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Hi ataloss,

I think where you get a problem with intercst's information is that people here and on the REHP now take the 4% and 25x spending as a rule rather than one possible result based on the past. A recent thread here had many discussing how close they were to 25x and it seems to have become the norm for that to be the goal. However carefully you feel intercst has put his words (I think not carefully at all when he states categorically the safe w/d % to two decimal places), it is dangerous for people to treat that as gospel, past results based on a poor asset allocation model that is not appopriate for a FIREd investor.

Just because that was all the reliable information intercst could find, does not make it correct or a suitable example for modern times. It makes it limited and a poor example which many have now regrettably grabbed onto as their saving target without a knowledge of the limitations, the unliklihood of past returns being as good lowering the w/d rate and increasing the multiple of annual budget needed to FIRE.


ataloss posted:

As I said before, there is no "myth" of a 4% safe withdrawal rate. That number is just what came up based on very thorough tests of the historical data using a particular methodology. If investors and would-be FIREees can't understand what the number means, it is hardly intercst's fault, now is it?

And I think that intercst has been quite careful in this regard. One person (ok hocus) has claimed that by 100% safe intercst meant to refer to 100% future safety. I can't find anything to support this on rehp. I am not sure how this misconception arose.

FWIW, I would actually agree with you that one should probably be more diversified than US stocks and US bonds. However, the safe withdrawal studies were not done with other asset classes, so when I am ready to cash in my chips, I will be either looking for a relevant published study or doing my own multi asset class safe withdrawal study.

The way I see it if I can get asset classes with expected returns similar to us stocks but with less than perfect correlation, the it makes sense to diversify (unless expenses are totally out of line.) The longest data series is for us stock indexes so it makes sense to use this for swr studies as intercst has done.

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