Let’s talk about the 4% rule, why this may no longer work for retirement, and what you can do to prepare – Enjoy! Add me on Instagram: GPStephan | Join My Free Newsletter For More Information: http://grahamstephan.com/newsletter
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The 4% Rule:
This basic retirement rule suggests that could spend 4% of your portfolio every single year, without running out of money in retirement, in the worst case scenario – so, if you had a million dollars, that’s $40,000 to spend on whatever you like. However, others argue it’s too simplistic – and could leave you broke, in the event it were to fail.
Subscribe to Ben Felix:
He argues that the 4% rule was based on a 30-year retirement which means, if you plan to live MORE than 30 years without working, there’s a strong chance you’ll run out of money.
In addition to that, ENTIRE portfolio was based the performance of United States Stocks and Bonds, which have seen some of the strongest returns throughout THE ENTIRE WORLD, and it’s unclear whether or not that will continue. He cites what’s known as the “Equity Premium Puzzle,” which suggests that investors are compensated EXTRA for taking on additional risk – but, when those risks never materialized – investors simply get “lucky,” and – eventually, that “luck” could very well “run out.”
For example, he mentions one study that shows how the United States could simply be the ultimate “survivorship bias,” with high stock market returns being the exception – not the norm. Because of that, they suggest that stocks may only return 4% above risk-free treasuries, instead of the historical 6% that we’ve all gotten used to, leading, of course, to lower returns.
The OTHER issue is that, once you look BEYOND the United States…you’ll begin to see that MOST developed countries have returns that are NOWHERE CLOSE to the 7-10% annually that we’ve seen here. Vanguard even says that “going from a 30-year to a 50-year retirement horizon decreases the probability of success from 81.9% to 36.0%”
HOW TO PREPARE:
-SPEND LESS.
If you want to “retire” for longer than 30 years, you’ll likely need to reduce your spending to 3%, depending on how long you want to live off your investments. For some people, this might mean spending the 2.7% that Ben Felix recommended, or it might mean spending 3.5% if you want to retire for 35 years. But, knowing that the 4% rule was only meant to last 30 years, is going to help point you in the right direction in terms of how much you need.
-VARIABLE SPENDING.
This means that – when times are good – you spend more, but when your investments are down…you spend less.
-DIVERSIFY INTO INTERNATIONAL MARKETS.
Throughout the last 50 years, INTERNATIONAL stocks have actually outperformed the US on several occasions – and, even Vanguard believes that using a mixed portfolio could increase the chance that your money lasts by more than 20%.
Honestly, I think Vanguard really just summarizes it perfectly: They say “By adding international diversification to the portfolio, the withdrawal rate can increase from 2.6% to 2.8%. By reducing fees from 100 bps to 20 bps, the rate can rise further to 3.3%. Finally, by using a dynamic spending rule, the rate can rise to 4.0%.”
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@Zar O if he had morals he’d cancel himself… the regulators in the US must be underfunded. He should either be in prison or sued. Instead he just says sorry.
When i am hearing about you and your millineium money friends in jail?
@LRKR_exe yeah the c l o wn boyz
Next video should be “what’s up guys, it’s grifter here”
@Arnold Farias totally grifters are some of the nasty leeches
Did I just hear the intro as “What’s up Graham it’s guys here”
i don’t know why but…the resolution always looks low
“What’s up Graham it’s guys here” lol
Just take up smoking.
“PUT ME DOWN HOOMAN” – baby turtle
Invest in real estate, retire on rental income😂
I love my job…
Hey good, hope you’re Graham today!
Need a video on How much money you made on YouTube in 2022
NON STOP STUPID VIDEOS. UNSUUBBED.
bro dude i strait drippin in sauce pushin Ps homie what’s a job gon do? hold me back dad wut
So ,this video is just a rehash of someone else’s more thorough one.
But this rule applies only for stock investments only, right? I would assume it’s different if you are generating income from rental properties. I don’t know because I’m just starting my financial freedom journey.
Because you listen to financial YouTube advice ” 3simple sets ” learn a skill, do the work, get paid.
Stop listening to them money hungry YouTubers that do it to serve themselves
What’s up gram it’s guys here 😂 love your videos ❤️
Risk on style equities are about to flourish contrary to popular opinion
I think that the goal for me would not be so much to retire early, but to be able to do something that I enjoy even if it’s a low wage job because I don’t have to worry about money, or, even more so, to be able to live wherever I want in the world and not have to worry about money.
