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Author: FoolMeOnce Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5138  
Subject: Re: Estimating future needs Date: 8/8/2003 5:07 PM
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chooey98 writes:

Yes, that's a simplified way... then I've heard multiply that times 25 to get the total amount you'd need to be FI.

Yes, if you buy into the approach that you should remain invested heavily in equities and take a 4% withdrawal rate. I reject this proposition as essentially unworkable for most folks. I also believe you can safely withdraw a much larger percentage of your portfolio if part of that portfolio contains good income-producing real estate in addition to other investments.

For those living entirely off their assets, a portfolio composed of primarily the S&P 500 and U.S. bonds is suicidal in my opinion. It is not diversified (being 100% in large cap U.S. stocks and bonds, whose price movements are highly correlated) and the volatility will have you wetting your pants and making moves which are not in your best interests. This approach also requires you to sell your seed corn due to current high valuations and low yields. Any approach dependent on the liquidation of principle is dangerous IMO.

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