General information
The 8% Rule employs no financial, investment, or tax professionals and The 8% Rule strategy nor any of its content should be taken as individualized investment or financial advice. The 8% Rule strategy is simply an investment strategy and it is ultimately up to the subscriber to decide if the strategy is right for their unique situation and take action.
Furthermore, just like The Trinity Study (a.k.a. The 4% Rule) cannot guarantee a 4% withdrawal rate is safe, The 8% Rule cannot guarantee an 8% withdrawal rate will continue to be safe in the future. Past performance is no indication or guarantee of future results. However, we can use the past to inform the future. The 8% Rule strategy has shown, using our own “Trinity Study”, to retain full value of capital over every 30-year period for which we have reliable data (i.e. 1973 forward). In fact, the minimum safe withdrawal rate from our study was over 8.5%.
We included multiple margins of safety to reach our final stated withdrawal rate of 8%.
First, our analysis required full retention of capital (i.e. if starting with $100,000 you must end with at least $100,000 after 30 years for the period to be considered a success). This is more conservative than the Trinity Study which merely required not exhausting all capital.
Second, our analysis included a 0.1% trading fee for each transaction. As of 2020, most brokerages offer fee-free trading. These fees act as a drag on returns and the safe withdrawal rate would undoubtedly be higher if we had not included this assumption. Once again, we’re being conservative.
Lastly, as mentioned, the true safe withdrawal rate we found in all 30-year periods from 1973 to the present was over 8.5%. We feel that reducing the stated safe withdrawal rate to 8% is quite conservative and is likely the most significant safety margin we’ve built in.
That all said, it remains up to the individual subscriber to decide what is right for them based on their unique situation.
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This Privacy Policy was last updated on June 19, 2020. If there will be any update, amendment, or changes to our Privacy Policy then these will be posted on this page.