3 ms·

How does he rely on regular returns on investment of 7% or 4%? You don't get that on bank accounts; and the stock market too has not given such returns over lo

How does he rely on regular returns on investment of 7% or 4%? You don't get that on bank accounts; and the stock market too has not given such returns over long-term timespans in the last 15 years.

HappyTypist 11y ago
A very simple allocation of 70% stocks and 30% long term treasury bonds has a 6.23% CAGR over the past 15 years. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&portfolio3=Custom&portfolio2=Custom&portfolio1=Custom&annualOperation=0&TotalStockMarket1=70&initialAmount=10000&endYear=2015&mode=2&inflationAdjusted=true&annualAdjustment=0&startYear=2000&rebalanceType=1&annualPercentage=0.0&LongTermBond1=30 https://www.portfoliovisualizer.com/backtest-asset-class-all...
- josh_fyi 11y ago
  Thank you. 6.23% before taxes and inflation, less after these. Is this reliable enough over the long run to retire on?
  - harryjo 11y ago
    It is if you are a famous blogger pulling in lots of ad revenue.
  - lukego 11y ago
    Relevant MMM post: http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/ http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need...
  - hudibras 11y ago
    Keep in mind that the period 2000-2015 includes two major recessions. Almost any other fifteen year period will work even better (you can test it on that website). Move the timeframe to 30 years (which is the bare minimum that the early retirement crowd looks at) and it's difficult to find a period with less than 7% returns. Even adjusting for inflation, it's rare to have a 30-year period with less than 4% returns, which is the basis for the 4% Rule mentioned in the article.
  - ciconia 11y ago
    The golden rule is to spend no more than 4% of your assets per year, so it's quite doable.
miseg 11y ago
Just a note for people outside of the States. I've seen this before, and live in Ireland. It's a very different story here, with taxation on ETF index funds at 40% on gains, calculated every seven years. From my perspective, the 4% rule just does not count. Perhaps running a business is a better way in Ireland, for example.

How does he rely on regular returns on investment of 7% or 4%? You don't get that on bank accounts; and the stock market too has not given such returns over long-term timespans in the last 15 years.

HappyTypist 11y ago

A very simple allocation of 70% stocks and 30% long term treasury bonds has a 6.23% CAGR over the past 15 years. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&portfolio3=Custom&portfolio2=Custom&portfolio1=Custom&annualOperation=0&TotalStockMarket1=70&initialAmount=10000&endYear=2015&mode=2&inflationAdjusted=true&annualAdjustment=0&startYear=2000&rebalanceType=1&annualPercentage=0.0&LongTermBond1=30 https://www.portfoliovisualizer.com/backtest-asset-class-all...

josh_fyi 11y ago
Thank you. 6.23% before taxes and inflation, less after these. Is this reliable enough over the long run to retire on?
- harryjo 11y ago
  It is if you are a famous blogger pulling in lots of ad revenue.
- lukego 11y ago
  Relevant MMM post: http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/ http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need...
- hudibras 11y ago
  Keep in mind that the period 2000-2015 includes two major recessions. Almost any other fifteen year period will work even better (you can test it on that website). Move the timeframe to 30 years (which is the bare minimum that the early retirement crowd looks at) and it's difficult to find a period with less than 7% returns. Even adjusting for inflation, it's rare to have a 30-year period with less than 4% returns, which is the basis for the 4% Rule mentioned in the article.
- ciconia 11y ago
  The golden rule is to spend no more than 4% of your assets per year, so it's quite doable.

miseg 11y ago

Just a note for people outside of the States. I've seen this before, and live in Ireland. It's a very different story here, with taxation on ETF index funds at 40% on gains, calculated every seven years. From my perspective, the 4% rule just does not count. Perhaps running a business is a better way in Ireland, for example.