It's unsafe now.
Posted: Tue May 27, 2003 8:07 am
It's unsafe now.
KenM and Ben have asked some questions that I want to address on this thread. I will start by reposting a couple of my previous posts at the Motley Fool. They were on my It is safe now thread back in July of 2002. The S&P 500 had fallen to 900 and I asserted that it was OK to use the 4% rule on that date.
I will also repost what I consider to be the best single post on this topic. It was written by BenSolar and posted on our IndexFunds discussion board. Our IndexFunds people know a whole lot about asset allocations and they are worth listening to. Although BenSolar's post was written in terms of the accumulation phase of investing, I think that his comments on allocations are important during the distribution phase (retirement) as well. The 4% number is still a good number, but not if you apply it to the S&P 500 today. You can make other choices. They will recover the deficit.
I will answer Ben's question first. He asked (on the Future Proceedings on the SWR Matter thread):
That said; has anybody actually MADE the study of SWR including the 3 tier valuations at starting year? (low P/E below 10, medium P/E (around 10), high P/E (above 10) - or whatever levels found fair).
Is is hard to do?
The answer is yes. Guess who? You are right. It was BenSolar. And he had help. He even had help by some who deny his conclusions.
Have fun.
John R.
KenM and Ben have asked some questions that I want to address on this thread. I will start by reposting a couple of my previous posts at the Motley Fool. They were on my It is safe now thread back in July of 2002. The S&P 500 had fallen to 900 and I asserted that it was OK to use the 4% rule on that date.
I will also repost what I consider to be the best single post on this topic. It was written by BenSolar and posted on our IndexFunds discussion board. Our IndexFunds people know a whole lot about asset allocations and they are worth listening to. Although BenSolar's post was written in terms of the accumulation phase of investing, I think that his comments on allocations are important during the distribution phase (retirement) as well. The 4% number is still a good number, but not if you apply it to the S&P 500 today. You can make other choices. They will recover the deficit.
I will answer Ben's question first. He asked (on the Future Proceedings on the SWR Matter thread):
That said; has anybody actually MADE the study of SWR including the 3 tier valuations at starting year? (low P/E below 10, medium P/E (around 10), high P/E (above 10) - or whatever levels found fair).
Is is hard to do?
The answer is yes. Guess who? You are right. It was BenSolar. And he had help. He even had help by some who deny his conclusions.
Have fun.
John R.