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Subject:  Re: New investor, am I on the right track? Date:  11/8/1999  1:49 PM
Author:  ChuckONeil Number:  15208 of 88772


I've been having second thought about your situation. While you are putting 6% into your 401K plan, you don't give any indication of how much that is. You also didn't give any indication of how much you expect to have when you retire at 55.

Anyway, I just purchased a financial calculator and learned how to operate it using your situation.

You have 25 years to grow your nest egg to 834,000 to be able to sustainably withdraw 50,000 per year (both in today's dollars)

Inflation over the past sixty years has averaged about 4.19%. Remember this is an average. Sometime in the next 25 years, we can expect one or two periods of much higher inflation. During those periods, it will be tough just to hold your own.

I assume that by investing foolishly you can earn about 20% per year. The RP4 earned 24.6% in the twenty five years ending in 1997 and 19.84% in the thirty five year period ending in 1997. Rember this too is an average. There are times when you will earn more and other times when you will earn less or even experience a loss.

Pluging all these numbers into my handy new calculator, you need to save $3,347 per year. I used a 16% return, 20% less inflation of 4%. So if all those assumptions are close to your actual experience, you should do just fine.

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