# Any member here who unselfishly shares his value / growth investing strategies?



## internalaudit (Jan 27, 2017)

and provides some high level analysis whether something is worth investing in? I'm not talking about day trades but more of building a portfolio that's almost bullet-proof over time with a little adjustment every few quarters for companies with weakening fundamentals.


rodbarc on the redflagdeals forum is one. Wondering if there's others out here that are as helpful.

http://forums.redflagdeals.com/investing-idea-dividend-growth-1587815/


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## tygrus (Mar 13, 2012)

That guy is trying to live off dividends. They usually grow in many companies but are very slow. A million dollars throws of $50k safely in dividends. Only 250,000 people in Canada have $1 million or more in the stock market and they didnt get there by buying stocks. They ran businesses.

To save enough to put a million away in the market over time is impossible due to taxes. Favorable taxation of business capital gains is the only fast way. Sell a house or business or commercial property. But if you are trying this from a wage that is taxed at 30-40%, there is no way. You have to compound your way there and that will take 30 yrs.


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## james4beach (Nov 15, 2012)

tygrus said:


> A million dollars throws of $50k safely in dividends.


That's not what the SWR studies say. If you have $1 million and are trying to live off 50k in dividends, that's a 5% withdrawal rate from your portfolio (dividends just shift cash from the equities into your pocket).

5% is not considered a safe withdrawal rate. There is a high probability of portfolio "failure" within 30 years, meaning you could run out of capital.

If you want to do this sustainably and not run out of capital over 30 years, then you'd probably use more like a 3% to 3.5% withdrawal rate, or about 30k - 35k in dividends/sales.


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## My Own Advisor (Sep 24, 2012)

"To save enough to put a million away in the market over time is impossible due to taxes."

I think it can be done but you're right, taxation is a PITA in getting there. I don't share my portfolio value on my site but I'm optimistic we can get to that mark within the next 7 years if things work out for us. Need our health first and foremost!!


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## Argonaut (Dec 7, 2010)

internalaudit said:


> and provides some high level analysis whether something is worth investing in? I'm not talking about day trades but more of building a portfolio that's almost bullet-proof over time with a little adjustment every few quarters for companies with weakening fundamentals.
> 
> 
> rodbarc on the redflagdeals forum is one. Wondering if there's others out here that are as helpful.
> ...


Wow, this guy is doing a lot of work for something that is basically just buying the market. He has dozens and dozens of stocks for $1000-$1500 a pop.. not a good strategy commission-wise. Every sector represented, so basically buying the TSX. And it isn't beating the TSX either. All that effort put into a 150+ stocks watchlist and the extra work in Excel. If you're putting in a ton of effort and not even beating the market you have to reevaluate your time spent and overall strategy.


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## Just a Guy (Mar 27, 2012)

tygrus said:


> That guy is trying to live off dividends. They usually grow in many companies but are very slow. A million dollars throws of $50k safely in dividends. Only 250,000 people in Canada have $1 million or more in the stock market and they didnt get there by buying stocks. They ran businesses.
> 
> To save enough to put a million away in the market over time is impossible due to taxes. Favorable taxation of business capital gains is the only fast way. Sell a house or business or commercial property. But if you are trying this from a wage that is taxed at 30-40%, there is no way. You have to compound your way there and that will take 30 yrs.


Buy and hold doesn't trigger any taxes. As for having $1M in the market, I know a few people who've done that and not by selling their house/business/first born whatever, but by building up their investments. I'm sure luck had some part in it, but that doesn't dismiss the fact that they did it. It's far from impossible. In fact, I remember reading that the government changed the TFSA rules a few years after it was implemented because several people had amassed huge returns. The government changed their classification to a business and subject to taxes because they were so successful (and the starting limits were tiny compared to $1M).


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## OnlyMyOpinion (Sep 1, 2013)

Two words: Patience + Discipline
Which leads to a third word: Compounding.
Then >$1MM is definately achievable. Unfortunately both are probably the hardest thing to do.
From age 30 through age 60 paying yourself first, consider $10,000 per year sheltered in TSFA and RRSP, 4% real return (6% nominal) in a balanced low cost portfolio, 30yrs later you have nearly $600k. Manage 6% real and you'll have $848k, *6% and $12k/yr puts you over $1MM*.
But I agree, there are very few people or couples even who will accomplish this.

P.S. James, I think Tygrus was considering a case where you were able to earn a 5% dividend on your $1MM to spin off $50k/yr. Principal/capital remains untouched so 4% safe withdrawl rule is moot.
Coincidently, I see BCE closed at $57.42 and yield appears to be exactly 5.0%. 
Anyone here willing to drop $1MM into BCE? :rolleyes2: and collect their $50k/yr of eligible Cdn dividends.


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## tygrus (Mar 13, 2012)

IMHO 1 million isnt enough anymore. You need $2.5MM or more

$500K house paid off
$1 MM in the market a little more aggressive (should earn 5% dividend if you have REITs in the mix)
$1 MM on the GIC ladder (safe and sound 2-3%)


Another million would be better.


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## gibor365 (Apr 1, 2011)

tygrus said:


> IMHO 1 million isnt enough anymore. You need $2.5MM or more
> 
> $500K house paid off
> $1 MM in the market a little more aggressive (should earn 5% dividend if you have REITs in the mix)
> ...


Agreed! Achieved 1st milestone, working on 2nd and 3rd one 

1mil is not enough!


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## mordko (Jan 23, 2016)

We are kinda there. 2m in cash/shares. Probably 0.5k in DB pension which is being transferred into LIRA. No house, will buy at some point this year. Certainly need a bit more, but planning to set up a hobby farm, which should keep down the expenses in the long term.


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## gibor365 (Apr 1, 2011)

> We are kinda there. 2m in cash/shares. Probably 0.5k in DB pension which is being transferred into LIRA. No house


 If we sell our house, we also will be "kinda there".but DB pension is much smaller


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## james4beach (Nov 15, 2012)

OnlyMyOpinion said:


> P.S. James, I think Tygrus was considering a case where you were able to earn a 5% dividend on your $1MM to spin off $50k/yr. Principal/capital remains untouched so 4% safe withdrawl rule is moot.


Dividends _do_ touch capital; it's not free money. If you reinvested the dividends, the capital would grow more. So taking the dividend as cash is equivalent to touching capital. Dividends are not a loophole out of 4% SWR.

SWR is stated in terms of all dividends + sales, so these are total return concepts. Any combination you want, it's a withdrawal. So if you're taking 50k out of 1M, that's a 5% withdrawal rate whether it's dividends or something else. And 5% withdrawal is a bit higher than the rule of thumb for what's sustainable -- which means that it runs the risk of depleting the portfolio over 30 years.

Dividends aren't a magic way out of SWR

https://www.bogleheads.org/forum/viewtopic.php?t=102154
http://www.early-retirement.org/forums/f28/how-do-you-factor-dividends-into-the-swr-51782.html


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## mordko (Jan 23, 2016)

> "If we sell our house, we also will be "kinda there".but DB pension is much smaller"


Well... Why not sell and move to a cheaper area? That's what we are doing. As luck would have it, I got a decent offer from a company which has offices in a cheaper/more rural area, but it would have made financial sense anyway. And I am not saying GTA housing market isn't going up again, but surely the risk is higher than usual.

And incidentally, the proceeds from selling your house are 100% tax free. Not fair but nice.


