Decumulation & Retirement – How To Spend Your Money
Today’s post is another in the series following a passive investing Meetup group that I organise.
Meetup
Back in January 2019, I took over the organisation of a Meetup group with more than 350 members.
- You can read more about that process and experience here.
The number of group members continues to drift upwards (we’re at 419 now), but the meetings have been relatively sparsely attended so far (never more than 11 attendees).
London Passive Investing Club
The group is called the London Passive Investing Club. Here’s the description:
This group is for passive DIY investors, and for those who want to become passive DIY investors.
We are primarily concerned with ETF portfolios, but people who use OEICs are also welcome.
Topic we discuss include:
- What is an ETF (exchange traded fund)?
- What’s inside an ETF?
- How do I invest in ETFs?
- What does it cost to invest in ETFs?
- What does a good ETF look like?
- What are the risks of investing in ETFs?
- How can I research ETFs?
- How do I decide on an asset allocation strategy, and construct a suitable ETF portfolio?
- Are lazy portfolios as good as properly diversified ones?
- Should I use smart beta / factor ETFs?
- How and when should I rebalance my portfolio?
- How does the UK Tax system affect ETF portfolios?
- Are the problems of living off my portfolio in retirement (decumulation) the same as those of building up my portfolio in the first place?
Previous meetings
- At the first meeting in February, I tried to answer as many of those questions as possible.
- You can find the notes here.
- The March meeting was organised around a presentation on how to build your own ETF portfolio.
- The slides are on this page.
- The April meeting looked at Portfolio Rebalancing.
- The slides are on this page.
- The May meeting examined Lazy Portfolios (constructed from just a few funds.
- The slides are here.
- The June meeting at UK Tax for ETF Investors.
- The slides are here.
Tax
The July meeting of the group looked at Decumulation & Retirement, and How To Spend Your Money.
Decumulation
The August meeting of the group will look at Smart Beta and Factor ETFs.
- You can sign up here.
Big Picture Investors
Immediately after the Passive Investing Club session, I’ll be hosting a meetup for active investors.
- You can read more about this new group – called Big Picture Investors – here.
The July meeting will look at the role of active investing in a diversified portfolio.
- And you can sign up for this meeting here.
Until next time.
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Mike Rawson
Mike is the owner of 7 Circles, and a private investor living in London. He has been managing his own money for 35 years, with some success.
When looking at CAPE based rules – where do you take the CAPE value from – ie: as CAPE will vary in different regiosn is this a global value or do you average out CAPE based on your own asset allocation to arrive at a portfolio average?
It’s a good question. I don’t use CAPE rules, so this is not my personal practice.
The people who write about CAPE rules are usually American, and they would use a US CAPE. I think that a global CAPE or a weighted average of your (stock) portfolio are each defensible, and it might come down to which was easier to calculate / access.
The key would be to use the same system each year, and not to chop and change.
Thanks Mike – I agree that picking something and sticking with it is the way to go.
I also saw antoher CAPE based approach, which could be easily confused with this, where one sells down equity or fixed income to withdraw depending on CAPE to average CAPE.
Yes, there are a lot of approaches, but generally, you are either changing the amount you take out each year (dynamic spending) or the split between stocks and others (dynamic allocation).
The safest approach is to build a pot big enough so that you can live off 3% pa and then set your equity allocation as close to 75% as you can get it.