March 16


My Core Beliefs As An Advisor

Family Update:  My wife and I had a wonderful opportunity to reconnect in Cancun last week.  With four young children and a year-long cancer battle, it was wonderful just being husband and wife again.  Thank you for all the kind words of encouragement….

I often speak about my “core beliefs” in these weekly notes.  Just to review:

The best chance a retiree has to “get the most life from their money” is to:

  1. Hire a financial advisor (preferably one that acts as a fiduciary).
  2. Invest in a diversified portfolio of stocks and bonds (with at least 50% in stocks).
  3. Take out 5% of the original investment per year (or .4% per month).
  4. Have an awesome life.

This week I wanted to take things up a notch.  Instead of focusing on how you don’t need to worry about running out of money, let’s focus on how awesome your life might be.

Normally we would spend 5% of the original account balance each year for the rest of your life, but what happens if you spend 5% of the ending account value each year?

The following table shows what would have happened if you invested your money in a 601/402 stock/bond portfolio starting in 1991.  As a reminder, this is not my opinion, this is just data.

In this hypothetical example, if you invested $100,000 at the beginning of 1991 and took your first withdrawal at the end of 1991 and then proceeded to take 5% of the year-end balance each year, this is what it would have looked like.

Year Fun Money For You Year End Value
1991 $124,641
1992 $6,128 $127,641
1993 $6,458 $133,558
1994 $6,854 $126,324
1995 $6,466 $157,792
1996 $8,087 $175,236
1997 $9,158 $211,527
1998 $10,698 $249,484
1999 $12,901 $275,950
2000 $13,225 $248,807
2001 $12,829 $217,699
2002 $10,790 $177,706
2003 $8,733 $204,308
2004 $10,373 $211,661
2005 $10,414 $209,833
2006 $10,694 $224,982
2007 $11,375 $226,648
2008 $10,873 $157,859
2009 $7,444 $179,389
2010 $8,795 $191,936
2011 $9,758 $189,480
2012 $9,790 $202,582
2013 $10,478 $236,196
2014 $11,539 $251,982
2015 $12,364 $242,603
2016 $11,697 $254,228



  1. The portfolio averaged 9.99% during those years.
  2. This time period includes two major stock market crashes.
  3. This person started with $100,000 and ended 25 years later with $254,228.
  4. During that time, they spent $247,923 on all kinds of awesome stuff.

Will it happen again this way over the next 25 years?  Maybe.  Nobody knows.  But the average returns in this time period are pretty close to the average returns over the past 217 years.

So, what does that mean to you?  If you get “lucky” and the markets maintain their historic average returns, you may be able to spend even more money from your account than we first thought.  That is great news!

Be Blessed,



1- as measured by the S & P 500

2- as measured by the Barclay’s Aggregate Bond Index


The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings.

The value of fixed-income securities may be affected by changing interest rates and changes in credit ratings of the securities.

 Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Indexes are unmanaged portfolios and individuals cannot invest directly in an index.  Actual results will vary.

This communication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any securities or product, and does not constitute legal or tax advice. The information contained herein has been obtained from sources believed to be reliable but we do not guarantee accuracy or completeness. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counse

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