Safe withdrawal rate
The share of a portfolio you can spend each year with a good chance it lasts; 4 percent is the famous starting point.
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Words beside it
- Burn rate
Cash leaving a business each month net of cash coming in.
- Cap rate
A rental property's yearly net operating income divided by its price. A quick measure of return before borrowing.
- Compound annual growth rate (CAGR)
The steady yearly rate that would turn a starting value into an ending value over a period.
- corporate bond
A loan you give directly to a company instead of a government, and the company promises to pay you back with interest over a set period of time.
- coupon rate
A coupon rate is the percentage of interest a bond pays you each year based on its face value. For example if a bond has a face value of one thousand dollars and a coupon rate of five percent, you receive fifty dollars per year in interest payments.
- Discount rate
The return you demand to accept future money today; higher rate, lower present value.
- Hardship withdrawal
Taking retirement money early for a qualifying need. Taxed, usually penalized, cannot be repaid.
- Interest rate risk
The chance a bond's price falls because rates rose.
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