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How to Avoid Comparing Against Your All-Time High Portfolio Value

A common question about of the “4% rule” is, well, 4% of what? People like to anchor themselves to the all-time high value of their portfolio, but we can see from recent events that can be a shaky idea. I believe that you should always be prepared for stocks to fall by 50%, which means you could be taking 4% of two very different values. Folks shouldn’t act like they “lost $XX,XXX” when their stocks drop from an arbitrary all-time high, and they shouldn’t plan out the next 30 years of retirement income based on a single value either.

I’m currently reading the new book Rethinking Investing: A Very Short Guide to Very Long-Term Investing by Charles Ellis. He’s been in the industry a long time, but may be best known for his bestselling book Winning the Loser’s Game, first published in 1985.

In the book, Ellis proposed a potentially better way to set your Spending Rule in retirement. It’s not based on the most recent value of your portfolio, and definitely not the all-time high of your portfolio. Instead, he wants you to use the rolling average over the last 5-7 years. Then, you can add the 4% rule (or whatever).

In designing your own spending rule, first, average the year-end values of your assets over the prior several years (preferably more than five years) to dampen the impact of market fluctuations. Next, calculate what would be a prudent withdrawal of the averaged assets—likely 4–5%—to determine what dollar amount you can prudently withdraw from your current portfolio each year to cover some of your expenses.

This has the effect of smoothing out your annual withdrawals:

Averaging your assets over multiple years makes the funds available for your spending far more consistent and predictable. If, for example, you settle on a 5% rate of withdrawal and a six-year moving average of the year-end value of your assets, a 30% drop in the stock market would lead to only a 5% reduction in your payout that year (and much of that reduction likely would be provided by your consistent dividend income).

(Side note: This supports the idea of me tracking my consistent dividend income…)

Let’s take a look at Vanguard LifeStrategy Growth Fund (VASGX), an all-in-one fund that is diversified similarly to their Target Date Retirement Funds, but a handy benchmark since it is a constant 80% stocks/20% bonds. Here’s a Growth of $10,000 chart for the last 5 years ending 4/4:

Instead of seeing that you are about 11% off your all-time high value of about $18,300, you might appreciate that you are still above January 2024 levels, and that your 5-year rolling average of year-end values is about $15,400. If you based your 4% withdrawal rate on that value, you would be much calmer now.

I like this strategy, and I believe it should be applied even when you are still accumulating for retirement. Don’t anchor yourself the all-time high of your portfolio and make it your new “If it ever goes below this, I’ll be sad!” value. Instead, mentally track a rolling average of your net worth. I’ll look to add this concept to my portfolio updates, hopefully it’ll reduce my stress levels during volatile times.

Finally, Ellis points out another potential benefit:

Importantly, by following such a Spending Rule, you are then free to concentrate on achieving significantly higher long-term returns without the need to be overinvested in bonds. Stabilizing the investor’s income with a responsible Spending Rule frees the investment portfolio to invest more in equities and produces, over time, a higher and more rapidly rising portfolio value and income stream.

US Bank Smartly Credit Card Review: Up to 4% Cash Back w/ $100,000 in Qualifying Balances

Update 4/2/25: Doctor of Credit reports a Reddit rumor that the US Bank Smartly credit card will be undergoing some major negative changes as of 4/14/25. This includes:

  • Base is still 2% cash back on unlimited amounts. Bonus cash back (up to another 2% for a total of 4%) is capped to $10,000 in purchases per statement cycle.
  • Bonus cash back now excludes: Educational/school, gift cards, insurance, taxes, business to business transactions, and 3rd party bill payments.
  • For new cardmembers after April 14th, only checking account balances count now towards the $10k/$50k/$100k deposit requirements. Critically, savings account balances and investment balances do not count after 4/14 for new cardmembers. Existing customers will be grandfathered in for now.

