Isn't on paper dependent on time?
Lose any significant amount on paper, recovery if it happens can take an unknown amount of time. The loss compounds since the original amount won't be gaining what it would have.
I think need is another factor. A loss that impacts what is used for daily expenses IMO has the potential for not returning to the level it once had.
The swing in the stock market impacted us negatively very little & for only a few weeks. Recovery to prior level and a decent increase share price is in place now. We don't plan on selling, our plan is to leave an inheritance that we expect to help our sons.
a loss in money used for daily expenses is a poor plan..
one normally shouldn’t have money needed to eat now in investments that can vary much.
money needed in 1-3 years to eat should be in ultra conservative to short term bond funds
plus in a down market , unless your money is in risky longer term bond funds it isn’t stocks that would get sold .
its either bonds that should be laddered for when the money is needed or it should be bond funds with durations that match when the money is needed.
stocks shouldn’t be needed for quite some time in a well thought out plan.
even at 65 we have money we won’t eat with for two to 3 decades so that is still long term money
but if someone did decide to be 100% equities thru retirement and spend directly from equities, 100% equities has almost the same success rate as 50/50. which is in the high 90% range asfar as supporting a 4% safe withdrawal rate for 30 years .
the higher up years without the weight of cash and bonds makes up for the spending in the down years .
we actually had124 - 30 year rolling retirement time frames to date .
50/50 had 6 cycles fail to last and had a 95% success rate
FIRECalc looked at the 124 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 124 cycles. The lowest and highest portfolio balance at the end of your retirement was $-223,952 to $4,145,063, with an average at the end of $1,161,704. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 95.2%.
100% equities had 8 cycles fail for a 93.5% success rate
FIRECalc looked at the 124 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 124 cycles. The lowest and highest portfolio balance at the end of your retirement was $-931,017 to $8,509,297, with an average at the end of $2,775,789. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 8 cycles failed, for a success rate of 93.5%
know what was the most dangerous at 4% inflation adjusted ?
just fixed income . it had a mere 45% success rate . a whopping 64 times you would have went broke before the time frame ended
FIRECalc looked at the 124 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 124 cycles. The lowest and highest portfolio balance at the end of your retirement was $-517,560 to $2,349,575, with an average at the end of $190,571. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 64 cycles failed, for a success rate of 48.4%.
that is scary .
one would have to take a 25% pay cut in draw to use just fixed income with a high success rate
