The author makes the convincing case that the 4% rule should be dropped to 3.25%-3.5% when the CAPE at the date of retirement is as high as it is now and when the period of retirement is longer than 30 years. u/NamitNasih had shared a piece of research a few weeks ago that argued something similar.
Here's a link that displays the CAPE for the Nifty for those curious: http://siblisresearch.com/data/cape-ratio-india-nifty/
Interesting add-on reads –
Comparison of safe withdrawal rates in other countries – mentions that India should be around 3.38-3.5%. This doesn't take CAPE into account though. https://mpra.ub.uni-muenchen.de/31080/1/MPRA_paper_31080.pdf
One of the foremost researchers on early retirement – Wade Pfau – comments here on the India situation: https://retirementresearcher.com/do-it-yourself-safe-withdrawal-rates/
While there is no decent study for India and simply not long enough time period to do anything so detailed – perhaps a 2.25%-2.75% withdrawal rate seems a best guess as to safe enough rate – 3.25% for US and an additional buffer for Indian markets keeping in mind our potential volatility and inflation. Your thoughts?
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