Comments on: A Review of “The Grangaard Strategy” by Paul Grangaard, CPA http://allfinancialmatters.com/2006/08/25/a-review-of-the-grangaard-strategy-by-paul-grangaard-cpa/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Fri, 20 Nov 2009 19:56:44 -0800 http://wordpress.org/?v=abc hourly 1 By: Greg G http://allfinancialmatters.com/2006/08/25/a-review-of-the-grangaard-strategy-by-paul-grangaard-cpa/comment-page-1/#comment-239727 Greg G Sat, 23 Feb 2008 18:47:18 +0000 http://allthingsfinancialblog.com/?p=1094#comment-239727 http://www.thegrangaardstrategy.com/ go here for his latest strategy http://www.thegrangaardstrategy.com/

go here for his latest strategy

]]> By: AllFinancialMatters » Blog Archive » Friday’s Reader’s Question - 401(k) http://allfinancialmatters.com/2006/08/25/a-review-of-the-grangaard-strategy-by-paul-grangaard-cpa/comment-page-1/#comment-62344 AllFinancialMatters » Blog Archive » Friday’s Reader’s Question - 401(k) Fri, 12 Jan 2007 16:07:05 +0000 http://allthingsfinancialblog.com/?p=1094#comment-62344 [...] 1. Read Paul Grangaard’s The Grangaard Strategy. I reviewed the book last year and also wrote a follow-up post about the strategy. These two posts will give you an idea of what the strategy is. [...] [...] 1. Read Paul Grangaard’s The Grangaard Strategy. I reviewed the book last year and also wrote a follow-up post about the strategy. These two posts will give you an idea of what the strategy is. [...]

]]> By: Jim T http://allfinancialmatters.com/2006/08/25/a-review-of-the-grangaard-strategy-by-paul-grangaard-cpa/comment-page-1/#comment-36382 Jim T Thu, 26 Oct 2006 19:15:28 +0000 http://allthingsfinancialblog.com/?p=1094#comment-36382 I read the Grangaard book about two years ago and have tried to apply his methods to my own personal situation. After only two years, it is hard to tell how successful I will be but I plan to continue. However, in the November 2006 edition of “Consumer Reports Money Advisor” newsletter is an article “Rethinking your investment risk” by Laurence J. Kotlikoff, a professor of economics at Boston University and president of the Economic Security Planning Company. In this article he advances the proposition that most of a retiree’s investments (about 80%) during retirement should be invested in TIPs, the Treasury Inflation Protected bonds, in order to protect the retired person from the effects of inflation. He also states that stocks are very dangerous to own in retirement because of their inherent variability and henceforth the danger of the retiree’s capital disappearing. He says the longer you own stocks, the more likely you will experience a large drop that may result in irreparable harm to your financial situation. I would be interested to hear how you reconcile this with the Grangaard methodology. Does the Grangaard method trump Dr. Kotlikoff’s thesis or does the Kotlikoff concerns indicate the need for a modification of the Grangaard method? I read the Grangaard book about two years ago and have tried to apply his methods to my own personal situation. After only two years, it is hard to tell how successful I will be but I plan to continue. However, in the November 2006 edition of “Consumer Reports Money Advisor” newsletter is an article “Rethinking your investment risk” by Laurence J. Kotlikoff, a professor of economics at Boston University and president of the Economic Security Planning Company. In this article he advances the proposition that most of a retiree’s investments (about 80%) during retirement should be invested in TIPs, the Treasury Inflation Protected bonds, in order to protect the retired person from the effects of inflation. He also states that stocks are very dangerous to own in retirement because of their inherent variability and henceforth the danger of the retiree’s capital disappearing. He says the longer you own stocks, the more likely you will experience a large drop that may result in irreparable harm to your financial situation. I would be interested to hear how you reconcile this with the Grangaard methodology. Does the Grangaard method trump Dr. Kotlikoff’s thesis or does the Kotlikoff concerns indicate the need for a modification of the Grangaard method?

]]> By: Fly Navy http://allfinancialmatters.com/2006/08/25/a-review-of-the-grangaard-strategy-by-paul-grangaard-cpa/comment-page-1/#comment-36166 Fly Navy Thu, 26 Oct 2006 02:33:58 +0000 http://allthingsfinancialblog.com/?p=1094#comment-36166 Rather than use the conventional method of calculating what you need to retire on, I like this alternative: Plan on retiring completely debt free, then calculate what expenses you will have that are “fixed”, i.e. taxes, utilities, insurance, etc. Plan on covering this amount with “fixed” income, i.e. social security, company pension, fixed annuity, etc. Everything over and above this fixed expense is variable, (even food is variable…how often do you eat out, etc) and this is the real amount you need to cover with variable income; that is income from investments which tend to be variable from month to month and certainly from year to year. If you want to travel a lot, or dine out a lot, or have expensive hobbies, you can adjust your “nest egg” accordingly…in most cases this model will allow you to be a lot more aggressive in your investments, i.e. more equities as long as you’re willing to adjust your variable lifestyle from year to year to match the market, knowing that your fixed expenses are covered with fixed income. Play with it and see how this might change your pre-conception(s) of how much is enough Rather than use the conventional method of calculating what you need to retire on, I like this alternative: Plan on retiring completely debt free, then calculate what expenses you will have that are “fixed”, i.e. taxes, utilities, insurance, etc. Plan on covering this amount with “fixed” income, i.e. social security, company pension, fixed annuity, etc. Everything over and above this fixed expense is variable, (even food is variable…how often do you eat out, etc) and this is the real amount you need to cover with variable income; that is income from investments which tend to be variable from month to month and certainly from year to year. If you want to travel a lot, or dine out a lot, or have expensive hobbies, you can adjust your “nest egg” accordingly…in most cases this model will allow you to be a lot more aggressive in your investments, i.e. more equities as long as you’re willing to adjust your variable lifestyle from year to year to match the market, knowing that your fixed expenses are covered with fixed income. Play with it and see how this might change your pre-conception(s) of how much is enough

