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A common model for forecasting equity returns either on an individual level or market level is based on dividend yield + div growth (with adjustments for stock buybacks).
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Mar 23, 2017 22:44
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E/P growth is another model and hasn't been noticeably more accurate., Both have (at least since 1950 for US equities) dramatically underslung realized returns. Put another way, a big chunk of the equity returns we've seen in the US in living memory has been due to one-off revaluations i.e., sharp jumps in the amount people are willing to pay for stocks. There's an interesting body of research showing that US equity risk premiums are more persistent and higher on a risk adjusted basis than the rest of the world even emerging markets.
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Mar 23, 2017 23:00
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Jeffrey of YOSPOS posted:I'm not sure what we're talking about here - my point is mostly that dividend payouts aren't really relevant to whether or not you make money trading equities. If you're talking about using them as a predictive factor rather than the income you get from the dividend payout itself, perhaps, but if there's no growth, there's not going to be dividend growth either. I don't think that's what the poster was talking about. You seem to be under the misapprehension that growth (earnings or economic) is the only source of equity returns. That's not true. To use a contrived example, you could have a firm with zero real growth still showing positive total equity returns, div + capital appreciation. Also, over the entire history of US equities 1870 till now, if you look at the building blocks of equity returns, div yields have been a larger component of returns than earnings growth or P/E expansion.
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Mar 24, 2017 02:53
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You came in stating that dividends weren't important, instead focusing on some inchoate notion of growth. I initially assumed you were talking about earnings growth or even some economic measure of growth e.g., GDP but apparently, you're talking about a stock price going higher is a sign of 'growth'. Sure but that's a meaningless statement. Like I said, and contrary to popular thought, over the history of the US equity markets, the lion's share of the total returns of equities in aggregate has come from div yield, not earnings/dividend growth. This skew evens more once we factor in share buybacks. I thought that was an interesting fact, not an advisory to buy high div yield stocks.
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Mar 24, 2017 06:45
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No, qualified dividends exist. Most of the types of investments that FIers would consider e.g., passive ETFs offer qualified dividends (QDI) which are subject to the same tax rates as long term capital gains. There is the caveat that if you're interested in offshore securities, they may not qualify for this. Most reputable fund houses like Vanguard publish the average proportion of stocks that qualify on a fund level. For example 100% of stocks in the S&P500 ETF qualify under this scheme versus 85% for the Total World ETF. And what kys said doesn't make any sense either.
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Mar 25, 2017 00:26
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That's a fair point and it's been a reason why US firms have moved towards buybacks over dividends since the 90s. There's a broader discussion about dividend policy to be had but I suspect this is enough of a derail.
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Mar 25, 2017 01:34
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Lmao https://twitter.com/reformedbroker/status/845251220038193152
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Mar 25, 2017 06:04
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Someone post the WSJ 250K image please.
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Mar 25, 2017 07:01
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Their 'charity' allocation is like < 7% of their total expenses so I'm not sure why people are focusing on that. I'd argue the two main drivers of rising tuition costs in the US are 1) reduced public funding (esp. for state schools), and 2) the hosed financial aid-student setup.
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Mar 26, 2017 03:16
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You'll need millions (tens?) these days for an Ivy admin to bypass admissions
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Mar 26, 2017 05:03
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shrike82 posted:Someone post the WSJ 250K image please. gently caress it, I'll do it myself WSJ article titled 'Struggling on 250K a year' from a couple years back 
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Mar 26, 2017 05:10
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I personally like the 'Clothes for 4 people (no fancy bags, shoes, or threads)' line item. Anyway rich people budgets like these are why I believe qualitatively in the 75K Kahneman finding (i.e., higher income != more happy).
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Mar 27, 2017 01:35
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This is verging on the philosophical but I feel that FI shouldn't just be about trading off current consumption to maximize future consumption. It should be partially about the realization that a lot of poo poo that you think you want to consume, doesn't make you happier.
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Apr 19, 2017 02:26
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I'd be careful about suggesting that the working poor would be better off if they practiced FI because it's tone deaf and patronising, and more importantly it doesn't work.
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Apr 19, 2017 12:22
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I have a couple friends who claimed EU passports through ancestry as a back up. Alternatively, most countries have an investor visa scheme that gets you residency for typically between half a million to a couple million, Singapore's a good option for this.
