Funding during retirement

[woof]

I am the wrong person to give advice on managing investment/cashflow to fund spending money.

I don't look at my assets/investment in this manner. My main objective in investment is to protect the downside. By doing so, I am sure that the upside will take cares of itself. I look at making few and bigger investment, say property or PM, and less so on equity or bond markets for now. Both look toppish at the same time which doesn't occur often. I don't like this situation.

I am happy to live off my saving/assets. I am drawing way less than 2% per year for my expenditure. I do not mind not making any investment for a few years and just let my cash/near-cash sits (while earning interests) while waiting for opportunities.

SKenny, looks like you have way more than enough savings/assets to last you through, so you don't wish to take any risks. A most enviable position!
Thanks for sharing all this.

 

[highsulphur]

SKenny, looks like you have way more than enough savings/assets to last you through, so you don't wish to take any risks. A most enviable position!
Thanks for sharing all this.

Our end goal!

 

[SKenny]

SKenny, looks like you have way more than enough savings/assets to last you through, so you don't wish to take any risks. A most enviable position!
Thanks for sharing all this.

It helps when my family and I adopt an almost minimalist lifestyle.

I still have my indulgences but I don't aspire after (most) material, aka expensive, comforts.

 

[Mecisteus]

It helps when my family and I adopt an almost minimalist lifestyle.

I still have my indulgences but I don't aspire after (most) material, aka expensive, comforts.

I am more curious what do you usually do to past time?

Still working part time?

 

[SKenny]

I am more curious what do you usually do to past time?

Still working part time?

The short answer is that "I do whatever I want, whenever I want"

Most people think that it would be "boring" to retire young. At the same time they do not think it is boring when most of their waking hours are spent chasing after objectives set by other people. I find this is more common with Singaporeans as we usually follow instructions by others from since schools, to NS and then working career. It is hard not to have this framework and they may feel lost, and hence bored.

PS: I don't work "part-time" or "any time". I stopped work cold-turkey.

 

[BBCWatcher]

You know that we are in record high markets now right?

Nearly, but we should be periodically, repeatedly hitting new highs if only due to inflation.

As long as you think that this super-bull market will never drop/bottom.

What if markets stay flat for the next 3 years then start climbing again?

 

[SKenny]

Nearly, but we should be periodically, repeatedly hitting new highs if only due to inflation.


What if markets stay flat for the next 3 years then start climbing again?

What if the world largest earthquake hit Singapore? What if aliens contact us?? Possiblity Vs probability.

The market always correct after hitting record high. Even the market pause and then continue its climb up, as you envision. It will still have to correct at some point. In fact, the longer and steeper the bull run, the shaper and deeper the correction. Surely you know this???

Spare me the "this time it will be different".....

 

[Mecisteus]

The market always correct after hitting record high. Even the market pause and then continue its climb up, as you envision. It will still have to correct at some point. In fact, the longer and steeper the bull run, the shaper and deeper the correction. Surely you know this???

I definitely agree on this part.

Personally, I have been reducing my equities.

 

[hwmook]

A couple questions:

1. Do you actually mean our standard of living, i.e. your entire household?

2. Is your statement still accurate with a 2%/year average inflation assumption?


It is possible Singapore will experience what Japan is experiencing: 3+ decades (and counting) of essentially 0% interest. Would you be OK in that event?

Having zero interest rate is not a problem by itself, it usually mean there is practically no growth in the economy and definitely no inflation to worry about so why should you be worried about 0% interest since you already accumulate enough wealth. In a 0% interest rate environment, it's those younger working generation who are trying to accumulate that should be worried. Inflation is a mean to transfer wealth from the old generation to the young so once that is broken, there is nothing to worry for the elder generation. That is exactly what is going on in Japan, the elderly are enjoying themselves.

 

[BBCWatcher]

What if the world largest earthquake hit Singapore? What if aliens contact us?? Possiblity Vs probability.

