6 ms·
Inflation adjusted the stock market has grown at 7% per year. I'm not sure what the proper return rate to assume is, but 6% doesn't seem far off it and that's b
by space_fountain 5y ago
Inflation adjusted the stock market has grown at 7% per year. I'm not sure what the proper return rate to assume is, but 6% doesn't seem far off it and that's before eating into the principle because none of us will live forever
- dlp211 5y agoThis is a common mistake and doesn't account for sequence risk. While it is true that the long run, inflation adjusted, DRIP average is about 7%, over the short run, those returns are not guaranteed and a few bad years can break your retirement. A much safer withdrawal rate is 3-4% with some inflation adjusted caps and floors so that in good years you grow your investments and in bad years you maintain a certain level of lifestyle.
- space_fountain 5y agoWell regardless 40k is still completely livable even ignoring the tax advantages we give capital right? I'm not saying a millionaire is wrong to want more, plenty of people can and do live on the passive income generated by that amount of money