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May 17, 2017 03:24
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tbf, healthcare, childcare, and education for your family including kids adds up pretty quickly. that's easily a million bucks in present value for two kids.
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May 23, 2017 12:01
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Arguing about some American exceptionalism when it comes to healthcare is bizarre considering we have a plethora of real-world examples ranging from Singapore to Scandinavia.
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May 25, 2017 01:58
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Has anyone ITT pulled the trigger and retired early? Interested in hearing about people's experience post-retirement rather than the prep for it. I'm hitting 40 next year, DINK, fully paid-off mortgage, and portfolio in the mid 7-figures. The pandemic's already made it slightly easier to think about it since I've become a fully remote computer toucher. I might transition to a part-time/contract role as an intermediate step. Outside of health insurance, I'm more curious about the soft stuff - are people able to find fulfilment given our social conditioning around seeing work as an intrinsic part of our life? It's a bit daunting to think about spending potentially the next few decades with no firm day-to-day "tasks" if that makes any sense.
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Nov 24, 2021 23:26
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There's a difference between the calvinist notion of work being intrinsically good and understanding that society is structured around most people working during the same hours of the day. A basic question for example would be who do you hang out with during the "work day" when most people are working? Another would be on relationships - how does one partner or both not working affect things? I posed the question specifically to people who have actually experienced early retirement. The few friends I have who retired early, ended up going back to some form of structured work after getting bored. shrike82 fucked around with this message at 01:32 on Nov 28, 2021 |
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Nov 28, 2021 01:28
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he's mentioned having an english instructor so there might be nuances in language being lost. i'm picturing an eastern european computer toucher for some reason
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Nov 29, 2021 04:59
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surc posted:-Somebody with ~$500,000 invested (/25 = 20,000 annual budget) planning to expatriate and go live in SE Asia or South America or any of the other go-to US expat spots who has actually lived in that region for a year+ and budgeted expenses there and has some level of language skills for the area, or owns a fully paid off house in the US somewhere and really fine living frugal. i'm struggling to make sense of the numbers. is the /25 the number of years? it doesn't seem to take into account inflation, bad investment years, or even longevity. and i don't think 500K guarantees you a long-term visa even in SE Asia these days. i wouldn't go so far as slyfrog but if those are representative of leanfire plans, i'd be skeptical of the movement.
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Nov 30, 2021 04:13
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it's a vague rule of thumb and probably not applicable for people trying to retire early and for longer periods of time
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Nov 30, 2021 04:32
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in any case, it's healthy to re-examine these assumptions once in a while my other thought about retirement has been it currently being a seller's market for labor in the US. at least within my social circle, my sense is that people are getting more money for less work and i'm not sure how long this situation is going to last. might not be a bad thing to push off retirement for a while longer and bank more money especially given inflation being a thing too
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Nov 30, 2021 05:04
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i don't think it's overly conservative to question the 4% rule when people differ on basic questions such as whether it's meant for a 30 year horizon or to run longer/indefinitely the other issue specifically with leanfire plans is that absolute dollar spend starts mattering more. when you have a sub-30K annual budget, you really don't have much room to maneuvre if you need to suppress spending during a bad sequence-of-returns event
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Nov 30, 2021 09:47
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i plan to work as a volunteer fireman after retiring early subscribe to my podcast to hear more about my new retirement plan - FIREFIRE
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Nov 30, 2021 21:36
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moana posted:The nice thing the leanfire crowd has going for them is that it's way, way easier to pick up work if you only need an extra $5-10k a year. this seems very much a ymmv thing. i took a year off on sabbatical once and had trouble getting back to "work mode". and i think people are underestimating how much harder it is to do work when you're older. i'm pushing 40 and am finding it harder to focus on computer toucher work versus when i was 30. i don't think it's trivial to do service work when you're past 50. quote:If you are in a job you dislike just to get your retirement success probability from 95% to 99%, maybe it's worth taking the risk that you might need to go get a part time job 15 years from now. and that's not a fair assessment of the discussion upthread when people were conflating SWR with an indefinite retirement
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Dec 1, 2021 13:22
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i honestly think it's a disservice to try to oversell leanfire-like plans with "it's 95% safe and you can always get a job if it doesn't work out"
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Dec 1, 2021 14:19
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