Yesterday I was thinking about this:
Assume you have around 600.000€, and get around 10% to 25% annual return on a fairly aggressive fund investment. Now assume that each year you take out 80.000€ yearly to finance your life and readjust portfolio accordingly to maintain our expected yearly return.
I have tested this and ran 10.000 simulations and I end up with around 1.200.000€ after 10 years. I have multiple questions:
First, is my thinking flawed in any sense?
Second, I suspect that my expected return is close to unmaintainable, I was just wondering because I recently read about Vanguard Small Caps that managed to yield over 35% yearly interest.
Third, assuming that I live in Germany and only adjust the portfolio once a year, I could thereby bypass the tax laws and just pay the 25% on the interest I made.
I of course know that there would be quite a big risk involved but in case this would work, it would leave me with roughly 60.000€ to live with per year and I would still double my investment in only 10 years.
It sounds a bit too good to be true, so please tell me if I am missing something.
Edit: After receiving all the feedback from you guys, which I am very thankful for, I came to the conclusion that 7% annually seems to be the aim and states the most reasonable point to aim for. Thanks again for all the pointer.