Case in point. An investor needs $60,000 in annual cash flow from their portfolio. A $2.0 million portfolio can easily sustain this level of distribution over the long haul (35+ years.) The question then becomes what level of growth is needed to sustain this three percent level of distribution plus inflation. Assuming the long-term rate of inflation is three percent our hurdle rate is six percent. Does your portfolio need to set up to produce a ten percent level of distribution? In reality no. It can be structured for a more moderated growth rate which will provide the required cash flow plus inflation. In short, building a portfolio which produces enough wealth to allow you to achieve all your investment goals.
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