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## gibor365 (Apr 1, 2011)

mordko said:


> Well... Why not sell and move to a cheaper area? That's what we are doing. As luck would have it, I got a decent offer from a company which has offices in a cheaper/more rural area, but it would have made financial sense anyway. And I am not saying GTA housing market isn't going up again, but surely the risk is higher than usual.
> 
> And incidentally, the proceeds from selling your house are 100% tax free. Not fair but nice.


Because my wife works in HQ of the one of the "big 5" Canadian banks, so she needs to travel to downtown Toronto... Probably we can downsize after our daughter moving away in several years...
We'll consider cheaper area when my wife will retire


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## tygrus (Mar 13, 2012)

gibor365 said:


> Because my wife works in HQ of the one of the "big 5" Canadian banks, so she needs to travel to downtown Toronto... Probably we can downsize after our daughter moving away in several years...
> We'll consider cheaper area when my wife will retire


Gibor, I would look to vancouver as to whats eventually going to happen in toronto. Your window of opportunity could be closing already.

Some advice, sell, cash up, move out to the burbs and rent something DT for a few yrs, spend the weekends at the new place. If its only for a few a few yrs thats no big deal. You might never get a few million free cash again. When this sucker turns it could go hard especially with Trump at the helm.


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## janus10 (Nov 7, 2013)

tygrus said:


> Only 250,000 people in Canada have $1 million or more in the stock market and they didnt get there by buying stocks. They ran businesses.
> 
> To save enough to put a million away in the market over time is impossible due to taxes. Favorable taxation of business capital gains is the only fast way. Sell a house or business or commercial property. But if you are trying this from a wage that is taxed at 30-40%, there is no way. You have to compound your way there and that will take 30 yrs.


Where did you get those numbers and how did you arrive at those conclusions? I'd be surprised to learn that I am such an outlier. Maybe I'm wrong to imagine that I'm just one of many, many "Next Door Millionaires".

Edit: This https://www.google.ca/amp/s/sec.theglobeandmail.com/globe-investor/personal-finance/the-million-dollar-club/article1212140/%3Fservice%3Damp?client=ms-android-bell-ca supports my belief that we aren't that uncommon. Based on this article I'd say there are about 750,000 households with $1M investable assets.

As for the OP's original question, it's probably best to find someone who has the same outlook and temperament with respect to investing as you do. Unless you've got an open mind, very different perspectives and risk profiles might prove distasteful and nonviable to you. Maybe there is a stock investment club near your city?


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## kcowan (Jul 1, 2010)

I was into building capital in my late 40s. By 50 I had had a buyout from the company that was worth $0.75 Million. By 53, I had to split my assets with th ex-wife. By 60 I had more than recovered and retired. For 5 years, I did momentum investing. That was required. Than I had enough to switch to value investing and still doing that nearly 10 years later. It takes a long time unless you get lucky.

68% equity, 12% bonds, 20% cash and equivalents.


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## redsgomarching (Mar 6, 2016)

pretty easy to grow your portfolio over the last 7 years though!


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## dotnet_nerd (Jul 1, 2009)

james4beach said:


> Dividends _do_ touch capital; it's not free money. If you reinvested the dividends, the capital would grow more. So taking the dividend as cash is equivalent to touching capital. Dividends are not a loophole out of 4% SWR.


Nonsense. Dividends are paid out of company earnings and profits.

If I own 1000 shares of XYZ, collect dividends for 20 years I still have my 1000 shares. No capital erosion whatsoever.


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## mordko (Jan 23, 2016)

dotnet_nerd said:


> Nonsense. Dividends are paid out of company earnings and profits.
> 
> If I own 1000 shares of XYZ, collect dividends for 20 years I still have my 1000 shares. No capital erosion whatsoever.


That is way too simplistic. What if XYZ dilutes shareholders over time? That is the norm. What if distribution payout rate is too high and is achieved through borrowing or to the detriment of the necessary investment? 

Given a 5 percent average dividend at today's interest rates, I would presume that the answer to the above questions is "yes" and that your capital will indeed erode over time unless you reinvest.


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## mordko (Jan 23, 2016)

...not to say that dividends aren't important. They are a great predictor of future returns. Still, right now I would be cautious about companies with unusually high distributions.


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## humble_pie (Jun 7, 2009)

dotnet_nerd said:


> Nonsense. Dividends are paid out of company earnings and profits.
> 
> If I own 1000 shares of XYZ, collect dividends for 20 years I still have my 1000 shares. No capital erosion whatsoever.




jas4 usually talks about the zero dividend situation. In such a case a company would be be investing all of its profits in its own growth businesses.

dollar for dollar, jas4 typically argues, investors in such companies will come out ahead. Reinvested dividends amount almost to the same happy return.

everyone can see jas4's point. Where i differ is that i see companies as organic, three-dimensional, in the end as uppredictable as human beings. I don't believe in forcing a rigid numbers projection onto something as malleable as a company's future growth.

likers of dividends always talk about the bird they receive in the hand. Other likers talk about the obligation on directors to keep communicating with shareholders, even if it's only by way of declaring a company's standard dividend at a regular directors' board meeting.

where i part co. with jas4 is when he keeps insisting that market prices of securities must fall by precisely the amount of a dividend on the day they go X div. This isn't true at all. Out of curiosity, i've been glancing at some payors of big dividends over the past few months & slightly more than half have risen as of 9:30 am on the X date. They've risen in tandem with market forces which drove them higher. There may be a correlation, but it's not precise to an X day moment.

jas4 goes further & insists that the company's treasury gets depleted by precisely the amount of each dividend payout, so it's possible to construct models showing how the procedure will work out for years into the future. 

but i counter-argue & say that if we are going to use the condition of a company's treasury to guesstimate its future return, why not go all the way & stick to cash flow? why bother with growth & earnings? why don't market forces drive down a company's shares every time the company pays a big bill? why not drive up the same shares every time the company takes in a big receivable?

in reality the market does recognize large payouts - fines, loss of major customers, disruption by war or sanctions - just as the market also notices important positive news that will bear on earnings in the future. But the correlation is not as mathematically rigid as jas4 claims, imho.

another reason why dividend likers are fond of birds in their hands.

.


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## mordko (Jan 23, 2016)

Yeah, that's a basic financial literacy problem. 

http://www.investopedia.com/ask/answers/137.asp


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## OnlyMyOpinion (Sep 1, 2013)

Subject for anther thread, however my explanation in post #7 was admitedly simplistic - save $1MM, get a 5% dividend (example BCE) and live off that without selling off any of the initial capital. I made no mention of inflation, no diversity, assume the investment doesn't fail, assume the dividend remains (or grows), etc. 
Call that '5% SWR' if you want but it is not consistent with the intent of the original Trinity study or subsequent permutations. 

But consider this, if you spent $240k and bought 10,000 sh of BCE in 1983 at $24, you would have gotten a dividend of $20.8k/yr. 
If you held those shares 34 years until now (I know, it seems like forever), you would now own 20,000 sh (they split 2:1 in may'97) worth $1.16MM and your annual dividend is $57.6k/yr.

So to each, whatever works for you. Been there, done that.


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## Koogie (Dec 15, 2014)

mordko said:


> We are kinda there. 2m in cash/shares. Probably 0.5k in DB pension which is being transferred into LIRA. No house, will buy at some point this year. Certainly need a bit more, but planning to set up a hobby farm, which should keep down the expenses in the long term.


+1 with roughly the same assets. Still currently working part time at my own company, so we are continuing to add to the pile although at a much reduced clip. 

The 4% SWR also typically (+90%?) results in the same size pile or larger at the end of the term (usually given as 30 yrs (the Trinity model)). However, some of us are quite happy to also spend down the capital as we don't need or want to leave a "legacy". I tend to use the Variable Percentage Withdrawal method more now in my planning.


