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David Van Knapp  

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  • Comparing The DG50 To My 3-Fund Portfolio On The Road To Retirement [View article]
    I would add: current yield; dividends received per year (whole portfolio); dividend increase year over year (whole portfolio); estimated next-12-months dividends.

    What I would be looking for is the amount (yield) and growth rate (DGR) of the portfolios. The purpose would be to see how the portfolios compare if someone's goal is to build retirement income stream brick by brick over the years, rather than looking only at total return.

    Dave
    Apr 24, 2015. 08:08 PM | 4 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    g, Some of your stuff is really good. That was really good. Thanks for the chuckle.
    Dave
    Apr 24, 2015. 07:52 PM | 4 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    In addition to the backtest, start a forward test now. Go on the record with what you would advise now. Not sure whose situation to start with? Make it whoever you have been referring to with comments about complacency, easily solvable problems, and the like.
    Dave
    Apr 24, 2015. 07:50 PM | 5 Likes Like |Link to Comment
  • Comparing The DG50 To My 3-Fund Portfolio On The Road To Retirement [View article]
    I am glad to see someone establishing portfolios and tracking them forward. This is light years better than reading about someone else' portfolio and then back testing to find inspvestments and timeframes in which the person who actually has a portfolio could have done "better." The latter is just Monday Morning quarterbacking, using information that was not available at the time the real person was managing his portfolio. It is close to useless.

    My disappointment here is that the author is using exclusively a comparison metric - total return - that is not the principal goal of the real DG50 portfolio. I have no trouble with using one portfolio design for another purpose, but I think that series of articles would have much more educational value if they tracked both this author's preferred metric AND Mike Nadel's preferred metric. After all, many readers were/are interested in the DG50 for its own central goal. Why not serve both sets of readers? It could be done with just a couple more data points, and the work would be minimal.

    That said, it is refreshing to see Financial Dave put a stake in the ground and say, here are a couple alternative ideas. Let's see how they compare over the next 1-year, 3-year, and longer timeframes. This is far better than cherry picked backtests.

    Dave
    Apr 24, 2015. 01:25 PM | 7 Likes Like |Link to Comment
  • Higher Yield And Value Oriented Strategies Underperforming Broader Market [View article]
    Thanks, David. I still can't tell whether "total return" means price + dividends or price + dividends with dividends reinvested. Do you know what TR means by that term?
    Thanks, Dave
    Apr 23, 2015. 09:00 PM | Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    extreme, I apologize, I misunderstood your intent.
    Dave
    Apr 23, 2015. 05:35 PM | 6 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    g, He's referring to my "Is It [Low T]?" article. I thought it was pretty funny myself.
    Dave
    Apr 23, 2015. 03:44 PM | 4 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    Rich, No, I did not find a good (or bad) dividend ETF focused on small caps. I was not looking specifically for one, and I don't know offhand if any exist.
    Dave
    Apr 23, 2015. 03:41 PM | 2 Likes Like |Link to Comment
  • Higher Yield And Value Oriented Strategies Underperforming Broader Market [View article]
    Are the returns shown with dividends reinvested, or without? For apples-apples, you need to show total returns with dividends reinvested.

    My own dividend growth portfolio has total returns about equal to SPY for the past year, and ahead of it since I started the portfolio in 2008.

    Dave
    Apr 23, 2015. 03:33 PM | 1 Like Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    There are lots of examples like that. Part of me wants to say, so what? That's just a backtest and announcing the results of what (it turns out) happened.

    What would a Monte Carlo test back then have predicted? What if you start your test in 2007, when someone was planning to retire? What if you start it in 2009, after their portfolio has been sliced in half, and 4 percent was no longer enough?

    It has become obvious that one can select scenarios and assumptions that (as things turned out ) worked, even through the Great Recession. The question really is about how to plan going forward. It is hard to see how someone (not saying you) can simultaneously mock people for trying to improve their probabilities of success while at the same time labelling a couple whose plans were ruined by 2008 as having been complacent.

    Dave
    Apr 23, 2015. 02:10 PM | 9 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    Understood. That outcome, of course, turns out to have been the result of a 6-year bull market in stocks plus continued positive returns from bonds (continued low interest rates). The scenario worked, given your presumption of 3-4 percent initial withdrawal being enough.

    But if one were planning to retire just when 2008 struck, 3-4 percent was no longer enough for lots of folks. Their plans were ruined. Now they needed 6-7 percent, or to work longer, or to significantly lower their hoped-for standard of living. They could not be sure, then, that 6-7 percent would be sustainable.

    It's easy to look back now and say it all worked out. It was not so easy then to feel confident that would be true, and/or the higher withdrawal rates actually looked like they would NOT work out.

    Dave
    Apr 23, 2015. 02:00 PM | 5 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    I think you guys are saying the same thing. Monte Carlo simulations give you probabilities based on the assumptions used, combined with the programmed probabilities of the way each asset class would perform over multiple trials.

    If the probability of success is 100 percent, that means you would never run out of money given all the presumptions. If it is less than 100 percent, there is that much possibility that you WOULD run out of money.

    A person who can live completely off of organic income never has to sell anything, so her probability of success is always 100 percent. If the person has to sell stuff, that's when the possibilities of running out of money can become non-zero.

    Again depending on the presumptions, some combinations of asset allocation, withdrawal percentage, and length of life do return 100 percent chances of success. As you vary the presumptions (such as increase the withdrawal percentage, change the asset mix, or lengthen the life), that's when success probabilities of 90 or 80 or 50 percent start to show up.

    Dave
    Apr 23, 2015. 01:46 PM | 4 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    How can they keep doing that? Magic pants! They send you some earnings, yet magically still keep growing them too.
    Apr 23, 2015. 01:37 PM | 4 Likes Like |Link to Comment
  • Social Security And Portfolio Withdrawals: It's Complicated [View article]
    The 4 percent rule was originated by William Bengen. It is worthwhile to read his original article, it is not hard to understand, and it is logical. Google "bengen 4” and you will find it.
    Dave
    Apr 23, 2015. 08:36 AM | 3 Likes Like |Link to Comment
  • Social Security And Portfolio Withdrawals: It's Complicated [View article]
    No, but he could have received and used the money while he was alive.
    Apr 23, 2015. 08:26 AM | 2 Likes Like |Link to Comment
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