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From reading the thread starting at: http://boards.fool.com/registered/Message.asp?id=1040013000079000&sort=postdate, I gather that the "safe" withdrawal rate is on the order of 6% for equities invested along any of the BTD strategies.

An interesting (for me at least) question is can I safely increase this rate to some percentage of my net worth if I have a substantial holding in real estate?

The real estate is divided between two income properties and my primary residence. Right now the equity represents 40% of my net worth.

It was 50% until last month when I refinanced, took out a substantial amount of money and put it into the Foolish Four.

Early retirement could be 1 to 2 years away if I can justify a withdrawal rate that would keep my standard of living about constant.

The rate of equity increase in real estate has been at least as good or possibly better than equities for me. At least the bottom line is that over the years I have put less money into real estate than stocks, and the net value of the real estate was equal until I deliberately reduced it. On the other hand I wasn't a Fool until 3 years ago...

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The only remark I would make is that real estate is not liquid and you can only sell it once. As it happens my asset allocation is much like yours. But I will sell my property only as a last resort. Of course, it is a personal decision, and my property is where I plan to retire.
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From reading the thread starting at:
http://boards.fool.com/registered/Message.asp?id=1040013000079000&sort=postdate,
I gather that the "safe" withdrawal rate is on the order of 6% for equities invested
along any of the BTD strategies.

An interesting (for me at least) question is can I safely increase this rate to some
percentage of my net worth if I have a substantial holding in real estate?

The real estate is divided between two income properties and my primary
residence. Right now the equity represents 40% of my net worth.

It was 50% until last month when I refinanced, took out a substantial amount of
money and put it into the Foolish Four.

Early retirement could be 1 to 2 years away if I can justify a withdrawal rate that
would keep my standard of living about constant.

The rate of equity increase in real estate has been at least as good or possibly
better than equities for me. At least the bottom line is that over the years I have
put less money into real estate than stocks, and the net value of the real estate
was equal until I deliberately reduced it. On the other hand I wasn't a Fool until
3 years ago...


I would say yes to including the real estate but,

The rate of growth should be your withdrawl rate plus inflation at the minimun.

Since a single piece of real estate has more risk that an investment portfolio I might think of reducing its value by 25% before including it in my calqulations.

I have probably read what you have read on safe withdrawl rates (investments in general not just BTD). I think in terms of 4% very safe and 5% ok. I don't see why 6% to 8% could not work but there is a chance it will fail. The longer your retirement years and the smaller your nest egg the lower I would make the withdrawl rate.
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Greetings, OldOne, and welcome. You asked:

<<From reading the thread starting at: http://boards.fool.com/registered/Message.asp?id=1040013000079000&sort=postdate, I gather that the "safe" withdrawal rate is on the order of 6% for equities invested along any of the BTD strategies.

An interesting (for me at least) question is can I safely increase this rate to some percentage of my net worth if I have a substantial holding in real estate?

The real estate is divided between two income properties and my primary residence. Right now the equity represents 40% of my net worth.

It was 50% until last month when I refinanced, took out a substantial amount of money and put it into the Foolish Four.

Early retirement could be 1 to 2 years away if I can justify a withdrawal rate that would keep my standard of living about constant.

The rate of equity increase in real estate has been at least as good or possibly better than equities for me. At least the bottom line is that over the years I have put less money into real estate than stocks, and the net value of the real estate was equal until I deliberately reduced it. On the other hand I wasn't a Fool until 3 years ago...>>


The readings you refer to were based on the total return and liquidation of individual stocks. That's a far cry than trying to sell real estate to generate the same level of income. I wouldn't count on your real estate holdings in the same way as I do stocks holdings. In fact, were it me, I would discount them heavily for withdrawal purposes. Who knows when and at what price they might sell if you needed to do so to generate living expenses? Someone said to decrease their value by 25%, but I'm more inclined to say don't value them at more than 25% if you want to count them as part of your assets available for withdrawal. Nevertheless, the decision is yours, so if you can live with it, that's just fine with me. :-)

Regards….Pixy
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