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## treva84 (Dec 9, 2014)

A few points:

On dividends 

- dividends are paid out of earnings and do not "deplete capital" in the sense of the underlying business. If a company is eroding it's capital base paying a dividend (and it does happen - see GM pre bankruptcy) then you should not invest in this company in the first place. This can generally be detected by due diligence. 

- As a stock represents the total ownership of a business, including earnings, theoretically share price should decrease after a dividend is paid. However this does not mean a company (and it's investors) are automatically better off by retaining the earnings rather than paying them out.

- Dividends are a form of capital allocation - with capital generated by operations management can either i) reinvest in the business; ii) pay down debt, iii) seek an acquisition, iv) issue a dividend or v) buyback shares. The investor should seek management that allocates capital with the highest return. A fast growing company should not pay a dividend, as re-investment in the business produces higher total returns. Alternatively, a mature company should probably pay a dividend, do buybacks, or pay down debt, rather than re-invest or seek an acquisition (~ 2/3 of acquisitions destroy value, despite what management says about "synergy" or "earnings diversification"). 

- If you are a "growth" investor, you want to buy younger companies that can reinvest their earnings at high rates - therefore it wouldn't make sense to buy dividend stocks. Alternatively, if you are a dividend investor, you need to pay attention to yield, growth, and pay out ratios to make sure your dividend is stable. A growth investor wouldn't buy VZ, and a dividend investor wouldn't buy AMZN. Different strokes for different folks.

On value investing:

- In general, everything is expensive right now so the best course of action is to do nothing. The best returns take patience, and now is a time to sit on your hands and buy nothing. When everyone wants to get into the market, you should sit tight. When everyone wants to get out of the market, that's when you buy - acquiring stocks from forced sellers (either due to margin calls, fear, or institutions unloading equities in the face of redemptions) is when you make a killing.

On Strategy

- The approach you take (growth investing, value investing, dividend investing, index investing, real estate investing, whatever) largely depends on your personality and what you are comfortable with. The problem with most investors ins't the plan of action they take, but rather the inability to stick to this plan. Know thyself. 

- If you do not know what strategy you want to take, then take the opportunity to invest in yourself and learn. Stocks are generally expensive, so you aren't missing out on anything at present. Start with Stocks for the Long Run by Jeremy Siegel, Common Sense on Mutual Funds by John Bogle, Common Stocks for Uncommon Profits by Phil Fisher, and The Intelligent Investor by Ben Graham. All should be available at your local library.

Things may seem hard and overwhelming, but like money, knowledge compounds with time and the more you do it the easier it gets.


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## OnlyMyOpinion (Sep 1, 2013)

treva84 said:


> A few points:...


^+! Wise and clearly stated Treva.Thanks. :encouragement:


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## mordko (Jan 23, 2016)

There is one little problem with saying "shares are expensive today". The value of shares is not based on today. It is based on expectations for future profits. So, to value shares, one needs to make an assumption. Right now the uncertainty is so high and the number of wildly divergent scenarios is so large that except for market prices, all else is pure guesswork.


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## mordko (Jan 23, 2016)

Koogie said:


> +1 with roughly the same assets. Still currently working part time at my own company, so we are continuing to add to the pile although at a much reduced clip.
> 
> The 4% SWR also typically (+90%?) results in the same size pile or larger at the end of the term (usually given as 30 yrs (the Trinity model)). However, some of us are quite happy to also spend down the capital as we don't need or want to leave a "legacy". I tend to use the Variable Percentage Withdrawal method more now in my planning.


I am working full time and my wife may do this and that now and then. Our kids are still at uni, although one of them almost earns his own keep. Still a long road ahead, which is why we need to keep adding to our assets for a while. Not thinking about legacy just yet. You seem to be in s good place and working for fun only, which is nice. Variable percentage withdrawal sounds like a good approach; something to consider.


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## Eder (Feb 16, 2011)

The thing is most high quality growing businesses also pay and regularly increase their dividends..ie: Cargojet, Premium Brands, Canadian Western Bank etc. That's the kind of growth I look to invest in.


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## TomB19 (Sep 24, 2015)

26 29 35 38 39 42


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## treva84 (Dec 9, 2014)

mordko said:


> There is one little problem with saying "shares are expensive today". The value of shares is not based on today. It is based on expectations for future profits. So, to value shares, one needs to make an assumption. Right now the uncertainty is so high and the number of wildly divergent scenarios is so large that except for market prices, all else is pure guesswork.


Yes, a company is really only worth the value of it's future cash flows, discounted to present value at a given discount rate. That doesn't meant that shares always trade around this price - sometimes they are above, sometimes they are below. When everyone wants to buy (like today) companies generally trade above their intrinsic values and P/E ratios increase. When everyone wants to sell (like 2008) companies generally trade below intrinsic values and P/E ratios decrease. 

The future is always guesswork - it is never knowable. You should run away from anyone (analysts included) who claim they can predict the future.


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## james4beach (Nov 15, 2012)

Koogie said:


> The 4% SWR also typically (+90%?) results in the same size pile or larger at the end of the term (usually given as 30 yrs (the Trinity model)). However, some of us are quite happy to also spend down the capital as we don't need or want to leave a "legacy".


SWR is a measure of the withdrawal rate that results in portfolio success. "Success" means not running out of money over 30 years. If your portfolio is worth $1 at the end, that's still a success.

This is critical ... SWR is already based on portfolio depletion, not preservation of capital.

4% SWR is already believed to be borderline. This means that if you withdraw 4%, whether it's in dividends or any other combination, you have a high probability of having enough money to live on for 30 years. *Withdrawing at a 4% rate already depletes your capital.*

Stated another way: even if your 4% withdrawals are coming in the form of dividends, the studies still say that you are depleting your capital. Your money will probably last 30 years, but don't count on having anything left over. If you want to have leftover money, go for a lower withdrawal rate like 3%.

If you get lucky and market conditions are favourable, of course you might end up with a good capital balance at the end of 30 years. You could equally well get unlucky and end up with $0 at the end of 30 years.


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## mordko (Jan 23, 2016)

treva84 said:


> Yes, a company is really only worth the value of it's future cash flows, discounted to present value at a given discount rate. That doesn't meant that shares always trade around this price - sometimes they are above, sometimes they are below. When everyone wants to buy (like today) companies generally trade above their intrinsic values and P/E ratios increase. When everyone wants to sell (like 2008) companies generally trade below intrinsic values and P/E ratios decrease.
> 
> The future is always guesswork - it is never knowable. You should run away from anyone (analysts included) who claim they can predict the future.


Why do you believe that "everyone wants to buy" today? Everything I've seen indicates that fear and greed are pretty much balanced (eg based on CNN fear index or volatility index). And investors are holding a tonne of cash while bond prices are still bloated.


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## Koogie (Dec 15, 2014)

james4beach said:


> 4% SWR is already believed to be borderline.


Based on assumptions about unknowable future markets by "experts". And you know what assumptions make them. 



james4beach said:


> Your money will probably last 30 years, but don't count on having anything left over.


Perfectly acceptable.



james4beach said:


> If you get lucky and market conditions are favourable, of course you might end up with a good capital balance at the end of 30 years. You could equally well get unlucky and end up with $0 at the end of 30 years.


And the likely outcome is probably somewhere in the middle, as with most things in life.


