The 4% Rule of Investing

The 4% Rule is a theory for investors that should allow them to take a salary from their stocks without ever going broke.

Let's say that one has one million dollars invested in the stock market. They want to live off of their investments but don't want to grow broke. They don't just want to sell that million. One way that someone could retire off of their investments without going broke is by applying the 4% rule. If one did have a million dollars invested, they could, in theory, take out $40,000 a year as a salary and never run out of money assuming that the market keeps doing what it does and going up, on average, 10% a year. 

This way they are making more money off of their investment than they are pulling out and as long as that remains true, they will never lose money. It's an interesting theory that allows one to retire off of their investments without dividend investing or pulling out massive amounts of capital. This means that they can keep gaining wealth while still living a good life.

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