Again, the above is a rumor. However, I do believe the following are true:

  • There is basically no way that this card can continue to exist without some sort of added restrictions. 4% with no cap simply does not math out, as I guarantee that some people are paying $100,000 in college or private school tuitions, $300,000+ in tax bills on this card, and who knows how many business transactions between “friendly” parties…
  • US Bank has a history of first rolling out a consumer-friendly product, and then later pulling it from the market or changing the features.
  • US Bank also has a history of grandfathering in existing customers of those products and continuing to offer them some/all of the old features.

Therefore, I see two possible actionable responses:

  1. Giving up on this Smartly card and not applying at all, and possibly avoiding the US Bank ecosystem altogether. It’s hard to work with unreliable people. If these changes take place, after 4/14 the lost interest on $100,000 in cash will outweigh the extra 2% by a good margin.
  2. Working extra fast right now in order to open up your US Bank Smartly savings account (this seems to be the easiest to open), then Smartly checking w/ bonus, then the US Bank self-directed brokerage account, fund it with $100,000, and apply for the Smartly credit card all as soon as possible, definitely before the rumored 4/14 deadline. Take advantage of the fact that they probably have to grandfather in these current terms at least for a year or so, otherwise in theory they would be bait-and-switching and might get in trouble.

Since my last update, I opened a new US Bank brokerage account, moved over $101,000 in cash, and then invested it all into the SGOV ETF that holds Treasury Bills. (I could have moved over stock ETFs instead, but I had the cash available.) I then applied for the Smartly credit card and was approved with a $25,000 limit despite my previous lack of “pre-approval”. I was hoping that reaching their top rewards tier first would encourage them to approve my new card, and maybe it helped. I’m okay with accepting the rumored changes as long as they grandfather me in on the brokerage balances; it could have been worse. What do you think?

I just took a quick look at the application page. Everything still looks the same as before as of today. I did take some screenshots in case there are subtle changes later.

Update 11/11/24: Applications for this card are now open. No sign-up bonus. It let me check if I was “pre-approved” with a soft pull (had to unfreeze TransUnion for it to work), but I was not pre-approved. That might be because I recently applied for the Altitude Reserve (now-discontinued) after setting up a Smartly Checking and Savings account to get “in” with them but was getting impatient (was denied for US Bank credit cards in the past without a banking relationship due to my geographic area). Will have to sit this one out for now, but plan to try again later if they don’t pull it quickly.

Original pre-review post:

US Bank recently announced the US Bank Smartly Visa Signature Card, a new rewards credit card that offers up to 4% cash back on all purchases, if you have enough qualifying balances with them. This is the newest entrant to relationship banking, where banks offers you extra perks for combining multiple account types with them like savings accounts and investment/retirement accounts.

The card is not open to applications yet, but you can get on an e-mail waitlist. Here are the details of how that “up to 4% cash back” breaks down according to this US Bank press release and CNBC article.

Base rewards of 2% cash back on all purchases, with no limit. Technically, this card earns 2 points per $1 spent in eligible net purchases. In order get 2% cash back, you must redeem those points into an eligible U.S. Bank checking or savings account.

Bonus rewards of 0.5%, 1% or 2% cash back based on your qualifying combined balances at US Bank. You must also have an open Bank Smartly Savings account. Your qualifying combined balances with U.S. Bank include “open consumer checking account(s), money market savings account(s), savings account(s), CDs and/or IRAs, U.S. Bancorp Investments and personal trust account(s).” Business accounts, commercial accounts, and the Trustee only (IFI) client relationship do not qualify.

  • $5,000 – $49,999.99 earns 2.5% total cash back. Total of 2.5 Points per $1 (a base of 2 Points plus the Smartly Earning Bonus of 0.5 Points),
  • $50,000 – $99,999.99 earns 3% total cash back. Total of 3 Points per $1 (a base of 2 Points plus the Smartly Earning Bonus of 1 Point).
  • $100,000+ earns 4% total cash back. Total of 4 Points per $1 (a base of 2 Points plus the Smartly Earning Bonus of 2 Points).

