Town Hall yesterday ...
Gina Miller of The True and Fair Campaign said: “We’ve created the True and Fair Calculator to provide UK consumers with a free public information service giving details of the investment fees and costs they pay, so they can make better informed decisions prior to purchase.
Now since the "safe drawdown rate" on life savings is 4%.
Some of these guys take the whole safe drawdown rate - meaning they take all profit, leaving the investor with nothing!
The concept of the 4% safe withdrawal rate originates from the Trinity Study, an influential paper published in 1998 by three professors of finance at Trinity University. The study aimed to determine "safe withdrawal rates" from retirement portfolios containing a mix of stocks and bonds. The 4% rule refers to withdrawing 4% of the portfolio during the first year of retirement, with subsequent withdrawals adjusted for inflation.
Here's how it works:
In the first year of retirement, you withdraw 4% of your total portfolio.
In subsequent years, you adjust that amount based on the Consumer Price Index (CPI) to keep pace with inflation.
The study backtested various stock/bond mixes and withdrawal rates against market data from 1925 to 1995. The authors concluded that a 4% withdrawal rate is extremely unlikely to exhaust any portfolio of stocks and bonds over a 30-year period, assuming the portfolio is well-diversified.
However, it's important to note that the 4% rule is not a guarantee but rather a guideline. Market conditions can change, and mid-course corrections may be necessary.