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…

@DividendBreeder @WillOAyers "Most people" do not buy Starbucks coffee. civicscience.com/gen-z-is-all-a…

@WillOAyers Most people buy Starbucks coffee. If someone can do that they can certainly invest $200 a month.

Unfortunately, investing $200/month isn’t nearly enough. After 10 years following this plan, you’d only have $39,000. Investing $1,000/month? You’ll have $194,000 after 10 years. This is assuming a 9% annual growth rate.

Again, micros are not a colloquially recognized cap size and aren't really investable anyway: youtu.be/HR0HWQh9ECU I never said $VT is "literally" anything. Please stop trying to put words in my mouth. It's terribly annoying. I don't treat cap weighting as a religion. Let's be honest; your reply was not "basic clarification." It was basically "I like this other thing more, and this isn't that, so I'm going to voice that." Doing so is ...something. You have the right to do so, certainly; this is a public forum. Just seemed, again, unnecessary and strange. I tried at first with this simply reply: x.com/OptimizedPort/… ...but you insisted on continuing. Cheers, mate.

@OptimizedPort I'm sorry? Pedantic or not, VT doesn't literally include all "investable countries or microcaps". And yes, cap-weighting has flaws, but people treat it like a religion. But calling a basic clarification 'silly and annoying' then writing a paragraph about it is..something.

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

Cap weighting is definitely arbitrary too; no disagreement there. But it's what we've got as the usual default, and is what $VT is, for better or worse. Wasn't intending to "contradict" anything. I just failed - and still fail - to see the point of the profoundly pedantic reply in the first place. It's like going into an ice cream shop that only sells vanilla and screaming "it's not chocolate!" Just seems so silly, pointless, and annoying.

@OptimizedPort Cap weighting isn't any less arbitrary than other strats. It's just more common. Doesn't make it a neutral starting point. Nothing in your reply contradicts my point. You seem pretty worked up over a simple clarification. Says more about you than anything I wrote. Any time

@DividendBreeder Agreed. Probably not. Was just confused about the arbitrary 10 years and "only $39,000."

@OptimizedPort $200 a month isn’t going to cut it, is the point I’m making. Work to invest more, is the point I’m making. 10 year horizon illustrates that well. Do you think “nearly $1M” will be enough in 2066? I do not.

@Dividend2Retire Not dividends, but I think you once you hit about $100k, the gains start to feel different.

What do you need to see as yearly dividends, to feel like it’s actually making a difference in your portfolio? Personally, I think I’d start to be encouraged once I see 1,000 yearly.

@SCHDaccumulator Yikes

I think a 50% $SCHD/ 25% $JEPQ/ 25% $BTC will be my plan moving forward Dividend growth, income, and the hardest money on earth 💪🏻

It's obviously implied that it's all investable countries. It contains all the colloquially recognized cap sizes - small, mid, large - and styles - Value, Growth, Blend. It intrinsically assumes one is okay with its market cap weighting and the results thereof. Every single fund out there is an "approximation." For all practical intents and purposes, all my original bullet points are true. Seems like you're being extremely pedantic here for no good reason. In the interest of full disclosure, this fund is not "tilted" toward large caps. That word specifically means moving away from default market cap weights. And just because it's not "tilted" toward whatever you arbitrarily like such as EM or small value doesn't mean it doesn't still contain those things. Didn't think this would require explaining. But I'm glad you'll "allow it." Thank you.

@OptimizedPort Right, but it's an approximation, not the full thing. So not literally "all countries", "all cap sizes", or "all styles", just a very good, low-cost proxy of the global stock market. It's also not the end-all of diversification some people make it out to be.

@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.

@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…