I am in my 40s, planning to retire soon for a 40-50 year horizon. Finalizing my portfolio now, and would appreciate your feedback.
My Plan:
- Withdrawal: Using a 2.75% SWR (Vanguard Dynamic rule).
- CPF: Not factoring in CPF since I cannot access it.
- Equities: Liquidating my S&P 500 (CSPX) and various single company stocks to simplify and de-risk. The entire equity portion of my portfolio will be a 90% IWDA / 10% EIMI split.
- Goal: A “stress-free” retirement. The plan needs to be resilient to market recessions (sequence risk) and USD/SGD currency risk (since I spend in SGD). I also want to grow the portfolio for my legacy, so I cannot be 100% conservative.
The Two Portfolios I’m Considering:
Which of these allocations makes more sense?
Portfolio 1: “The Aggressive” (90/4/6)
- 90% Equities (IWDA/EIMI)
- 4% SGD Bonds (SSBs / ABF Singapore Bond Index / )
- 6% SGD Cash (High-yield savings / Short terms fixed Deposits)
- (Total 10% in defensive SGD assets)
Portfolio 2: “The Balanced” (85/10/5)
- 85% Equities (IWDA/EIMI)
- 10% SGD Bonds (SSBs / ABF Singapore Bond Index / )
- 5% SGD Cash (High-yield savings / Short terms fixed Deposits)
- (Total 15% in defensive SGD assets)
My Key Questions:
- Does my plan to liquidate CSPX and single stocks into a 90/10 IWDA/EIMI split make sense for a more resilient, passive portfolio?
- Which portfolio split (90/4/6 vs. 85/10/5) do you think is better? Is the 90% equity plan’s 10% buffer enough, or is the 85% plan’s 15% buffer the more rational choice for my goals?
Thanks for your insights!
Comments
Desperate_Hurry_8496 • 13 points •
There’s little difference between the 2 portfolio.
You want a retirement portfolio but you want growth. You want to drawdown capital at 2.75%(which is low by most metrics) but you want recession proof.
Retirement portfolio is more conservative because it needs to last a certain time period. Growth doesn’t need to be drawdown coz you want it to keep growing.
A high % in stocks means you will be hit hard if recession hits. Stocks low + drawdown means your portfolio will shrink and your horizon will be shorter. High% in bonds means inflation might give you a run for your money.
Helpful-Staff9562 • 1 points •
What’s your solution?
Desperate_Hurry_8496 • 1 points •
If my aim is to make sure I have a legacy to leave behind, I wouldn’t retire at 30(assuming OP is 30 and retiring, using this to last till 80). I wouldn’t draw down at all if it’s possible. But for the sake of solving the problem, let’s say I am forced to retire due to health reasons. Every dollar I don’t use will be used to compound for the next 50 years, so I would go even more extreme to even as low as 2% drawdown.
My portfolio would look like 70-80% equities. 20-25% bonds 5% cash or HYSA. My primary objective is to ensure the equities remain vested and keep compounding. Whatever returns my bonds give would be used for my retirement. I am willing to downgrade lifestyle.
Helpful-Staff9562 • 2 points •
Well this isnt any different that OP portoflio 2 plan then just slightly higher bonds so I don’t see how this is a huge difference?
Desperate_Hurry_8496 • 1 points •
Well, if you choose to ignore everything else I said and focus on percentage allocation. Yes it’s very similar.
You can run your own simulations using AI and see what works out better.
DuePomegranate • 10 points •
For actual retirement, 50-50 stocks to bonds is considered balanced. Or 60-40.
For a low SWR of 2.75%, you could probably go something like 80% bonds.
Even 80% stocks would be considered quite aggressive for a retirement portfolio! It’s like you didn’t separate the advice for the accumulation phase (when you can live off salary) from the withdrawal phase (when you soon have to sell something to live off of).
paperboiko • -4 points •
Can explain more? Its incredibly low equity proportion.
