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Sir-Viette t1_j6cmkeo wrote

Reply to comment by iamr3d88 in One day, being a millionaire is not going to be considered rich. by Coronazonewearmask

It depends on what the inflation rate is. In the US, it’s 6.5% per annum. If you earned 4% and didn’t spend any of it, you’d still be effectively losing money.

However, if someone is at the end of their life, perhaps it doesn’t matter so much.

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Irishbeast57 t1_j6cwnnw wrote

I think he is referring to the idea that you can safely withdraw 4% per annum and not lose your initial capital

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Sir-Viette t1_j6cx1ji wrote

Yes that's true. But inflation would mean that the same initial capital would buy 6.5% less every year.

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iamr3d88 t1_j6e84vn wrote

Over 20+ years, I you take 4% per year out while making 7-10% on average, your portfolio will grow with inflation. That's not guaranteed, but it pretty much works out that way.

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StrangeKnee7254 t1_j6d0e5l wrote

The 4% withdrawal rate takes inflation and bear markets into account.

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Moon-In-Leo t1_j6eprs3 wrote

if you put it in almost any investment except cash you will beat inflation

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