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You are facing one of life's real issues. If we spend too much, we won't have it and won't have the prospect of getting more ever. If we don't spend it, we will miss out on a bunch of fun in life. There are no answers.

With regard to investments the defintion of long term generally means longer then a year and I dare say more commonly a period of years. I make investments which at the time I make then I expect to hold for five years. I figure if I have not looked into the company and its product so that I belive I would be happy keeping my money there for five years I need more work. I have sold things in time frames of 18 to 24 months when circumstances changes or when I was just plane wrong.

The impact of inflation over a period of years is great -- just as great as the impact of compounding. But there are two things I am aware of that it is very difficult to prepare for.

#1) is the falling meteor event. If you are in perfect health and suddenly an accident or freakish event happens you could become a handicaped individual with all your mental abilities unchanged.

#2 is the fact no one knows when the next period of stock market ups or downs will begin. It makes a great deal of difference to you if you have 5 years of flat or decreasing investment values during the first 5 years of a retirement -- and I am not talk just about the psycological view.

Regarding the second issue, there are methods of establishing a probability your investment will (or will not) last for a given period of years. You have to pick the # years and then decide how much money you want to take each year. These computer programs then say that in any given year there is a X% probability of stock market declines. Some of the more sophosticated programs even deal with the lengths of cycles.

Simple planing programs such as Quicken's Financial Planner don't. It is very easy mathmatically to say over the last 100 years the stock market has returned say 12% and just plug that number in. If you retire in 1928 or 1971 the returns don't look anything like 12% a year after 5 or 6 years of retirement.

The complex programs usually give results like there is a 95% change you won't run out of money. I have heard there is such a program in the T. Rowe Price site that has a charge of $500. There are some spread sheets that can be downloaded from a web site which I believe is called Retire Early. The sheets I have download deal with an allocation between stocks and bonds.

I believe I found the Retire Early information on a Motley Fool Board dealing with retirement planning. Hope some of this helps.
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