- A "5% rule" withdrawal strategy on $1 million invested in a total US stock market index fund in 2000 would have run out of money by 2018.
- A similar failure would have occurred with a total international stock portfolio over the same period, but not with emerging markets, US dividend growth, or small cap value portfolios.
- In this article, I show the year-by-year math of these withdrawal simulations based solely on past data.
- My takeaway from this: the failure of the two "total market" portfolios was due to high starting valuations, and these failures could be avoided by investing in more value-oriented strategies.
- I see similar risks investing in the US Vanguard Total Stock Market Index Fund today as I did in 2000, so will also compare the four alternatives based on today's forward-looking numbers.
For further details see:
An Example Of How Withdrawal Strategies Fail