It's all a matter of psychology. Most people might define "sustainability" in terms of sustaining X-number of years of spending/drawdown, without falling to $0. Any positive amount, after X-number of years, is "success". But suppose that one defines "success" as attaining some CAGR across that X-number of years? Depending on market conditions, and investing-style (allocation etc.), then the only sustainable withdrawal amount might be negative. Set the success-criteria to be sufficiently strenuous, and then one might find that it is literally unaffordable to be wealthy.If 1% is untenable with interest rates go to zero, markets are down, dividends are cut, I wonder what life is like for everyone else.
The chief psychological impediment, is if we set our life-goal as stewardship of money, or if you like, becoming a surrogate financial advisor to ourselves. This "financial advisor" is charged with growing wealth, as opposed to merely attending to its non-depletion. Face another Lost Decade for stocks, and this "financial advisor" will likely fail, even with 0% withdrawal rate. That means diversification into less-risky assets... and that means, likely, a long-term attenuation of rates of return.
We have to define the problem, mentally, in a tractable and realizable way. If we don't then not only would billions of dollars not be enough... but on the contrary, perhaps the ideal portfolio would be $0. "The only way to win, is not to play".
Statistics: Posted by unwitting_gulag — Sat Jul 06, 2024 3:13 am