Oh come on. A retirement plan, particularly an early one, ought to be robust against at least the calamities that have actually occurred in the past.

Let’s take the first one and call it, generally, “national existential risks.” They may not be earthquakes, but let me remind everyone that, within the living memory of many, Singapore was invaded and occupied by a foreign power. And it was brutal. This actually happened. I don’t think national existential risks are at all likely in Singapore, but they are possible — obviously, and fortunately the government understands this, is worried about it, and makes a lot of preparations to try to defend against such risks. Also fortunately, financially it’s really, really easy to prepare for such an event: if you can afford it (an early retiree surely can if it’s a viable early retirement), keep at least a “survival level” of assets offshore.

The market always correct after hitting record high.

No, they don’t. Markets can also meander for months or even years — they can stay relatively flat — then start rising again. This too has actually happened; it’s historical fact.

Even the market pause and then continue its climb up, as you envision. It will still have to correct at some point. In fact, the longer and steeper the bull run, the shaper and deeper the correction. Surely you know this???

OK, at which point you’ve likely sat out a net double digit percentage gain. This too has actually happened, a lot.

Look, I don’t think you should pile aggressively into stocks (or anything else) at current prices, but I also don’t think you should try to time markets, which is what you’re attempting to do. If you want to spend the next 20 months raising your stock portfolio from zero to 30 percent of wealth, 1.5 percentage points per month, that seems reasonable to me, as an example. If the market corrects or crashes 3 months in (let’s suppose), fantastic, you’re buying cheaper stocks.

You have something like a half century ahead of you, probably more since that’s a lot of medical innovation. I just don’t think it’s a good idea to time markets especially with that sort of time horizon.

Even if you want to be super defensive and ultra conservative there are other ways to do it. In particular, this is one of the few situations when a high quality insurance company might have something interesting to offer, even with its overheads — more interesting than bank fixed deposits, certainly.

Having zero interest rate is not a problem by itself, it usually mean there is practically no growth in the economy and definitely no inflation to worry about so why should you be worried about 0% interest since you already accumulate enough wealth.

There’s that tricky “usually” part. Wide gaps between bank interest rates and inflation have actually occurred, and sometimes for long stretches. It’s a matter of historical fact. Just search on “negative real interest rates,” and you’ll find a lot of details about this particular aspect of financial history.

Look, I don’t have any problem with anyone who wants to retire at whatever age. However, I take my own retirement plan and everyone else’s quite seriously. I “stress test” my own plan in a wide variety of ways, and it’s perfectly reasonable to test the plan against events that have actually occurred. No alien scenarios required, although global climate change, which is happening, is quite tough to test against since there aren’t close historic parallels. Nonetheless, I try. I also try to stress test on the expense side, for example the common scenario of long-term care needs, which can be quite expensive.

 

[FrostWurm]

The market always correct after hitting record high. Even the market pause and then continue its climb up, as you envision. It will still have to correct at some point. In fact, the longer and steeper the bull run, the shaper and deeper the correction. Surely you know this???

An unpersuasive argument.

Saying that the markets will "correct" at some point is no different from saying that:

1) You will choke on your food at some point in your life.
2) You will fall sick at some point in your life.
3) You will fall down or get injured at some point in your life.

Despite this, a majority of the population will still be able to lead meaningful and fulfilling lives.

And it is not always the case that "the longer and steeper the bull run, the shaper and deeper the correction".

Firstly, a bull run does not necessarily mean a bubble.
Secondly, even if you were able to tell its a bubble, how would you be able to predict the magnitude of the correction?
Thirdly, why is it that the markets have a higher tendency to go up rather than down over the long term?

 

[The_Godfather]

Could reits help you with your retirement plan ?

 

[BBCWatcher]

Could reits help you with your retirement plan ?

Maybe, maybe not. That’s like asking, “Could pharmaceutical industry or ocean cargo company stocks help you with your retirement plan?” Real estate is just another sector, that’s all.

I don’t recommend overweighting any sector.

 

[hwmook]

An unpersuasive argument.

