Over at My Plan IQ they’ve been analyzing the performance of David Swensen’s model portfolio. It’s been successful over the long term, they conclude, but recently some weaknesses have begun to hurt its performance. Continue reading →
I just published an article over at Advisor Perspectives that is titled “What Investors Should Fear in The Permanent Portfolio” that looks at a very simple model portfolio proposed by Harry Browne. This portfolio contains equal allocations to four elements: stocks, gold, long-term government bonds and cash. Back in 1998 when Browne first proposed this portfolio in his book, Fail Safe Investing, it was decidedly harder to create your own version of this allocation model. Today, you can easily implement this portfolio at fairly low cost using four ETFs.
Harry Browne’s Permanent Portfolio has gotten a great deal of attention–and many new advocates–due to its solid performance in recent years when more traditional asset allocations suffered substantial losses. However, the question that investors need to ask is whether this will be a successful way to invest in the future. Continue reading →
Dave Ramsey is a well-known author and media personality famous for his focus on saving and getting your financial house in order. His books have hit The New York Times’ bestseller list and 137,000 people follow his radio show’s Twitter feed.
Praise seems to be universal when it comes to his advice on how to pay down debt and save. But his ideas about investing are far less popular with some, who argue they are irresponsibly optimistic. Why does he set hopes so high? Continue reading →
The Employee Benefits Research Institute has issued the 2011 Retirement Confidence Survey. And the answer is: We are not confident. We are somewhere between pessimistic and hands-thrown-in-the-air hopeless.
This, the smart people at EBRI tell us, is good. You must recognize any problem before you can solve it. It’s not that our retirement situation nationally has gotten all that much worse. It’s that we’re finally facing reality. Continue reading →
Yesterday, I posted a review of Unveiling the Retirement Myth: Advanced Retirement Planning based on Market History by Jim C. Otar, a financial advisor, Certified Financial Planner, and engineer.
In this second post, I share a few quotes that epitomize the reality-based themes and critical insights woven throughout Otar’s text:
Proper retirement planning requires planning for the worst.
This book is based on my research of retirement planning involving one hundred and nine years of market history. What you read will be depressing.
When it comes to retirement finances, the three main risk factors are longevity risk, market risk, and inflation risk. A retirement plan must minimize each of these three risk factors to be considered a well-designed plan.
Disregard any financial research, any words of wisdom, any gibberish from financial gurus in the media that “markets eventually recover in the long term.” They are not telling you the full story: Yes, markets did always recover in the past, but your distribution portfolio retained a permanent loss for the rest of your life.