Stupid captcha: asks to identify the taller building, but shows just the crane (no building), lol.
AI "implied" that the building is there somewhere, beyond the frame, lol.
I am on vacation, and I am getting there in age (younger than Phil, but not by much), so i was reading a bunch of retirement books.
At the risk of @JJG getting at me...and saying that all you need is btc,
For sure when we begin our investment, we can start out with only bitcoin and cash and then build that up to include other kinds of assets as we build up our net worth..
Sure there are other folks who are not coming to bitcoin as a first investment and they come to bitcoin and they already have other investments, so of course they can either keep those other investment or reallocate some or all of them into bitcoin.
At the same time, if they are new to investing, then they do not have any other investments, and they can start out with just building up their investment portfolio by having bitcoin and cash and as both of those assets grow then they can choose to add more assets.
It seems to me that even if we start out with just bitcoin and cash, at some point it starts to make sense to spread out beyond just bitcoin and cash (ie diversify).. .. and the threshold amount as to when to diversify can differ from individual to individual.. maybe if the bitcoin is a year or two of expenses and the cash is 6 months of expenses, it might make sense to expand the categories of investments (assets) beyond just bitcoin and cash at that point?
Diversification is a discretionary matter, and surely some folks do have access to 401ks and perhaps they buy residential property.. and maybe those are their only other investments.. yet if someone knows about some other areas or they are comfortable they might have some other investments too. .even though many folks these days do not go beyond index funds.
It can start to feel problematic to be holding more than 6 months of expenses in cash, even though if some of that amount held in cash is to buy bitcoin dips, then surely if your bitcoin investment might be the size of several years of your expenses, then you might have 6 months or more of your expenses in cash.. and maybe your bitcoin investment is 15 to 25 years or more of your expenses, and then it might be acceptable to have even a couple of years in cash for buying dips or various ways to offset the bitcoin investment volatility.
Surely the more value one has, then the more options that they have too in regards to how to hold it and how to protect it, and many times, I think of diversification as ways to protect the wealth from shrinking rather than necessarily aiming to grow it..even though sometimes both can be possible within limits..
To me it seems that the larger our investment size, which ends up likely being 10 to 25 years of our expenses, then the more likely that we would have it in more than one asset (or currency) and go beyond just bitcoin and cash, and in traditional assets 25 years is considered fuck you status since it takes 25 years of income to support a 4% withdrawal rate.. and sure my own theory of bitcoin valued at the 200-WMA allows for just 10 years of expenses as long as they are valued at the 200-WMA..
I would say that i read the new book by William Bengen (the "4% rule" guy), who now says that for a 30 year retirement at least 4.7% spent (percentage of portfolio withdrawal per year) is possible.
To me it does not make sense to have a flat withdrawal rate for all assets, even though I can see why it might be done that way for simplification reasons... For example, if you have a 401k, then the various asset classes contained within the 401k are likely able to be combined and even withdrawal from the funds might be considered to be done at equal rates from various assets within a 401k. I think that at least some of the 401k funds have those kinds of capabilities to withdraw equally from the assets contained therein.
I have some kind of a fund of a variety of index funds that I started to withdraw at a set rate (which is about 4%) in mid 2022, yet it withdraws in proportions that are equal to the value of the holdings of each of the assets.. so that if there are 4 funds then each would withdraw at 1% (per year) and if there were to be 8 funds then each of them would withdraw at 0.5% each per year... Yet mine I have been withdrawing monthly since mid-2022 at about 4% per year.
I would consider that optionally you would not necessarily have all of your assets being withdrawn at the same rate, at least I would consider treating the bitcoin funds differently from other funds.. .. even though sure, for convenience sakes, maybe you would do it at a set rate for each, and then your asset that grows more would grow more and you would be withdrawing from the slower growing asset at a rate that is faster than it is growing.
As I am typing and thinking it through, there could be reasons to just keep them all at the same flat rate, even though you should have options to treat your bitcoin differently... especially if you own the actual bitcoin rather than having them in some 3rd party fund in which you ONLY own bitcoin exposure rather than actual bitcoin.
Hahahahaha., .there are going to be plenty of guys who are acting as if they own bitcoin, when they merely own bitcoin exposure, and surely we can see draconian governments creating penalties for the actual ownership of bitcoin and costs of cashing them out.
If the retirement is less than 30 years, and I modeled both 15 and 20 years, then up to 7-8% portfolio withdrawal per year could be safe (without EVER having a 0 in the account based on ALL >100 years of previous data).
