No. of Recommendations: 6
<I think you need to check your numbers. I have Shrewd Sam running out of money in 1987. Inflation was way more than 2%.>
Yeah I agree. Maybe Sam's not really so shrewd? LOL
Anyhow, I am in no way advocating a portfolio of 100% T-bills.
I am advocating diversification based on an individuals need, willingness and ability to take risk. A well diversified portfolio would include: cash, bonds, TIPS, & Equities of various market caps.
I am also pointing out that the S&P 500 is richly valued, by any valuation tool known to man.
Historically when this has happened future returns have been well below average. (Often underperforming fixed income, as noted in earlier posts.)
Higher valuations = lower future returns, it's basic math.
How is this actionable?
Make sure you are diversified. If T-Bills outperform over the next decade you'll have some. If TIPS are top performers, you'll have some, and so on.
Temper your expectations going forward. Save more. If you are withdrawing from your portfolio use a conservative withdrawal rate...
Or end up like Sam & Ned, both used withdrawal rates that were unsustainably high and both went broke.
Don't end up like Sam & Ned.
