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Author: DrTarr Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74856  
Subject: Re: SWR - a priori - is wrong. Date: 12/18/2005 10:58 PM
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So my thought for SWR - 100% government bonds.
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This was in NO WAY - a recommendation from me for 100% government bonds for any ones retirement portfiolios.

This was merely my take on if some one were to want to form such a portfolio! And the conclusion about SWR for such a set up.

I am sorry for the confusion.

Actually, if you took a 6.63% SWR from a 100% S&P500 portfolio in 1980, you'd have about 7 times your original principal today, 25 years later. A much better performance than the 100% LT Gov't bond portoflio.

I totally agree, and that is why I do not undersand why some one would instantly limit their SWR to 4% - without looking at the current conditions - bond yield and then readjusting as the same as rebalancing a portfolio. That is the only problem or contempt for the 4% - is that it seems some Fools were going to just use 4% as a maximum - no matter what. I thought that was (f)oolish.

True. Though if the long bond hit 14% like it did in 1981, it would be mighty tempting. It's unlikely inflation would run that high, that long.

At 14%, it was great, in Dad's situation (which BTW was not 100% T's) as the interest rates came down, the bonds prices soared quite nicely (2-3X). But I still would not put 100% in bonds.

But then, 10 years later, when I'm still alive, kicking and hopefully have many years less, the situation now calls for your 2.42% rate.

Again - rebalance and understand that at that time you may be limited to 4%, 3% or what ever you calculate will survive that economic down period. But do not just go ahead blindly with a preset number in the good times!

wake up
Good Morning!


DrTarr
Again - just want Fools to enjoy their retirement and not AUTOMATICALLY limit to a preset number.
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