Critical Mass - Care and Feeding For Once Attained: Re: Re: Mutual Funds

» Normxxx - Re: Re: Mutual Funds

In response to Re: Mutual Funds posted by bob90245:

This is why I am in favor of withdrawing a set maximum percentage (e.g., 4% - 5%) each year (and redepositing any unused funds) rather than taking out a set amount based on, say, an initial 4%. This may be harder to plan for, but it sure is safer!

While the author's widely diversified portfolio will reduce volatility, nevertheless, a stretch of poor returns early in retirement could force depleting principal at a faster rate than expected.

Which is why I would also have an additional mechanism for gradually increasing equity while the real S&P was decreasing (to as much as 70% after the real S&P had dropped by 50% or so from its previous high), and gradually decreasing equity while the real S&P was increasing (to as little as 40% after the real S&P had increased by 100% or so from its previous low).

Remember, too, I am anticipating a world (for the next 10 - 20 years or so) in which it will be extremely hard to earn anything like the 8.5% that Tim is predicting. Also, about now, I would plan on 3.5% - 4% inflation, until proved false (say over the next 5 - 10 years).

-- posted by Normxxx