Financial Independence My 401k contributions vs. 401k gains (graphed over time) |
- My 401k contributions vs. 401k gains (graphed over time)
- We all appreciate the pros to FIRE. But what about actual downsides or cons to FIRE?
- Anyone here actually FIRed at 45 or younger without blogging or vlogging or earning a regular income? Just living off their portfolio? I know there’s a pharmacist fellow who is doing it.
- People who have FIRE'd, what are you up to now?
- Daily FI discussion thread - October 06, 2018
- Canadian FIRE?
- Anxious, about to pull trigger and leave job...
- The NEXT Millionaire Next Door -- many references to this community
- People who left a job they enjoyed for a higher salary, was it worth it?
- The role of dividends in FIRE?
- FIRE as active duty military
| My 401k contributions vs. 401k gains (graphed over time) Posted: 06 Oct 2018 05:35 AM PDT I decided to make a chart to see how much I made in my 401k over time. Normal scale: https://i.imgur.com/pdtBeXm.png Log scale: https://i.imgur.com/9KUxfGf.png The blue line is my cumulative 401k contributions. The red line is 401k contributions made by my employers, most entirely as company matches, but also with 2 safe harbor bonuses (the small spikes in the chart) paid entirely as a 401k bonus; this line is basically free money since the match is a benefit in addition to my salary. The green line is the blue line plus the red line. The purple line is my 401k account balance. The difference between the purple line and the green line is investment gains. There was a brief period in 2008/2009 where I lost money due to the '08 market crash, but it was followed by solid gains for the last 10 years due to the 10-year bull market that's been happening. Compounding over time is magic! Keep at it everyone! Edit: someone asked for the source data. I put it (retirement.xlsx) here: https://ufile.io/oe5cz (That site says it will only stay there for 30 days before they delete it). If there's a better place for me to put it to share it, let me know. [I didn't want to share it publicly on my personal google drive.] Also (in addition to my 401k) in there is my brokerage account, showing my $1,000,000+ total investments, so you get bonus charts if you get this file. I've added links to my total investments here: Normal scale: https://i.imgur.com/7mHuQ2P.png Log scale: https://i.imgur.com/Cmq4Xql.png For my total investments (401k, plus taxable brokerage, plus roth IRA, plus HSA): It took 139 days to go from $350,000 to $400,000. It took 150 days to go from $400,000 to $450,000. It took 79 days to go from $450,000 to $500,000. It took 171 days to go from $500,000 to $550,000. It took 166 days to go from $550,000 to $600,000. It took 406 days to go from $600,000 to $650,000. It took 48 days to go from $650,000 to $700,000. It took 132 days to go from $700,000 to $750,000. It took 80 days to go from $750,000 to $800,000. It took 113 days to go from $800,000 to $850,000. It would have taken 110 days to go from $850,000 to $900,000, but I was fancy and bought a new car in cash. It took 130 days to go from $850,000 to $900,000. It took 55 days to go from $900,000 to $950,000. It took 30 days to go from $950,000 to $1,000,000. It took 19 days to go from $1,000,000 to $1,050,000. [link] [comments]  |
| We all appreciate the pros to FIRE. But what about actual downsides or cons to FIRE? Posted: 06 Oct 2018 04:09 AM PDT This subreddit is (appropriately so) an echo chamber of the benefits and pros of FIRE, but not really the cons. This is not a bashing post but instead intended to discuss scenarios causing potential regrets or cons of FIRE. I hope this is helpful to most of us, because downsides, as few as they can be for FIRE, certainly do exist. A few that I can think of:
2. You become very sick or disabled early after FIRE, and then wish you spent more of your wealth earlier when you could have fully enjoyed it. 3. Very high inflation and stagnation wrecks both the bond and stock market just like in the 70s, but more prolonged. Your portfolio is unlikely to recover as you are forced to keep selling more and more of your principal to survive, as the costs of living continue to increase rapidly. You wish that you had spent your money earlier on things or experiences to enjoy because now your portfolio is being lit on fire and you can't ever get it back. Inflation can be a great equalizer because your peers who didn't save anything now have their fixed debts become cheaper to service, while your savings are eroded. Also inflation will cause you to withdraw more, and can potentially push your withdrawal income into higher tax brackets, destroying even more wealth. 