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Glossary entry · Money in motion
Safe withdrawal rate (SWR)
Definition
A back-of-the-envelope number that tells you how much you can sustainably pull from an invested portfolio each year, adjusted for inflation, without exhausting it. The famous 4% rule is the most common SWR, but the right number depends on your retirement length, asset mix, and starting valuations.
Example
A 4% SWR on €500,000 means €20,000/year of inflation-adjusted income; a more conservative 3.5% SWR gives €17,500.
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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