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## twa2w (Mar 5, 2016)

james4beach said:


> SWR is a measure of the withdrawal rate that results in portfolio success. "Success" means not running out of money over 30 years. If your portfolio is worth $1 at the end, that's still a success.
> 
> This is critical ... SWR is already based on portfolio depletion, not preservation of capital.
> 
> ...


I think you need to re look at the studies. AFAIK the studies that arrived at the 4% 'rule' used hypothetical portfolios of various mixes of stocks and bonds and cash with various withdrawal rates using a monte carlo simulation.( and using long term rates of returns over various time periods)
The 4% was arrived at for a certain portfolio mix based on the fact that 90% of the time, the 4% payout continued for 30 years with at least some principal intact at the end. Higher payouts resulted in a much less than 90% certainty.
Depending on start and end dates, in some cases the portfolio actually increased over the 30 years even with a higher payout percentage.
Remember this was also based mostly on USA returns of stocks and bonds and inflation. This may not apply to other markets. And it is historical and certainly may not be valid going forward.
And if you are one of the 10% it doesnt work for or live longer than the 30 years it may not make you too happy.

This didnot mean the payout of 4% necessarily eroded principal..

If you graphed it as a scattergram, at a 4% withdrawal rate, 90% of the portfolios at the end of 30 years would be at or above the 0 balance. Some would be much higher than zero.


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## treva84 (Dec 9, 2014)

mordko said:


> Why do you believe that "everyone wants to buy" today? Everything I've seen indicates that fear and greed are pretty much balanced (eg based on CNN fear index or volatility index). And investors are holding a tonne of cash while bond prices are still bloated.


VIX is at 10.97

Schiller P/E for US is 28.47

Schiller P/E for Canada is 23


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## Eder (Feb 16, 2011)

Didn't Canada just suffer a bear market January 2016?


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## Saniokca (Sep 5, 2009)

tygrus said:


> That guy is trying to live off dividends. They usually grow in many companies but are very slow. A million dollars throws of $50k safely in dividends. Only 250,000 people in Canada have $1 million or more in the stock market and they didnt get there by buying stocks. They ran businesses.
> 
> To save enough to put a million away in the market over time is impossible due to taxes. Favorable taxation of business capital gains is the only fast way. Sell a house or business or commercial property. But if you are trying this from a wage that is taxed at 30-40%, there is no way. You have to compound your way there and that will take 30 yrs.


We are at $900k (960k if you include my DB plan) and reached it simply by saving and investing and not running any businesses. About 600k is in RRSPs/LIRAs which will be taxed eventually but we are only 32 and 36 so even if you take taxes into account we're almost there.

I think the main obstacle to reaching 1M is not taxes but debt and overspending...


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## mordko (Jan 23, 2016)

treva84 said:


> VIX is at 10.97
> 
> Schiller P/E for US is 28.47
> 
> Schiller P/E for Canada is 23


1. Shiller himself specifically stated that his index shouldn't be used to time the market. 

2. CAPE for S&P 500 hasn't changed all that much since 2013. Have you stayed out of the market? How did that work out for ya? 

3. While CAPE is not meant for timing the market, it is one of the better predictors of returns over the next 10 years. Still, if you look back, it explained only 43% of 10-year returns. 

Last but not least, right now it's quite hard to tell where the cycle is going. It has been interfered with and there is more to come. A cyclically-adjusted index is going to be even less accurate than usual.


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## gibor365 (Apr 1, 2011)

> About 600k is in RRSPs/LIRAs which will be taxed eventually but we are only 32 and 36 so even if you take taxes into account we're almost there.


 we have about 700k in RRSPs/LIRAs/TFSAa, but we are 50 and 41 , I just immigrated to Canada at 33 ...




> I think the main obstacle to reaching 1M is not taxes but debt and overspending...


 we never had debt (except 6 years we had mortgage) and never overspent, so out main obstacle is taxes


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## james4beach (Nov 15, 2012)

twa2w said:


> This didnot mean the payout of 4% necessarily eroded principal..


The Monte Carlo simulation runs a large number of possible outcomes. In some outcomes, the principal was eroded all the way down to 0. In others, you could end up with capital growth. True, does not necessarily erode principal.

My point was that the Trinity Study type of SWR analysis is focused on you being able to live off your capital for 30 years and they allow capital depletion in their definition of a "success". When I first learned of SWR I mistakenly thought it spoke to preserving capital, but that's not what it analyzes.



> If you graphed it as a scattergram, at a 4% withdrawal rate, 90% of the portfolios at the end of 30 years would be at or above the 0 balance. Some would be much higher than zero.


I agree with you there, some % of them (I thought it was 95%) end 30 years at positive balance. Some of these "success" outcomes depleted the portfolio close to zero, or it reached close to zero at some point in those 30 years.

Yes, you're correct that 4% withdrawal does not necessarily deplete capital. But I wanted people to be clear on the point that 4% SWR might deplete your capital, and that's still considered a SWR "success".

By extension of that point -- withdrawing the 4% using dividends may or may not deplete your capital. There is no assurance that your capital won't be eroded, and it could erode quite a bit if you're unlucky. (This would still be considered a SWR success).


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## kcowan (Jul 1, 2010)

Don't know if this has been mentioned but the SWR of 4% is based on the initial portfolio at the start of the 30 year period and not a 4% per year WR. Also it assumes that some years there will be an erosion of capital.

In my experience, most people follow a 3% WR and may even vary it (VPW) in down years.


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## gibor365 (Apr 1, 2011)

> In my experience, most people follow a 3% WR and may even vary it (VPW) in down years.


 It make sense to vary it.. IF for example you retired in 50's, you may withdraw even 4.5-5%, as at 60-65 you gonna start getting CPP and OAS and drop WR to 3 - 3.5%


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## mordko (Jan 23, 2016)

I think kcowan referred to reducing the rate of withdrawal during the down years. 

In an ideal world one should count CPP as part of total assets as fixed income and withdrawal rate for someone retiring in his 50s should be nice and low.


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## gibor365 (Apr 1, 2011)

mordko said:


> I think kcowan referred to reducing the rate of withdrawal during the down years.
> 
> In an ideal world one should count CPP as part of total assets as fixed income and withdrawal rate for someone retiring in his 50s should be nice and low.


That what I was talking about ...reducing WR when starting getting CPP and OAS, I agree that both should count, but I have no idea what CPP I gonna get if I retire before 60 , calculation is very robust


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## mordko (Jan 23, 2016)

You should be able to figure out your CPP from this spreadsheet. http://www.holypotato.net/?p=1694


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## treva84 (Dec 9, 2014)

mordko said:


> 1. Shiller himself specifically stated that his index shouldn't be used to time the market.
> 
> 2. CAPE for S&P 500 hasn't changed all that much since 2013. Have you stayed out of the market? How did that work out for ya?
> 
> ...


1) I did not make any suggestion that the CAPE should be used as a market timing tool. My point is that it is higher than the historical mean of 16. 

2) I have not stayed out of the market since 2013, I am pretty close to fully invested. I have been riding the wave up. A pending correction (see reversion to the mean) would create great opportunity, so I'm starting to accumulate a bit more cash to take advantage of this opportunity, whenever it happens.


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## Pluto (Sep 12, 2013)

internalaudit said:


> and provides some high level analysis whether something is worth investing in? I'm not talking about day trades but more of building a portfolio that's almost bullet-proof over time with a little adjustment every few quarters for companies with weakening fundamentals.
> 
> 
> rodbarc on the redflagdeals forum is one. Wondering if there's others out here that are as helpful.
> ...


