Page 44 - DIY Investor Magazine | Issue 30

THE SUNDAY RIDE #5 – UPDATED 4% RULE
The Sunday Ride brings a collection of Investment Research and Financial Independence topics for long term investors with the aim of providing you the very best reads; to be enjoyed with your Sunday post-ride coffee.
While rebalancing your portfolio, learn how the markets work and get the highest quality insights from Wall Street and Main Street. Unlike the rest of Bankeronwheels.com, this series is provided without much additional guidance; everything is to be used at your own risk.
Realised inflation has never been so high with interest rates so low.
Although I find Michael Batnick’s analysis somewhat misleading given he compares realised (past year) inflation to forward interest rates (kind of apples and oranges), but it’s worth highlighting nevertheless what exceptional year it has been and how low rates are.
The forward looking inflation hasn’t moved much over the past month (table above) while the interest rates dropped again – I look at you (again) hedge funds shorting treasuries!
That said, returns (S&P 500) over the past decade or so, are nothing short of extraordinary:
A quick glance at where we stand year-to-date when you rebalance, specifically taking a long term investor view.
Long term historical risk and returns are here.
Is it as good as it gets? Asks Ben Carlson.
This section is dedicated to research on what really matters (aka the 90% of your Portfolio) – achieving Financial Independence, Asset Allocation and Long Term Investing Research.
Vanguard writes about fine-tuning the 4% FIRE Rule, including (i) International diversification (ii) considering longer horizon, and (iii) thinking about fees.
The FT describes MSCI’s quest for the ultimate Index.
Credit Suisse released the annual Wealth Report – Your portfolio is probably a reflexion of the global trend. Total global wealth grew by 7.4% and wealth per adult rose by 6% to reach another record high of USD 79,952.
Overall, the countries most affected by the pandemic have not fared worse in terms of wealth creation. But some countries were worse off.
BoW updated analysis on Bond ETFs may be helpful for those looking to buy US ETFs. There is only a handful of ETFs with a yield above Inflation.
Vanguard also analyzed investor expectations during the COVID crash.
2009: 2010: 2011: +25.6% +14.8% +2.1%
2014: 2015: 2016: +13.5% +1.4% +11.8%
2019: 2020: 2021: +31.2% +18.0% +18.4%
2012: +15.9%
2017: +21.6%
2013: +32.2%
2018: -4.2%
DIY Investor Magazine | Sept 2021 44