]]> By: Fly Navy http://allfinancialmatters.com/2006/08/25/a-review-of-the-grangaard-strategy-by-paul-grangaard-cpa/comment-page-1/#comment-36164 Fly Navy Thu, 26 Oct 2006 02:25:21 +0000 http://allthingsfinancialblog.com/?p=1094#comment-36164 After reading Paul Grangaard and Frank Armstrong, I would add another suggestion incorporating the two bucket scenario with my earlier post on fixed and variable income funded by fixed and variable accounts. The fixed bucket should be the age 60-70 and be in a taxable account, invested in tax efficient instruments, i.e. tax frees, dividend producing equities, tax deferred REITS, pipeline partnerships, etc. The second bucket that kicks in at age 70 1/2 is the IRA/401 rollover that has been invested 100% in equities beginning when they were first established and left to incubate since inception. This bucket should remain invested in equities ad infinitum. This bucket would produce the variable income discussed in my earlier post, while the taxable bucket provides the fixed component of living expenses. After reading Paul Grangaard and Frank Armstrong, I would add another suggestion incorporating the two bucket scenario with my earlier post on fixed and variable income funded by fixed and variable accounts. The fixed bucket should be the age 60-70 and be in a taxable account, invested in tax efficient instruments, i.e. tax frees, dividend producing equities, tax deferred REITS, pipeline partnerships, etc.

The second bucket that kicks in at age 70 1/2 is the IRA/401 rollover that has been invested 100% in equities beginning when they were first established and left to incubate since inception. This bucket should remain invested in equities ad infinitum. This bucket would produce the variable income discussed in my earlier post, while the taxable bucket provides the fixed component of living expenses.

]]> By: » Read These Posts or You’ll Be Poor Forever on Blueprint for Financial Prosperity http://allfinancialmatters.com/2006/08/25/a-review-of-the-grangaard-strategy-by-paul-grangaard-cpa/comment-page-1/#comment-22430 » Read These Posts or You’ll Be Poor Forever on Blueprint for Financial Prosperity Mon, 28 Aug 2006 00:26:43 +0000 http://allthingsfinancialblog.com/?p=1094#comment-22430 [...] On the investment front, JLP has reviewed the Grangaard Strategy by Paul Grangaard (clever name for the strategy!). Also on the topic of investment, Flexo writes about four mental mistakes in investing, all of which I have made and will probably make a couple more times. [...] [...] On the investment front, JLP has reviewed the Grangaard Strategy by Paul Grangaard (clever name for the strategy!). Also on the topic of investment, Flexo writes about four mental mistakes in investing, all of which I have made and will probably make a couple more times. [...]

]]> By: Steve http://allfinancialmatters.com/2006/08/25/a-review-of-the-grangaard-strategy-by-paul-grangaard-cpa/comment-page-1/#comment-22151 Steve Sat, 26 Aug 2006 12:19:20 +0000 http://allthingsfinancialblog.com/?p=1094#comment-22151 JLP I had never heard of Grandgaard but already employ much of his strategy with my clients. You are correct to highlight the necessity of keeping fees low when implementing any retirement strategy. If a 4% withdrawal rate is considered prudent for retirement assets, then it doesn't make much sense to burn 1% to 2% on adviser fees -- a quarter to one half of your annual withdrawal amount -- no matter if it's by commissions or other fees. Thanks for bringing Grandgaard's book to everyone's attention. It's a very important topic. JLP

I had never heard of Grandgaard but already employ much of his strategy with my clients. You are correct to highlight the necessity of keeping fees low when implementing any retirement strategy. If a 4% withdrawal rate is considered prudent for retirement assets, then it doesn’t make much sense to burn 1% to 2% on adviser fees — a quarter to one half of your annual withdrawal amount — no matter if it’s by commissions or other fees. Thanks for bringing Grandgaard’s book to everyone’s attention. It’s a very important topic.

]]> By: Barry Barnitz http://allfinancialmatters.com/2006/08/25/a-review-of-the-grangaard-strategy-by-paul-grangaard-cpa/comment-page-1/#comment-22093 Barry Barnitz Fri, 25 Aug 2006 18:36:10 +0000 http://allthingsfinancialblog.com/?p=1094#comment-22093 Hi JLP: Frank Armstrong has a succinct summation of the "two bucket" retirement portfolio approach in the following pdf. file: <a href="http://www.investorsolutions.com/v2content/investing%20during%20retirement.pdf" rel="nofollow">Investing During Retirement</a>. Hi JLP:

Frank Armstrong has a succinct summation of the “two bucket” retirement portfolio approach in the following pdf. file:
Investing During Retirement.

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