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Monday Night Finance- Volume 65

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Monday, 11 April 2022 / Published in Monday Night Finance

Monday Night Finance- Volume 65

The Four Backstops to the Four Percent Rule

One of the recent additions to CountAbout was the FIRE widget. The FIRE widget uses your net worth to predict your income based in retirement (or early retirement) based off of your assets that are tracked in CountAbout and a safe withdrawal rate. While CountAbout allows you to select a wide range of withdrawal rates, a 4% withdrawal rate is the most commonly talked about withdrawal rate discussed in the FIRE movement. The so-called “4% rule” comes from the Trinity Study which showed that most portfolios could support a withdrawal of 4% of the initial balance adjusted for inflation each year for the next 30 years.

Obviously, we have no idea what the next 30 years will bring. Some people believe that a 4% withdrawal rate may be too aggressive for the next 30 years. However, Sean Mullaney, the “FI Tax Guy” points out that early retirees have 4 “backstops” to the 4% rule that could help them if their portfolio takes an unexpected downturn.

As a result of these risks, and stock market highs in late 2021, some are worried that the 4% Rule is too generous for many retirees. Christine Benz discussed her concerns on a recent episode of the Earn and Invest podcast.

This post adds a wrinkle to the discussion: the four backstops to the 4% Rule for early retirees. What if worries about the adequacy of the 4% Rule for early retirees can be addressed by factors outside of the 4% Rule safe withdrawal rate? And what if those factors quite naturally occur for early retirees? ~FI Tax Guy

The first and most obvious backstop to the 4% rule is that you can always reduce spending in retirement or early retirement. While we all need to eat, most retirees/early retirees can make changes to discretionary spending to help them weather downturns in their portfolio. Maybe you decide to not replace your car for a few years or scale back a tropical vacation.

What to Do During a Recession: A Timeless Strategy

Are we headed for a recession? Do you even remember what a recession feels like? It’s been more than a decade since our last recession that started with the 2008 housing crisis. If you are having problems remembering that far back, a recession means a decline in economic activity such as GDP, real income, or employment. Currently, our unemployment numbers are low, but inflation is high. It doesn’t take an economic expert on TV to tell us that inflation is high, just try to fill up your car with gas or go grocery shopping. Darius Foroux is quick to point out that while inflation hasn’t caused every recession, a recession has ended every inflationary period. That is to say, now that we have high inflation, we should expect a recession before things get better. So- while the economy looks great now, we may very well be heading for a recession. If that’s the case, it makes sense to prepare for a potential downturn.

Since the probability of a recession this year is getting higher, I’d rather expect it. That helps me to do well when it happens. And if it doesn’t happen, I will still do well. Preparing for a recession is a no-lose situation. ~Darius Foroux

This article walks through several steps you can take today to help you prepare for a recession. First and foremost, it is important to not stop investing during the recession. If you are able to continue buying stocks during a recession, you can buy these assets at a big discount. When the economy recovers, these stocks can deliver a massive return. You can also help yourself survive a recession by giving yourself options. While most people are dependent on their job for 100% of their income, developing a second stream of income can help you in case you lose your job during a recession. You may also prepare for a recession by updating your skill set to make you indispensable to your current employer or more attractive to a new employer. If you think a recession is likely in the future, check out the article for even more great tips.

Investing styles, if they were animals

We all know there are different investment strategies and investment vehicles. Stocks, Bonds, Real Estate, Dogecoin. In fact, there may be as many different portfolios as there are investors in the world. But despite this diversity, it is often hard to get excited or visualize different strategies. What’s the difference between a growth portfolio and an income portfolio? This fun, illustrated article by The Woke Salaryman describes different portfolios as different animals.

Your goal is to carry your hard earned money as far as you can so they’re safe from the Eternal Sandstorm of Inflation… Your investments? They’re beasts of burden that will carry your money through the passage of time. ~The Woke Salaryman

If you’re wondering what portfolios and animals have in common, I’ll tell you. The authors describe growing wealth as an epic journey. If you had to walk all of the way to retirement on your own two feet (by not investing) you’d never make it. Riding on an animal can help you travel farther and faster. You may choose an a fast animal (like an ostrich, who can complete a marathon in under an hour) by investing in speculative assets. But there’s also a chance that the ostrich may buck you and your speculative assets may crash. If this analogy spoke to you, you may wish to check out other animal portfolios and decide which animals you feel most comfortable partnering with on your journey to retirement.

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Reviews

Shirley Hou
CountAbout was Perfect
15-03-2017

I was looking for finance software to use as treasurer of the parent-teacher association at my child's school. CountAbout was perfect - it had all the register features and download capabilities that I was familiar with from desktop Quicken, but it has the advantage of being in the cloud so I can use it from any computer.

 
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Amanda Sherlock
25-08-2020

I started using Quicken in 1987, before I had my own PC. I continued using it for years, frustrated by the frequent breaks in the synchronization. Finally I took the leap and used Mint for a year or two. Free software is worth as much as I pay for. Finally, in 2019 I found Countabout. The synchronization is great and I am happy to have a product that's easy to use and reliable. The customer support is excellent and very responsive to my questions.
There aren't as many bells and whistles as Quicken but the simplicity outweighs the complications.

 
Barbara Ann Feeney
16-05-2016

I switched from pencil and paper on grid accounting paper, then to a Google spreadsheet, then to CountAbout. Really happy with how this app makes it easy to track how I doing, staying (or not) on budget.

