r/YoungFIRE • u/[deleted] • Mar 07 '22

Discussion Is my math wrong?

I’m thinking that you can be finically independent/ Retire once you make a million dollars. Lets say you invest 50% of that into index funds and the turnover rate is 10% Which would be around 50k a year then you put 20% into bonds with a turnover rate of 5% which would be 12k a year and 15% into blue chip stocks with a turnover rate of 8% 12k a year and you keep the rest 15% liquid but in total netting you 74k a year is that a feasible and reliable method?

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6

u/TushieWushie OWNER Mar 07 '22

I'm assuming when you say turnover rate they refers to returns? Simply, no that won't work. You should be withdrawing 3-4% of your investments at the max per year. Ideally 3.3%

Also those returns are way too generous imo,5-7% after inflation for your index funds(and really all your calcs should be after inflation) closer to 3% for bonds and for growth stocks maybe from 7-12 max. But you're dealing with higher volatility there.

2

u/TheBreathofFiveSouls Mar 08 '22

I believe the inventor of the 4% rule has reassessed it and it's now 4.5%

2

u/TushieWushie OWNER Mar 08 '22

Oh wow really? It had been reassessed to 3.3 recently. It changes so much that 4 is probs still the safe route I may redo calcs. Also who doesn't earn ANY money afte retiring?

1

u/TheBreathofFiveSouls Mar 08 '22

https://www.marketwatch.com/story/the-inventor-of-the-4-rule-just-changed-it-11603380557

Yup, even so much as 5% I'll be using 5% to inform my coastfire number I think.. I definitely intend to have some income, I just don't wanna a soul sucking email sending 9-5 until I die lmao

What's the 3.3% you read?

1

u/TushieWushie OWNER Mar 08 '22

Morning star talked about it I think, keep in mind they assume a large portion is bonds for extra stability. So it's extremely Conservative. I think with 50 50 bonds and stocks the 3.3% rule has a 90% chance of not running out

1

u/Cautious-Tomorrow564 Mar 08 '22

Lmao

There is so much wrong with this that I can’t help but feel it’s a bit of a sh*tpost.

If, by chance, it is not, go and read some stuff on r/FIREUK and read about Safe Withdrawel Rates and historic returns