Reading 2021-11-03


Notes from reading

how to calculate the amount of money they’ll need to have saved up before they can retire?

  • Determine Your Spending Needs
    • how much you will have to withdraw from your portfolio each year during retirement
  • Multiply by 25
    • We multiply by 25 because multiple studies have shown that, based on historical U.S. market returns, a starting withdrawal rate of more than 4% per year has led to an undesirably high likelihood of running out of money over the course of a 30-year retirement. Therefore, you’ll want to ensure that your portfolio is at least 25-times (that is, 1 ÷ 4%) the amount that you expect to have to withdraw each year.

Asset Allocation and Risk Tolerance

The primary factors determining your risk tolerance are:

  • The degree of flexibility you have with regard to your financial goals, and
  • Your personal comfort level with volatility in your portfolio.

Example 1, Example 2