How You Beat Inflation

J_ · Post by J_ » Sun Jul 15, 2012 10:56 am

Inspired by Jacob another exercise. Make a spreadsheet with one column, let your savings account grow with 3,5% each year. Let your yearly spendings grow with 2% each year.
Say you start with $ 600,000 in savings after ERE, and your spending starts with -$ 9,000 per year (is a 1,5 Jacob). So after one year the savings grows with $ 2,100 and your spending will rise to -$ 9,180. After two years the spending rises to -$ 9,364 and so on

What will happen after 10 years?

The exercise is fun for the reader.
Answer: after 10 years your spending has grown to $ 10,756 per year.

But your savings have grown to $ 731,397
So next time one comes up with the inflation story I’m going to give him this exercise..

BeyondtheWrap · Post by **BeyondtheWrap** » Sun Jul 15, 2012 11:19 pm

A 1.5% SWR? Sounds like someone saved way too much money...

J_ · Post by J_ » Mon Jul 16, 2012 8:32 am

are you smugging me ?

"saved way too much money..."
Or the other way around... was later (after saving) spending much less. There are always more perspectives than one.
And as it appears a low SWR is a good weapon against inflation.

And you will have noticed that after ten years the SWR has been sunk to 1.47%...