Wade Pfau, Ph.D., CFA, RICP®

Is Buying an Annuity in a Zero Interest Rate Environment a Good Idea?

By Wade Pfau, Ph.D., CFA, RICP® / April 8, 2020 / Comments Off on Is Buying an Annuity in a Zero Interest Rate Environment a Good Idea?

The Federal Reserve’s decision to cut its benchmark federal funds rate from 1% to a range of 0% raises significant questions for those reassessing their retirement nest egg—a common occurrence following a dramatic selloff in equities according to resea…

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Is Buying an Annuity in a Bear Market a Good Idea?

By Wade Pfau, Ph.D., CFA, RICP® / April 3, 2020 / Comments Off on Is Buying an Annuity in a Bear Market a Good Idea?

As the stock market experienced unprecedented growth over the past eleven years, many people were naturally less interested in the lifetime income options from pensions or annuities. Who wouldn’t rather have all the assets today so they can invest them…

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Adjustments For A Conservative Return Assumption

By Wade Pfau, Ph.D., CFA, RICP® / April 1, 2020 / Comments Off on Adjustments For A Conservative Return Assumption

Consider three scenarios: An individual investing a lump-sum amount for thirty years An individual saving a fixed percentage of a constant inflation-adjusted salary at the end of each year over a thirty-year accumulation period An individual withdrawin…

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A Guide to a Conservative Return Assumption

By Wade Pfau, Ph.D., CFA, RICP® / March 27, 2020 / Comments Off on A Guide to a Conservative Return Assumption

A simple approach for building a financial plan is to decide on a rate of return for the investment portfolio and to plug that value into a spreadsheet to represent assumed asset growth. Historical data may be used to calculate historical average retur…

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Planning For The Future – What About Bond Yields?

By Wade Pfau, Ph.D., CFA, RICP® / March 24, 2020 / Comments Off on Planning For The Future – What About Bond Yields?

Adjustments for Current Bond Yields An important consideration is that current interest rates are lower than the historical averages. The historical average return is not relevant for someone seeking to estimate future market returns from today’s start…

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Inflation, Deflation, Confiscation & Devastation- The Four Horsemen Of Risk

By Wade Pfau, Ph.D., CFA, RICP® / March 4, 2020 / Comments Off on Inflation, Deflation, Confiscation & Devastation- The Four Horsemen Of Risk

Noted financial advisor and historian William Bernstein makes a compelling case for stocks in his e-book Deep Risk: How History Informs Portfolio Design. In the introduction, Bernstein begins by offering an operational definition of risk. Risk is the s…

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Taking Portfolio Spending Into the Real World for Retirees

By Wade Pfau, Ph.D., CFA, RICP® / May 3, 2017 / Comments Off on Taking Portfolio Spending Into the Real World for Retirees

In February of 1998, the Trinity study established the idea of focusing on success and failure rates, building into our psyche the idea that your retirement is a failure if the investment portfolio is depleted. This has put too much emphasis on the portfolio and spending conservatively to keep failure rates low. This is not…

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Which Makes More Sense for Retirees: A Total-Return or Income Portfolio?

By Wade Pfau, Ph.D., CFA, RICP® / April 25, 2017 / Comments Off on Which Makes More Sense for Retirees: A Total-Return or Income Portfolio?

Total-return investing focuses on building diversified portfolios from stocks and bonds to seek greater long-term investment growth. By focusing on total return, the objective over the long run is to produce a greater and steadier amount of income relative to what could be obtained by investing for income by focusing solely on interest and dividends to…

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Why Does Everyone Experience Such Different Retirement Income Outcomes?

By Wade Pfau, Ph.D., CFA, RICP® / April 10, 2017 / Comments Off on Why Does Everyone Experience Such Different Retirement Income Outcomes?

Individual investors are vulnerable to the sequence of market returns experienced over their investing lifetimes. Individuals who behave in exactly the same way over their careers (saving the same percentage of the same salary for the same number of years) can experience disparate outcomes based solely upon the specific sequence of investment returns that accompanies…

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