5% Distributions Yields Tell me what you think of this investing idea?

[FANOFJESUS]

Barbell Investing for Retirement (5% Distributions Yields)

He has five years of cash.
The idea worked for 40 years of ups and downs.
Anybody doing anything like this?

 

[FIRED2018]

The presenter seemed to have prepared poorly and his presentation was amateurish. He was nearly incoherent, stumbled on his words, couldn't recall important facts from his prior presentations and seemed to me to be unreliable. I expected to see the camera pan to his boxer shorts and slippers. He was a mess and his presentation provided nothing useful.

For me to take a financial presentation seriously I need to see and hear a presenter who is on top of his game. That's the minimum for me to spend 12 minutes with someone.

I will not follow him on youtube or anywhere else.

If you are interested in how much you can draw on your portfolio there is lots of research by respected industry experts.

5% initial draw with periodic cutbacks of 10% is reasonable. Nobody draws year N money based on the draw from year N-1 plus CPI adjustment and continues this until death. The 4% "rule" is as good a planning idea as many others out there and in fact is really more like a 4.5% rule (according to the author of that research paper).

 

[pb4uski]

+1 I could only take a few minutes of the video.

 

[catman2020]

I don’t think what he’s claiming is that much different than the findings from the Trinity study and the “4 percent rule” folks in general. If I followed him he seems to have a large equity allocation that would tend to pull up the SWR from 4ish to 5ish.

I (and I think a lot of other FIRE folks) do something roughly similar to what he is outlining: 1) have a cash account for shorter term spending needs - could be a few years for some folks 2) have an equity heavy investment account 3) periodically move funds from the investment account to the cash account using some SWR guidelines.

His focus on his specific ‘flavor’ of withdrawal seems a little narrow and probably not something many people would actually follow over a period of many decades. I (and I think many other FIRE folks) adapt withdrawals based on spending needs and sometimes market performance while still staying within our SWR guidelines.

 

[FANOFJESUS]

I ran his idea on FIRECalc and it came back 79% success. I do have social security in there also. He has no bonds. That takes bond risk out of the picture. I think bonds do not have much more gain ahead of them. Five years of cash is enough for most bears. I don't need all of the 5% Distributions so I could not adjust for inflation. That would increase the success rate. Going his way this year you would need a 70/30 instead of the normal 60/40 fund to get the same returns. I like some of his ideas.