BacktestFolio · Glossary
VPW
In plain language
With VPW you always withdraw a percentage of what you have today — not of what you started with. If markets fall, you withdraw less in money terms; if they rise, more. You can never run out of capital before the horizon, but you accept that withdrawals will fluctuate with markets.
Technical definition
Variable Percentage Withdrawal: a withdrawal strategy in which each year a percentage of the current portfolio value is withdrawn, calculated so that capital reaches zero at the chosen horizon (amortisation logic). The percentage increases as the remaining years decrease.