Financial freedom is definitely the answer over just stopping everything because retired. In my own experience, older family members that just stop end up passing away faster than those who keep their mind fresh and always try to push themselves.
I read a lot of reports during the pandemic about it being exceedingly difficult for people 50 and over to get jobs due to age discrimination and a preference for younger workers, so it may not be so easy to return to the office after retirement. You may have to rethink your options.
That’s true. Investment strategy should be examined in the long run and risk tolerance should be adapted to age and capital. As a data scientist, one of my interests is how the retail investors can utilize ML to benefit thier investment strategy and keeping edge fund hands out of our pocket.
To be safe, have X years of money where X is the number of years in retirement. That way an inflation-adjusted return of 0% still works.
Of course I can retire. Just send me some money sir millionaire I watch every week.
I love these videos about retirement. I’ve dreamed about retirement since I was like 17 years old.
A rising tides raises all boats. 30 trillion dollars later… we shall see lol. “When the tide goes out, you see who’s not wearing a suit.” Warren Buffett
Financial Independence Retire Early. FI/RE
This is why a dividend growth portfolio is appealing. You withdraw 0% of principal.
Beware this man! Graham received large payments to indorse FTX. He did no investigation on the company and cost his followers millions of dollars. He will sell you out again.
Is this video slowed down?
Is it just me, or does he keep saying, “What’s up Graham, it’s guys here!”?
Yes, these are the kind of videos that had me subscribing in the first place. More of these please.
Clown following other clowns
Probably can’t ever retire after you convinced me FTX was a good investment.
No one put a gun to your head. Do your own homework make better choices and stop living for others. 😉
I can’t I watched you and I invested into FTX no am broke
Maybe if I had FTX money I could retire early. Unsub
We have money in stocks, but most of our FIRE comes from paid off real estate being rented out and living in a low cost country.
Hey just commenting to say that your click bait titles are a real turn off. I used to watch you got good info. Maybe you still give it idk haven’t watched a video in a while. But when I see click bait titles that don’t tell me anything I just don’t watch the video.
Im gonna have to work forever 😞
Just be a grifter..easy
Im working towards a 1% withdrawal rate, and even then, il still work, but will feel relaxed.
Nice to see my man Ben getting some love for once. Their podcast is fantastic too
Whats up GRAHAM its GUYS here!!! LOL
i dont like your titles anymore Graham!
No pus wow😂
Why is everyone spamming Amazons ZRO100X is it fake likes I’m really confused lol
Hey this video is old, and Elon did buy twitter, you are not that tricky Stephen
I’m a big fan grahm but…. This video is pointless …. There is No countries in the western world that anyone can live on the 4-5% rule… I googled the “ Median” net worth of a 65-74 year old and its $266,400…. At a 4-5% withdrawal that’s less then $12,000 a year… no one should be using the 4-5% rule in the environment that we are currently living in
I’m a big fan grahm but…. This video is pointless …. There are No countries in the western world that anyone can live on the 4-5% rule… I googled the “ Median” net worth of a 65-74 year old and its $266,400…. At a 4-5% withdrawal that’s less then $12,000 a year… no one should be using the 4-5% rule in the environment that we are currently living in
clowns following other clowns
I’d love to hear your thoughts about the fair tax act in Congress right now
“But we want the German Mark to be an honest peice of paper, an honest equivalent for the honest work of somebody else, that is the true and only real meaning of money.”
ily graham
Been loving your content! Makes me think about the future and what to start early with. What do you think of this new app that just came out that focuses on talking about how to invest and details about stocks from experienced investors? Will it help people start saving money and investing it? The app is called StockPick App and I have been using it for a bit. Let me know your thoughts!
Here only to see all the dipshits that still believe this nincompoop🤣🤣🤣🤣🗣️🗣️🗣️🔥
I click baited so hard to this
that’s right …..
The pill… So black!
I hope these people are retiring at 45 because this life is short, you are very blessed to see 70 year old, just work hard, pay off all debt, have a small 401k plan, stick with your spouse, and draw social security and give thanks to God for taking care of you.
Exactly!!! 😂
Unfortunately social security payout will likely be significantly less in the upcoming years. I’m in my 20s and I’m not relying on social security payouts still being there by the time I retire.
Looking more like china everyday
Are you forgetting how much someone would get from social security?
Do not count on it being there or at the current levels. No one can promise you it will be there.
Nothing better than working till your 67 because you want to be covered till 100 just incase and die at 68
If you buy the right stocks like Buffet and Coca-cola, you can get 20% and never sell a share Keep 100% of your portfolio forever and just live off dividend income like Buffet.
