Comment: Sad to say, 25X only works for the US or Canadian retiree and the Trinity study has a few conditions that are dangerous to extrapolate to Singapore's context without adaptation. 33X is probably a better figure to aim for.
I agree that the Trinity study is dangerous to extrapolate without adaptions. Here are some of my adaptions:
- my 25x does not includes CPF, and I am working towards FRS for both of us while working towards FIRE. I am already 39, CPF Life kicks in at 65.
- At the start of my retirement, if market does not do well, I will likely go back to work
- I included as my housing loan as my expense. My housing loan is about $250k, and will actually be fully paid off in 16+ years.
- I have yet to decide upon the indexes or ETFs that I will be in. For now, my thinking is that I will be split equally in 2 indexes (world index - VT and Singapore STI - ES3). I will rebalanced them each to 50% of the portfolio yearly (i.e. sell off better performing index to buy the cheaper index). I am still thinking about STI ETF though. This article explains.
* I was typing the reply in the comment box and due to the length of the reply, decided I should put it in a post.
For VT, the 30% dividend withholding tax and FX means that you cannot extrapolate the returns a US retiree enjoy to a Singaporean retiree's situation. I agree ES3 at 50% isn't a good instrument to use for retirement.
ReplyDeleteAnyway Trinity Study was done for a 30 years time frame with US equities/bonds and for a longer retirement using world equities domiciled in Ireland for lower dividend withholding tax/estate tax and lowered bonds returns, a 3% withdrawal rule is probably safer. And yes, 3% without any boost from CPF.
Just dump into VWRA listed on London. Use interactive brokers.
ReplyDeleteForget about STI; if you really want, don't put more than 10-15% into it.
5 years from your targeted retirement, start building up a cash bucket equivalent to 3-5 years of expenses. This helps if the first few years of your retirement is a huge bear market.
Once you are past the first few years of retirement, you can reduce the cash bucket to 2-3 years of expenses.
I want 2 indexes/etf to rebalance. Any recommendations?
DeleteMBH for domestic bonds. Rebalance between global equities (VWRA) and domestic bonds (MBH).
DeleteVWRA is a global etf and will auto rebalance on your behalf.
ReplyDeleteIf you really want two. AGGG for global bonds.
Or you can find another stock etf to tilt your portfolio in your preferred direction. More to China? US? Nasdaq? Emerging countries? Up to you.
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