I'm about 100% equities except for cash and playing around in my head this morning on withdrawal strategies (especially since I don't trust current valuations). Assume the WR is "safe" for the ER's comfort level (say <2.5% with a planned draw period of 50 years).
I was thinking of treating the HELOC like a bond fund in a sense. In years where portfolio growth is negative and/or gains are less than the required withdrawal (and/or calculated), borrow from the HELOC to cover the difference and pay off in years when the portfolio is generous.
Obviously there are interest costs (expected to be offset by gains upon market return to mean, and a risk of compounding SORR if there were multiple years of declines that required a larger withdrawal to pay the HELOC at even further depressed market prices. (but historically unlikely to have too many bear years without a bull)
This is not my plan but a thought experiment, for now the HELOC is just to mitigate cash flow risks from unknown unknowns and for tax planning purposes to disjoint spending from realized income (or floating till EOY when I can plan taxes better).
Thoughts/anyone tried this?
FLSunFIRE
I was thinking of treating the HELOC like a bond fund in a sense. In years where portfolio growth is negative and/or gains are less than the required withdrawal (and/or calculated), borrow from the HELOC to cover the difference and pay off in years when the portfolio is generous.
Obviously there are interest costs (expected to be offset by gains upon market return to mean, and a risk of compounding SORR if there were multiple years of declines that required a larger withdrawal to pay the HELOC at even further depressed market prices. (but historically unlikely to have too many bear years without a bull)
This is not my plan but a thought experiment, for now the HELOC is just to mitigate cash flow risks from unknown unknowns and for tax planning purposes to disjoint spending from realized income (or floating till EOY when I can plan taxes better).
Thoughts/anyone tried this?
FLSunFIRE