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Subject:  Re: 5 Year "Cushion" Date:  4/14/2000  10:00 AM
Author:  TMFPixy Number:  3531 of 20640

Jeff writes:

<<I've asked pixy this and he said that he was cosidering writing an article on it, but since you claim to an investment professional maybe you can help. When one is investing, the FOOLISH way is to invest at regular intervals a.k.a. dollar cost averaging, right. So why is it such a bad thing to dollar sell average when taking money out of the market after retirement? If I have calculated that I need to only remove 4% of my funds per year and I do that by selling once a quarter, sure I'll have to sell more shares when the market is down but I'll also sell fewer when the market is up and I'm not trying to time the market by only selling when the market is up to replenish a 5-year cushion.>>

Given the low withdrawal rate you're using, that may work. However, I wonder if you're using 4% of the intial portfolio as increased by inflation each year, 4% of the initial portfolio held constant over the years, or 4% of the portfolio's value each year? It makes a difference. Give me that data, and I'll use that in an analysis I'm constructing for a future article.

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