I would, of course, buy a jar of jam. But, I don't know what this metaphorical jar of jam would be in practice, nor would I know that it would cost $4 in two years (i.e. what the inflation will be in the future). And, if you are literally talking about a jar of jam (i.e. food), than I would say that this is too much of a short term to think about.basuragomi wrote: ↑Fri Dec 30, 2022 11:47 amWould you rather: buy a jar of jam (or socks or fertilizer or pre-paid services or whatever) for $2 now that you know you will eat two years from now,
or: invest the $2, have it turn into $3, and buy the same jar of jam in two years for $4?
What course of action delivers more value to you? What leaves you with more money in the future?
No, no it isn't by definition that. Expectation and SWR are not the same. SWR is more conservative than the expectation. You can model it as a statistical random variable. Its expected value can be something like 5% (the historic S&P 500* annualized return adjusted for inflation), but that doesn't mean that you won't catch a bad stretch of years where you need enough net worth that will only support an initial withdrawal of 2.7%.basuragomi wrote: ↑Fri Dec 30, 2022 11:47 amIf you are saying that you expect the market to yield more than inflation so it's worth the risk, then your SWR is by definition above 2.7% in this scenario. If that's the case, then how is 2.7% relevant?
* - I am aware the the Trinity study had something like a 50/50 stocks/bonds portfolio, but my overall point remains