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Intercst writes:

<<Replace the S&P500 index fund with the Foolish Four and the safe withdrawal rate drops to about 3%. Holding something like the Rule Breaker portfolio instead out the S&P500 drops the "safe" withdrawal rate down to about 1.2% of assets. See link:

http://www.geocities.com/WallStreet/8257/concport.html>>


Sorry, but your study is flawed as it pertains to the Foolish Four. By your own admission, you failed to take into account the annual trades. Using the same methodology taking into account those trades, it's actually a 6% inflation-adjusted withdrawal using a 75% FF holding. The correct figures are in my analysis "Foolish Payouts" at http://www.fool.com/retirement/manageretirement/manageretirement8.htm .

That said, I'll also say that there is absolutely no guarantee such a payout will persist into the future. That, of course, depends on a number of factors, not the least of which is the year one starts. Pick a bad year as I did last year, and it could prove disasterous. As an example, see the Racy and Reasonable Ports. The former will make an excellent teaching point, while the latter may be iffy. Only time will tell.

Regards..Pixy
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