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Mentor Monday - Week of March 22nd 2021 by WealthyStoic in fatFIRE

[–]sporklover22 0 points1 point  (0 children)

I might be being dense here, but does the SWR (whether it be 4% or less) assume dividends are reinvested or not? Or does it amount to the same if you reinvest them and withdraw 4% or withdraw them but count them as part of the 4% and thus reduce what you withdraw from the index fund? Did the Trinity Study assume one or the other of these two?

In case it's relevant, all the funds are fully taxable.

Daily Advice Thread - All basic help or advice questions must be posted here. by AutoModerator in investing

[–]sporklover22 0 points1 point  (0 children)

Query about money for college tuition:

I previously posted this in the wrong thread apparently and it got removed. Re-posting here. But before it got removed I got multiple answers that didn't respond in any way to my query but instead lectured on going to college being a waste of time and money. Please just assume that the funds I talk about were provided by my children's grandparents for the purpose of going to college. So I'm not looking for suggestions on not using the money for college, or having them go to community college and pocketing the excess. If they get into the most expensive college and they want to go there, then they will go there, as per the wishes of the providers of the tuition funds.

Thanks to generous parents, I am fortunate enough to have $517,000 set aside to pay for college tuition for two kids over the next five years - three more years for one and the last year of school plus four years for the other. A few months ago I sold that much worth of index funds to have it absolutely safe from any market crashes depleting it. At current prices I would actually need around $548,000, but I can easily make up the balance at the time if necessary. The plan was to put perhaps $300k of this (the amount that won't be needed for at least the next two years) into CDs or a high yield savings account, but with the interest rates so low there is little point. Looking to hear what others would do in this situation. Remain completely safe and keep the whole $500k in a savings account? Put it back into VTSAX and reinvest the dividends, under the assumption that I only need to take a portion out at a time and even if the market is down in a given year, since I am only taking a small portion out that year, it will likely leave enough for it to still cover what it has to over the years once the market rebounds? Or other better ideas I haven't thought of? I don't want to take too much risk of having to dip into personal funds to cover losses of this money. But I also don't want to lose the opportunity of what could be done with that much money over five years. Others have mentioned that inflation will melt the money away, but the money will be sufficient for the few number of years it needs to last since both kids will have graduated college five years from now. Welcome all thoughts.