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Old 18-07-2020, 03:40 PM   #2504
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Join Date: Jun 2010
Posts: 13,000
Anticipating Headwinds Ahead

Here’s how I’m thinking about the next several years. First of all, the basic financial math is working really well, or has worked anyway. If for example I estimate an average 6.0% annualized nominal return, we double principal about every 12 years. Then, if we steadily inject more principal, it’s truly magical, really. Boring works, and how.

I expect some upcoming headwinds, though. Maybe we’ll see lower average returns — that wouldn’t surprise me. It seems highly likely tax rates will have to go up (and should) over the next several years, starting as early as 2021. And at some point the “downshifting” into lower average yielding but less volatile holdings will have a meaningful impact. However, the income side of the ledger still looks good (fortunately), and spending is well under control and looks to stay that way. I’m also happy with the fact we have foundational retirement life annuities nailed down well already.
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