If you invest in the S&P total return and take out 7% per year your capital will dwindle pretty quickly. The annualised total return on the S&P since 2000 has been 3.31% https://www.buyupside.com/alphavantagelive/stockreturncalcco...
The alfphaantagelive calculator is reporting much lower numbers than the real value.
Yahoo has a symbol for S&P 500 total return: ^SP500TR Check out: https://finance.yahoo.com/quote/%5ESP500TR/chart?p=%5ESP500T...
Punch in December 2000 for start and today's date for end. You'll get 398% total return. 398/21 = 19% annual return.
Total return includes dividend re-investment.
The alphavatangelive calculator says 3.31%, but even without dividend reinvestment the S&P 500 reports 11% average annual gains.
This does not price in inflation which historically reported as 3% over long periods and was much lower until recently.
Damodran has as good historical financial returns summary page: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/... . According to the spreadsheet linked to on that page, S&P 500 returns with dividend reinvested is 11.64% since 1928. Assuming 4% inflation, that's 7.64% annual returns.
So going all in on the stock market over a long time you can withdraw 7%. Even through world wars, depressions and stagflation periods. Some decades will be better than others.
I don't think you understand how percentages work. 19% annual return means on average every year you get 19% of the amount you have at the beginning of the year, not 19% of the amount when you began investing in December 2000.
If the 21-year return is 398%, the correct annualized return is pow(1+3.98,1/21)-1 which is 7.9%.
Note the spreadsheet from Professor Damadoaran : http://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls
The years 2001-2020 inclusive S&P 500 arithmetic average inflation adjusted total return is 6.79% ( =average(o92:o111) ). Which is below the 1928-2020 average return of 8.5%. Inflation might be underestimated. 6.7 is a lot closer to your calculation!
A portfolio that includes some gold would have performed well enough during the 70s and 00s (gold wasn't a commodity in the same sense in the 30s).
2018: -6.24% 2016: 9.54% 2015: -0.73% 2011: 0.00% 2007: 3.53% 2005: 3.00% 2004: 8.99% 1994: -1.54% 1993: 7.06% 1992: 7.06% 1990: -6.56%
in all other years it was double digit in either direction (of course it more often increased than fell). So it's still a huge gamble, if you start this at the beginning of recession and/or need to eat into your capital it won't end great.
The best way to invest is to pick individual stocks in companies you have carefully evaluated.
Also I never said anything about taking out 7% a year.
Only if you're able to guarantee a priori that you're an outstandingly good stock picker. A substantial majority of retail stock pickers lose out significantly to broad-based index funds.