True for most people but im sure there is a minority where working might not be possible, for example due to ill health or living somewhere where job opportunities might be low (e.g. someone unskilled living in a far flung corner of ireland)
Performance Update for Colm Fagan's ARF
- Thread starter Colm Fagan
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Being forced to return to work is pretty much the definition of a failed retirement plan. No thanks.
Drawing a 25% lump sum and keeping it on deposit means you no longer have an all equity portfolio. It’s important to look at all accounts in combination and not to focus on one account in isolation.
You can never fully deplete a portfolio by drawing down a fixed 4% (as opposed to a fixed euro amount). But the amount drawn down will obviously vary according to market returns. Sorry but I’ve a lifestyle to maintain regardless of market returns.
I’ve no issue with somebody maintaining an all equity portfolio while accumulating assets for retirement. In fact, I would advocate a leveraged approach by contributing to a pension while holding a mortgage.
But sequence of return risk is very real when drawing down a portfolio. Maintaining an all equity portfolio in retirement risks a comfortable retirement - there’s no getting around it.
Drawing a 25% lump sum and keeping it on deposit means you no longer have an all equity portfolio. It’s important to look at all accounts in combination and not to focus on one account in isolation.
You can never fully deplete a portfolio by drawing down a fixed 4% (as opposed to a fixed euro amount). But the amount drawn down will obviously vary according to market returns. Sorry but I’ve a lifestyle to maintain regardless of market returns.
I’ve no issue with somebody maintaining an all equity portfolio while accumulating assets for retirement. In fact, I would advocate a leveraged approach by contributing to a pension while holding a mortgage.
But sequence of return risk is very real when drawing down a portfolio. Maintaining an all equity portfolio in retirement risks a comfortable retirement - there’s no getting around it.
Setforlife
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You can’t have it every way though.
I’m not sure anyone would actually say that with an all equity portfolio? The 4% ‘rule’ is called that for a reason, I’ve never seen anyone suggested at all equity portfolio and drawing a fixed income regardless of market returns. Sequence of returns risk is a real risk, but it has simple mitigation of a basic reaction to events.
Its seems you have to do something no one would ever suggest and retire on the worst day in history to run out of money.
Anyone who says ‘sorry but I’ve a lifestyle to maintain regardless of market returns’ needs an annuity not an ARF.
I’m not sure anyone would actually say that with an all equity portfolio? The 4% ‘rule’ is called that for a reason, I’ve never seen anyone suggested at all equity portfolio and drawing a fixed income regardless of market returns. Sequence of returns risk is a real risk, but it has simple mitigation of a basic reaction to events.
Its seems you have to do something no one would ever suggest and retire on the worst day in history to run out of money.
Anyone who says ‘sorry but I’ve a lifestyle to maintain regardless of market returns’ needs an annuity not an ARF.
No, I’m comfortable funding my lifestyle from a balanced portfolio.
I have some flexibility in my spending but I’m not prepared to slash my expenditure by 50%+ because of a stock market crash.
Annuities are shockingly expensive in this country. No thanks.
I have some flexibility in my spending but I’m not prepared to slash my expenditure by 50%+ because of a stock market crash.
Annuities are shockingly expensive in this country. No thanks.
Colm Fagan
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Let's go back to your favourite Exhibit A of 26 years ago, which purports to demonstrate the folly of my proposed 100:0 portfolio, and compare it to your 70:30 portfolio, but start the comparison from 5 years before retirement, i.e., assume equal account values on 1 January 1995 (in practice, the 100:0 fund will be much higher by that point) and build up from there. Then assume 40k a year withdrawals from 1/1/2000, as you suggest.
I would bet that the residual fund today under the 100:0 scenario would be well more than three times that under the 70:30 scenario.
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Colm Fagan
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It was stupid of me not to realise that you’d be 100% in equities until the market hit its absolute peak and that you’d choose that moment to take your 25% cash, then shift 30% into bonds, again with perfect timing.
And you also walk on water.
And you also walk on water.
You've also found the cure for inflation?
Colm Fagan
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I’ve just given my pension fund a thorough spring cleaning, which is most unusual. Normally, I don’t disturb it; I let the dust rest.
Transactions on the portfolio, which consists of shares in just 14 companies plus a tiny cash balance (currently 1.1% of the fund, before this month’s scheduled withdrawal), are usually few and far between. In 2023, for instance, there were no transactions whatsoever: the 6% withdrawal required for tax purposes was funded entirely from dividends and by depleting the fund's cash balance, from 2.6% at the start of the year to 0.6% at year-end.
The combination of a highly concentrated portfolio and a passive buy-and-hold strategy has served me well: the average time-weighted return in the 15.2 years from December 2010, when withdrawals commenced, to Friday last (13 Feb) was 10.6% a year.
This year is very different. So far, and we’re still only six weeks into 2026, I’ve disposed entirely of three of my long-standing holdings. Two of the disposals (Apple Corporation and Town Centre Securities) have already been chronicled on this forum. The third was Walt Disney Company, which I sold last week.
Disney was one of my less successful investments. I bought in August 2017 at $102.35 a share and sold last week at $105.80 a share, not exactly a stellar return. Dividend receipts too were miserly: they were suspended entirely during COVID.
