If an individual wishes to have a fixed portion of the portfolio liquidated each month, then the type of withdrawal plan which he or she should elect is fixed percentage.
A withdrawal plan is a financial plan that allows a shareholder to withdraw money from a mutual fund or other investment account at predetermined intervals. Frequently, this type of plan is used to fund expenses during retirement.
Fixed percentage withdrawals refer to withdrawing a fixed percentage of your account balance every year. For example, taking out 4% or 5% of your total invested funds every single year. With this approach, the amount you withdraw will vary as your investment account balance increases and falls.
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