Friday Reading: Designing Your Portfolio

By Harry Sit

White Coat Investor published a 7-part series on designing your portfolio:

  1. Goal-setting
  2. Return vs Savings
  3. Choosing Asset Classes
  4. List of Asset Classes
  5. Putting together the asset allocation
  6. Implementing the asset allocation
  7. Maintaining the asset allocation

It’s a great methodological guide but he got very few comments. I’m guessing most people are more interested in someone telling them what to do and not how to do it.

*****

My Money Design asked Is 2 Percent the New Safe Retirement Withdrawal Rate?

The answer is — nobody knows. There’s an inherent problem with using variable-return assets for fixed withdrawals (after inflation). Without risk-pooling or inflation protection, each individual always runs the risk. And that leads to our next article …

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Building a Super-Safe Retirement Portfolio at Oblivious Investor

Inflation protected bonds and inflation adjusted annuities are about the only ways to match fixed (after inflation) withdrawals. Ideally you want the adjustments to match inflation on your own spending, but matching inflation in general is a good start.

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I Am 1 Percent lists some Tax Deductions Not Available to the 1%. Once you hit AMT, forget about tax deductions. You get a deduction for mortgage interest and charitable donations. That’s about it. Come think of it, AMT is a much cleaner system. I don’t know why people are pushing to abolish it. It should be the other way. Everybody should go under a system similar to AMT: simple rates, fewer deductions.

*****

License to…Steal? at You Have More Thank You Think

A tongue-in-cheek poke at people’s attitude toward stealing. Somehow people who don’t normally steal physical products from a store even when the cashier isn’t watching don’t hesitate a second to steal digital content. They openly talk about getting around the loose fence put up by the New York Times or Wall Street Journal. Just because a store has an unguarded door does not mean you should go through it and grab what you want.

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$51 for 2 Minutes: German Pay Phones Anger Troops at New York Times

I got bitten by this unscrupulous company BBG Communications three years ago. I can’t believe it’s still in business. Even class-action lawsuits couldn’t take it down because it’s hiding behind entities in other countries.

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Software picked, likely related posts:

Posted on March 16, 2012 under News. Keywords: , , .

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Comments

10 Comments on Friday Reading: Designing Your Portfolio

  1. MyMoneyDesign on March 16, 2012
     

    Thanks for including my post! These other articles sound interesting and I will be checking them out as well.

  2. serbeer on March 16, 2012
     

    “Come think of it, AMT is a much cleaner system. I don’t know why people are pushing to abolish it. ”
    Hm, could it be because everyone pays more in taxes under AMT?

    Sorry, could not resist…

  3. TFB on March 16, 2012
     

    @serbeer – Actually no. It’s the exact opposite. Everyone computes two numbers today: one under the regular system and one under AMT. They pay whichever is higher. Since most people don’t pay AMT today, switching to AMT for everyone means most people will pay less and those who pay AMT today will pay the same.

  4. serbeer on March 16, 2012
     

    Hm, now that I think about it, you are right TFB.
    But then, by saying “means most people will pay less” you answered your own question

  5. Shawanda @ You Have More Than You Think on March 16, 2012
     

    Wait. What? There’s a loose fence around the New York Times and the Wall Street Journal. Well, I’ll be…. I’m paying full price for both. ;) Thanks for linking to my post.

  6. B on March 16, 2012
     

    I agree with your comment about the AMT being cleaner. I think the best way to institute a fairer, simpler,flatter tax would be to gradually let the AMT take over for the majority or Americans and then get rid of the other system. I’m thinking something like a 10 year phase-in. My husband and I paid about $7K of AMT on top of what we would have owed under the regular tax system. So since the AMT is 25% then that makes my marginal federal tax rate 25% at least for the ballpark of income that we are in right now, right? So even though the trditional tax tables may have me in the 31% bracket — I’m really paying 25% on my next $1,000. Just wonder if there is something I’m not considering.

  7. dd on March 16, 2012
     

    I enjoyed “Is the Percent the New Safe Retirement Withdrawal Rate?” The 6% return, 3% inflation, 3% withdrawal rate seems conservative and realistic.

  8. TFB on March 16, 2012
     

    @B – There is a phaseout range for the AMT exemption. It makes your marginal tax rate 32.5% or 35% if you are in the phaseout range. See 2011 AMT Tax Brackets.

  9. Michael on March 19, 2012
     

    I enjoyed White Coat Investor’s post, and you’re right, it kind of is annoying how people ask “what should I do”, and when you give them the guidelines to do it, they ask “what specifically.” I don’t want to hold anyone’s hand.

  10. White Coat Investor on April 3, 2012
     

    Thanks for the shoutout.

    I often do posts like that mostly so I can link to them later when people ask questions!

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