No. of Recommendations: 19
Buffett said a 5% "Berkshire share" withdrawal rate will last a very, very long time.
What does that look like? Say you have $1,000,000 in Berkshire. Today's price is $370. So, 2,703 shares. Assume 7% real growth?
Today you sell 135 shares and pocket $50,006.
Next year you sell 128 shares and pocket $50,831.
Year three you sell 122 shares and pocket $51,669.
...
Year ten you sell 85 shares and pocket $57,941. Your Berkshire stake is now worth $1,158,815.
...
Year twenty you sell 51 shares and pocket $68,243. Your Berkshire stake is now worth $1,364,860.
...
Year thirty you sell 31 shares and pocket $80,377. Your Berkshire stake is now worth $1,607,540. You have 580 shares left.
You have less shares, but they're worth more. Of course, in practice it won't unfold exactly like this, but I think the result will be satisfactory.
