Example: P = $6K/year and A = $100K would be a 6% Withdrawal Rate. With a return of 8% and inflation at 3%, it'd last just over 30 years.
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Date: 11-Apr-98 - 10:46 AM Subject: Systematic Withdrawal Plans From: JH |
Where can I find comparisons of W/D plan performance eg. If you invested $100,000 10 yrs ago and received $500 @ month over that time, how much capital would be left. Thank you.
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Date: 11-Apr-98 - 4:23 PM Subject: RE: Systematic Withdrawal Plans From: thbox |
JH
The amount of 'capital' left depends on the growth rate of the investment doesn't it. If your $100K is growing at 10% per year, and you're grabbing out $500 per month, you'll have more left than if the $100K is growing at only 8% per year.
FWIW, Templeton does a nice back-test analysis of the residual value of the TGF based on various withdrawal rates. I believe Trimark does as well, but I'm not sure.
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Date: 11-Apr-98 - 5:27 PM Subject: RE: Systematic Withdrawal Plans From: Scanner98 |
For more discussion on this topic -- and several great links -- you might want to return to the main Forum page; type withdraw in the Filter blank; change the Age: drop-down to 90 days and click the Show Threads button.
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Date: 12-Apr-98 - 1:43 AM Subject: RE: Systematic Withdrawal Plans From: Rob |
Mackenzie also does one -- for the (ouch, this pains me to say) Industrial Growth fund.
Unfortunately, a calculation based on 10% growth and 8% withdrawal just doesn't work, 'cause the growth isn't in a straight line! Take a look at the Templeton one, Trimark, and Mackenzie. It'll at least give you an idea of what's going on.
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Date: 12-Apr-98 - 5:01 AM Subject: RE: Systematic Withdrawal Plans From: gummy |
Wanna do The Math?
You got $A earning a return of R and you withdraw $P at the end of each year.
After N years you'll have left: A (1+R)N - P( (1+R)N-1)/R
Or, if you withdraw an increasing amount to keep up with inflation, y'all kin peek at:
Example: P = $6K/year and A = $100K would be a 6% Withdrawal Rate. With a return of 8% and inflation at 3%, it'd last just over 30 years.
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Date: 12-Apr-98 - 12:26 PM Subject: RE: Systematic Withdrawal Plans From: Bylo |
gummy,
This presumes steady inflation-adjusted rates of return on the principal amount.
What happens if at some point during one's 30+ year withdrawal horizon there is, say a 50% correction followed by a decade-long bear market (e.g. like the 1973-74 bear, which happened "only" 25 years ago), and/or a period of sustained high inflation (e.g. from the mid-70s to early 90s)?
thbox,
Where can one find the "Templeton ... back-test analysis of the residual value of the TGF based on various withdrawal rates"?
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Date: 12-Apr-98 - 2:05 PM Subject: RE: Systematic Withdrawal Plans From: thbox |
Bylo:
I have a paper copy. I don't know if its on their web site. (I'll work on transforming the paper to electronic form, and will e-mail you with it.)
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Date: 12-Apr-98 - 3:00 PM Subject: RE: Systematic Withdrawal Plans From: Al |
Give this a try: Yahoo search,,, type IFP Canadian Financial Calculator Links... you may like it....
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Date: 12-Apr-98 - 10:30 PM Subject: RE: Systematic Withdrawal Plans From: Rob |
Bylo,
Exactly, that's the point I was trying to make. Thanx for making it so much clearer....
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Date: 13-Apr-98 - 8:09 AM Subject: RE: Systematic Withdrawal Plans From: gummy |
Y'all mean the REAL WORLD don't follow The Math?
Ya say ya wanna have yer portfolio increase a constant amount each year, in a market with a 9% annual return?
Piece o' cake.
Here's what The Math sez:
Can't y'all see the pretty curves?
Now, the REAL WORLD (using the TSE 300 index):
Uh ... The Math can't be wrong ... gotta be some mistake ...