platform) with the
Rabbi.
Once the Shul
President’s term was up and a new Shul President took the former’s place not
just as President but also sitting on the Bimah with the Rabbi
This change
didn’t sit well with the old Shul President who made things difficult for the
New President even though he knew the rules.
The moral of the story – it is easier to up
to the Bimah than come down from it aka The Bimah Schema
It is easier to
increase spending than to decrease it – regardless of whether in retirement one
is in the go-go (pre Covid) phase, slow go, or no go phase of retirement.
All the above, of course,
is subject to the cascade of the personal financial filter design and cascade
previously stated - may make the 4% example unworkable anyway.
An interesting conceptual
model to ask your planner about whether one is on the Bimah or not regardless
of stage fright or stage one is in.
