5Mês·

Carefree pension

Hello, oh-so-nice GetQuin community.

Here’s the thing: I’m short on cash. I’ve been retired for 10 years now, and I need cash for the next 10. Something like 150–200k in current purchasing power per year. To achieve that, I’m looking to invest about 1.5 times that amount. That money can be spent by the end of the 10 years—it’ll come back in from somewhere else anyway.

I’ve spoken with my team of advisors, and they came back with the following proposal. I’m a bit skeptical, but I also don’t want to presume that I know more than the bankers...

Overlap is definitely a major issue, especially $XOM (-0,18%) but also all the other assets in those two major positions. Besides, the smaller positions are actually too small to make any difference to the overall performance.

I’m aware that with a 10-year investment horizon and a withdrawal rate that’s not insignificant, I’ll definitely be investing with lower risk, but I’m still curious if there are any opinions or perhaps experiences we could discuss here.

If anyone’s interested, I can share my main portfolio in the next few days.

Thanks for any comments and for taking the time to read this.

Galigrü

17 Comentários

5Mês

How? You want to generate 150-200k pa with 1.5 million?
If the 1.5 million can be used up, then you can easily achieve your goal with a money market ETF.
If you want to keep the 1.5 million, you need a strategy that reliably performs above the market return. In my opinion, this is only possible with something like GTAA.

If it's just about reliable income, then something like this might be the easiest: https://extraetf.com/de/etf-portfolio/jeden-monat-ausschuettungen

Your current variant seems to me to be a typical world portfolio with sector satellites. Only the fluctuations are likely to be reliable. 🤷

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gig_geldistgeil@A_S

5Mês

@Epi Thank you for the quick and extremely helpful answer. Combining different ETFs with different distribution dates is something I wouldn't have thought of myself. I should probably add, and I have now edited it, that 200k in current purchasing power is required per year, otherwise a money market ETF would have been an option anyway.

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Epi@Epi

5Mês

@A_S First of all, I would calculate the annual target return, which can then be used to derive the strategy with the lowest risk or the lowest fluctuation. That's actually what financial advisors are there for.

But there are some things you can do better on your own. So: Assumptions 1500k capital, 200kpa incl. inflation withdrawal in 10 years, 4% inflation.
You enter all this here:
https://m.zinsen-berechnen.de/entnahmeplan.php
If the result ends up somewhere around the required 5-8% return per year, you're in good hands with a dividend portfolio. Otherwise, you need other solutions.

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Solitair@Solitair

5Mês

150k withdrawal is easily possible with a return equal to the inflation rate. With 200k you need about 10%. I think it is ambitious but not impossible to achieve this continuously over 10 years, but not with a normal world ETF. The question is also what is the capital gain on this 1.5 million that would still have to be taxed on withdrawal.

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ZeissJessy@ZeissJessy

5Mês

150-200 thousand a year, so you have an average of 12-18 thousand a month in credit. If that were the case, you wouldn't be here at GQ Community

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Wealth-Accelerator@Wealth-Accelerator

5Mês

You want to take an inflation-adjusted 1.5-2 million from today's 1.5 million over the next 10 years.
Is that correct?
How dramatic would it be for you if the 1.5 million were to halve in value within the 10 years? Would you simply be able to compensate for this from another pot or would the plan be screwed?

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gig_geldistgeil@A_S

5Mês

@Wealth-Accelerator If I end up with 0 of the 1.5 after 10 years, that's not only not a problem but actually the goal of the whole thing. I estimate that expenses will also increase, so I would probably have to make around 700k in the 10 years.

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Wealth-Accelerator@Wealth-Accelerator

5Mês

@A_S I understood about the consumption. But with a world equity allocation, it could happen that you withdraw in year 1 and reduce to 1.35 million. After the withdrawal of year 2 at 1.2 million, the portfolio halves due to a crisis.
Then you are at 600,000 euros before the withdrawal in year 3. What would you do then?
I guess just withdrawing 60,000 euros feels like dry bread for a year.

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Epi@Epi

5Mês

@A_S Don't underestimate inflation! With 4% inflation, the 200k is 300k in 10 years. On average, you would have to withdraw 250kpa. In other words, you need a significantly above-average return, around 12-15%pa.
With conventional means (B&H WeltETF) this is not achievable.

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gig_geldistgeil@A_S

5Mês

@Wealth-Accelerator All right, please forgive my mental somersault. I would just finance my standard of living and that includes at least 90-100k fixed costs. Vola should therefore be kept rather low and that's where my real problem lies. Nice returns with low vola...

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Wealth-Accelerator@Wealth-Accelerator

5Mês

@Epi
Is it even "safely" accessible?
GTAA "only" has a better expected return. What are you "planning" for 5 years as a worst-care scenario with GTAA compared to B&H Welt AG?

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gig_geldistgeil@A_S

5Mês

@Epi That's what worries me; somehow everything is screaming at the moment that we simply need more capital.

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Wealth-Accelerator@Wealth-Accelerator

5Mês

@A_S so my gut feeling tells me 3 pots:

1 pot of money market 150k
1 pot of bonds with final maturity after 1 year, 2 years, 3 years, ..., 9 years and 900k.
1 pot with All-World ETF with 450k.

Roughly speaking. You're unlikely to achieve your return. But the volatility is low enough and predictable.

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Epi@Epi

5Mês

@A_S More capital, less consumption or more brainpower. 😏

I was and am faced with analogous questions. The answers are not easy, neither technically nor psychologically. But I think they do exist.

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gig_geldistgeil@A_S

5Mês

@Epi Thanks to both of you for the many suggestions and the extremely constructive comments. Keep up the good work and good luck and success with your daily routines! gali green

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MrPeak@MrPeak

5Mês

Hi, maybe it was already a topic and you have discussed it with your bankers. In Austria, there are housing bonds for private investors that are tax-exempt up to 4% interest. You can get these from housing banks such as Erste Bank Wohnbau, Raiffeisen Wohnbau, etc. So assuming you have your 1.5 million in there and get 4% tax-free interest on it every year, you would already have an additional 60k tax-free. However, I have to say that the 4% is not very realistic in the current market environment. I would assume 3 to 3.5 % interest per year. It also depends on how the price of the bonds is and you might make another + due to the entry price. I know there would still be a few things missing from the desired capital, but it might still be helpful. https://www.raiffeisen.at/wohnbaubank/de/wohnbauanleihen.html https://www.bankaustria.at/wohnbaubank/wohnbauanleihen.jsp Here are some links to read up on if you haven't already. In my opinion, it makes sense to invest a portion of larger assets there and thereby generate a cash flow. The return is also attractive due to tax exemption. Someone I know has structured his assets with these bonds and has been a private investor for 10 years.

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gig_geldistgeil@A_S

5Mês

@MrPeak Thanks for the great suggestion, it actually works well, that's how I actually finance my grandchildren's student life, or "help them out". galigrü

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