walkinwood
Thinks s/he gets paid by the post
I put chunk of money into a virtual "emergency/slush" bucket. The money is invested in the same pot (ie. same AA) as the money used for annual withdrawals, but is not used in calculating the withdrawal.
We have used money from it once when our annual expenses exceeded our withdrawal. Since we use a percentage of portfolio value withdrawal method (ie. no automatic increases based on CPI), our annual budget can be quite volatile. This bucket helps smooth it out.
It is purely a mental game, but it helps me.
Imho,the timing, number and scale of large expenses are hard to predict. I find my method works for me.
We have used money from it once when our annual expenses exceeded our withdrawal. Since we use a percentage of portfolio value withdrawal method (ie. no automatic increases based on CPI), our annual budget can be quite volatile. This bucket helps smooth it out.
It is purely a mental game, but it helps me.
Imho,the timing, number and scale of large expenses are hard to predict. I find my method works for me.