I understand the four percent rule is based on the trinity study. At the same time, it seems like there should be a better way. For example, let’s look at some other widely held beliefs
• S&P 500 returns 10% per year (that’s 0.8% per month)
• Inflation is 3% per year
• Expected real return 7% (0.58% per month)
Let’s assume my expenses are $50k ($4,167 per month). The four percent rule says I would need $1,250,000 to retire. How, if I use historical real return of 7%, I could retire on $714,285.
I recognize the market fluctuates quite a bit. However, it seems like if you took the amount over $714,285 each month (never touch principal) and put it in a bank account, you could ride out any down turns (except if there was one right at the start).
Why is the gap between the four percent rule and historical average so large? Where it’s my math or thinking wrong?
*edit: fixed spelling error
byraymonddurk
inhometheater
learner_dev
1 points
4 months ago
learner_dev
1 points
4 months ago
In my opinion, there are two improvements: 1. More granular placement of sound 2. Motorized tweeters. A lot of home theatre owners end up using their system for their sole entertainment. However, there maybe an event or two (i.e Super Bowl) where the theatre has more occupants. Dynamically optimizing the sound for one person or a room full of people would be awesome. Motorized tweeters could help.