How To Boost A Portfolio’s Retirement Income

I sat in the passenger seat as we swept around a corner.

My friend, Pat, was driving. I was 20 years old. Pat was 31.

But he was more like a giant kid with a grown-up’s income, credit cards and a taste for fast cars.

He drove a black Porsche Carrera.

His friend, George, followed us in his 3-Series BMW. As we hit a more open road, Pat floored the Porsche. I didn’t think George could keep up.

But within seconds, George flew past. I later learned that he had rigged his car to use nitrous oxide.

You’ve probably never altered your car to boost its performance.

But I’m guessing you wouldn’t mind boosting your future retirement income.

Image by Pixabay

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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14 Responses

  1. Jin says:

    Hi, wise Andrew! It seems have a error making a comment link. so I’m making a comment in your article , sorry.
    I’m a soldier from South Korea.
    I’ve read your book Millionaire teacher book and
    bought Some ETFs according to your Endorsements in the book.
    But I got some questions.
    Is Etf different from Index Fund? I am really wondering.
    John bogle, in his a certain book, showed skeptical view about ETF, comparing with Index Fund. I want to know your opinion.
    Thanks and I hope you always stay healthy and wealthy!

    • Jin says:

      Why don’t you reply to my comment?
      please look at here!

    • Hi Jin,

      An index mutual fund and an ETF (exchange traded index fund) are the same thing, but they are purchased differently. Index mutual funds are not very common outside the United States. They allow people to invest automatically every month, often without paying a commission fee. Investors outside the U.S. always pay commissions to buy ETFs. Bogle prefers index mutual funds because they can’t be traded mid-day. Some people speculate with ETFs. They trade them daily. Bogle doesn’t like this.

      I hope this helps.

      Cheers,
      Andrew

  2. Dennis says:

    Hi Andrew, great book! I have started crunching the numbers on how much I will need when I retire and how much my portfolio would be worth upon retirement. You use 3.5% as the inflation rate and 7% return for Lindell and Yan’s retirement calculations. Can I assume that 7% is the real return? The reason I am asking is because I am earning in 1 country and looking to retire to another. I have used numbeo as a basis to estimate how much I would need upon retirement. The ETFs I am using are global stock and global government bond ETFs and so would require assuming a different inflation rate. Pls help!

    • Hi Dennis,

      I’m glad you’re finding the book useful. I would work out an after-inflation (real return) of about 4 percent to give you a higher margin of safety.

      Cheers,
      Andrew

      • Dennis says:

        Thanks Andrew!

      • Dennis says:

        Hi Andrew, just to confirm. When I plug in the numbers into the moneychimp calculator, based on what you are saying above, I should plug in the after inflation (real return) right, which you are saying I should aim for 4? And the 4 you are suggesting includes dividends being reinvested also right?

  3. Dennis says:

    Hi Andrew, thanks for this! So I have run 7% return when trying to calculate potential returns. You were right – 4% is better. Credit Suisse cited a real return of 5.1% globally over the past 100+ years (using US inflation at 2.9%). In which case, I could assume 1% max would go to ETF transaction fees so bringing it down to 4% (being conservative here).

    Just wondering what source you are using for 3% inflation for developed countries over the past 100 years?

    • Dennis,

      You’re overthinking this. You won’t know what inflation will be over the next 5, 10 or 50 years. Just save as much as you can, invest intelligently, have a rough plan and hope for the best.

      Cheers,
      Andrew

  4. Dennis says:

    Sorry – 1 more question – can I then use a different inflation rate when trying to estimate the cost of living? The country I am looking at has records going back to 1960 and the arithmetic average is around 3.59%. Or should I be using the same inflation rate?

  5. Thoby says:

    Hello Andrew,

    Really enjoyed your books and your ‘How To Boost A Portfolio’s Retirement Income’ article.

    Small thing when reading this article:

    The ‘Withdrawal Rates And Portfolio Allocations For A 30-Year Retirement’ chart has numbers that are inconsistent with the ‘Journal of Financial Planning’ source. It was probably just a typo but worth correcting 🙂

    Cheers,
    Thoby

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