The previous data does not contain bitcoin since it is very new, but if even without bitcoin 7.5% withdrawal rate is possible for a 20 year long retirement, then with 20% bitcoin (an arbitrary number with some here having much higher numbers, probably), even 8-10% SWR (safe withdrawal rate) is very doable, imho.
Or, stick to the 4.7% withdrawal rate and leave a large legacy
.
My own ideas of sustainable withdrawal rate means that it is sustainable forever and ever and ever... so your asset should be growing faster than the rate of withdrawal so that you are not depleting the principle of your assets. From my point of view, if you are depleting the principle you are doing something wrong in terms of your assets not growing enough or you are withdrawing at a higher rate than you should be.
Now, if you want to purposefully deplete your principle, then that is a different thing that you can do, yet you don't necessarily need to if you want to try to make sure that your assets are growing faster than the withdrawal rate (meaning that the withdrawal rate is actually sustainable forever and ever and ever.. ie perpetually until you late might change it upon your changed circumstances.. I think that it is better to start out with perpetual rather than starting out with a date that you end up outliving your money.. and yeah, that is a personal preference.. yet I think that no one really wants to outlive their money, which is part of the reason to try to make a sustainable withdrawal plan).
You have already heard my theory about being able to withdraw the BTC at 10% per year rate as long as you are valuating of the BTC is based on the 200-WMA and as long as the spot price is more than 25% higher than the 200-WMA.. and I propose reducing the withdrawal rate if BTC's spot price is less than 25% higher than the 200-WMA...
So
right now, if you want to withdraw from BTC at $80k per year, then you would need to have at least 14.1784 BTC, and surely it is helpful if you have a bit more for a cushion, yet from my perspective 14.1784 is enough to start and you can give yourself a 7% raise each year, which is $85.6k in year 2, and $91.6, in year 3, etc etc etc..
So there can be at least
a couple different solutions if you are worried about depleting your BTC too soon.
1) withdraw at a lower rate in the beginning and maybe the rate will catch up as bitcoin appreciates and the 200-WMA goes up
or
2) accumulate a bitcoin total quantity that is 10% or 20% higher than your targeted withdrawal rate, so if your target withdrawal rate is $80k per year and you know that the threshold minimum quantity of bitcoin is 14.1784, then perhaps then if you make sure that you have at least 20% more then that would be an additional 2.83568 BTC, which would be a total of 17.01408 (= 14.1784+2.83568), and so as you are already withdrawing $6,666 per month (which is $80k per year).
In regard to the percentage of growth of bitcoin, and the second scenario, you have a cushion in your total quantity of bitcoin that will continue to compound in value since you would stay within your goal limit to the extent that you had established your goal sufficiently and with up to a 7% per year increase per year, it seems more than enough to keep up with debasements and/or inflation. My premise would also be that since bitcoin is already designed to account for debasement (since it is the soundest of monies), if the debasement it greater than 7% per year and you need more, then bitcoin's appreciation (in dollar terms) would likely keep up with whatever debasement and/or inflation happening so that the amount withdrawn could be made in the higher amounts since bitcoin will go up in value in dollar term to whatever extent (or more) that the dollar is being debased (or inflation is taking place).
It may well be warranted to treat bitcoin differently in terms of the withdrawal rate as compared with other assets, since it appreciates differently and it seems to be somewhat inversely correlated to dollar debasement, since it remains the soundest money known to man. I do think that traditional assets could perhaps be withdrawn at 4% per year, yet you still would need to have those invested in ways that have returns that are on average higher than 4% per year... .On the other hand treating all assets with the same withdrawal rate would end up leading to a bit of a skewing of the BTC to withdraw it at a slower rate than its capacity, which would lead us to a result like Phil's suggestion of withdrawing the bitcoin slower or last.
Of course, if we are withdrawing at spot price valuations, then our withdraw is going to be all over the place, which is part of the justification that I have for using the 200-WMA for measuring withdrawal rate with an ability to give 7% raises each year...Of course, if you don't need a 7% raise, then you can forego it or even just delay giving yourself that raise, which would then cause that value that had not been withdrawn to continue to grow and compound depending on how long it might be until you give yourself a raise (up to 7% each year upon your wishes)... If for some reason your BTC is not growing as fast as your withdrawal rate, then you might need to consider your withdrawal rate as well including potentially reducing it.
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