OT. Isn't 4% also the rule of early retirement, that is if you can live of 4% of your savings you can retire?
Can anyone clarify if this rule applies for both individual and corporate? If so, how would be even more interesting to know?
An immortal, such as a corporation, has to use a safer number, such as 3%, or 2.5% for operations and 0.5% in fees for the fiduciary management. So the permanent endowment needs to be 40x annual operating costs, and the fiduciary needs to grow it by 3% better than (price) inflation per year. That's relatively easy to do when most of the principal won't be touched within the next 30 years: buy all the publicly-traded stocks that have historically paid regular dividends, and reinvest whatever isn't paid out. On a long enough time scale, that's probably 7% better than inflation.
So the fiduciary could possibly be replaced by a robot that only needs 0.05% annually for maintenance, and then you'd only need to endow 34x annual operating costs to run forever.
The 4% spending ratio theoretically varies with market performance but evens out over time. 7-8% typical returns for a total market index/etf, minus a couple % to account for inflation.