A.I.M. Users Bulletin Board

[ls7550]

What is your opinion on actually implementing such an stock+gold or gold+stock AIM machine at this point in time?

Hi Jaiml

Personally I'm 'AIMing' a lot less as time passes, so not the best person to ask. I 'retired' over a decade ago in my 40's and have 'won the game' so to speak, enough in bonds to draw-down/provide income, own a home(s) so 'rent' all paid in advance, and enough in 'growth' to cover longevity/heirs. For me its more a question of preservation/security than growth/accumulation.

Somewhat similar to starting with a initial 50/50 stock/bonds with a view to draw down the 50 bond allocation, leaving the 50 stock allocation to grow. 2.5% safe withdrawal rate for 20 years assuming 'safe' bonds pace inflation. For growth, something along the lines of 60/40 BRK/physical gold, literally bought and held for 20 years as-is might suffice, i.e. low cost, tax efficient (no dividend taxation drag, no ongoing fees after purchase etc.) and the potential (historic ability) to have doubled or more in real (after inflation) terms after 20 years. Accordingly starting with that 60/40 BRK/gold at any time would likely do ok.

BRK alone for stocks would be too much single stock risk, so I should stress that the above is demonstrative only, not my actual.

If once all of bonds have been spent the growth portfolio has doubled in real terms, then in effect you're back to square one again (longevity). Low cost and simple means that should I loose my marbles then just letting things ride as-is for a while (years) would be ok. In practice however I have reset to square one again twice now before bonds have all been spent i.e. a form of take profits after stocks had had a good run (locked in gains).

Historically 60/40 BRK/Gold for a UK investor has averaged a 33 times real gain factor for all 20 year periods since 1968. Much of that however is a distortion from earlier years. More broadly a four times real gain factor is a more realistic expectation IMO i.e. 50 initial allocation grows to 200 (end 20 years with twice as much in real terms as at the start), after discounting the 50 amount being spent (bonds).

I like the security of roof over head with rent in effect all paid for years in advance, and a steady, stable and relatively safe income, with risk mostly having been shifted towards longevity/heirs.

Regards. Clive.