Thanks!
Maybe using the phrase ‘magic number’ was not the clearest way to express my dislike for this ‘meme.’ There is nothing wrong with the numbers themselves, it’s their consequences that trouble me. In your referenced post you said
If people believe you, and the industry does, the above becomes a dictum. Everyone is advised not to take out more than 4%. The problem is that every portfolio has an owner with distinct characteristics, age, gender, family, wealth, health, risk tolerance, income sources, and so on.
A 4% straitjacket for everyone is not a good idea. It stifles creativity. Same for the 60/40 rule and many more. Let me illustrate with my portfolio. I no longer have any income stream so I need a portfolio that generates income. As I noted previously I do it with covered calls. 2022 results so far (approximate, conflating euros and US$, ignoring stock capital gains or losses from option trading). The income has allowed my port to beat NASDAQ by almost 2 to 1 despite having hard hit ‘high risk’ securities
YTD
Income 13.35%
Withdraw 8.30%
My point is that ‘magic numbers’ are interesting data points but should not be taken as commandments handed down from on high. There is too much variety among investors to do so. Portfolios should fit like well tailored clothes.
The Captain