Thursday, October 25, 2018

What are we all so worried about?


What are we all so worried about?


bull
I am about to blow your mind.  Are you ready?
Here is the scenario:
Mr. Dickey retires in 1940 with $100,000.  He then proceeds to take out 5% per year ($5,000).  Each year he increases the amount by 3%.  Meaning, the 2nd year Mr. Dickey took about $5150, and the 3rd year he took $5300.  Etc.
Mr. Dickey also put all of his money into the S & P 500 Index (the 500 largest American stock companies).
So the question is:  If Mr. Dickey lives 30 years, will he run out of money?  Well let’s take a look.
So he started with $100,000, took out his withdrawals for 30 years, and ended up at the end of his life with $1,750,000.
What a minute…….What?  How is that possible?  He must have just gotten lucky, right?  Hmmmm…. Let’s look at some other examples.
Years Money is WithdrawnOriginal AmountTotal Amount ReceivedEnding Value
1940-1970$100,000$237,000$1,750,000
1950-1980$100,000$237,000$1,200,000
1960-1990$100,000$237,000$474,000
1970-2000$100,000$237,000$1,275,000
1980-2010$100,000$237,000$1,100,000
1990-current$100,000$162,000$598,000
Even I, a seasoned financial advisor am amazed at these numbers.  And it begs the question: What are we all so worried about?
Plan. Invest. Live.
Have a Blessed Week!
Dave
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