The DIY Financial Advisor 3 – Decision Framework and Asset Allocation

DIY Financial Advisor

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4 Responses

  1. Avatar Al Cam says:

    Does the book have anything to say about Yale’s (Swensons) drawdown method?
    I understand it is based on the Tobin spending rule.

    • Mike Rawson Mike Rawson says:

      I don’t remember the book saying much about withdrawal. I only have a physical copy of that book, so I’ll have to try to find it tomorrow.

      From memory, Yale used something like a Tobin rule – 50% based on a fixed percentage (5%?) of the average fund value over several (3?) years, and 50% based on last year’s spend plus inflation.

      I find variable withdrawal rules too complicated and I just stick to a conservative fixed percentage (failsafe – around 3% pa).

      • Avatar Al Cam says:

        I thought Yale was more like:
        a) 20% from last years valuation times drawdown percentage [of X%]; plus
        b) 80% from the last ten (?) years pay-out corrected for inflation

        • Mike Rawson Mike Rawson says:

          Maybe. From my helicopter, those both look very similar. The only dynamic rule I like is a CAPE rule, but even that is too much bother for me.

          I think the best approach is to build a margin of safety into your retirement pot so that you can live on significantly less than 3% pa.

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The DIY Financial Advisor 3 – Decision Framework and Asset Alloc…

by Mike Rawson time to read: 7 min
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