The subject of a save withdrawal rates from an investment portfolio keeps coming up. Someone I was reading over the weekend pointed to this research paper.
Before I stopped working in 1999, I had read a lot about save withdrawal rates. I decided to go with the theory you should earn 8% and withdrawal 4%. Since until that time I had average rates of return over 5, 10 and 15 years above that, I thought I would be fine.
Of course, along came 2001 and I lost a lot. I decided to change my withdrawal to what I earned and no more. It took me to 2006, but I reduced my withdrawal to income earned. I also adjusted my portfolio to earn more. My income yield, mostly from dividends, was under 3% and I got it to over 3%. I reduced my withdrawals to 3%. What also help is that I am into dividend growth stocks and my income did grow nicely.
I number of people remarked that I would be leaving an estate because I would not be touching my capital. That is fine with me. What I really care about is having money to whatever age I live to. Mortality tables only give average life expectancies and they are based on people who are dying now. There have been a number of women in my family that lived into their 90's, so I do have the possibility of living quite a while longer.
On my Investment Talk blog I am today writing about Organic Resource Management (TSX-ORI). Today, I am discussing the stock. To read about this stock go here....
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