Have a look at this article here:

http://www.theglobeandmail.com/news...t-then-left-charity-43-million/article969254/

The teacher amassed her fortune mostly via stocks - IBM that she bought on her own, and later via her advisor, banks and insurance companies. Speculative stocks were kept to 10% of portfolio. She ended up with an undisclosed many millions, apparently more than 5 million. 

She didn't inherit any money. 

My best advice is, Buy quality assets that produce income, and hold for a long time. "Quality assets" doesn't have to be stocks, but for many, that is the easiest. I do believe that the higher quality Canadian banks and insruance companies could do it. 

Many will insist that diversification is key, but I don't buy that. Quality is the key. If there are industries that don't contain quality, skip it/them. There is no point in buying substandard stock simply for the sake of diversification.


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## hboy54 (Sep 16, 2016)

kcowan said:


> Don't know if this has been mentioned but the SWR of 4% is based on the initial portfolio at the start of the 30 year period and not a 4% per year WR. Also it assumes that some years there will be an erosion of capital.
> 
> In my experience, most people follow a 3% WR and may even vary it (VPW) in down years.


It looks to me like this Monte Carlo simulation study is another example of very mathematical, high precision that is completely misapplied: Most assume that the individual lives the entire 30 years under discussion. It is a piece of financial planning for sure, but it surely is not the whole thing.

Consider the opposite but entirely analogous error: Assume an average rate of return of 8% over 30 years, and a Monte Carlo simulation of the individual dying. Most people will immediately see this as suspect.

Surely the sensible high precision mathematics to run here is the product of the Monte carlo simulation of both investing results and life expectancy.

So if we combine a 5% probability of running out of money from the study being tossed about above, with the conditional probability of one of two spouses surviving from say age 65 to 95, which at a guess I would estimate to be about 0.15, then we get under 1% chance of BOTH either individual surviving 30 years and having the money run out after 30 years.

I do not know of any long term worthwhile task that I have ever undertaken where it would have had a 99% chance of success. Nor can I imagine one in the future. Ditto for anyone else. Only about 50% of people who start a particular university program complete it. Only about 70% complete any program. Do people avoid having children, because surely the birth defect rate is more than 1%? The world is full of people because other people looked at the odds and seeing they were about 60 or 70%, had sex without contraceptives. Yet so many seem to try for absolute precision with their money. It just does not seem rational to me.

hboy54


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## hboy54 (Sep 16, 2016)

Pluto said:


> Have a look at this article here:
> 
> http://www.theglobeandmail.com/news...t-then-left-charity-43-million/article969254/


The only thing remarkable here is that she lived to 89. The investing mathematics is quite clear:

Future value of an annuity of $10K/year for 70 years at 8% PA is $27M.
Or if she was particularly brilliant, try $10K/year for 70 year at 11% PA is $135M.

The only difficult thing stopping anyone who happens to pop out of their mother in a first world country from becoming fabulously wealthy is getting enough years. The annual savings and a reasonable average return of 8% are the easy pieces.

hboy54


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## Pluto (Sep 12, 2013)

^ well, in 1973 she presented her financial advisor with 500,000 in savings to invest. She was much younger in 1973 when she was 56. And back then 500,000 was worth about 
2.326 million in 2006 dollars. seems somewhat remarkable for a teacher by age 56.


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## birdman (Feb 12, 2013)

tygrus said:


> That guy is trying to live off dividends. They usually grow in many companies but are very slow. A million dollars throws of $50k safely in dividends. Only 250,000 people in Canada have $1 million or more in the stock market and they didnt get there by buying stocks. They ran businesses.
> 
> To save enough to put a million away in the market over time is impossible due to taxes. Favorable taxation of business capital gains is the only fast way. Sell a house or business or commercial property. But if you are trying this from a wage that is taxed at 30-40%, there is no way. You have to compound your way there and that will take 30 yrs.


Not impossible but no doubt harder than when we did it. Purchased our 1st home for 18M in a good part of Vancouver while on a salary of 5500. pa. Had 3,000. for a down payment and borrowed another $5,000. which my wife paid off in 2 yrs on her salary of about 3,000. pa. She then was a stay at home mom and homemaker and our house was paid off several years later thanks to the high inflation and wage growth at the time. My salary increased quickly and I was successful in my career. Changed employers (and location ) and ended up making a well above average salary but still lived my same lifestyle and saved lots without sacrificing lifestyle. Retired at 55 (now 71) and still live the same lifestyle, do what I want, and am a net saver. I don't consider ourselves frugal but don't purchase the latest computer, phones, vehicles, RV's etc and do most of our own house and yard maintenance. Have a conservative portfolio mostly in Banks and utilities and only 25% in the market, 50% in cash/GIC's, and some sundry stuff. Have a small defined benefit and OAP/CPP. Also, we got married young by todays standards (23 yrs).
Much harder to do now particularly with people getting married later in life and often their homes are not purchased until they saved the DP and even then they have a large mortgage which takes 2 incomes to service. Also added expenses with daycare, etc and the amortization of the mortgage takes them later in life to pay off. Furthermore, the purchase price of the house at say age 25 is a lot less than purchasing it at age 40. If one gets married at 23 yrs and saves one of the salaries they would have lots of $$ by age 35. Not suggesting this is the way to live your life but financially getting married younger contributes significantly to financial independence. Our children weren married later in life and are faced with this issue. Just my thoughts.


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## Woz (Sep 5, 2013)

frase said:


> Purchased our 1st home for 18M in a good part of Vancouver while on a salary of 5500. pa.


Wowzas, that's quite the 1st home. Although, for Vancouver I guess that's as believable as 18k :smile:.

Actually, I guess that's right. M does mean 1000 doesn't it.


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## gibor365 (Apr 1, 2011)

> Not impossible but no doubt harder than when we did it.


 I'd say that this is very possible if you don't waste money by buying stuff you don't really need . We came to Canada in 1999 with very modest amount of cash.... Bought house in Toronto suburbs right away... never sold it it... in 18 years we're here,we changed car only once (we have 2 cars)... I started from 0 , as before Canada I worked at Forensic service in police (not recognizable here), so went back to college. My wife started to work right away. Have 2 kids, but didn't have grandmas there, so both went to kindergartens, that extremely expensive here.... Never owned any business... In any case , now we have much more than 1mil (50%stocks and 50% cash).... We're frugal, but not extremely... Every years 3-4 times we're travelling abroad (AI or Europe)
Agreed that if taxes won't so high, our wealth would be much more...


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## treva84 (Dec 9, 2014)

gibor365 said:


> I'd say that this is very possible if you don't waste money by buying stuff you don't really need . We came to Canada in 1999 with very modest amount of cash.... Bought house in Toronto suburbs right away... never sold it it... in 18 years we're here,we changed car only once (we have 2 cars)... I started from 0 , as before Canada I worked at Forensic service in police (not recognizable here), so went back to college. My wife started to work right away. Have 2 kids, but didn't have grandmas there, so both went to kindergartens, that extremely expensive here.... Never owned any business... In any case , now we have much more than 1mil (50%stocks and 50% cash).... We're frugal, but not extremely... Every years 3-4 times we're travelling abroad (AI or Europe)
> Agreed that if taxes won't so high, our wealth would be much more...


Well done!

We all like to talk about our investment strategy and returns, but at the end of the day, the gateway to true wealth only opens when you are frugal and live well below your means.


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## gibor365 (Apr 1, 2011)

treva84 said:


> Well done!
> 
> We all like to talk about our investment strategy and returns, but at the end of the day, the gateway to true wealth only opens when you are frugal and live well below your means.