DuePomegranate • 1 points •
Where are you getting this 85-90% equities portfolios from? That might make sense for accumulation phase, while you’re working. But the most classic portfolios for retirement are 50-60%. So that if there’s a multi-year crash, you can sell your bonds to survive instead of selling your IWDA or whatever at 30% losses.
paperboiko • 2 points •
My cash (5%) and sgd denominated bonds(10%) should give me ~8 years of spending. Unless ofc, bond drop a lot and there is high inflation in Singapore.
DuePomegranate • 4 points •
Basically you have accumulated way more than you need for your own retirement then.
Because conventionally you only need 25x of yearly spending to retire, and maybe adjust upwards to 30x for an early retirement. If 15% is 8 years worth, then 100% is 53x. So you have like twice of what is conventionally recommended.
In that case, roughly consider 50% to be for your kids (which can be 100% equities) and the rest is actually for yourself. So portfolio 2 is 30% safe stuff when counting only the portion for yourself. Which is a little more reasonable, but basically is plenty “greedy” already.
paperboiko • 1 points •
In this case, that sounds like a good thing right?
Hence, it’s sounds like i could have a higher equities proportion for my portfolio?
DuePomegranate • 1 points •
Yes, it’s fine as long as you have the fortitude to not panic sell.
Ceyenne18 • 1 points •
With current high interest rates that we can lock in, the mindset for decumulation phase should switch from cannibalization to perpetual income.
DuePomegranate • 4 points •
I don’t see much difference between a distributing income fund and selling a portion of an accumulating fund with similar holdings. It’s just whether you sell or the fund manager sells.
Ceyenne18 • 0 points •
Yes, your view is fine if you are selling an accumulative bond fund and selling it at a rate no faster than its yield.
Because if you sell faster than its yield, then you are cannibalizing the flesh.
But if it’s a model based on cannibalizing equity, then it’s not the same thing.
kingkongfly • 5 points •
A stress-free retirement means your finances—and your peace of mind—are protected, even when markets get unpredictable. With 80–90% of your portfolio in equities, consider how you’d react if a market downturn hits suddenly. Would you feel comfortable, or would worries about your lifestyle and long-term security creep in?
Importance of Diversification While concentrating investments in equities can deliver higher returns during rising markets, it also exposes you to potentially large losses during recessions. Asset diversification may lower your overall returns in some years, but it’s the cornerstone of a secure, resilient retirement plan.
Core-Satellite Strategy Structuring your portfolio with a stable, diversified core and a smaller allocation to higher-risk assets offers several benefits:
• The core base provides reliable growth and income, typically using bonds, dividend-paying stocks, and cash, reducing volatility and preserving capital.
• Satellite positions in high-risk equities present opportunities for upside, but their impact is contained—supporting your financial goals without jeopardizing your retirement lifestyle. Additional Points to Consider
• Diversification shields against single-market shocks and sharp downturns, lessening emotional stress and the need to make drastic moves.
• Resilience comes from disciplined rebalancing, keeping your portfolio aligned with your risk comfort and retirement income needs, even through volatile times.
• Building cash reserves ensures you have liquidity for unexpected expenses, so you won’t need to sell assets in a downturn.
Remember: A resilient retirement plan doesn’t just aim for the highest returns focuses on sustainability, predictability, and the freedom to enjoy your later years without financial anxiety.
SeriousMeringue7630 • 4 points •
Regardless of your split, not factoring in CPF because you cannot access it now is illogical. Your money needs to last you well beyond the CPF retirement age, so that means you are not using up all your money now - whatever portion of your money is in bonds and gets used after 65 is no different to you if it was locked up before 65 or not.
paperboiko • 2 points •
What I meant is that for retirement, I will not consider CPF monies. Any amount coming from that would be a bonus during retirement.
SeriousMeringue7630 • 2 points •
Is there any logical reason to do so? The more a cash flow is certain the more you should be factoring it in (eg not counting on high risk stocks mooning). CPF payouts are not like a job bonus that is a variable and highly uncertain, you can very much calculate with almost 100% certainty (less policy risk) how much you are getting each year, which makes it an excellent asset to factor in.
