The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: bikebum on March 09, 2013, 03:19:09 PM
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http://www.investopedia.com/articles/personal-finance/030613/why-4-rule-no-longer-works-retirees.asp#axzz2MzgmTzZD (http://www.investopedia.com/articles/personal-finance/030613/why-4-rule-no-longer-works-retirees.asp#axzz2MzgmTzZD)
I don't have an opinion on this. Just thought people may find it interesting.
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Thanks, Josh. The article appears to indicate problems for portfolios heavily invested in bonds. Continuing the theme of interesting reading, here is a link to the Trinity Study: http://www.fpanet.org/journal/CurrentIssue/TableofContents/PortfolioSuccessRates/
I'm not tech savvy enough to be able to just let you click on the link. If it doesn't work, Jim Collins cites to it in his December 7, 2012 blog post - Stocks Part XIII. Happy reading.
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11 years later, and 4% still seems ok.
I guess saying that the 4% rule won't work "anymore" has helped advisors keep people from managing their own accounts. After all, the ad keeps playing if customers keep coming - an example is a RE Investment Co. that is 'only looking for a few select people looking to make passive income.' That ad played for years on a radio station near me.
Prudential article says "it may not stand up today," but has the solution of "making dynamic withdrawals," which sounds to me like forgetting you're not holding inside info.
https://www.prudential.com/financial-education/4-percent-rule-retirement
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Wow blast from the past but..... Since I still keep hearing how the 4% rule won't work anymore.... It's still relevant. Guess as long as it keeps the cash flowing in to advisers, it really doesn't work.... Fear is an excellent industry to be in after all!
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Here's a portfolio visualizer applying the "4% rule" from March 2013-today. Portfolio #1 is 100% stocks, #2 is 90/10 stocks/bonds, #3 is 75/25.
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https://www.bogleheads.org/wiki/Variable_percentage_withdrawal
https://www.finiki.org/wiki/Variable_percentage_withdrawal
Bogleheads and Canadian sister site Finiki say 4% is too low (depending on your age), but also that it relies on annual returns, diversification, and not a constant 4% of the initial balance. It also doesn't rely on the last ten years' recency bias.
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"Why Clickbait titles on articles don't work anymore"
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http://www.investopedia.com/articles/personal-finance/030613/why-4-rule-no-longer-works-retirees.asp#axzz2MzgmTzZD (http://www.investopedia.com/articles/personal-finance/030613/why-4-rule-no-longer-works-retirees.asp#axzz2MzgmTzZD)
I don't have an opinion on this. Just thought people may find it interesting.
weird - I'm not finding the same article? Can't find a mention of 4% in the link, even though it is in the link.
lol, because the OP is 11 years ago!
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https://www.bogleheads.org/wiki/Variable_percentage_withdrawal
https://www.finiki.org/wiki/Variable_percentage_withdrawal
Bogleheads and Canadian sister site Finiki say 4% is too low (depending on your age), but also that it relies on annual returns, diversification, and not a constant 4% of the initial balance. It also doesn't rely on the last ten years' recency bias.
that's what I like to hear, hahahaha!
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Here's a portfolio visualizer applying the "4% rule" from March 2013-today. Portfolio #1 is 100% stocks, #2 is 90/10 stocks/bonds, #3 is 75/25.
Yes, investing 100% stocks during the longest bull market in history was a good choice. Most people won't be that lucky. The average investor might follow a path closer to a Monte Carlo simulation, which randomizes performance and runs repeated simulations.