The famous book "The Millionaire Next Door" by T. Stanley should be taught in schools


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## treva84 (Dec 9, 2014)

gibor365 said:


> The famous book "The Millionaire Next Door" by T. Stanley should be taught in schools


Yes I totally agree - it was one of the first books I read on personal finance. The idea seems so simple - you don't get rich by spending your money on things and living above your means - and yet our society and culture thinks those that drive luxury cars and own big houses must be loaded.


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## james4beach (Nov 15, 2012)

I think that in several of the above examples, people are downplaying the luck of catching a long lasting bull market. That includes the Canadian real estate boom. There are many other factors that are out of your hands, even if you are frugal. Being injured or disabled, for example (and being unable to work). Other health issues. Having family members who need you to help them out. Having an ex wife who divorces you and then aggressively comes after you for money.

Most of these are just luck. It's not enough to just be frugal and sensible with your money. Nor should you conclude that just because you've amassed wealth, that it was because you're smarter or made better investments than other people.

It's true that being frugal is important, but recognize that you were also lucky.


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## james4beach (Nov 15, 2012)

Pluto said:


> Have a look at this article here:
> 
> http://www.theglobeandmail.com/news...t-then-left-charity-43-million/article969254/


Investment advisors and stockbrokers love this kind of story. It makes it sound like someone became fabulously wealthy because they invested in stocks.

That isn't how this woman became wealthy. Doing an inflation adjustment of her principal amount, she already had $2.6 million (in today's dollars) in 1973, at age 55, before she started investing it. She was already fabulously wealthy BEFORE she got into the stock market.

How many of you have $2.6 million at age 55 ?

Going into the stock and bond markets wasn't a bad way to manage and grow her money, but the important point is that she was already very wealthy before starting her investments.

P.S. the Portfolio Visualizer shows that 500K (her principal) in 1973, invested entirely in zero-risk short term treasury bonds (similar to XSB or SHY today) would have grown to $5.5 million today.

What to take away from this story? This woman somehow saved up $2.6 million by age 55, without investing. At this point she was already very wealthy and could have even put the money into no-risk short term bonds.


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## mordko (Jan 23, 2016)

Being born in a developed country is a stroke of luck. After that, assuming you are in good health: not being reasonably well off = laziness.


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## james4beach (Nov 15, 2012)

True, being born in a developed country is a huge stroke of luck. So is being born white or with lighter skin.

But sometimes family members drain money from you. My ex girlfriend was the oldest child in her family, and was helping out her mom as well as one of her sisters, both of whom had lower incomes. Can you hold it against her that she was helping out her family? I have several friends in scenarios like this, with family members they are assisting financially.

The money she was transferring to them was impeding her ability to grow wealthy.


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## mordko (Jan 23, 2016)

james4beach said:


> So is being born white or with lighter skin.
> 
> .


BS. The richest guy I know is black. Really, really dark skin. Our boys played on the same hockey team; he has since bought a junior hockey team so his boy can play at a higher level.


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## mordko (Jan 23, 2016)

And by the way, Asians (who have dark skin) are the most successful ethnic group in the country. Could it possibly have something to do with a culture of education and hard work or shall we put it all down to just the right amount of pigmentation? 

Kids who are born on a reserve do have a disadvantage. The system is screwed; their mums and dads don't have to work to get by which ends up hurting them and their children.


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## gibor365 (Apr 1, 2011)

mordko said:


> Being born in a developed country is a stroke of luck. After that, assuming you are in good health: not being reasonably well off = laziness.


True! Laziness and stupidity 



> But sometimes family members drain money from you


 So what?! We sponsored our moms and helping them... 
I just see those Canadians who buying new car every 2-3 years, almost everyday on lunch going to restaurants and they crying that they have so much debt that cannot retire at all


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## gibor365 (Apr 1, 2011)

> And by the way, Asians (who have dark skin) are the most successful ethnic group in the country.


 I don;t know about Canada, but as per Thomas J. Stanley ("Millionaire next door" author) research , the most millionaires in % of their population have 1. Russian 2. Hungarian 3. Scottish background


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## mordko (Jan 23, 2016)

You see it among the younger people, there used to be too few Asians in Canada and N America. In fact Asians (Indians and Chinese) are starting to draw some of the resentment for studying too hard and being too successful that used to be directed against the Jews.


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## mordko (Jan 23, 2016)

Other groups that apparently tend to do well in N America are Mormons, Iranians, Nigerians, Cubans, Koreans.


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## Mortgage u/w (Feb 6, 2014)

If you ask me, immigrants usually do better than our youngsters born in Canada. The immigrants come here for a better life and are starting from 0 (or almost) - so there is only one direction for them and that is UP.

Canadians (specifically the younger ones) are accustomed to their parents lifestyle and tend to bank off their wealth. Parents now-a-days do a very poor job at teaching their young ones about finances. I think everyone should learn how to build wealth from scratch - no inheritance, no free ride.


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## Pluto (Sep 12, 2013)

james4beach said:


> Investment advisors and stockbrokers love this kind of story. It makes it sound like someone became fabulously wealthy because they invested in stocks.
> 
> She was already fabulously wealthy BEFORE she got into the stock market.
> 
> ...


She bought IBM stock in the late 40's early 50's and held it for life. 
Lucky: there is risk in stocks, so if one does well, there must be a component of good luck, but I doubt if it is pure luck. 

Buy quaility assets that produce income and hold for a long time seems to be the message. There is also the implication of concentration, as opposed to vast diversificastion. Limit speculation to a small % of investments.


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## mordko (Jan 23, 2016)

On average immigrants don't do as well as Canadian-born citizens. This is to be expected; there are language difficulties, lack of network, cultural issues, etc... It's the certain groups that outperform. 

You have the same in the UK: immigrants from India do really well; immigrants from Pakistan - not so much. Ethnically both groups are identical. Immigrants from Africa do really well; immigrants from Caribbean - not so much. Same abundance of melanin.


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## hboy54 (Sep 16, 2016)

james4beach said:


> Investment advisors and stockbrokers love this kind of story. It makes it sound like someone became fabulously wealthy because they invested in stocks.
> 
> That isn't how this woman became wealthy. Doing an inflation adjustment of her principal amount, she already had $2.6 million (in today's dollars) in 1973, at age 55, before she started investing it. She was already fabulously wealthy BEFORE she got into the stock market.
> 
> ...


This must be an example of "alternative facts" that I keep hearing about in the news. Did we all even read the same article in the G&M? Much of the quoted post above is made up nonsense. Let's examine in more detail shall we ...

Let's start with her age in 1973. "Miss Langtry, who died last year at the age of 89" so 89 - (2017-1973) gives us her age of 45 in 1973. Where did you and Pluto get 55 in 1973?

At least James and one other have asserted that she somehow appeared in 1973 with $1/2M, having never seen a stock certificate in her life up to that point. "All the details on how Ms. Langtry amassed her nest egg aren't known." And 

"Mr. Borden ... remembers Miss Langtry made a prescient investment call by buying shares of IBM in either the 1940s or 1950s, and kept the stock in the high-tech giant until she died."

A clue without magnitude that might lend some credence to her early circumstances being exceptional "Miss Langtry may have had a modest side income because she developed a number of educational games, based on puzzles, that were sold in the United States." This could be material, or it might not be, we just don't know.

James and others desperately want her story to be an exceptional one, such that it might excuse their own current and expected future poor returns I guess. Easier than attacking the truth as I presented it, because, well, it is true:

Future value of an annuity of $10K/year for 70 years at 8% PA is $27M.
Or if she was particularly brilliant, try $10K/year for 70 year at 11% PA is $135M.

