Antell, Jan – Vaihekoski, Mika (2026) Long-term equity investing and withdrawal rules. Forthcoming in Financial Markets and Portfolio Management. DOI: https://doi.org/10.1007/s11408-026-00492-1. This article is available as Open Access.
Abstract
This paper provides evidence on the outcomes of several different withdrawal policies for a long-term equity investor with a motive to preserve the real value of their assets and maximize withdrawals. Using data for the US and Finnish stock markets from 1913 to 2023, we find that historically, the maximum endowment-preserving withdrawal rates would have been 10.95% and 1.83% of the initial investment at the end of 1912 for the US and Finland, respectively. The maximum withdrawal rate varies with the timing of the initial investment. The average maximum withdrawal rate over the first 100 years is 7.79% for the USA and 6.63% for Finland. A rearview look shows that following a rule where the withdrawal is a given fixed rate of the nominal value of the portfolio, all the while either disallowing reductions in nominal withdrawals (Finland) or keeping them at least 90% level of the previous nominal withdrawal (USA), would have historically provided the highest average withdrawals in real terms. Looking forward, both countries offer withdrawal rates of four or even 5% with reasonable risk if one allows withdrawals to be adjusted for stock market development.