Retirement strategy - The 4% Rule

The 4% Rule is very widespread and a lot of people starts their investments focusing on this theory.

There is a lot of online material explaining this strategy and why it mostly doesn’t work.

Ben has some nice videos and I want to share this one because it’s fresh and has some interesting data about this rule:

Stay safe, stay invested :wink:


Yea, love watching Ben’s videos. Seems to dig a little deeper than the other youtubers. :+1:

Watched, stopped watching on his sentance, I personally don’t invest in ETFs…

Practice what you preach…


It was interesting how he mentioned the same adjusted 2.5% I was using by default as a more reliable metric. Mine was just an intuitive number I picked while his was backed by a lot of math.

I think in my case however the rules would be further different as the majority of my portfolio will pay dividends and not just/necessarily grow and those dividends could fund me in part with the excess going back to reinvesting. I by default also don’t hold bonds and currently I hold no treasuries or commodities or positions in emerging markets.

I’ll get around to making a formulaic table of my plan at some point to iron out the details with live comparisons of all potential lifespans and re-tune frequently. should make things much simpler for me going forwards if I only have to set up the maths once and then factor for extenuating circumstances, like the plaque…

@Vedran I get what you mean, but some say the same for Warren Buffett and he is frequently telling people to do what he says rather than what he does, as the rules for investing at his level are no longer the same for retail investors with high liquidity portfolio’s where his is highly illiquid. At the very least, this guy is qualified to provide advice and opinions on ETFs despite not using them. I don’t use them either for a variety of reasons, lack of specificity and control being just the first of many.

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Actually I think he is very competent, thus I would rather here him on reasoning for his choices or how he makes decisions, rather then theory about ETFs, which he doesn’t apply for himself.

drop him a comment it may be the idea he is needing for new content since he has now run out.

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@Dao, I agree, I had heard about the 4% rule and I always thought that 4% seemed a bit excessive and it surprised me how it could work, particularly when everything is cyclic and large recessions occur (as well as inflation). For example in the last 15 years now we have had 2 market fals (2008 crisis and Covid-19).

I would have intuitively said something along the lines of 2 to 2.5% for it to be safe, assuming an average annual growth of around 5% (though I think the historic average is around 7%) and a possible inflation of 2.5-3%, but then you need a very big investment total.

I have never really done the maths supported with actual numbers either, as I am nowhere near retiring. Interesting video though :smiley:.

Can you remember which video that was? I feel like it may be taken out of context.

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the idea was that you grew your portfolio by 8% annually so you could afford to remove half of it to live on without the balance diminishing, though no longer growing.

In my case I am trying to reach 1 million at least anyways, but I don’t need much to live on at all and will always have other sources of income so 2% in dividends accumulating every month at varying amounts put into my bank for enjoying life and the rest trying to keep growing until there is something expensive I want as I have no plans to amass a lot of money just to pass it on to family members.

I will run through my list of viewed. I know I stopped few once I run into contradiction… Watched many tho.

@Dao I have a similar strategy of yours, relying more on dividends stocks (less risky ones)… but I also have a “Growth pie” and some bonds and cryptos… all together representing maximum of 20% of my portfolio.

I like how you already think in pies :slight_smile:

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