Weekend reading: safe withdrawals and dangerous deposits


What caught my eye this week.

Not one but two must-read articles for you this week. Less than ideal now the sun is finally showing its face, I know.


The first comes from the ever-reliable Portfolio Charts.

Inspired by the many criticisms that ‘safe’ withdrawal rate (SWR) research has overwhelmingly focused on US returns, Portfolio Charts conducted an incredibly deep dive into the SWRs of other countries – and also the myriad different asset allocation mixes you could have chosen to achieve them.

It’s a valuable read. Not because I think anybody should load up on any particular asset allocation that proved successful in the past – we do not know the future – but for the illustration of:

  • How a lot of different assets can work together to deliver a decent SWR
  • How, nevertheless, the resultant SWRs still varied quite widely

Today everybody should really have at least a somewhat globally diversified retirement portfolio. So to that extent, individual country returns are moot.

The point rather is to see again why global diversification is so valuable in the first place.

Unless you do have a perfect crystal ball, of course. In which case buy the best and forget the rest!


(Spoiler: you don’t have a crystal ball).

It was different in their day

Secondly, a powerful article from John Burn-Murdoch on the growing wealth inequality that’s caused by wildly different outcomes when it comes to inheritance and property.

For more than 15 years I’ve been arguing on Monevator that inheritance taxes should be far higher to curb us from inching back into a feudal state. While many childless people get the point, those with biologically-activated selfish genes tend to say “maybe, but not my kids”.

I understand people love their children and want to do whatever they can for them. Also that preventing that can seem draconian and punitive.

But where do we want to end up as a society?

Well, here’s where we’re going:

As you can see, boomer parents – who rage indignantly about being ‘taxed twice’ when they die and their children get something for nothing – grew up in a different world.

Not only had many started building property wealth by their 30s, but the gap between the average boomer and those who were really making progress with property was also far narrower.

Burn-Murdoch notes:

The average millennial still has zero housing wealth at a point where the average boomer had been building equity in their first home for several years.

But the top 10% of thirtysomethings have £300,000 of property wealth to their names, almost triple where the wealthiest boomers were at the same age.

These differentials are the result of wealth becoming increasingly hereditary:

Bee Boileau and David Sturrock at the Institute for Fiscal Studies found that more than a third of young UK homeowners received help from family.

Even among those getting assistance there are huge disparities, with the most fortunate 10th each receiving £170,000, compared with the average gift of £25,000.

I suppose it’s possible this is a one-time enrichment caused by the spectacularly lucky lives of the Boomer generation in the US, UK, and Europe. There’s signs that the generational wealth escalator has flatlined.

So perhaps the feudalisation is a one-off event? Bad, in my view, but maybe it won’t get worse.

The robber barons next door

But what if it does get worse?

Do we really want to be in a situation in 30 years where it almost doesn’t matter where you study, what job you get, or how hard you work – for the average person whether you can buy a nice home is not a reflection of your efforts and talent but how well your grandparents did with property in the 1980s?

I’d tax the recipients of inheritances at their highest rate of income – so 45% for those enjoying large windfalls in a particular year – perhaps after a modest allowance of £20,000 or so, as a sop to the atavistic realities.

No it’s not a perfect solution but what is?

Have a great weekend.

From Monevator

Early Retirement Extreme – Monevator

Decumulation strategy: First withdrawal, tax-free cash, and drawdown antics – Monevator [Members]

From the archive-ator: Making big savings – Monevator


Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.

Latest elevated US inflation figures make sticky reading – Axios

UK property market to bounce back later this year, says RICS – This Is Money

Spain axes ‘Golden Visa’ popular with British expats – Evening Standard

Services trade sees UK become fourth-largest exporter – City AM

British farmers demand Universal Basic Income to prevent post-Brexit bankruptcy – Farming Today

Briton and French wife face £11,000 bill to return home to UK – Guardian

Royal Mint to stop making overseas coins, will focus on gold recycling – This Is Money

Vietnamese billionaire sentenced to death for $44bn fraud – BBC

The top 50 restaurants in London – Time Out

It’s official: stock market crashes make you miserable [Research]Alpha Architect

Products and services

eBay scraps fees for selling pre-owned clothing – Which

Quidco Vs TopCashback: comparing the best cashback sites – Be Clever With Your Cash

