willthrill81 wrote:That's not at all what I meant. I wasn't sure of the precise AA that has historically maximized the success rate of a 4% withdrawal rate, hence I said "believe," but I will provide those data here.
Success rate of various AA using 4% WR over 30 years according to FIRECalc (U.S. TSM and LTT):
So anywhere from 60/40 to 70/30 has, historically and with these two major asset classes, had the highest success rate; the failure rate of 70/30 is one-third that of the 30/70 AA. That is not just my 'belief'.
Firecalc is also built on a system of belief. Not just your belief, but many people's belief.
There is no way to statistically justify predicting x years into the future when you have, at best, 2x or 3x worth of past data, and no sound, testable scientific hypotheses to suggest why the prediction would be valid. Especially because the past century has seen perhaps the most remarkable growth since the dawn of civilization (if not THE most remarkable, it is certainly a serious outlier).
And even if you do "believe", based on Firecalc's numbers, given the infinite number of possibilities as to how the world will look in 2047, do you really think the difference between 95.7% and 94.8%, or for that matter 95,7% and 87.1%, is statistically significant? WW1, WW2, The Roaring Twenties and the Great Depression all happened within 30 years.
In my view, asset allocation "theory" is useful to the extent that it keeps people disciplined. If you decide, based on your "risk tolerance" and your "beliefs" (reinforced by Firecalc or whatever), that 60/40 or any other fixed ratio makes you sleep the easiest at night, it keeps you on track and within your comfort zone. It forces you to monitor your finances, which is a good thing. If you are lucky you will have a lot of money at the end of the day. To paraphrase Shakespeare (via the Incredible String Band), all the world is but a play. Be thou the joyful player.