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Excellent post! I was going to mention many of the same things you did.

One addititional point for retirees who are withdrawing funds from their portfolios is that volatility is equally important to the CAGR percentage. Given two portfolios having equal CAGR's (long term), you can safely withdraw more money per year from the one with lower volatility.

This is one of the main reasons that a 70/30 equity/bond split is the best for a retirement account during the withdrawal phase. Shift away from this split, and the safe withdrawal rate goes down.

All that said, my overall 70/30 portfolio increased about 20% in 2003 while I withdrew 4%.

Of course, if you are not withdrawing funds yet, and you have at least five years before you will, then volatility is only important to how well you will sleep at night (ie, your risk tolerance).

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