I of course just picked 8% out of the air by way of being the century long generally accepted average annual return of stocks. Sometimes I see 10% tossed about, but frankly I don't need that to make the case. $10K annually is just picked out of the air too, so let's consider other scenarios given the constant period of 70 years:

How about 6%, $10K: $9.6M
Maybe not as good a saver how about 6%. $5K: $4.8M <- not a particularly good saver, nor skilled/lucky investor = 1%er
How about 5%, $10K: $5.8M <- prudent saver, maybe average investor = 1%er
And finally 4%, $10K: $3.6M <- prudent saver, poor investor still = 1%er

No, given 70 years many entirely reasonable scenarios land one in 1%er territory. If you can arrange to have a 70 year investing window, and are not a member of say the 25% of the population that has some disability or health issue as James correctly points out, that removes the possibility of participating here, the only reason you don't become fantastically wealthy is because of how you behaved. (2nd annual vacation, or save $5000, your choice. 2nd or 3rd car or save $10,000, your choice). Or the financial world somehow ends.

"How many of you have $2.6 million at age 55 ?" Well, you are right, not me individually, but for the couple here, I'll let you know if we drop to $2.6M when I turn 55 in the summer. Keep in mind, I handicapped myself because I have not worked since about age 39. If I had and saved say an additional $30K/year and achieved the same return as the rest of my money achieved, I'd have about another $1M and would hit that magic $2.6M all by myself with some excess.

This is wealth derived from stock investing over a 1/3 century. James has a very hard time believing that anyone can get wealthy by way of stock investing. Instead of making up fairy tales about stock investing as he insists upon doing all up and down this fora for close to 7000 posts now, I realized and accepted the truth of what is possible and behaved accordingly. It has paid off handsomely. I have not done FI in a quarter century, and never hit the real estate jackpot, the house here is about 7% of household net worth.

This is at least the 3rd "elderly unassuming ~ 90 YO passes leaves fortune" story I have seen in the past 10 or 15 years. We likely only hear about the 10%, $20K or $30K annual savings -> ~$100M stories and not the likely thousands of 6%, $5K annual savings -> $5M stories.

When it comes to stock investing, James is "All hat, no cows." I have been tending my stock herd since circa 1981. I have maybe 500 posts here under 2 userIDs. James is close to 7000. He can dig up facts and figures and studies. He can show calculations and figuring. He runs "experiments" and model portfolios. He sounds so knowledgeable and wise, and yet does almost no actual stock investing. All I do around here is get on with it: I accept the nature of stocks and get wealthy via long term stock investing, and once in a while tell you the truth about how I achieved it, warts and all.

hboy54


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## OnlyMyOpinion (Sep 1, 2013)

mordko said:


> ... You have the same in the UK: immigrants from India do really well; immigrants from Pakistan - not so much. Ethnically both groups are identical. Immigrants from Africa do really well; immigrants from Caribbean - not so much. Same abundance of melanin.


Interesting observations. I know we are thin ice trying to generalize, but what do you attribute the differences to? Is it the culture/language, institutions/government, international relationships with your country of origin? 
I haven't thought a lot about it, but have noticed traveling the Caribbean, Central Ammerica and Africa that former British colonies seem to have done better on their own than others - again, perhaps an inappropriate generalization.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> ... Investment advisors and stockbrokers love this kind of story. It makes it sound like someone became fabulously wealthy because they invested in stocks ... That isn't how this woman became wealthy ... She was already fabulously wealthy BEFORE she got into the stock market ... This woman somehow saved up $2.6 million by age 55, without investing.


I don't see anywhere the article tells us how much money she had when she started investing. 

What I can see from the article is that the claim "by age 55 without investing" is clearly wrong.


Perhaps you missed the part where


> ... Miss Langtry made a prescient investment call by *buying shares of IBM in either the 1940s or 1950s* ...


 This clearly shows the 1973 $500K *includes investing*. (Unless you are arguing the investment advisor used a time machine ... :biggrin: )


If my math is correct, there's somewhere between a minimum of fourteen years to a maximum of thirty-three years investing that are being dropped/ignored to make this claim.

There's nothing to tell us whether this was Miss Lantry's first stock purchase, so the number of investing years dropped/ignored could be larger.


Cheers


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## mordko (Jan 23, 2016)

OnlyMyOpinion said:


> Interesting observations. I know we are thin ice trying to generalize, but what do you attribute the differences to? Is it the culture/language, institutions/government, international relationships with your country of origin?
> I haven't thought a lot about it, but have noticed traveling the Caribbean, Central Ammerica and Africa that former British colonies seem to have done better on their own than others - again, perhaps an inappropriate generalization.


Probably a mixture of different factors:

- History. As I understand it, many Pakistanis came to Britain in the 60 for economic reasons to work in the textile industry which promptly ceased to exist as production moved elsewhere. Many Indians are refugees from the former British Empire, e.g. they legged it from Idi Amin's Uganda. So, you may have a bit of a selection by intellect/education going on here.

- Religion and culture. If you look at Christian countries, predominantly Protestant ones have generally done better since the reformation. Holland used to be a backward province of Spain. I think the mixture of religion and culture would have had something to do with it. In the same vein there will be great/successful/hard working Pakistanis but in general British Indians are far better integrated and display more social mobility. Segregation and misogyny are fairly wide spread among British Pakistanis.


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## Eclectic12 (Oct 20, 2010)

hboy54 said:


> This must be an example of "alternative facts" that I keep hearing about in the news. Did we all even read the same article in the G&M? Much of the quoted post above is made up nonsense. Let's examine in more detail shall we ...


Agree on some points ... but ...



hboy54 said:


> ... Let's start with her age in 1973. "Miss Langtry, who died last year at the age of 89" so 89 - (2017-1973) gives us her age of 45 in 1973. Where did you and Pluto get 55 in 1973?


Trouble is the article dateline says it was published in Sept 2006. So instead of Miss Langtry being 89 in 2017, it looks like she was 89 in 2005.
So in 1973, she was about 57 years old or so.





hboy54 said:


> ... At least James and one other have asserted that she somehow appeared in 1973 with $1/2M, having never seen a stock certificate in her life up to that point ...


Which isn't true as she is indicated to have bought IBM stock anywhere from fourteen to thirty four years previously (I'd have re-calculate as I used 2006 as the age 89 date). This may or may not be her first foray into stocks. The wording makes it sound like it was her idea start to finish, which is a sign of a more experienced investor ... but it is not clear.




hboy54 said:


> ... A clue without magnitude that might lend some credence to her early circumstances being exceptional "Miss Langtry may have had a modest side income because she developed a number of educational games, based on puzzles, that were sold in the United States." This could be material, or it might not be, we just don't know.
> 
> James and others desperately want her story to be an exceptional one, such that it might excuse their own current and expected future poor returns I guess ...


I don't think it's the returns so much as I read James comments as being more about that stocks had a much smaller role than the article implies, where other sources were more important. 

There's not enough info to do more than speculate ... but I don't see how pretending 1973 was the first foray into stocks is an improvement or helpful.




hboy54 said:


> ... "How many of you have $2.6 million at age 55 ?"


Without knowing when Miss Langtry started investing or how much the investing contributed versus say the side income - is this all that meaning full?


Cheers

*PS*




hboy54 said:


> ... James has a very hard time believing that anyone can get wealthy by way of stock investing.


Which makes this profile of Canadian millionaires interesting on a couple of points.



