tag:blogger.com,1999:blog-5465015914589377788.post8884071727249158546..comments2023-01-26T14:34:50.928-05:00Comments on Michael James on Money: Treating Your Entire Portfolio like a RRIF in RetirementMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-5465015914589377788.post-63567044611663247572021-09-10T08:18:49.813-04:002021-09-10T08:18:49.813-04:00Hi ispeuq,
I think I understand what you mean. Y...Hi ispeuq,<br /><br />I think I understand what you mean. Your interpretation of PV(c,m,-1,0,1) is correct, but this happens at the end of retirement rather than the beginning. For the first m-n years, the cash interest feeds the annual withdrawals and the rest of the annual withdrawals comes from the stock portfolio.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-66332744622969552172021-09-07T11:13:48.896-04:002021-09-07T11:13:48.896-04:00Thank you for your explanation. I was looking at i...Thank you for your explanation. I was looking at it differently.<br /><br />I was interpreting PV(c,m,-1,0,1) as how much do I need now to fund $1 (present value) for the next m years at c% interest.<br /><br />And was looking to see the 2nd formula in the same light, i.e. How much do I need to fund $1 (present value) starting to be paid after m years for n-m years. <br /><br />I think I part I missed was that some parts of the portfolio will not grow at 's' rate because they get moved into cash and can grow only at 'c'. So my calculation will result in a higher number than actually what is possible. <br /><br />Does that make sense?ispeuqhttps://www.blogger.com/profile/17271555509021327726noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-36853417062841542021-09-07T07:20:11.243-04:002021-09-07T07:20:11.243-04:00Hi ispeuq,
Each year, the HISA level is steady be...Hi ispeuq,<br /><br />Each year, the HISA level is steady because we refill the HISA from the portfolio after taking out the year of spending. The amount we pull from the portfolio is one year of spending (this is the -1 part in the PV calculation) less the interest produced by the HISA (this is the HISAPV*c part). The portfolio has to support these payments for n-m years, at which point the portfolio is depleted. The m years of living on cash at the end of life doesn't need to be considered in the portfolio PV calculation because the portfolio will be gone after the n-m years. The HISA PV calculation handled the HISA amount necessary to live for the remaining m years.<br /><br />If this doesn't clear things up for you, let me know your reasoning behind your version of the portfolio PV. I'm just guessing, but it seems like we have different ideas for how the HISA and portfolio are being drawn down.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-64833732476492206532021-09-07T06:42:50.924-04:002021-09-07T06:42:50.924-04:00Thank you for your withdrawal worksheet
I have a ...Thank you for your withdrawal worksheet<br /><br />I have a question.<br /><br />If c is the cash rate and s is the portfolio rate, m is the number of years to keep in cash, and n is the remaining life then you calculate<br />HISA PV as PV(c,m,-1,0,1) which makes sense. I am not able to understand the Portfolio PV calculation. In my mind it should be PV(s,n-m,-1/(1+s)^m,0,0) but what you have is PV(s,n-m,-1+HISAPV*c,0,0). I believe that the growth of portfolio during the cash years is not considered in your calculation. Can you please explain?<br /><br />Thank youispeuqhttps://www.blogger.com/profile/17271555509021327726noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-325201921646103752014-01-31T04:45:54.708-05:002014-01-31T04:45:54.708-05:00@Potato: Thanks. I've been motivated to figur...@Potato: Thanks. I've been motivated to figure this out lately to help some of my older family members. I also want to be able to know when I think I'm truly financially independent. I hope to say more about this next week.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-29645449266358810632014-01-31T00:52:22.704-05:002014-01-31T00:52:22.704-05:00Wow, no comments. I love the idea, but I've be...Wow, no comments. I love the idea, but I've been too swamped with work to go through the spreadsheet in detail and say anything intelligent. Just wanted to let you know that there are still people out here who appreciate this sort of thing!Potatohttp://www.holypotato.netnoreply@blogger.com