Sign-up to Trading 212 via our affiliate link to claim your free share and cashback. T&Cs apply – Trading 212

American Express changes terms on its BA Avios cards – Be Clever With Your Cash

Chase Bank’s 5.1% savings account is a Best Buy, with big catches – This Is Money

Open an account with low-cost platform InvestEngine via our link and you could get up to £2,500 as a cashback bonus (T&Cs apply. Capital at risk) – InvestEngine

Should UK investors have easier access to crypto? [Search result]FT

Is this credit card with a 704.6% APR for real? Yes and no – This Is Money

Get £100 worth of free trades when you open an ISA or trading account with Interactive Investor. Terms apply – Interactive Investor

Cost of UK passport to rise for second time in 14 months – Guardian

Mansions for sale for less than £1m, in pictures – Guardian

More LSE woes mini-special

Even Shell ‘looking at all options’ on ‘undervalued’ London listing – City AM

How Brexit wrecked the stock market – Wealth of Nations

Will investment trusts flee the UK over cost disclosure rules? – City AM

CEO of AIM-listed stock explains why it is delisting from troubled LSE [Thread]via X

Will UK stocks finally catch a break? [Search result]FT

Comment and opinion

Vanguard’s cautionary tale hidden in plain sight – Simple Living in Somerset

How to lie with charts – A Wealth of Common Sense

Ineffective savings accounts [Boo! Hiss!]Resolution Foundation

Should you use equity release to pay off your mortgage? – Which

Salary sacrifice can boost your pension and your take home pay – Guardian

There’s nothing special about dividends – Morningstar

What can commodities do for you? – Morningstar

Victor Haghani: Lessons From The Missing Billionaires [Podcast, transcript]Morningstar

Naughty corner: Active antics

Active investors need to think about the odds – Behavioural Investment

FAO Moguls! Great interview with Bill Ackman [Podcast, few weeks old]Lex Fridman

Market share and profitability – Verdad

Top 40 quality UK dividend stocks – UK Dividend Investor

More long-term Bitcoin hodlers are selling out – CoinDesk

Hedge fund jobs versus private equity jobs – eFinancial Careers

Magnificent alternatives mini-special

Baskets of UK/European stocks to rival the Magnificent Seven – II

UK investment trusts look more attractive – Proactive Investors

Kindle book bargains

How to Read Numbers by Tom Chivers – £0.99 on Kindle

The Dip: Knowing When to Quit by Seth Godin – £0.99 on Kindle

The Pathless Life by Paul Millerd – £0.99 on Kindle

The Deficit Myth by Stephanie Kelton – £0.99 on Kindle

Environmental factors

New scheme to enable you to see a local heat pump working – Visit A Heat Pump

Future oil demand is wildly uncertain – Semafor

The coffee apocalypse – Slate

England could produce 13x more renewable energy using just 3% of land – Guardian

Saving a sea monkey hatchery – Hakai

Robot overlord roundup

Time is running out to avoid a super-deepfake future – Guardian

Where is artificial general intelligence? My grandfather’s guess is as good as yours [Search result]FT

Gemini 1.5 and Google’s nature – Stratechery

Off our beat

Lucky versus repeatable – Morgan Housel

Where did all the Little Chefs go? – BBC

Carer convicted over benefit error with 30p a week fights to clear his name – Guardian

Canada’s NORCs: an alternative to nursing homes – The Walrus

Why it could be harder to find love in the age of TinderBBC

It’s slow-going in the 3D printed house revolution – Construction Physics

Why are so many young people getting cancer? – Vox

Life lessons from old people at the beach [Short videos]via X

Crying to sleep on the biggest cruise ship ever – The Atlantic [h/t Abnormal Returns]

Eat, sleep, move – Humble Dollar

Peter Higgs: the shy man who changed our understanding of the universe – BBC

And finally…

“Every profession is a conspiracy against the laity, and every profession’s jargon is meant to confuse and exclude those who aren’t part of the guild.”
– Jason Zweig, The Devil’s Financial Dictionary

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