This article examines three retirement investment and distribution strategies that are very popular and often recommended on web site. It finds that all fall short of retirement security at key times and don’t measure up to the results delivered by a balanced asset portfolio, what I call True Diversification.
The popular stock portfolio would have run out of money, net of withdrawals, by mid-year 2015! Only one of the stocks—Exxon—even managed to outperform the S&P 500 Index, while GE (-0.1% per year), Citigroup (-10.3% per year), Cisco (-3.4% per year), and AIG (-16.4% per year) all had cumulative losses including their dividends.Today’s popular companies (Apple, Amazon, Facebook, Google, etc.) are not the same as the leaders in 2000, but it’s unlikely that retirement plans based on this strategy will turn out much better. If you have a diversified asset allocation, these companies are already included in your portfolio. But not in amounts significant enough to derail your retirement when their popularity eventually fades.