Overview

An aging population asks?

• Do I have enough to retire?
• How much longer must I work?
• Will my money last?
• Can I trust anybody to look out for my interests?

The wealth management industry feeds on these anxieties, but:

• Skims entrusted funds.
• Provides one-size-fits-all products.
• Inaccessibly sequesters funds.
• Churns accounts.
• Punts on taxes. “Consult your tax advisor.”
• Demands you trust their secret “proprietary” algorithms.
• Makes no promises.

The Hedgematic Portfolio is an alternative to traditional wealth management products.

How does Hedgematic work?

• Fill out a questionnaire with demographic info, account balances, and required yearly expenses.
• Click “compute”. When results are ready, you are notified.
• Results include graphs and tables that list all transactions, which once executed, subject to your risk tolerance, provide a hedged lifetime stream of payments sufficient to cover yearly expenses.
• If funds are sufficient, the size of your estate is provided. Otherwise, shortfalls are listed for affected years, showing you the additional savings you need to commence your retirement, or your retirement date given no increase in your assets. Recompute with different expenses or risk tolerance until satisfied.
• Results are:
  • After-tax.
  • Inflation adjusted.
  • Tax-optimized.

How is it hedged?

• Each year of retirement is separately funded and hedged. All assets are held long.
• Assets dedicated to each year are apportioned between:
  • S&P (via ETF)
  • TIPS inflation protected bonds.
• Withdrawals are denominated in:
  • Inflation adjusted dollars.
  • S&P index multiples.
• Apportionment is based on a model derived from work by Robert Shiller (Case-Shiller Housing Index, CAPE10, “Irrational Exuberance”, Nobel Prize), who observed that a ten-year moving average of stock market returns can explain, in part, future returns.
• You don’t run out of money. Yearly payouts may exceed expenses or fall short. Risk tolerance is accounted for by an aversity figure. 1 is the default.

Compare the Hedgematic Portfolio to traditional offerings:

• Everyone gets either:
  • A retirement date and dollars needed to retire today, or,
  • A green-light on retirement and the likely amount of any remaining estate.
• Funds will not be exhausted.
• You retain control of your assets. No institutional risk.
• No service charges.
• All assets are held long. Market risk controlled.
• Income satisfies user’s individually specified year-by-year expenses.
• Open, transparent algorithms based on unimpeachable economics.
• Social security payments are optimized and incorporated.
• Taxes are optimized.
  • Results include yearly tax returns.
  • Optimizes withdrawals over brokerage, IRA, and Roth accounts.
  • Schedules optimum rollovers between IRA and Roth accounts
  • Optimizes S&P sales for capital gains treatment.
  • Dividends get capital gains treatment.