Other bits: CNBC article reports no annual fee. Points will expire if there is no reward, purchase, or balance activity on your account for 12 consecutive statement cycles. Bank Smartly Credit Card and Bank Smartly Savings available in all 50 states.

Bank Smartly savings account. Let’s take a closer look at the Bank Smartly Savings account, which also earns difference rates based on both your balance inside the Smartly savings account itself AND your qualifying combined balances at US Bank. Here’s their current interest rate grid, updated as of 9/3/2024.

Importantly, these rates can change at any time. But right now, if you have at least $25k in Smartly and $25k in combined qualifying combined balances across US Bank, you can get the current top rate of 4.10% APY.

There is also a $5 monthly maintenance fee, which is waived if you have a Bank Smartly® Checking account (or Safe Debit account which also costs $4.95 a month). The Bank Smartly® Checking account itself has a $6.95 monthly fee, waived with $1,500+ average account balance, qualifying U.S. Bank consumer credit card, or combined monthly direct deposits totaling $1,000+.

Therefore, technically if you get this credit card, that would make the Bank Smartly Checking account free, which in turn would make the Bank Smartly Savings account free. Right now there is also a $450 bonus for new Bank Smartly Checking customers with a direct deposit requirement.

Rough opportunity costs with depositing cash at Bank Smartly Savings. Let’s try some rough theoretical numbers. Let’s say you actually have $100,000 in cash lying around, but you could get ~5.10% APY elsewhere and so you would be giving up ~1% APY to park your money at US Bank instead. If you held all of it at Bank Smartly Savings to qualify for the 4% cash back on the credit card, you’d be giving up $1,000 in taxable interest each year ($100,000 x 1%).

In exchange, you are getting 2% extra cash back over your existing, flat 2% cash back card. Cash back rewards are generally considered non-taxable as they are a rebate on your purchase. If you assume a marginal tax rate of 0% (this is just a guess), then you’d need $50,000 in annual purchases ($4,166 a month) at 2% extra cash back to break even with the hit from the lower interest. If you assume a marginal tax rate of 22%, then you’d need a little less: $39,000 in annual purchases ($3,350 a month) at 2% extra cash back to break even with the hit from the lower interest.

US Bank self-directed investments accounts! As with the Bank of America Preferred Rewards program, an alternative way to satisfy the balance requirements with minimal opportunity costs is to transfer over existing assets into a self-directed US Bank brokerage account. For example, you could transfer over $100,000 in index ETFs inside an IRA or taxable brokerage account. This would appear to fully satisfy the requirements as a “U.S. Bancorp Investments” account. This way, US Bank also gets a stronger foothold in the world of wealth management, as all the banks seem to want these days.

Be careful though, as US Bank’s self-directed brokerage account has a slightly higher fee schedule than much of the competition. Stock trades are $4.95 each, although you get 100 free trades per calendar year if you have both a Bank Smartly Checking account and paperless statements. There is a $50 annual account fee and a separate $50 annual IRA fee; these are waived if you have $250,000 in combined statement household balances.

My quick take. If all of these details actually hold through launch, they would be a potential improvement over the best current situation of 2.62% cash back on all purchases via the Bank of America Preferred Rewards program (also requires $100k in assets held at BofA) and a BofA cash back credit card. (The Robinhood 3% credit card is still “coming soon”.) But will it last? Even the BofA 2.62% has remained something of an outlier, but my hunch is that it has encouraged enough of people to keep a ton of cash at BofA earning zero interest so that BofA is still happy overall. Given that this new US Bank program actually offers a decent interest rate and an even higher cash back rate, I am concerned about its longevity. On the other hand, maybe this is US Bank’s big push to become a major player on the national level of Bank of America or Chase.

