THE END OF THE 4% RULE Goodbye Savings

October 30, 2021 - mediadealer - Money Hacks - 1,164 views

Date: 2021-08-24 20:13:28

Lets talk about the End of the 4% rule, how to invest or retirement, the changes moving forward, and how you can best use these strategies to make money – Enjoy! Add me on Instagram: GPStephan

GET YOUR FREE STOCK WORTH UP TO $1000 ON PUBLIC & SEE MY STOCK TRADES – USE CODE GRAHAM:

NEW BANKROLL COFFEE NOW FOR SALE:

DOWNLOAD MY NEW FINANCIAL APP:

JOIN THE WEEKLY MENTORSHIP –

THE NEW PODCAST:

The YouTube Creator Academy:
Learn EXACTLY how to get your first 1000 subscribers on YouTube, rank videos on the front page of searches, grow your following, and turn that into another income source: – $100 OFF WITH CODE 100OFF

THE 4% RULE:
All of this begins in 1994, when the 4% rule was first “invented,” and used as a method of calculation to make sure you NEVER run out of money in retirement. The premise was that you could spend 4% of your portfolio every year for 30 years.

However, Vanguard recently cautioned AGAINST this metric for these reasons:

1. Spending 4% relies on historical returns, that might not work for today’s investments.
As Vanguard calculated, historically….the markets have a REAL RETURN of 7.5% for US Stocks, and 2.43% for Bonds, adjusted for inflation, between January 1926 and March of 2021. BUT…over the NEXT 10 YEARS…they’re forecasting SIGNIFICANTLY lower returns…like, 2.44% for US Stocks, and 0.27% for US Bonds, adjusted for inflation.

2. 30 Years Might Not Be Long Enough
The 4% rule was originally crafted to fit a 30-year time horizon…not someone who wanted to retire early. Because of that, the “standard 30-year retirement calculation” is LESS LIKELY to work for someone who wants to STAY RETIRED for a longer period of time.

3. The 4% Rule Doesn’t Take Into Account FEES
For example, your retirement accounts could have annual costs that eat away from your profit…almost every index or mutual fund has an expense ratio that needs to be factored in…and, as a result…your overall return begins to decline.

4. You need diversification
See, when the 4% rule was first calculated – it ONLY considered the US Stock Market…but, Vanguard’s analysts believe that, over the next 10 years…INTERNATIONAL STOCKS could actually wind up OUTPERFORMING…which means, if you diversify throughout the entire world…you could increase your chance of having enough money from 36%…all the way up to 56%.

And FINALLY…FIFTH…they said there’s risk in simply just spending 4%…and that’s it.
Even though the 4% rule was meant to be SUSTAINED throughout a time where the stock market crashes out of nowhere, for no reason, even though Jim Cramer told us to buy….in reality, Vanguard says that…if the market drops…it’s probably a better idea to cut back on your spending until things recover, JUST to give yourself a greater chance that you can make your money last as long as possible…PLUS, that kind of dynamic spending could increase your chances of success by nearly DOUBLE.

My ENTIRE Camera and Recording Equipment:

For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com

*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. This is not investment advice. Public Offer valid for U.S. residents 18+ and subject to account approval. There may be other fees associated with trading. See Public.com/disclosures/

THE END OF THE 4% RULE Goodbye Savings

Other articles similar to: THE END OF THE 4% RULE Goodbye Savings

Categories