My friend Ser JingPortfolio Manager at the Compounder Fund, shared a part of this Jaime Dimon interview with acquired that the essence of the safe recording rate of income planning explains: What we read for a week ending on August 3, 2025 @ the good investors.
Ser Jing chose the part where Jaime discussed his way of thinking when he thought about risk management for JPMorgan, especially in the big financial crisis.
Am: It seems that your philosophy is that the worst will happen. So just plan for it. Don’t say, oh, we are good, as long as this crazy, insane four Sigma event does not happen. You’re like that, no. That will happen, and it often happens.
Jamie: Yes. When I look at it, when I do stress tests and a risk of high yield, I remember that I went to JP Morgan and thorn the risk books. Their stress test was that high efficiency would move 40%, the credit distribution. That time was 400 or whatever it was. That means 560.
I said, no. Our stress test once becomes the worst. The worst ever was 17%. They said, that will never happen again. The market is more advanced. Good, In 2008 it reached 20% and you could not have been able to sell bond. There was no market. So those things do happen.
The point is not that you try to guess them. The point is that you can handle them so that you continue to build your company. I always look at what I call the thick tails and manages that we can handle all the thick tails. Not the stress test that the Fed gives us, but all the thick tails.
Markets with 50%, interest rates up to 8%, credit spreads back to the worst ever. Of course your results will be worse, but you are there. You kill the thing about financial services. Aggressive accounting can kill you, what many companies do. Also trust. If you lose money as a financial company – I always knew this – the headlines are people read that. If they are a line to place their money with you, they look at that difference.
Jaime gave us the parameters that could be so challenging to navigate to a bank in that last bold, underlined highlight.
Jaime said during the interview that he is always Risk -conscious. But he emphasizes that We should not consciously confuse with the elimination of risks. It means correct prices for risks and understanding the potential results.
His long -term operational experience gave him a wide dataset.
The width of the dataset tells him that he should not go around if you still want a company afterwards.
In a sense, this is what I feel that people are very wrong about the safe recording rate in income planning. The framework for the safe admission percentage helps you to find out the amount of capital that you need to offer inflation (or real) income that can last 30.40, 50, 60 years that corresponds to your planning needs.
It often comes out to be a lower number, say 3% of your capital. This means that if you need $ 60,000 in annual income, the capital you need is $ 2 million.
Some would tell me: “But Kyith, DBS is currently being traded and gives a dividend yield of 6%. If I stop all DBS shares, I just need $ 1 million. In fact, you don’t have to look at DBS. There are many dividend shares that can be higher than that. Do you not think that the safe withdrawal method a poorer?”
Well, my question to you is whether you have seen how DBS gives dividend in their absolutestest period. I don’t have that answer.
You will all sort that out.
I can tell you how a diversified portfolio of US shares and fixed -income incoming in the great depression. In the midst of a 30-year-old persistent high inflation period that is an average of 5.5% per year. Or during Boom Town Charlie Time.
The framework for the safe recording percentage Give you the highest income that will Survive the worst periods of 30, 40, 50, 60 years. That is equivalent to the credit distribution of Jaime 17%.
Jaime Dimon will say The point is not guessed. The point is to ensure that you can handle them so that you can continue to build the company [in this case, spend the income]
And I am sure everyone will say how important the bank is for Singapore, how it is one of the most well -run bank in the world. You have to ask if you hope or wish you a plan that is less hoped for.
Why are we conservative with some things?
Jaime explains why. How important is it for him (and the people) to have a bank afterwards?
Ben: they lose confidence.
Jamie: They lose confidence, and that is what is caused to see on banks. You recently saw a few because people take their money out.
In the same way you have to ask why you would go to that extent.
Most people imagine that they have an income with which they can stop working at any time and not have to work. If so, if there is ever a chance that your portfolio will be low, so much to worry, to reduce your expenses more than you want, or to find a job 20 years later, if you don’t already have a working history and are older, would you rather prevent it from taking a chance with it?
I think this is what you should think about.
Some have the mentality that the risks of failure planning failure are not too different than saving for the university education of your children. If your investments do not work, provide loans, you work longer, cut your pension funds to take care of them. In other words, you adjust.
It is a bad planning because you find it important, but adjust.
In my thoughts, if you can always adjust, even bring down an income of $ 10,000 a month to spend $ 2,000 a month, then you don’t have to be that conservative. But what does that make of your original sum?
I think this part is really good:
Am: One, there is something you just said, namely that you might be worse, but you’re there. There is this assessment that you make where you are less profitable in the short term, but at least you get stuck.
If you look back on the companies you have run – Bank One, JP Morgan Chase – is that true in the good years that you have actually been less profitable than those who are at risk?
Jamie: A bit. You say that if you look at the history of banks from until 2007, Many banks earned 30% equity. Most of them went bankrupt. We have never done much. But in 2008 and 2009 it was good and they were not.
But You want to build a really strong company with real margins, real customers, conservative accountingWhere you don’t trust leverage. It is very easy to use leverage to boost the return in every company, but in banking it can be particularly dangerous …
You have to think about what kind of risks you are willing to take and what kind of risks you really don’t want to take. And what does those risks do not mean.
I think many people admire Jaime Dimon based on the performance of JPMorgan’s stock price, but does not assess him for the cautious things he said in the media. Sometimes you can’t separate them both. One reason why they are so good can be due to this kind of mindset.
Finally, the framework for the safe recording percentage is not the only way to achieve a similar conservative income, but it is the most empirical to find the worst. If you have a portfolio of 10 companies, the worst case is that the majority of them will be bankrupt in the long term. You have to think about that.
It can mean at the age of 80, you would still have to think about those 10 companies, if they die or bloom, and how much income you could extract from them.
The last question to think about whether you consider your income stream as Jaime is considering JPMorgan.
That acquired episode is great. Jaime Dimon was fired and chose to go from New York to work at a wrestling bank one. He put half of his assets in the bank’s stock before he walked into the door for the first day of work. His way of thinking is that he will go with the ship or will go with the ship.
If you want to trade these shares I mentioned, you can open an account Interactive brokers. Interactive Brokers is the leading cheap and efficient broker I use and trust to invest my investments and trade in Singapore, the United States, London Stock Exchange and Hong Kong Stock Exchange. This allows you to trade shares, ETFs, options, futures, forex, bonds and funds worldwide of a single integrated account.
You can read more about my thoughts about interactive brokers in These interactive brokers Deep Dive series, Starting making it easy and financing your interactive broker account.
Kyith is the owner and some writer behind investment canals. Readers coordinate investment canals to learn and build stronger, stronger power foundations, how to have a passive investment strategy, to know more about investing in Reit’s and the notes and bolts of active investing.
Readers also follow Kyith to learn how to plan well for financial security and financial independence.
From 2004 to 2019, Kyith worked as an IT operational engineer. He is currently working as a senior solutions specialist in insurance. All opinions about investment canals belong to him and do not represent the views on providing.
You can view Kyith’s current portfolio herethat uses his Free Google Stock Portfolio Tracker.
His favorite investment broker is Interactive brokersAs a result of which he is able to invest in the effects of various stock markets around the world, at very low commission rates, without retention, near spot currency rates.
You can read more about Kyith here.
#JPMorgans #Jaime #Dimon #Safe #Passive #Income #Planning