Back in 2011, a friend spoke of these magical financial vehicles called “index funds”. What was news to me at the time sparked immediate deep research and eventual action.
Index funds have seen massive traction in the “FIRE” or Financial Independence, Retire Early community. And while there are many funds that track many indexes, the most common recommendations made tend to track the following indexes:
- S&P 500
- Total Stock Market (the entire US equity market)
- FTSE All-World
- MSCI World
- Other local indexes, such as the ASX200, FTSE Developed Europe, TSX60, and so on.
Whether right or wrong, the general consensus from this community is that for every $100 invested today, it will pay you back $4 every year, for at least 33 years.
This is known as the 4 percent rule, and is the “safe withdrawal rate” that finance bloggers like MMM, jlcollinsnh, Millenial Revolution and everyone else rehashing the same stuff over and over are talking about (no disrespect, there’s just very little “new” information).