5 ms·
>Look at any long term chart. I'll take the risk. There are 30 year periods where US stocks (spy 500 or a close proxy thereof) posted a negative total return.
by hcknwscommenter 6y ago
>Look at any long term chart. I'll take the risk.
There are 30 year periods where US stocks (spy 500 or a close proxy thereof) posted a negative total return. Are you prepared for that?
My larger point is that 12-15% return assumption is absurd. There are very few long-term periods where that has ever been achieved in the US market, most (but not all) of which were followed by a deep and long-lasting correction.
The alternative is to assume a lower return like 5% and plan accordingly.
- icedchai 6y agoDespite these huge gains over the past 10 years, I do agree with you. I plan for a 3.5% withdrawal rate during retirement (hopefully early retirement.)
- hcknwscommenter 6y agoYou can still plan for a 3.5% withdrawal rate and be way off of what you need to retire if you are assuming a 12-15% return rate.
- icedchai 6y agoI already hit my FIRE goal, so not a problem for me.
- hcknwscommenter 6y agoGood for you, but your FIRE goal either explicitly or inherently assumes both an inflation rate and an expected return rate. It is crazy to ignore both as you seem to be doing with your statement that you are safe from failing to meet 12-15% returns simply because you are assuming a 3.5% withdrawal rate. In addition to inflation and expected return, you also should consider max draw down potential.