5 Year Cash Pot + everything else in stocks?
I have the following plan and I was wondering if I am missing something:
* I am 55M, live in Europe, own a nice house in the alps and I have around 3m $ in investment accounts.
* I want to have 150,000 $ per year for the first 10 years then I can go down to 100,000$ per year. (depending how the markets go I can adjust of course.). Also with 65 I will get around 25K in state pension per year + free health care.
I was thinking of the following strategy:
* I put 5 x 150k = 750 K into a "cash pot" which is in reality "low volatility" investments (overnight ETFs, fixed term deposits, bonds with right duration etc.). That will make around 3 % to 4 % at current interest rates.
* the rest 2250K I put 100 % into the stock market (MSCI world ETFs and similar)
* depending on the stock market development. In good years I sell up to 5 % and move it to the cash pot and in bad years I sell less or nothing. That means if there is a stock market crash I do not need to sell because I have my "cash pot". Even there would be a major stock market crash in the first year - I could wait 5 years for the stock market to recover.
What is your view?
Is it too aggressive to set a budget of 5 % of my investments as a yearly withdrawal target?
Is a 5 year cash pot a good strategy to protect against the sequence of return risk and to protect my good sleep?
Is there a better strategy?