Thanks, this is really helpful information about trusts and the 4% rule!
On self trust: I feel that a common pattern might be that when you’re young, you’re ‘idealistic’ and want to do things like donate. When you’re older, you feel like spending your money (if you have it) in ways that might not make you particularly happy. I might even decide I would rather give it all to my kids (if I have some). This makes me think there’s a good chance I won’t donate it later if I haven’t pre-committed.
On safety: I am from Australia, and to some extent my context is probably quite different to many others. (On the whole, Australia tends to look after you if you get severely injured or run entirely out of money. This makes quick access less of a pressing consideration for me). But to the extent that it is an important consideration, why not have a little money that’s easily accessible and most of it in a trust?
Oh, Australia. I fell prey to the common mistake of “assuming other people people are like me.” I know a good deal about personal finance in a USA context, but only parts of that are universal: good chunks of it are particular to a specific national context. The national context matters a lot in personal finance issues.
Your idea of “have a little money that’s easily accessible and most of it in a trust” does make sense. Have an ‘emergency fund’ or ‘support myself fund’ with enough money for a a year or two of expenses, and then have everything else in a fund that transfers X% into your ‘support myself fund’ each year (or 1/12th of X% each month). If you do it right, the trust should grow indefinitely, and the inflow to your ‘support myself fund’ will be larger than your expenses.
I think that I don’t have anything particularly wise or useful to write about the whole ‘trusting your future self’ topic. But I imagine that there are likely personal finance professionals who have done research about that time of thing. It might take some poking around to find it though.
Thanks, this is really helpful information about trusts and the 4% rule!
On self trust: I feel that a common pattern might be that when you’re young, you’re ‘idealistic’ and want to do things like donate. When you’re older, you feel like spending your money (if you have it) in ways that might not make you particularly happy. I might even decide I would rather give it all to my kids (if I have some). This makes me think there’s a good chance I won’t donate it later if I haven’t pre-committed.
On safety: I am from Australia, and to some extent my context is probably quite different to many others. (On the whole, Australia tends to look after you if you get severely injured or run entirely out of money. This makes quick access less of a pressing consideration for me). But to the extent that it is an important consideration, why not have a little money that’s easily accessible and most of it in a trust?
Oh, Australia. I fell prey to the common mistake of “assuming other people people are like me.” I know a good deal about personal finance in a USA context, but only parts of that are universal: good chunks of it are particular to a specific national context. The national context matters a lot in personal finance issues.
Your idea of “have a little money that’s easily accessible and most of it in a trust” does make sense. Have an ‘emergency fund’ or ‘support myself fund’ with enough money for a a year or two of expenses, and then have everything else in a fund that transfers X% into your ‘support myself fund’ each year (or 1/12th of X% each month). If you do it right, the trust should grow indefinitely, and the inflow to your ‘support myself fund’ will be larger than your expenses.
I think that I don’t have anything particularly wise or useful to write about the whole ‘trusting your future self’ topic. But I imagine that there are likely personal finance professionals who have done research about that time of thing. It might take some poking around to find it though.