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highly reveling

Goes to show I shouldn't post so late at night. I meant "revealing" (making interesting or significant information known) instead of "enjoying oneself in a lively and noisy way, especially with drinking and dancing" which is also great but not pertinent at this point. Oh well...

As to FIRECalc, it sure is interesting but it was not what I wanted.

Working with my spreadsheet I discovered the formula for a perpetual portfolio, at least in theory.

P*Y = P*D + P*I
Y = D + I

p = Portfolio in dollars
Y = Portfolio's yield as a percentage
D = Drawdown as a percentage of the portfolio
I = Inflation as a percentage (best guess)

Simplified be eliminating P, the formula says that when the portfolio's yield equals the drawdown percent plus the inflation as a percentage it will last forever.

I find this interesting because it tells you at a glance how well interest and dividends cover your expected drawdown. If not enough then growth like capital gains will have to make up for it. By knowing what growth rate is required you can better select the most convenient stocks for your portfolio, i.e. the risk level you have to take.

Denny Schlesinger
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