 
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Steve P.
22-09-2017

My search for a cloud-based alternative to Quicken is over! Very easy to transfer my Quicken data and customize my account. Thank you CountAbout!

 
‏@davepurcell
15-11-2016

I rarely tweet endorsements, but -- after years of using/hating Quicken, Countabout is awesome for tracking home budget/finances. Thx!

 
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Richard Luna
03-02-2021

I'm a one-person real estate brokerage and having accurate financial records and being able to easily search transactions and generate reports is crucial. I'd been using Quicken for Mac for 10+ years and wanted to migrate to using a Chromebook instead of a Mac, to do that I had to find a replacement for Quicken.

The replacement had to be online; available from my phone, tablet, etc., and no software installations almost every year. I immediately dismissed any 'free' financial software (Mint, etc.) - I believe that you get what you pay for and there is no such thing as 'free.'

I settled on Tiller and CountAbout and subscribed to both; I quickly decided that a spreadsheet is not what I wanted. I wanted something that worked a lot like Quicken and CountAbout fit the bill. It took me awhile to fully embrace it but once I did I've been very happy and would not go back to Quicken even if they offered a fully online version. The few times I've had a question about using CountAbout I've always gotten a response by the end of the day - and often in an hour or less. If feels like I'm working with a small enterprise that's interested in putting out a superior application, improving it and solving issues and responding to questions. I'm very satisfied!

 
David M.
16-07-2016

CountAbout is as easy to use on my mobile as it is on the desktop and it provides me with the same or better information than Quicken.

 
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Jim Powell
17-03-2018

Vastly superior to the execrable Quicken, which caused me to have to choose a new bank password every time I used it. CA is fast, simple, and all you need unless you have a complicated investment portfolio. Its almost fun!

 
Nate E.
05-02-2016

Fantastic! I finally found a great replacement for Quicken! CountAbout is entirely cloud-based, so you can access it from whatever OS you happen to be using. And the mobile app isn't hamstrung like Quicken's. No looking back for me, this is a great app and a great service!

 
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Jeffrey Wilk
02-04-2018

Great product and great customer service. Thanks!

 
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Keith Hurst
22-05-2020

I've been trying to ditch Quicken for years, finally a worthy replacement, but it's so much more, so clean and intuitively designed. I was really surprised and delighted to find a full featured iphone app that meets all my needs.

 
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Nancy
10-08-2018

I love CountAbout! I have hated Quicken for years, but didn't have an alternative. Now I do! I love that the cost is only $9.99 per year for the basic service (which is all I need). You can upgrade for more features, if you need them. But for personal use, the basic plan is just fine. When I found CountAbout, I gleefully gave Quicken the boot and I haven't looked back or missed it at all. Bye bye Quicken!!!

 
Widgets to Compare Monthly Spending in Active Categories
17-02-2017

Huzzah! I can add widgets now and already made one to compare my monthly spending in my active categories to my budget. Excellent. That tool is one of my favorite features in a personal finance product.

 
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Ann
28-06-2021

Countabout's concept is awesome. I track checking and credit cards by transactions, and investments by total only. The reason for four stars is that periodically the investment accounts refuse to update the correct amount. Then, I have to unlink the account, delete the account then set up the account a second, third or fourth time. Often times, when trying to link a new account, CA logs me out. If you have patience, CA is a hundred times better than Quicken, but not yet perfect. Still trying to set up a credit card account after 6 attempts. At some point, it will click.

 
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Dana Linder
29-03-2019

This is an incredibly well thought out program.

It imports QIF files perfectly. I tried a number that failed miserably.

It has a function that emails reminders about scheduled transactions. That is an extremely useful function that I hadn't seen anywhere.

Tech support is second to none. All my questions were answered in detail within hours (sometimes minutes).

The companion phone app is very simple. You can browse, search, enter transactions and see scheduled transaction. That's really all you need on the phone.

It's one failing for me is that I have a transaction that I have a transaction that occurs on the 3rd Wednesday of the month, and it's not possible to set that up. It's easy enough for me to change the date of next transaction when I enter the current one.

I am extremely impressed with the company. The trial is free for 15 days. You have nothing to lose.

 
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Colin R. Vine
13-07-2021

I have been using Countabout Basic for a few months now and love the program. It is far and away better than any other personal finance program I have used.
I would recommend Countabout to anyone. Give it a try. The web interface is easy to use on my Chromebook and on my Android phone and tablet.
When I have had a query, the company has written back almost instantaneously. Great service!

 
My Bank Tracker
24-11-2016

...you won’t be bombarded with ads when you log in. Mint, for example, uses targeted ads to help keep the platform free. All in all, CountAbout could be a good choice for Quicken and Mint users who want to start fresh with their finances without losing their past transaction history.

 
Mark Goldfarb
20-01-2017

I love the software – nice and clean – the categories was a must have that your competitors are lacking.

 
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Wayne Everett
07-02-2022

I have been using Countabout for over 2 years. I got sick of quicken continuing to "improve" itself with crap I did not want, even if they did not increase their costs constantly. Countabout has done everything that I need. I have 20+ accounts linked and all is great!

 

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CountAbout® is an easy-to-use online personal finance application that imports data from Quicken and Mint and automatically downloads data from banking, credit card, and retirement accounts. With no software to install, we’re anywhere you have an Internet connection. Our platform is stable, secure, and totally private. Our dedicated customer service team is friendly, knowledgeable, and quick to respond.

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