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Glossary entry · Money in motion
The 4% rule
Definition
A widely-cited safe withdrawal rate popularized by the Trinity Study (1998). It says that with a 60/40 stock-bond portfolio, retiring on 4% of your starting balance, adjusted for inflation each year, survived almost every 30-year window in US history. Its inverse, 25× annual spending, gives the "FIRE number".
Example
To support €2,000/month (€24,000/year), you need ~€600,000 invested (24,000 ÷ 0.04, or 24,000 × 25).
Related
Money in motion
Compound interest
Interest paid not just on what you put in, but on the interest you have already earned.
Read →Inflation
The rate at which the general price of things rises. Same money, less purchasing power.
Read →Interest rate
The percentage something pays, or costs, per year.
Read →Return
The gain (or loss) on an investment, usually expressed as a percentage per year.
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