As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

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Sunday, 10 January 2010

Uncomfortable With Draw-down Method?

Singaporeans unclear about retirement income: survey

Someone told me that he is uncomfortable about using draw-down to fund his retirement and also want to see growth in Portfolio. I am also assuming that he would still want to keep up with his current lifestyle.

Let us do the Maths and don't talk about growth first and just only to maintain the Portfolio.

What type of return is needed for the Portfolio to fund retirement expenses without draw-down and assuming the following:

1. Retire at 55
2. Inflation rate at 3%
3. Portfolio size at 25 x Yearly Estimated Expenses
4. No draw-down
5. 5 years upfront cash out
6. Live up to 80

We would need the Portfolio to produce annual compound ROC at 7.5%

To compound the entire Portfolio at annual rate at 7.5% through the bulls and bears market cycle is a super challenging task. Not only you need super investing skills, you need super guts too to sink in the entire portfolio into the Market when you don't have any more earned income.  Phew!

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