Thanks for the article. What you can add to 4a is that a classic B&H investor gets more shares for his euros during a weak dollar. This may not matter in the short term, but it boosts returns later on.
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@MineraLogik If the portfolio is 35% under water, it doesn't matter how many shares I get for what.
Above all: Who assures me that my assets in the portfolio will become a booster(!) and were not boosters(!)?
It is primarily about hedging the portfolio with regard to currency fluctuations
Above all: Who assures me that my assets in the portfolio will become a booster(!) and were not boosters(!)?
It is primarily about hedging the portfolio with regard to currency fluctuations
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@MineraLogik You are of course right that the EUR buys more when the USD and equity markets are weak. However, you are assuming that both will then rise again. And then the EUR will buy less again.
There are just these huge fluctuations - you can take advantage of them or sit them out. In the long term, they balance each other out.
Note: The cycle becomes particularly relevant at the start of the payout phase. This is when the yield succession risk can increase massively, so that your safe withdrawal rate is only 2-3%. In the end, you'll need a EUR 1 million portfolio to even come close to closing the pension gap.
There are just these huge fluctuations - you can take advantage of them or sit them out. In the long term, they balance each other out.
Note: The cycle becomes particularly relevant at the start of the payout phase. This is when the yield succession risk can increase massively, so that your safe withdrawal rate is only 2-3%. In the end, you'll need a EUR 1 million portfolio to even come close to closing the pension gap.
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