4% Rule - what is it.....and how does it work...

Can you teach me

 

Interestingly, BH do not pay dividend at all. It's the classic growth stock where you would need to sell to release the value.

I think take home is that you need to consider total returns.

 

So that asset number in total is excluding Super and Government pension ?

 

For privacy reasons I dont put out in public domain specific number details other to say centrelink and spouse income take minor apportionment with remainder close equal spread . Capital draw downs are structured to maintain tax deductibility, with gross rent apportionment towards lifestyle. 7% is a minimum historic CG benchmark I use structured on middle market Sydney, Melbourne, Brisbane and Perth metropolitan areas. Structuring finances to Maximise LOC tops up happen prior to rat race exit, not after.

 

Ah, I see so dividend paying stocks don't achieve capital growth as well eh? Average growth YOY of "over" 15-20% AFTER tax, repeatable over the long term in "growth" stocks....yeah sounds viable if ;

1. you are a superinvestor - you'd be one of the best in the country if you could do this for decades.

and

2. you want a full time job.........which is what we are trying avoid here.

 

I am no super stock investor....but I look at the stocks which have maintained consistent growth...have been the old boring ones which tend to pay dividends.

15-20% growth YoY is really hard to get even for the experts. If you can get an average return of 5-7% growth with 4-5% dividends you are really doing well.

 

BRK and compounders like it are an exception to the no sell rule, (but even still I wouldn't) as they can redeploy free cashflow more effectively than paying dividends. There will come a time however when BRK will not be able to redeploy cash as effectively and its pretty well recognised that there will come a day, perhaps 10 years from now where BRK begin paying a dividend.

 

So a 6% withdrawal rate

There is a study below on withdrawal rates (share based though) looking at various scenarios

Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable

 

http://www.finsia.com/docs/default-...rement-an-australian-perspective.pdf?sfvrsn=2

Bit more recent than Trinity study and Australia/ NZ perspective

 

Learning more from you every time I come on here @sash. Thanks mate

 

Bump blast from past…. How does this work today
I am a dummy

 

Yeah I’m curious too. I’m starting to nod off.

 

I thought this video explains it pretty well, instead of drawing down from your asset base, you can borrow against them for living expenses. Depending on personal situation, this may work out to be more tax efficient

How To Invest Like The 1% - YouTube

 

An opinion piece from a few years ago.

17 Surprising Facts You Probably Don’t Know About The Retirement Income 4% Rule

 

Super well!!!!

 

Wonder how people are going with the LOE strategy. I can’t see it working today with all the changes to lending criteria etc

 

Just watched, just keep collecting assets

 

What he is saying is get a Line Of Credit.
"I went to the bank and said my dad has equity can you give me money? Sure said the bank"
Yeah sure...pigs fly too when you throw them in the air

 

4% rule would apply to ETFs. So to earn 100k you need $2.5m in a diversified ETF.

2.5-3% on fully paid off property returning minimum of 4.5%. $3.33m to $4m in property to have 100k come in regularly.

 

are you still in china or back in oz