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Comment by vm | Hacker News Reader

Public market stocks. I know this isn't exactly what you're asking but I mention because it's worth considering in your personal decisioning framework (and is my honest answer)

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Just to put it in perspective, you can make ~$500 per month from having $150,000 in mutual funds if you assume that you make an average of 4% per year after inflation. VTSAX made almost 15% last year, but last year was unusual.

I've put $23k into $clm and make $345 in dividends a month.

That's a very large initial outlay.

$10k gets you $32 a month, roughly. And that's not even an especially safe rate of return - true fixed income would be closer to 4% before inflation, i.e. 2.5% after inflation.

Google about "safe withdrawal rate" and you'll see theres a bunch of information about a portfolio being able to fund 4% long term (in perpetuity?) .

I know of it, and I think it's optimistic. You have to factor in the chance for inflation to go up and general equity returns to go down. I think 7% nominal returns is an outlier in the history of the world.

For example, the 30 year TIPS return at the moment is ~1% - I would consider that a truly "safe, real interest rate" return. By that standard, taking out 4% in real dollars has a significant chance of depleting your principal over time.

Picketty's "Capital in the 21st Century" gives ~5% as the historical rate of return of capital after inflation, which is remarkably consistent across countries and decades.

1% is way off.

a robo-adviser I am using "assume[s] a return of 5.1-5.45% on stocks and 0.74-1.05% on bonds after 0.5% fees". I do find these numbers a bit pessimistic but at the same time, I would expect the robo-adviser to give more optimistic numbers than pessimistic ones.

0.5% fees are high. are you getting value out of those, compared to index funds and some vanguard target funds that are 1/10th to 1/4 of the price?

they do auto-rebalancing and auto tax loss harvesting, kinda hands-free investment. Real human investors can charge 1.5%

S&P 500 return was about 22% in 2017. On paper, I made a lot, although I have no plans to touch any of it for a long time.

+1 for VTSAX

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