Ceyenne18 • 7 points •
Why sell and cannibalize yourself if all you need is 2.75%?
There are literally plenty of instruments that pay more than that in yield.
Let me offer you an alternative - 50% in income generating instruments (with 5.5% yield) and 50% in equities. This will allow you perpetual compounding and perpetual income. Without ever having to sell a single asset.
paperboiko • 1 points •
That low growth right? I thought keeping into equities over long period will beat bond
mailame • 3 points •
I would say your SWR is so low that it doesn’t matter in the long term what your distribution split is. In fact I would say there is little need to pursue growth anymore.
However in the name of diversification a 50:50 split would be more prudent. Slp better at night.
paperboiko • 2 points •
Thata the thing. I’m not sure the bond really offer the shock absorber that it is meant to. In fact during the recent crash, both stock AND bond drop. In that sense, I feel that having too much bond will lead to a drag on the overall portfolio.
Ceyenne18 • 3 points •
Which do you think will grow faster?
(a) 50% in equities without selling or (b) 100% in equities by selling 2.75% every year?
Do not forget you have 0% fear of crash/corrections and sequence of return risk with (a).
Desperate_Hurry_8496 • 3 points •
(A) means your 50% stake in bonds is used instead of reinvested. Whilst your 50% stake in equities is compounding without being sold.
If we use 7% as the expected returns on equity. (A) would compound at 7% x 50% = 3.5% per year (B) would compound at 7% x 97.25% = 4.0575% per year.
Ceyenne18 • 2 points •
I = Investment Amount = $1m, Y = Years = 30
(a) 0.5 x I x (1.07)Y = $3,806,000
(b) 1 x I x (1.07 x 0.9725)Y = $3,243,000
I.e. 50% without withdrawal > 100% with withdrawal.
And your income is provided through your bonds, never having to worry about sequence of return, crash, etc … for perpetuality.
True financial independence means detachment from the anxieties of the stock market and living the life you want, fully funded. If you are dependent on market going up in a straight line at 7% for next 30 years, that’s not independence.
Desperate_Hurry_8496 • 2 points •
Wow thanks for that. Amazing my error of thinking halving the interest rate and principal was interchangeable translated to such a big difference.
Ceyenne18 • 1 points •
😊
paperboiko • 2 points •
Thanks man.
I always thought that SWR on combif of stocks+bonds is the way to go. But you just show me a new way!
Did some simulation, and found that across different returns of 3% to 20%, in roughly 25 years, your 50% split of portfolio would beat the 100% equities portfolio.
Ceyenne18 • 1 points •
100% equity is what I will recommend for those in accumulation phase over decades.
But once in retirement, it becomes a bit risky to depend on selling to fund retirement.
All the best in your retirement :).
Terrigible • 1 points •
The cash flow in these two scenarios are not equivalent.
For A, the withdrawals are constant, because PIMCO GIS Income Fund has historically maintained a relatively stable NAV (actually it has gone down a bit but close enough) and you assume yields are fixed.
For B, the withdrawals grow at 4.0575% p.a. because they are proportional to the portfolio and the portfolio grows at 1.07 × 0.9725 - 1 = 4.0575% p.a.
Ceyenne18 • 1 points •
The scenarios have nothing to do with bonds or Pimco funds.
paperboiko • 1 points •
Yup, my thought exactly. In my opinion, having bond is a drag. And I really not sure why many propose holding so high a prop of the portfolio on bonds…
paperboiko • 1 points •
That does not work for me, since the SWR is applied to both equities and bonds.
Ceyenne18 • 2 points •
I believe your 2.75% SWR is based on your budgetary needs?
But if 50% of your asset is generating 5.5% of income, then you have all the money you need.
