Anonymous
Little information about using investment funds during retirement... Probably because seedly tends to draw a younger crowd?
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Calculate how much you will need per year after you retire (Eg 3,000 x 12 = 36,000)
Multiply that amount by 25 (36,000 x 25 = 900,000)
Put 900,000 into an investment that generates 4% return p.a.
Withdraw the interest (interest ONLY) every year
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Pang Zhe Liang
04 Aug 2020
Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)
It depends on the types of investment that you have. Let me give you a hypothetical example.
Assume...
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Traditionally, there has been a 4% rule formulated in the Trinity Study in 1998. However, that was during a period where the 10Y Treasury bond yield was at 5%. If your portfolio was made of 10Y bonds at 5% yield with 4% draw down annually, it will not deplete. This cannot be said for the current economic climate where current yields are hovering at 0.7%.
You can deploy a strategy where you withdraw 80% of 10Y bond yield. The 20% can be for safety net, in addtion to emergency funds. In 1998, you can draw down up to 4%. In 2020, the maximum is 0.5%.
In your retirement portfolio, there should be other components like annuities (CPF Life or private-owned) to complement the draw downs.