Living off your capital: how much you need

Living off your capital means it generates every year what you spend, and the capital stays intact. You eat the fruit and the tree remains. For that, what you receive has to come out of the return, never out of the trunk.

The rough sum is simple: what you want to receive each year defines, together with the expected return on your investments, the size of the tree you need. Receiving more each month demands a larger capital, and inflation demands the tree keep growing even while you harvest it.

The fine print is in the assumptions, and that is where a serious calculation parts ways with a back-of-the-napkin one. The Proyecto 5% calculator runs that sum with your data and hands you your exact target, with what inflation does to it on your date.