Join Early Retirement Today
Thread Tools Search this Thread Display Modes
a 3% rule?
Old 03-31-2007, 02:50 PM   #1
Thinks s/he gets paid by the post
Join Date: Apr 2006
Posts: 1,487
a 3% rule?

an intersting read on how the "other half" lives ...
Over time and as a general rule, Tiger 21 members say they have learned that spending 3% of assets annually to live is the maximum one can spend each year before stressing one's portfolio and tilting it towards short-term income over long-term gains.
And, they say, holding 9% of assets in cash allows them to withstand three years of market distress without having to liquidate long-term holdings at unnecessary losses.
It's interesting to note the conservative nature of this asset allocation, especially given the increased weighting toward private equity investments. The data seem to show that while these high-net-worth investors are only willing to shave off 3% of their portfolio for living expenses (at $10 million, let's say that's $300,000 a year), yet they are willing to increase their exposure to what seems like riskier investments: hedge funds and private equity instruments.

d is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: a 3% rule?
Old 03-31-2007, 04:53 PM   #2
Recycles dryer sheets
Robert the Red's Avatar
Join Date: Aug 2005
Posts: 328
Re: a 3% rule?

These people are probably planning on keeping their assets high forever -- not just one or two lifespans. That reduces the withdrawal rate.

Robert the Red is offline   Reply With Quote
Re: a 3% rule?
Old 03-31-2007, 06:25 PM   #3
Recycles dryer sheets
Join Date: May 2005
Posts: 442
Re: a 3% rule?

It appears they are using a reduced withdrawal rate due to higher portfolio volatility from a low fixed income allocation plus illiquid private investments.
rmark is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
95% rule kat FIRECalc support 1 05-27-2006 01:51 PM
Question on the 95% rule Surfdaddy FIRE and Money 9 04-04-2006 05:17 PM
95% rule and the 4% SWR intercst FIRE and Money 15 12-22-2005 10:20 AM
Bogle's Rule of 72 km4hr FIRE and Money 27 11-24-2004 10:24 AM
About the 4% rule GTM FIRE and Money 9 11-22-2004 01:25 PM

» Quick Links

All times are GMT -6. The time now is 06:47 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.