The Experiment Catch Up

Over here at the industrious Zombie Towers we have been running an investigation.  An investigation into the toilet habits of skiving office workers.  What’s that?  A different investigation?  Ok, fine…

Over two years ago we set up an example portfolio, with annual withdrawals set at 4% of the starting value and increasing by inflation each yeah and we’ve let it run.

The last update was in October, and things were sure looking rosy back then.  The portfolio started at £625k back in November 2014 and it punched it’s way through the £700k mark in October 2016.  Not bad, given it had nearly £50k sucked out of it, in the form of withdrawals.

Rebalance that Portfolio

It’s been a little bumpy since then, with a dip in the funds value in November.  But the general trend has been up.

At the end of the year I rebalanced the experimental portfolio to it’s intended asset split.  That’s 75% equity / 25% bonds & cash.

The equity is split further into;

  • 30% Vanguard LifeStrategy 100% Equity
  • 20% Vanguard S&P500 ETF
  • 15% Vanguard FTSE 100 ETF
  • 10% Vanguard Developed Europe ETF

The split is arbitrary really, it would have been easier to chcuk in all in an All-World tracker fund.  But there you go.

  • 20% Vanguard UK Government Bond ETF
  • 5% Cash (assumed to be post office ISA)
  • The rebalance largely involved moving money out of the LifeStrategy and S&P500 investments into the UK Government Bond fund.  Equity did well across 2016 it seems.

    Inflation’s a bitch

    At the start of this fecking awesome experiment the monthly withdrawal was £2,083, or £25k a year.

    That inflated to £2,106 for 2016 and has been inflated by 1.8% to £2,144 for 2017.  This means our annual withdrawal is up from £25k to £25,730.  Inflation has been pretty low over the last couple of years, coupled with some good growth in equities is why we see the assets sitting so pretty.

    And…Skip to the End

    We haven’t got all day, so let’s bring in updates for November, December, January and Febraury all at once.  Clench your buttocks and brace yourselves;

    Finance Zombie Safe Withdrawal 2017 02 alt funds

    The options of going 100% into bonds or cash are painfully lagging behind the portfolio options that include equity, at the moment.  The UK Government Bond fund has taken a bit of a beating since August, perhaps it was getting a little highly valued?

    It’s still beating the starting position, so it’s not doing too badly.  Perhaps it was just getting a little overvalued in August?

    The alternatives that include equity are following pretty similar paths, with our experimental portfolio sandwiched inbetween the Vanguard High Yield ETF and all in the Vanguard Lifestrategy 100% equity option.  Although they’re close together, there’s still a £50k gap between the three.

    So there we go, all up to speed 🙂

    Mr Z

    6 thoughts on “The Experiment Catch Up

    1. theFIREstarter

      The only elephant in the room here is of course the devaluing of GBP

      Is it worth now including another graph that takes this effect into account do you think?

      It remains to be seen whether we can get the same quality of life for what they’ve told us inflation was last year but if the effects haven’t filtered through fully just yet surely they will do soon?
      Our experimental zombie could just tighten the purse strings in the face of higher prices of course and that is the most realistic course of action in real life, but I’m not sure that is what the original experiment intended (otherwise you could just make him spend less if the portfolio had dropped below it’s value, for example, which again I don’t think were “the rules”)

      Cheers

      Reply
    2. weenie

      Thanks for continuing with the experiment. Interesting to see that the bonds, despite taking a massive kicking recently, are still above the starting position. LS100% is king but as TFS mentions, currency may play a big part.

      Reply

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