I’d have to open a lot of new accounts to go for this one. Savings account, brokerage account, credit card, move over assets, all for a bonus that is based on my credit card spend so will trickle in slowly. (None of these have a big upfront bonus.) Given the amount of shady stuff US Bank will probably have to deal with when paying 4% cash back, I’d also have to trust that it will last long enough to be worth the effort.

US Bank has a history of making cards and then pulling them from the market, but sometimes they also let the grandfathered users keep the old perk system. Hmm…

MMB Portfolio Dividend & Interest Income – 2025 Q1 Update

Here’s my 2025 Q1 income update as a companion post to my 2025 Q1 asset allocation & performance update. Even though I don't focus on high-dividend stocks, income-focused ETFs or high-yield bonds - I still track the income from my portfolio as an … [Read the rest]

MMB Portfolio Asset Allocation & Performance – 2025 Q1 Update

I try to limit checking my portfolio to once a quarter, and this is my 2025 Q1 update that includes our combined 401k/403b/IRAs and taxable brokerage accounts but excluding our house and side portfolio of self-directed investments. Following the … [Read the rest]

5% Cash Back Cards: Grocery Stores, Wholesale Clubs, Amazon, Streaming – April through June 2025

Activation reminder for 2025 2nd Quarter. The credit cards below offer 5% cash back and up on specific categories that rotate each quarter. It takes a little extra attention, but it can add up to hundreds of dollars in additional rewards per year … [Read the rest]

Bilt Mastercard: Earn Rewards For Paying Rent w/ Any Landlord (April 1st Rent Day / Avios Transfer Bonus)

Update for Rent Day 4/1. For Rent Day on 4/1, Bilt Rewards is offering the following additional perks. If you are a renter, this program offers steady stream of free monthly points and a variety of promotional perks. They also recently announced … [Read the rest]

Amtrak Guest Rewards Preferred Mastercard: 40,000 Point Offer (Worth $1,000 in Amtrak Fare)

The Amtrak Guest Rewards Preferred Mastercard, issued by First National Bank of Omaha (FNBO), offers a variety of perks for Amtrak riders. It also currently has a 40,000 points limited-time offer that is worth up to roughly $1,000 value in Amtrak … [Read the rest]

Fidelity, Schwab Won’t Let You Trade Money Market ETFs (That Aren’t Theirs)

In case you aren't aware that a huge profit source for every broker is your idle cash, Bloomberg reports that Fidelity and Schwab are blocking all new purchase trades of new money market ETFs (gift article) from Blackrock and Texas Capital. Here's … [Read the rest]

Best Asset Location for TIPS Ladder: Taxable, Tax-Deferred, or Roth?

If you are a DIY investor (or professional financial planner) that is looking to geek out on the intricacies of the tax treatment for holding Treasury Inflation-Protected Securities (TIPS), check out the new paper Best Asset Location for a TIPS … [Read the rest]

CIT Bank Platinum Savings $225/$300 Bonus + 4.10% APY (New and Existing Customers)

Update 3/20/25: This $225/$300 Platinum Savings deposit bonus. The bonus depends on deposit amount, and it is open to both new and existing customers. The bonus is on top of the interest rate, currently 4.10% APY (as of 3/20/25) with a balance of … [Read the rest]

PeerStreet Bankruptcy Update (March 2025): Why I Avoid Fractional Real Estate Now

My last update on the PeerStreet bankruptcy was about a year and a half ago. PeerStreet marketed high-interest investment loans backed by real estate in $1,000 fractional increments. A few days ago, I received a big, thick envelope with lots of … [Read the rest]

Webull ACAT Transfer Bonus: 3% of Assets Possible ($750 Bonus on $25,000)

Updated with new offer. The Webull brokerage app is offering an updated ACAT Transfer bonus plus up to $100 in outgoing fee reimbursements on your first transfer of at least $5,000. This specific offer ends 4/6/25. The minimum hold period is 1 … [Read the rest]