At the time I made the investment, I hoped that Disney would be able to mount a successful challenge to Netflix in streaming. I was wrong. More recently, its theme parks have been hit by a fall in foreign visitors to the US. The one consolation is that Disney was one of my smallest holdings.
So, what did I do with the proceeds from the various sales? The bulk of the money was used to buy shares in a company that I hadn't even heard of until last month, but which is now my fourth largest holding, accounting for 8.7% of the fund.
And what is that company’s name? All will be revealed ....
Transactions on the portfolio, which consists of shares in just 14 companies plus a tiny cash balance (currently 1.1% of the fund, before this month’s scheduled withdrawal), are usually few and far between. In 2023, for instance, there were no transactions whatsoever: the 6% withdrawal required for tax purposes was funded entirely from dividends and by depleting the fund's cash balance, from 2.6% at the start of the year to 0.6% at year-end.
The combination of a highly concentrated portfolio and a passive buy-and-hold strategy has served me well: the average time-weighted return in the 15.2 years from December 2010, when withdrawals commenced, to Friday last (13 Feb) was 10.6% a year.
This year is very different. So far, and we’re still only six weeks into 2026, I’ve disposed entirely of three of my long-standing holdings. Two of the disposals (Apple Corporation and Town Centre Securities) have already been chronicled on this forum. The third was Walt Disney Company, which I sold last week.
Disney was one of my less successful investments. I bought in August 2017 at $102.35 a share and sold last week at $105.80 a share, not exactly a stellar return. Dividend receipts too were miserly: they were suspended entirely during COVID.
At the time I made the investment, I hoped that Disney would be able to mount a successful challenge to Netflix in streaming. I was wrong. More recently, its theme parks have been hit by a fall in foreign visitors to the US. The one consolation is that Disney was one of my smallest holdings.
So, what did I do with the proceeds from the various sales? The bulk of the money was used to buy shares in a company that I hadn't even heard of until last month, but which is now my fourth largest holding, accounting for 8.7% of the fund.
And what is that company’s name? All will be revealed ....
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Colm Fagan
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Answers to questions that have been asked on the above post:
1. Are the figures for return net of expenses?
Yes, they're net of all expenses and charges. The biggest is the provider's platform fee, which was 0.615% a year until end 2023, when it fell to its current 0.4% a year (charged monthly).
2. Did the €/$ exchange rate change much between when I bought the Disney shares and when I sold them?
No. The rate was around $1.19 per €1 at both dates, which surprised me. I would have thought that the dollar had weakened. It must have strengthened, then weakened. Either way, Disney proved to be a poor investment.
3. What was the money-weighted return over the entire period?
The money-weighted return was slightly higher than the time-weighted return, at an average 10.8% a year. The money-weighted return is what matters to me. That's what I would have had to earn from a bank deposit to replicate my pension return.
4. How is the 10.6%/ 10.8% return split between withdrawals and growth in the value of the remaining fund?
For every €1,000 invested at the start, I've withdrawn €1,271 to date (13 Feb 2026) and the remaining fund was valued at €2,027 on that date.
1. Are the figures for return net of expenses?
Yes, they're net of all expenses and charges. The biggest is the provider's platform fee, which was 0.615% a year until end 2023, when it fell to its current 0.4% a year (charged monthly).
2. Did the €/$ exchange rate change much between when I bought the Disney shares and when I sold them?
No. The rate was around $1.19 per €1 at both dates, which surprised me. I would have thought that the dollar had weakened. It must have strengthened, then weakened. Either way, Disney proved to be a poor investment.
3. What was the money-weighted return over the entire period?
The money-weighted return was slightly higher than the time-weighted return, at an average 10.8% a year. The money-weighted return is what matters to me. That's what I would have had to earn from a bank deposit to replicate my pension return.
4. How is the 10.6%/ 10.8% return split between withdrawals and growth in the value of the remaining fund?
For every €1,000 invested at the start, I've withdrawn €1,271 to date (13 Feb 2026) and the remaining fund was valued at €2,027 on that date.
Might it be ASML?
Colm Fagan
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No, but a good try! (Don't all the best quizmasters say that to console competition entrants?!) I plan to give a few clues before revealing the name. The hope is that this will yield some good suggestions for my next buy, the one after this one!!!
TSMC?
GrumpyOldMan
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Applied Materials or LAM Research ?
Colm Fagan
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@ClubMan and @GrumpyOldMan
Two more good tries, but the box of chocolates has yet to be won.
I now realise that I gave a clue at the end of my “harem” post above:
“I have added one new share to the portfolio, to replace the two I’ve sold. My wife will be relieved to learn that new woman in my harem is well over a hundred years old! I’m keeping her under wraps for now.”
Two more good tries, but the box of chocolates has yet to be won.
I now realise that I gave a clue at the end of my “harem” post above:
“I have added one new share to the portfolio, to replace the two I’ve sold. My wife will be relieved to learn that new woman in my harem is well over a hundred years old! I’m keeping her under wraps for now.”
Colm Fagan
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No. I said that I'd never heard of the company previously. Given that I spent my entire working life in financial services, I've obviously heard of M&G, so it can't be it.
Another clue, which also excludes M&G, is that I wanted a company that wasn't at risk from AI. I would think that M&G's business is very much at risk.
Must try harder!