Bob Brinker Free Discussion Site 59,820+
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- bob90245
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» bob90245 - Re: Brinker's Phantom Fund Notion
In response to Brinker's Phantom Fund Notion posted by solarblast:I never subscribed to the notion of "phantom assets". Here's an example to show what I mean. Suppose a retiree receives $20K COLA'd in SS and pension income. At 4% long bond rate, that would imply a phantom asset of $500K. So if this retiree has $500K in personal retirement accounts, his "total" net worth is $1M. Further, if this retiree wants a balanced 50:50 allocation, that would mean that he has $500K in phantom bonds (from SS and pension) and should put all of his $500K of personal retirement money into stocks. I doubt many retirees would cheerfully comply with this recommendation.
On the other hand, I subscribe to a "needs analysis" approach. Let's say this same retiree receives that very same $20K COLA'd in SS and pension income. And let's further assume that this retiree needs $40K in annual income. So will his $500K in personal retirement money meet his needs? With a conservative withdrawal rate of 4%, I would say yes. 4% times a $500K nest egg would produce $20K in annual income. And how should the retiree allocate his $500K nest egg? I would think that a 50:50 stock:fixed allocation should work.
Also notice that in my phantom example above, the retiree has a "total" portfolio of $1M. For the same conservative 4% withdrawal rate, it would allow $40K withdrawn in annual income. $20K would come from SS and pension. And the other $20K would come from the personal retirement account. I couldn't imagine withdrawing the other $20K from an all stock nest egg.
-- posted by bob90245
» iamacamera - Re: Re: Brinker's Phantom Fund Notion
In response to Re: Brinker's Phantom Fund Notion posted by Kirk:Yes, Kirk, I use your method. I call it "my life as a mortgage" I use a TI business Analyst calculator. I believe it is much more realistic but if you drop dead tomorrow it won't help your survivors.
-- posted by iamacamera
» solarblast - Re: Re: Cisco
In response to Re: Cisco posted by allancoleman:True, but sometimes a caller questions him on particular stocks. I've heard him comment on Cisco before and have heard callers slide the question in?
-- posted by solarblast
» solarblast - Re: Re: Critical Mass Rebalance
In response to Re: Critical Mass Rebalance posted by bob90245:I'm not looking for a recommendation. I'm wondering about the validity of the phantom fund in fixed vs stock investments. He sometimes talks about various % schemes, but doesn't mention the phantom notion. He alwasy seems to mention the phantom notion loosely.
=========== Whoops ==========
Looks like I responded to the wrong message. It looks like I need to pose a question to Kirk about the "Edit" button that I'm using to add this comment. Suite101 is a little different than other forums I belong to.
-- posted by solarblast
» solarblast - Re: Re: Brinker's Phantom Fund Notion
In response to Re: Brinker's Phantom Fund Notion posted by bob90245:Yes, I agree with your first example. Further, note in the event of a retirement fund failure one would find themselves fully invested in the stock market. Although the phantom notion is interesting, it cannot always be applied without thinking of one's total position.
-- posted by solarblast
» allancoleman - Re: Critical Mass Rebalance
In response to Re: Re: Critical Mass Rebalance posted by solarblast:i listen to bob almost every chance i get . bob always uses the term " phanton asset " and never " phantom fund " . weither it's a valid notion of setting asset allocation between stocks and bonds is a personal decision .
is this " particular to brinker " ? no
has " someone else describe(d) it ? yes
but bob probably is asked a specific question regarding it almost every weekend and usually his answer depends on the callers specific details as to that callers " asset " that is producing income and how the caller is supposed to treat that asset in his total asset allocation mix .
i have heard others mention it but not as often as bob does . and as you can see by the answers you've already gotten here , there are as many answers as there are opinions . i think weither a person wants to count a income stream such as social security , a pension , annuity , etc , in his asset allocation percentages is up to each independent investor .
one of bob's favorite phrases is to look at one's total assets , or " position " as you've stated , in figuring your asset allocation .
sometimes the " validity " is in each investors own eye . just as the ultimate responsibility is .
-- posted by allancoleman
» kenp11 - Re: Re: Critical Mass Rebalance
In response to Re: Critical Mass Rebalance posted by bob90245:1. Target Allocation 60 Equity /40 Fixed
2. No stable value fund in 401k. Trying to find one outside of 401k
3. Taxable 50% 401K 35% IRA 15%
4. Age 47
5. No RMD problem
-- posted by kenp11
» kenp11 - Re: Re: Critical Mass Rebalance
In response to Re: Critical Mass Rebalance posted by allancoleman:Is there a stable value fund outside of 401k's that is available in a fund family?
-- posted by kenp11
» allancoleman - Re: Critical Mass Rebalance
In response to Re: Re: Critical Mass Rebalance posted by kenp11:hello kenp11 ,
if you'll " goggle " " stable value funds " , you come up with a lot of hits . you can start with : http://www.stablevalue.org . do your homework cause most require that you keep your money in the fund for awhile , but that's getting to be the case in regular mutual funds too .
good luck . keep in mind that most stable value funds are just simply the old GICs ( guaranteed investment contracts ) and are subject to the old saying , " guaranteed by whom " . but , until the n.a.v. of our favorite fixed income mutual funds comes down , they are acceptable .
p.s. you can " google " right here on suite101 , i think ? , thanks to kirk & company . and i think we also have a " stable value " forum too . ? ?
-- posted by allancoleman
» bob90245 - Re: Re: Re: Critical Mass Rebalance
In response to Re: Re: Critical Mass Rebalance posted by kenp11:I did some research around 2 or 3 years ago on Stable Value funds for IRA accounts. The only one that seemed worthwhile was one offered by Pimco. Pimco has since changed the fund's objective. Just before that change, there was some controversy over Stable Value funds as a fund category. That's why I think they are mostly only offered through 401k's.
A agree it's a tough call to go with bond funds. Kirk gave some good advice in his post. The alternative is building a bond or CD ladder (usually 5 years) and holding each to maturity. My 401k has a good Stable Value fund. So that is where I keep most of my "Fixed" allocation.
Assuming that you want to build a ladder, this would best located in your IRA account. So the question would be, Can you transfer your 401k to a rollover IRA? That way, you'll have the flexibility to have all your "Fixed" allocation in tax-defered accounts.
-- posted by bob90245
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