Retirement Planning: Stress Testing a Simple 5 ETF Portfolio

As mentioned in a recent post, stress testing the portfolio is one useful method of checking to see if there will be sufficient funds available to comfortably retire.  In this QPP analysis of a simple five ETF portfolio we will make some initial assumptions that will vary from investor to investor.

Assume this investor is 50 and plans to retire at age 67.  The current portfolio is valued at $400,000 and $6,000 is added each year.  Inflation is set at 3.5% and the S&P 500 is projected to grow at 7.0% each year.

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Charles Ellis: Revisit Loser’s Game of Stock Picking

Let’s revisit* Charles D. Ellis’ 1995 paper, “The Loser’s Game,” where he describes his Break-Even Return (BER) equation. Here is a review of this equation.

* I checked the readership of this blog and only nine readers picked up this information.  That is too few so I am bringing this material forward in hopes more folks will walk through the math to see the importance of cost when operating a portfolio.

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