How keep-it-simple investing continues to pay off

What can I say? After a year of fear and death from a new disease that morphs to spread faster, investors are better off, not broke.

That goes in spades for simple, humble Couch Potato investors. We invested, we spent and we were still better off at the end of the year.

What we lost in cocktail conversations we couldn't have had anyway, we gained in net worth.

Yes, it's time for the annual Couch Potato Portfolio Report. But this year I have given it a new name. While most investment reports are filled with percentages and other abstractions, the newer Couch Potato Reports tell the results of investing — and withdrawing — in dollars.

Doing that, they offer evidence that simple, low-cost Couch Potato investing will pay the bills, adjusted for inflation, for a long, long time.

Probably longer than most of us will have bills to pay.

Suppose, for instance, that you had retired 30 years ago, in January 1991, at age 65. An original investment of $100,000 would now be $569,683, despite an annual spending distribution that started at $4,432. (That would be $4,300 adjusted for the first year's inflation.) By the end of 2020, at age 95, the distribution had risen to $8,363.

This 30-year period provided the highest net return after withdrawal spending of the seven periods examined. It turns out 1991 was a good year to retire.

While you had more years of net losses — five — they were spread out over 30 years with 25 years of gains.

But what about a really nasty period for investments? That would be the beginning of this century, retiring in 2001. In that period, the net return, after spending, was only 1.24% a year. And you had four years of losses with only 16 years of gains. So, you ended the period with a mere $127,946.

Scary, right? But it isn't. Here's why. After the passage of 20 years, you would be 85 years old. If you were still alive.

Here's what the actuarial tables tell us. For a couple, there would only be a 19% chance that both were still alive. Only 37% of men survive. Only 51% of women.

If the portfolio still makes inflation-adjusted distributions, there is a 100% chance the portfolio will last 10 years to age 95.

My bet? If you feel remorse, it won't be about inadequate investment returns. It will be about not spending more money when you had the opportunity.

The last 20 years have been a terrible time for retirement investors. Historically, I would compare it to the 20 years that followed the first OPEC oil embargo, 1973 through 1992. In that period, the stock market had five years of decline. Equally bad, inflation raged.

So what happened? A nearly identical portfolio had an ending value of $143,688, a net return of 1.83%. It adjusted for, and endured, whopping inflation.