Do You Use the 4% Rule to Set Your Investment Goal?
In yesterday's livestream, @谋定后动 mentioned the 4% Rule for wealth freedom.
Wealth Freedom Goal = monthly expenses × 12 months ÷ 4%
The 4% Rule is based on the assumption that withdrawing 4% of your savings each year will allow you to live off your investments without exhausting them too soon.
Do you agree with this principle?
Calculate Monthly Expenses: Determine how much you spend each month.
Annualize Expenses: Multiply monthly expenses by 12 to get annual expenses.
Estimate Required Savings: Divide annual expenses by 4%.
Example:
If your monthly expenses are $10,000:
Annual expenses = $10,000 × 12 = $120,000
Required savings = $120,000 ÷ 0.04 = $3,000,000
This means you need $3,000,000 to live off 4% of your savings annually, achieving financial independence.
But it’s important to note that we should adjust for inflation. People in Singapore may need a smaller percent like 3% rule.
How do you set your investment goals?
Do you agree with the 4% rule?
How’s your investment goal going?
Leave your comments and also post to win tiger coins!
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sometimes, you can plan all you want and then poof... life turns you upside down and inside out...
most months always have something coming up and need to fork out more [Allin] [Allin] [Allin] for either this or that [Facepalm] [Facepalm] [Facepalm]
money no enough [Facepalm] [Facepalm] [Facepalm]
how to plan like that [Glance] [Smug] [Thinking] [Victory] [Helpless]
@rL @LMSunshine @koolgal @GoodLife99 @Universe宇宙 @Shyon @Aqa @SPACE ROCKET @HelenJanet @TigerGPT
How do you set your investment goals?
Do you agree with the 4% rule?
How’s your investment goal going?
Leave your comments and also post to win tiger coins!
Let's say I want to retire in 20 years time, so...
To save $3,000,000 in 20 years, i would need to save:
- $150,000 per year (simple calculation)
- $75,000 - $90,000 per year (assuming 7% annual return and 2% inflation)
- $6,250 - $7,500 per month (assuming 7% annual return and 2% inflation)
To achieve $150,000 a year in I may need:
- A portfolio size of $2.5 million to $5 million, depending on the dividend yield or interest rates.
- An average annual return of 6% to 8% on your investments.
- A combination of stocks, bonds, and other assets to generate passive income.
Where to find a portfolio size of $2.5 mil to $5 mil?!
How’s My Investment Goal Going?
Personally, my investment journey is ongoing, with a keen focus on building a diversified portfolio that can generate steady returns. I regularly reassessing my goals against the backdrop of the 4% rule.
The “4% rule” is merely a guideline that setting a goal to accumulate assets that are at least 25 times your estimated annual living expenses. However, wealth freedom starts with a plan, and the golden rule applies are: 'the earlier you start, the better!'
By starting early and staying disciplined, I’m confident that I’m on the right path to financial independence and early retirement.
@CSing how do you think?
just would like to understand more from ur strategy?
1. are u buy n hold SG dividend counters? for long or
2. hop on counters for dividend?