Optimized Portfolio | John Williamson, APMA®

More evidence illustrating that the oft-parroted "U.S. companies get foreign revenues and thus provide international diversification" is misguided nonsense. Source: dimensional.com/us-en/insights…

@RyanWhite1975 Not going to make or break anything, but yea you'd get the foreign tax credit splitting it up into $VTI + $VXUS.

@OptimizedPort Read somewhere you basically just want this in a retirement account due to how the foreign dividends are taxed.

$VT is the Vanguard Total World Stock ETF. It covers: • all countries • all sectors • all cap sizes • all styles ...and only costs 0.06%.

@RyanWhite1975 Same, and I'm not sure which is worse. 😌

@OptimizedPort I legit can't tell if they are morons or engagement farming.

Another one bites the dust.

@JohnvsAll2024 Yes, it's market cap weighted.

@OptimizedPort VT is great, but "all countries and all cap sizes" is marketing language, not technically true. It’s heavily tilted toward large caps in developed markets, which is exactly why people add small value, EM tilts.... like in Ginger Ale. But in spirit… yeah, I'll allow it.

@flufferbot01 @SCHDaccumulator Apparently, yes.

@SCHDaccumulator Bro the app literally will calculate your returns for you… It’s the same thing, count that money. Do I need to make an app like DivTracker, that’s just a ShareTracker and charge people to preform projections on how much $VOO will appreciate a day?

I understand the “total returns” investors… But there is a phycological aspect to dividend and income investing that is criminally underrated: 1. Passive cash flow 2. Never need to sell shares 3. Don’t have to “time” the market

@SCHDaccumulator @flufferbot01 Now I'm starting to think you're just trolling...

@flufferbot01 Yea but if the market is down when would you sell your position?? It’s easy to say “$VOO goes up at a steady 10% every year and will forever while we are in a raging bull market

1. "cAsH fLoW" can be generated many different ways, and really just comes down to mental accounting. That would also mean you're withdrawing your dividends. 2. Also entirely mental accounting. Number of shares is irrelevant. We care about the value thereof. 1 share worth $100 is effectively the same thing as 100 shares at $1 each. 3. How the heck does not caring about dividends = market timing? 🤔 Definitely potential psychological benefits to dividends, but these ain't them.

@MoneyJrod x.com/OptimizedPort/…

Someone please sell me on the idea of why a happily married couple should have separate finances

First, realize and remind yourself often that just by having any savings and investments at all, you are well ahead of the vast majority of people, especially at your age. The people you see online claiming 6 figure savings and zero debt are very much the exception, if those claims are even real. We get a skewed sense of reality here on FinTwit. Secondly, assuming sleep, diet, and exercise are pretty good already, look into specific exercises and supplements with clinical evidence of helping with stress and specifically lowering cortisol. An AI tool can summarize those for you. It would include things like breathing exercises, meditation, vagus nerve stimulation, etc. Sounds woo woo, I know, but I started a dedicated regimen of these recently and it has helped immensely. Lastly, maybe step back and really think about whether or not you want to shift career paths into something that pays more over the long term, and whether that might entail more education. It's never too late. You're young. You have plenty of time. I don't think you're doing anything "wrong." Quite the opposite. The sheer fact that you're here asking the question illustrates that. Good luck.

I am 27 years old. Here's my problem: Savings account: 60k Liabilities: -100k Investment account(s) value: 45k Low-paying job and highly stressed. What am I doing wrong? Help me figure out what I'm doing wrong so I can change my life.

@money_nerd89 @SCHDaccumulator Just trying to use my powers for good and help novices avoid potential pitfalls where I can.

@OptimizedPort @SCHDaccumulator Why do you care so much dude? If he wants to invest in TY Bennie babies let him

Starting a position in $JEPQ tomorrow! -11% yield -0 nav erosion -Nasdaq exposure

Somehow forgot one of the most important ones! 9. The exercise withdrew 4% of the portfolio the first year and then adjusted that $ amount for inflation every year thereafter. It did NOT withdraw 4% of the portfolio annually, which would obviously never exhaust the portfolio.

