mickeyd
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[url]http://www.fpanet.org/journal/articles/2004_Issues/jfp1004-art6.cfm?renderforprint=1 [/url]
This paper tests these conditions against the extreme period from 1973–2003 (two severe bear markets and a prolonged early period of abnormally high inflation) by employing a balanced multi-asset-class portfolio in conjunction with systematic decision rules to govern the management of investment portfolios, funding sources for annual income withdrawals, impact of years with investment losses, and increases in withdrawals to offset ongoing inflation. This analysis finds that applying these Decision Rules produces a "safe" initial withdrawal rate that ranges from 5.8 percent to 6.2 percent depending on the percentage of the portfolio that is allocated to equity asset classes—rates significantly higher than most published research has previously recommended.
This paper tests these conditions against the extreme period from 1973–2003 (two severe bear markets and a prolonged early period of abnormally high inflation) by employing a balanced multi-asset-class portfolio in conjunction with systematic decision rules to govern the management of investment portfolios, funding sources for annual income withdrawals, impact of years with investment losses, and increases in withdrawals to offset ongoing inflation. This analysis finds that applying these Decision Rules produces a "safe" initial withdrawal rate that ranges from 5.8 percent to 6.2 percent depending on the percentage of the portfolio that is allocated to equity asset classes—rates significantly higher than most published research has previously recommended.