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Comment by atwebb | Hacker News Reader

Where are you getting low risk 3.5% interest these days?

It's an average inflation-adjusted expected rate of return over time of a balanced portfolio, not a guaranteed rate every year. Some years might be 10%, some years might be -10%.

Historically, about 4% is the safe drawdown rate. FIRE folks tend to be a little more conservative than that, though, because of the even longer time horizon involved with retiring earlier.

Check out a tool like https://www.firecalc.com/ that is designed to run backtested simulations to see if your drawdown rate from your starting assets would historically be safe for your time horizon. The UI is clunky but the math is good.

That's fair, I'm pretty familiar with FireCalc and the withdraw rates, I wasn't in the right frame of mind (are any of us?) but that makes sense.

I think the 3.5% number is not for low risk investing. Additionally, you would need to make something more like 5.5% to account for inflation. Still a fairly conservative number for investments in equities.

The oft-quoted 4% figure is accounting for inflation. The nominal average return of a balanced portfolio over time is more like 7-8%.

FYI, the oft-quoted 4% figure was derived using a 30 year retirement time horizon [1]. Using longer time horizons will lower that number. [1] - https://financiallyfinanced.com/posts/will-bengen

In the UK My ISA portfolio is yielding at 3.2 from when I last did the sums - this is ignoring any capital gains.

Its a mix of some big Investment Trusts some wealth protection like Personal Assets RIT and Capital Gearing and a few more speculative bets

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