Q: Hi there, often times the 4% rule is used as a foundation for retirement planning. I believe the original study used US equities and US bonds as the funds to develop the 4% withdrawal rule. Obviously no one has a crystal ball, but what would be your opinion on using as international equity ETF with the 4% rule rather than a US fund such as VFV? If you were make an educated guess, do you believe using funds such as XEQT/VEXT and VAB/XBB instead of US funds would yield similar results as the 4% study over the longterm going forward?
5i Research Answer:
It is a difficult question. If we look historically, the US market over the past 20 years has massively outperformed Canada and the rest of the world. Thus the 4% withdrawal may be more difficult to achieve if this underperformance continued. We would be fine with adding more diverse exposure, but we would not want to see the US at 0% in such a plan.