Withdrawal Rates
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The results depend on whether you are runnning simulations where Terminal Wealth at death is =0, or has some positive value. Obviously if you assume the portfolio's compound rate of return exceeds the w/d rate then you are fine (w/ a min sized portfolio to begin with). The problem is the w/d rate for consumption purposes is usually a relatively fixed number (say $75k/yr in real terms) while the portolio return can vary into negative territory. You really should be estimating this using a MOnte Carlo model where you can estimate a portfolios std dev. How many of You even know what your clients portfolio's std dev is? Very few I would guess, let alone the thrid and fourth moments.
B24-
I never used hypos. I just listened to all the folks who sounded just like the first post on this thread-and I quote: "I've run a couple different hypos of clients' portfolios to try and give me some confirmation that they'll be okay withdrawing 6%. Every time I run a hypo with a 6% withdrawal over nearly any 20-25 year period imaginable, the investor comes out smelling like a rose. " MEANINGLESSRight. Hypos are bs - meaningless.
My experience has brought it down to this :better to discuss fundamental strategies, and see what happens. " I never promised you a rose garden. "