Saying that the markets will "correct" at some point is no different from saying that:

1) You will choke on your food at some point in your life.
2) You will fall sick at some point in your life.
3) You will fall down or get injured at some point in your life.

Despite this, a majority of the population will still be able to lead meaningful and fulfilling lives.

And it is not always the case that "the longer and steeper the bull run, the shaper and deeper the correction".

Firstly, a bull run does not necessarily mean a bubble.
Secondly, even if you were able to tell its a bubble, how would you be able to predict the magnitude of the correction?
Thirdly, why is it that the markets have a higher tendency to go up rather than down over the long term?

1. A bull run does not mean a bubble but it almost always end with a bubble eventually.

2. No way to determine the exact magnitude of the correction. Too many factors at play.

3. Because there is overall growth in world economy due to productivity gain so it will reflect in the stock market and thus stock market always go up over long term. If we all go back to farming and hunting then the stock market would crash and burn but since you know it's unlikely to happen thus the overall stock market will likely move up over long term. But of course if you are too focus on a single stock market then there is a risk that due to country specific problem that cause the economy unable to recover. That's why I never believe in singapore stock market, you need to invest in the world market to be safe.

 

[Mecisteus]

1) You will choke on your food at some point in your life.
2) You will fall sick at some point in your life.
3) You will fall down or get injured at some point in your life.

Despite this, a majority of the population will still be able to lead meaningful and fulfilling lives.

So how do you mitigate the risks that you mentioned?

Same thing applies to the market. Risk management applies in investment as well.

Kenny is more of an active investor. You are taking the passive approach.

So the actions are different for both type of investors.

Personally, I adopt both approach.

I have a small portion of passive portfolio while keeping a bigger portion in active portfolio.

Which approach to follow? I think it depends on your risk appetite and experience.

 

[BBCWatcher]

Because there is overall growth in world economy due to productivity gain so it will reflect in the stock market and thus stock market always go up over long term.

Plus there's some inflation on a global basis, so nominal asset valuations -- including stock valuations -- should be long-term correlated with inflation.

There's also a controversial aspect of long-term (or at least medium-term) stock appreciation, which is the long running trend toward new monopolies and oligopolies, many of them natural ones. It's not just in technology but in long established industries, such as airliners. It wasn't all that terribly long ago that the world had several competing airliner manufacturers (including Douglas, Convair, deHavilland, Vickers, Dassault, Lockheed, and Sud-Aviation -- not counting the Russian ones like Ilyushin and Tupolev), but now it's a global duopoly fulfilling much higher demand: Airbus and Boeing. Maybe Comac, Mitsubishi, and/or Embraer will try to offer larger aircraft in the future, but that didn't work out well for Bombardier even with a superb product, now the Airbus A220. (The A220 is a wonderful, winning replacement for aging DC-9/MD-80/MD-88/Boeing 717, Fokker 70/100, BAE-146/Avro RJ, and even some Boeing 737 airplanes. It's still early, but it looks like Airbus is going to do quite well with their acquisition of Bombardier's C Series program.)

 

[starlight318]

To protect against 'national existential risks', instead of keeping some assets offshore, is holding physical gold a good option?

 

[limster]

To protect against 'national existential risks', instead of keeping some assets offshore, is holding physical gold a good option?

its already discussed in the gold thread. Having physical gold on hand is important. If there is an invasion or some other disaster and you need to quickly leave the country, it's likely that your S$ will no longer be accepted. You'll need to bribe the boatman with gold or maybe rolex watches.

 

[henrylbh]

Public liability or a house get burnt is a more likely event than invasion. Yet how many are protected?

 

[limster]

Public liability or a house get burnt is a more likely event than invasion. Yet how many are protected?

when i took housing loan the bank said housing/fire insurance was compulsory during the period of the loan so i guess most homeowners have some coverage as they will continue even after the loan expired.

but for fire, frankly, prevention is better than cure. there are many simple precautions that can be taken.