> In 2011, the average age of a Canadian millionaire was 54 years old ... 40% of Canadian millionaires are business owners.


http://www.alwayssavemoney.ca/single-post/2014/06/19/PROFILE-OF-A-MODERN-MILLIONAIRE

Plus another articles lists as one of the key factors for increases ... stock market gains.


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## hboy54 (Sep 16, 2016)

Eclectic12 said:


> Trouble is the article dateline says it was published in Sept 2006. So instead of Miss Langtry being 89 in 2017, it looks like she was 89 in 2005.
> So in 1973, she was about 57 years old or so.


Sorry, I missed that. Likely also means that this historical story is one of the three instances I noted hearing of, leaving me with just two. I believe the other instance was an elderly man.

hboy54


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## Pluto (Sep 12, 2013)

hboy54 said:


> This must be an example of "alternative facts" that I keep hearing about in the news. Did we all even read the same article in the G&M? Much of the quoted post above is made up nonsense. Let's examine in more detail shall we ...
> 
> Let's start with her age in 1973. "Miss Langtry, who died last year at the age of 89" so 89 - (2017-1973) gives us her age of 45 in 1973. Where did you and Pluto get 55 in 1973?
> 
> ...


jboy54, She didn't die in 2017. I think it was about 10 or 11 years ago, around the time the article was written. 
I believe you are a stock market virtuoso. Nothing wrong with the way you do it, and you clearly have a handle on the ebb and flow of markets, trading, knowing when to average down, and so on. I can relate to that style. Lots of people here can't do it, and many don't believe anyone has done it successfully. Just their bias. It just doesn't conform to their cognitive map of financial markets. So for them, there is a style that suits them - indexing, bonds, real estate, and what not. There is a style for everybody.

Anyway, getting back to the little old lady, it was just a story that might have been inspirational to some folks.


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## james4beach (Nov 15, 2012)

> Let's start with her age in 1973. "Miss Langtry, who died last year at the age of 89" so 89 - (2017-1973) gives us her age of 45 in 1973. Where did you and Pluto get 55 in 1973?


This newspaper article was published in 2006 as you can see in By line. It said she died "last year", which means she was age 89 in 2005. Therefore she was born in 2005 - 89 = 1916.

In 1973, her age was 1973-1916 = 57. I was a bit off. She was 57 years old in 1973 when she approached the stockbroker.

There is nothing that says that her great wealth at age 57 was due to stock investment. It does say that she dabbled in IBM stock in the 1940s-1950s, but that doesn't tell us much. My aunt once dabbled in Bre-X stock.

The article strongly implies that approaching the grand stockbroker, Mr. Borden in 1973, is what really propelled her wealth higher. The article's focus is on the grand stockbroker and his wonderful wealth creation abilities. They try to gloss over the magnitude of her wealth in 1973, trying instead to paint the story that finding a great Bay Street advisor is how she become fabulously wealthy.

We don't have a lot of facts in this article. We don't have any information on how she amassed $2.6 million (in today's dollars) at age 57. hboy is assuming it was in the stock market. How do you know it wasn't in the BOND market, smart guy? It could have well been a large number of working years, side jobs, and the much higher real wages back then relative to cost of living. Coupled with some prudent bond investments -- which were more accessible to average people back then, without access to stock brokers.

Either way, she was tremendously wealthy before she went to the stockbroker in 1973. That's all we know for certain.

I agree it's possible she was investing in stocks & bonds before 1973, but that is left to our imagination. *This story does not prove that she became wealthy due to the stock market.* All we are told is one IBM anecdote, and that's the only reference to stock investment before going to the stockbroker.


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## james4beach (Nov 15, 2012)

Come to think of it, the most likely explanation is this:

She started working at a young age, lived frugally, had multiple jobs/sources of income, and was responsible about saving. The most likely place she'd put those savings were in interest-bearing bank deposits and term deposits. Back then real wages were higher than today, vs cost of living.

Also noteworthy, she started working right at the start of the Great Depression and appears to have been employed throughout the depression. That alone... being one of the few people to be earning income during the heavy deflationary period (and low cost of living) was a huge plus.


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## hboy54 (Sep 16, 2016)

james4beach said:


> In 1973, her age was 1973-1916 = 57. I was a bit off. She was 57 years old in 1973 when she approached the stockbroker.


Yes, as Electric12 and Pluto pointed out to me, and I already acknowledged half a day before your response, I got this wrong.



james4beach said:


> I agree it's possible she was investing in stocks & bonds before 1973, but that is left to our imagination. *This story does not prove that she became wealthy due to the stock market.* All we are told is one IBM anecdote, and that's the only reference to stock investment before going to the stockbroker.


You are not wrong here, we don't know. You did however before assert flat out incorrectly that she did not make her money in stocks.



james4beach said:


> What to take away from this story? This woman somehow saved up $2.6 million by age 55, without investing.


Flat out false assertion you made. IBM is the counterexample. I guess you could say that owning one stock is not investing, it is something else. Please advise if this is the case.

This whole exercise really started with my observation that given 70 years and what would be a modest savings rate for folks around here, maybe $10,000 annually, it would be darn near impossible that one would not land in a great pile of money. This is the take away of this story for me. I don't need to speculate too hard on how she did it, only that it is entirely feasible by a number of means.

It could certainly have been done with stocks at the average long term rate of 8%, fixed income at the average long term rate of 6%, or real estate at it's long term rate of maybe 4 or 5%. Even being a poor investor, someone who only managed 4% PA when 6 would be easy and 8 entirely reasonable, ends up wealthy given sufficient years.

So lets review and assume 4% made in GICs, about the worst possible outcome for the most irrationally fearful of stocks, though otherwise competent investor:

70 years, 4%, $10K annual savings: $3.6M

Looks like you can get there James, if you can arrange to live long enough. Actually, I know you save well above $10K, so you can likely shave a couple decades. 

The thing is, I don't understand why you insist on making it so hard - stocks have had the highest historical return of any asset class, at the cost of short term risk and uncertainty (and call short term 20 years if you insist, as you usually do). I invest to harvest the most excellent long term average returns and stomach the short term bad bits. What you do is invest to avoid short term risk at all costs, and take the long term thrashing of low returns.

Well, actually I have a pretty good idea. You should tell us about how your father lost so much money in stocks about 15 years ago. You have made a passing reference in the past, but as far as I know, never gave a detailed account of exactly what happened. You have used some pretty harsh terms. I won't hunt down a specific quote, but you said things to the effect that the stock market is a place of theft, corruption, malfeasance in general. 

I think trauma explains your investing style, just like trauma explains why I used to get the willies holding babies. Well I still do, but on the rare occasion a baby shows up, I force myself to overcome my brain hard wired nature and indulge in the joy of a new life.

Any chance you will ever force yourself to overcome your fear of stocks nature and indulge in the higher returns of stocks? Go ahead, hold that stock certificate in your arms. Isn't it beautiful?

hboy54


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## canew90 (Jul 13, 2016)

Come On, guess those who have gotten there don't want to admit it. 
We did not inherit, sell our house (thought when we moved into a condo we did invest some of the gains), have a DB Pension, or win a lottery, but achieved the goal of having $1Mil invested and in GIC's by the time we were 65. We are now 75, at least I am and don't have $2Mil (invested), but are fully invested in the market and those investments are generating over $100k with a yield of 6% (Yield on our Invested dollars). No we do not hold high yielding stocks, bonds, preferreds, etf, and only one REIT.
During the past 5 years our income has grown at a much faster rate and looks to continue. 
Our past posts talks about our strategy so I won't repeat it, but will again credit The Connolly Report.


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