General Topics starting from March 3, 2007

Updated: April 16, 2007.

A Special Kind of Investment

This looks at a special kind of investment: high income producers that return capital. As part of a blended strategy, it lifts the income stream to 5.8% of the original balance (plus inflation).

A Special Kind of Investment

Dividend Baseline: Expanded

Here are variations around my Dividend Baseline.

Dividend Baseline: Expanded

Fluctuating Dividends

I examined the income stream with wildly fluctuating dividends. It is higher than expected.

Fluctuating Dividends

Fluctuating Dividends with a Growth Kicker

I added a growth kicker to an investment with wildly fluctuating dividends. This increases the income stream.

Fluctuating Dividends with a Growth Kicker

Income Stream Insights

I have used the Income Stream Allocator to look at a variety of conditions. Here are the key insights.

Income Stream Insights

A Special Kind of Investment Sensitivity Study

This extends my investigations into a special kind of investment: high income producers that return capital.

In this sensitivity study, I introduce a lower yielding Investment B that has a stable or slowly growing dividend amount. I examine three variants for Stock A.

A Special Kind of Investment Sensitivity Study

A Special Kind of Investment Addendum

I collected more data with the higher dividend yield version of Investment B. I looked at the effect of slower dividend declines.

This confirms earlier observations.

A Special Kind of Investment Addendum

Diversifying Risk

I have developed a variety of worthwhile approaches. You can combine them to diversify risk.

Diversifying Risk

TIPS Table

Here are TIPS Safe Withdrawal Rates and percentage balances for interest rates of 1%, 2%, 2.5%, 3%, 3.5% and 4%.

TIPS Table

Everyone CAN Be Above Average!

Here is how.

Everyone CAN Be Above Average!

Taken At Face Value

I have taken the Morningstar Dividend Investor newsletter at face value. I have assumed that its portfolios meet their goals. I have put its numbers into the Income Stream Allocator. This is what the portfolios do for retirees.

I include a sensitivity study.

Taken At Face Value

The Cost of Capital Appreciation

Retirees give up very little income in the hope of capital gains.

The Cost of Capital Appreciation

Gentle Failure Mechanisms

Our TIPS baselines and dividend strategies share one thing in common. They have gentle failure mechanisms. At worst, they could result in your cutting back to 70% of your original buying power.

Gentle Failure Mechanisms

What Do I Really Think About Long-Term Timing?

Long-term timing raises today’s traditional Year 30 Safe Withdrawal Rate to 5.4% (plus inflation) of your original balance. It raises today’s traditional continuing Safe Withdrawal Rate to 4.9% (plus inflation).

Dividend strategies do better.

What Do I Really Think About Long-Term Timing?

Expanded Allocator

I have built an expanded version of the Income Stream Allocator. It includes 5 income streams and a cash management account.

Expanded Allocator

Using Weighted Averages

I examined using weighted averages on the Expanded Allocator. They almost always work well for the first 15 years. Sometimes, weighted averages work well for more than 30 years.

Using Weighted Averages

Valuations and Income Streams

The Year 30 Retirement Risk Evaluator shows us why it is best to focus on the income stream in today’s market.

Valuations and Income Streams

Expanded Allocator Insights A

In this initial investigation, I find that I can increase the Income Stream substantially. The reason? My Expanded Allocator is much easier to use than my Income Stream Allocators.

Expanded Allocator Insights A