Without having to ever sell anything or worry about whether it will grow at 8% :).
paperboiko • 2 points •
Ya, the thing is that the 5.5% income is not guarantee right?
Ceyenne18 • 0 points •
The nominal US IG bond yield since 1926 is 6.1%.
For myself, I assume 4% after inflation adjustment.
paperboiko • 1 points •
Thanks.for Singapore denominated equivalent bond, that would be SGX:MBH?
Ceyenne18 • 3 points •
Hi, I’m not familiar with MBH.
The more common income instruments will be SGD hedged bond funds like Pimco Income Fund, Neuberger Berman Fund, JPM Income Fund, etc. Most are paying 5.5% to 6.5% currently.
For me, around 70% of mine are in Pimco and Neuberger.
https://endowus.com/investment-funds-list/pimco-gis-income-fund-IE00BSTL7535
https://endowus.com/investment-funds-list/neuberger-berman-strategic-income-fund-IE00BRJFZM13
https://endowus.com/investment-funds-list/jp-morgan-income-fund-LU2044937824
Also, you can consider DBS shares. Treat it as an income generator and capital gains as bonus. DBS has recently increased its dividend to 55 share price, you are still locking in 5.89% yield. Yes, I also own it as a ballast for my bond income.
paperboiko • 1 points •
Thanks man. Those bonds you suggest seems to be investment grade right?
paperboiko • 1 points •
Is PIMCO available in IBKR? Cannot find that.
Terrigible • 2 points •
A 5% difference in asset allocation will not make a difference. You are splitting hairs. How you adjust your withdrawals while in a drawdown will matter much more.
87.5% equity. /thread
mrmrdarren • 1 points •
I might do a 75% equities vs 25% bonds split instead. Or even a more conservative approach of 60/40 especially one of your goals is to be resilient against market crashes.
Like what the other commenter said, I wouldn’t sell CSPX, just treat it as a portion of your portfolio.
With a 2.75% SWR, you should be plenty safe for almost any situation in the future.
paperboiko • 1 points •
Thanks. Which bond would you recommend? I’m looking at SGD denominated bonds.
KLKCAhBoy90 • 1 points •
If we based on the charts we can find online, at your SWR, you pretty much have 100% success no matter the allocation (except 100% bonds).
So, whichever portfolio you choose will achieve the same thing. You can just choose whichever lets you sleep better.
Also, while it is true that you can’t touch CPF but technically (assuming you hit FRS), it can be a 2.5% bond (on the values excess of FRS) from 55 to 64 and then a 6% bond (on the values in RA) from 65 to infinity, assuming they don’t change the rules. So, in theory, you can afford to have retire on less capital by letting some of the capital drawdown before 65, since you are guaranteed additional 2.5% or 6% in older ages.
paperboiko • 1 points •
Thanks for sharing. I’m looking at 45-50 years retirement, which is not modelled in the chart.
I used FI calc to model, and both portfolios give 100% success.
UverZzz • 1 points •
Would consider the FX risk instead.
How about a portion in sgd for dividends ?
paperboiko • 1 points •
Dividend stock in my opinion is risky. It depends only whether the company really give the dividend, and anytime the dividend is given the share price will drop accordingly.
To protect against FX, I play to hold Sgd cash (5%) and sgd denominated bonds (10%), which would give me ~8 years of spending.
mianbaotoast • 1 points •
Looks like nobody mentioned, do you have any house loan? Car loan? Young Kids? Other liabilities? I hope you already have a house fully paid, when you FIRE. Also the portfolio could change every few years, and also when you can access CPF / SRS.
Cold-Yesterday1175 • 1 points •
Need to know your buffer. If your annual expenses is 100k, it matters greatly if your portfolio is 2m or 10m. If it’s 10m, I would say just go 100% equities
cornoholio • 1 points •
Monte Carlo
bnfbnfbnf • 1 points •
SWR is too low. 3.25% is the floor rate with 60% equities and 40% bonds. alternatively you can withdraw higher in good years while decrease in bad years