I’ll never retire because I invested with FTX after you promoted them
Boohoo. I lost money investing in an obvious ponzi cuz a youtuber who was clearly being paid told me it was good.
Can’t help you if you put everything into that exchange
Reputation is investment that very hard to gain
He also says to diversify your investments 🤷
only invest money you can afford to lose. emergency fund must be never be touched !
“What’s up graham it’s guys here” 😅
yeah sure blah blah blah especially those who you recommend FTX, yeah those fo sure wont retire…figure that genius
This c l o w n surely will retire comfortably while the FTX investors will not…real shame on you little man Stephan
Pin this comment. I dare you
love the mindset!
Michael reeves just posted you need to react to it. It will make you laugh specifically.
Could you invite Sebastian Ghiorghiu to the podcast?
So if Graham retires with $50,000,000 invested, at a 3% withdrawal rate he can spend $1,500,000 per year and not run out of money.
video idea- update on yotta doesn’t seem worth it anymore compared to most small banks giving 3-4%
So creepy how a coworker and I were talking about not being able to retire in our lifetime unless we strike it “lucky”
Can’t you just retire on investment properties until your passive income covers your big bills if not all of them? Knowing this video is just focused on stocks etc..
Thanks Graham, Inspiring! As a data scientist, one of my interests is how the retail investors can utilize ML to benefit thier investment strategy and keeping edge fund hands out of our pocket.
Interesting. Though, as for the last comment- how would I know I talking to the real Graham here? 🙂
Success is not built on success. It’s built on failure, It’s built on fraustration. it’s built on fear that you have to overcome. I pray that anyone who reads this will be successful in life
You are right.!
Do a video tour of your Ford GT
Just hoping one day I can go part time.
Complete snake oil salesman here 🤣😂🤣🤣😂 SellOUT
I’ll say this
Wouldn’t it be easier to just spend 1/2 the prior years earnings. So there will be fun years (also years to buy a car or vacations) and years to wait for those things.
¡Hey, Stephan!
What are some luxury watches that would go up in value.
why dont you ever talk about your pokemon collection ?
If you swapped all of your growth stocks or at least a majority of them into income/dividend companies or ETFs, then wouldn’t you not have to worry about this rule? Just live off the dividends and never sell?
So u need like a 15M portofolio….
I really see retirement as doing what you enjoy. Currently I work in sales. It’s okay but income is good. We are working towards buying rental properties at the Beach. (We live 45 min from the beach) use that income as extra with retirement and then I might start a fishing charter business as well. I believe true wealth is freedom and health. Health is so important and really should be at the top of everyone’s retirement plan
Why are you posting here
Stephan, do you have a podcast?
Using just data from 2021 to assess the performance of the US against other countries is really really poor. While the FTSE 250 hasn’t done as well as the S&P500 since 1996, it’s still up roughly 350% percent … Your 2021 data obviously shows a very different trend.
Come on Graham.
You expect me to trust a Canadian in a black hoodie to manage MYYYYYY money?!?!?…..that’s like listening to ‘someone’ praising a pudgy dude with an oversized gray Tshirt and a messy afro. Hey didn’t you push a guy like that a month or two ago????!!!!?!?
I’ll never retire because I followed advice from those Millennial Money guys. Hey, where is the FTX or BlockFi ad???
I’d have to disagree that food shopping is “extra” right now with soaring inflation.
So why not put that money into something like jepi, live off the dividends and never have to sell the investment
The best of America’s growth is behind it. AI is the future and its gonna literally change everything.. problem is we truly have no idea how nor how much.. plan B. Invest like normal. Retire. MOVE TO A CHEAPER COUNTRY IN RETIREMENT. Let’s be real. What r u gonna do sit around the house? Do retiree stuff? U can do that in a cheaper country all day
graham you an retire lmao
Graham stop cutting your own hair it looks terrible😂
Would you clarify what your intro means “hello Graham, this is Guys”. I really can’t translate that.
I think most young people don’t really want to “retire”, but they want financial independence where you can take a lower paying job or go part time so that we have more freedom to do the things we love 🙂 No one really wants to sit at home at 35 to do nothing
Retiring young is a lazy mindset and bad for society let’s be honest now.
The problem ppl wanna retire too fast trying to catch the next shibu coin to get 200x. And they lose more money
FTX? Stop blaming Graham. Holy crap. I cannot stand incompetents. U make ur own choice….. LIKE DUH…..
Spending actually increases the older you get on bills and health care
🫨🫨🫨