The famous "4% Rule" is maybe the most misunderstood and misrepresented idea that I encounter. Here's what it is and isn't: 1. It is simply the observation by Bill Bengen in 1994 of the highest withdrawal rate that did not exhaust a 50/50 portfolio - i.e. the max "safe" one - for hypothetical 30-year retirements starting in 51 years between 1926 and 1976 and using real historical returns. 2. Bengen has explicitly said it is not a "rule" and is not meant to be a withdrawal protocol prescription. Those who recognize this often half-jokingly call it the 4% Not-a-Rule. 3. It may provide a rough estimate of a retirement savings target, which would be about 25x annual expenses (100 / 4). 4. The average safe withdrawal rate (SWR) observed for the period was actually 7%. In that sense, the 4% figure was quite literally born of the worst case scenario, though unknown future scenarios may be worse. 5. The 4% Rule does not care about preserving "principal," as many erroneously claim. It looked at exhausting the total portfolio. 6. Bengen later investigated tweaking things like adding small cap stocks and timing strategies based on inflation regime and CAPE, both of which increased the observed SWR. 7. Some believe the future SWR will be lower, based on headwinds and subsequent lower expected returns from both stocks and bonds. Only time will tell. 8. High-yield products like covered call funds do not somehow obviate the math behind SWR and sequence risk. You can't just compare dividend yield to withdrawal rate and think you're golden; they're 2 different things. If you want to read about all this in much more detail, I did a pretty deep dive on the topic a while back here: optimizedportfolio.com/4-percent-rule…

Just fyi off the top of my head @Smartnetworth1 @aincomeinvestor @DividendBreeder @Ashton_1nvests @boss45790

@SCHDaccumulator Both invest and build an emergency fund? The former is for long term and the latter is for short term. That's why rule of thumb is get the EF established before investing. Don't play short term games with long term money, and don't play long term games with short term money.

@OptimizedPort Why can’t I do both?

@SCHDaccumulator But then separate from all that, fundamentally, do you really need current monthly income from investments to cover expenses? I thought you were working on building up your emergency fund anyway.

$JEPQ has grown rapidly (34B AUM) and has proven to be steady a number of crashes already since its inception in 2022 I also like that I don’t have to think about withdrawing, the fund pays out automatically every month. There are phycological benefits to income/dividend style investing as well, it doesn’t strictly have to be about total returns. If that were the case why even invest in $VOO? Just invest all your money in $QQQ and $NVDA because the theoretical “total returns” will blow everything out of the water. NFA obviously

@ReardonTrades @Create_Profit Can't have the cake and eat it too, though. If you want to hide from beta, you have to own less beta: x.com/OptimizedPort/… Definitely better than stock picking.

I can’t think of any vehicle safer than that with the potential to generate S&P equivalent returns plus dividends if you want to remain exposed and beat fixed income yields. Not to mention this is leagues safer and offers infinite downside protection in comparison to my single stock portfolio at the moment. Perspective and semantics

When would you guys start focusing on dividend income as an investor?

On "steady," here's 1: x.com/OptimizedPort/… Here's 2 (more "steady!"): x.com/OptimizedPort/… On automatic withdrawals, just set up one with the brokerage to sell shares for you. There's your "dividend." That's what I do. On psychological benefits, sure, but that certainly doesn't necessitate an expensive covered call fund. On $QQQ and $NVDA, recent past returns don't indicate future returns, and I buy the total global haystack anyway (i.e. $VT). US LCG currently has quite literally the lowest expected returns of the entire global stock market. By your own logic, one would want to buy small cap value stocks - the opposite corner of the style box - as those have smoked every other corner of the market historically, including US large cap growth stocks like $QQQ, but who's counting... Again, please research more and get out of your own way. To be blunt, you continue to demonstrate that you do not fully understand what you're buying and tweeting about. I say that because that invariably means it will be harder to stay the course. Shameless plugs because I genuinely think these might actually help you here: 1. youtu.be/KOPcFCS1Lyg 2. youtu.be/w36sJdbsBhA

@ReardonTrades @Create_Profit $SCHD does not provide "downside protection" in any meaningful sense. x.com/OptimizedPort/…

@Create_Profit Would depend on my age and capital. If you’re younger, ~$200k-$500k With that you can justify $100k in a vehicle like $SCHD for both downside protection and dividends if you’d like. If I’m about to retire with that same amount it would most likely be 50% of funds

That doesn't make me feel any better... In all seriousness, kid, assuming this isn't just for the social media engagement, I'd again encourage you to research this stuff more and figure out a strategy you fully understand, can stick with, and that makes sense for your personal goal(s), time horizon, and need, capacity, and tolerance for risk. Objectively, that's almost certainly not $JEPQ. Don't just jump around to shiny objects and the flavor of the week on Twitter chasing yield and "income." Remember, we went over this already: 1. x.com/OptimizedPort/… 2. x.com/OptimizedPort/… 3. x.com/OptimizedPort/… 4. x.com/OptimizedPort/…

@OptimizedPort Small position! $SCHD will still be my largest position 💪🏻