Withdrawal rate
The share of a portfolio withdrawn over a period to fund spending.
Definition
The share of a portfolio withdrawn over a period to fund spending.
Why this concept matters
It links spending needs to the capital required and the intended duration.
What to watch
A rate that is too high may deplete capital, while a cautious rate still cannot guarantee sustainability.
Simple example
Withdrawing £30,000 from a £1,000,000 portfolio represents 3% in the first year.
Example currency : United Kingdom (GBP). The reference country controls the example currency.
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