4. Universal basic income is somehow implemented and almost everyone achieves the same FIRE lifestyle as you, even if they didn't save a dime. Or, technology advances exponentially and everybody gets plugged into virtual reality paradise for a better life, so all your saving and money hoarding for decades put you in no better spot than everyone else who didn't. You missed out on spending your wealth earlier, before these sweeping changes. 5. Political turmoil: If you retire to a southeast Asian country as an expat for example, but a coup occurs and your assets are seized by the new dictatorship. Your acquintances who didn't FIRE are still in your home country working in the same cubicle but are clearly better off. Or if in the U.S., intense populist sentiment allows new lawmakers to get elected on "eat the rich" platforms and destructive wealth taxes areimplemented which ruin your portfolio. You envy your neighbors who spent and lived their income while saving nothing, and now you are emptier handed than they are. [link] [comments]  |
| Posted: 05 Oct 2018 09:47 PM PDT |
| People who have FIRE'd, what are you up to now? Posted: 05 Oct 2018 06:51 PM PDT Most of the posts here are, rightfully so, full of us folks still in the middle of our journeys. Any of you out there who are on the other side, what do you do? Where do you go? How do you spend your time? [link] [comments]  |
| Daily FI discussion thread - October 06, 2018 Posted: 06 Oct 2018 04:09 AM PDT Please use this thread to have discussions which you don't feel warrant a new post to the sub. While the Rules for posting questions on the basics of personal finance/investing topics are relaxed a little bit here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply! Have a look at the FAQ for this subreddit before posting to see if your question is frequently asked. Since this post does tend to get busy, consider sorting the comments by "new" (instead of "best" or "top") to see the newest posts. [link] [comments]  |
| Posted: 06 Oct 2018 10:58 AM PDT Lots of really great posts here regarding 401ks and all that, but I'm wondering what's the best course of action for Canadians? It seems that for Americans, the quickest (reasonable) route to FIRE is sinking as much as possible into a 401k. Would this mean that a similar route for a Canadian would be to sink as much as possible into an RSP? At the moment I have a TFSA, mutual funds, and an RSP. Which should get prioritized? The internet tells me maxing out the TFSA isn't necessary but all my co-workers who are FIRE-minded say to max out the TFSA first thing. Looking to properly get started here (I'm 25). What's the best route to take? EDIT: TD also has an "ePremium" savings account with an interest rate of 1.05%. Is this relevant? [link] [comments]  |
| Anxious, about to pull trigger and leave job... Posted: 06 Oct 2018 06:32 AM PDT Hi Everyone, First a huge thanks to this community for all of your support and advice. Even knowing the math and having read voraciously, you sometimes just psychologically need other humans to confirm they get the same answer as you. This community has done that for me time and time again. On to the reason for my post: In January of this year, I posted about leaving my job in 2019 to pursue/finalize my Phd. I have a fellowship that means I'll have free coursework, and earn a very small stipend that essentially covers a few lunches out a month and some walking around money. This is my version of CoastFIRE for now, though I'd like to go back to work in 2-3 years. That said, I've emotionally prepared myself to accept that getting back to work at the same pay level may be difficult due to job market, etc. My husband is employed, and plans to keep his gig. We can live off of his single salary while he continues to put the federal max away into his 401k each year. We have healthcare through his employer. He plans to work another ten years. Here are some assorted facts and numbers, and we live in a high cost of living area (to put the numbers in perspective): 1) We want our 4% WDR to give us 160k per year to live comfortably in this same high cost of living area, after tax. This gives us out-of-pocket health care premiums until we qualify Medicare, and it also means we spend more in retirement than we do today. 2) We currently spend about 80k per year after tax. 3) We have saved (total as of today, together) 2.35Million in various accounts. My questions are these: 1) With the above info, do you agree 4M is our fire number? 2) By my calculation, I understand we will get to 4M in 9 or 10 years even if I Coast Fire in January - assuming no major issues/interruptions. Do you agree? 3) Am I silly to CoastFire/BaristaFire now given the expectation of a recession? Notwithstanding all of the above, I just have so much anxiety about walking away now but I really need to do this. I am afraid I am suffering from "one more year" syndrome. I really am miserable in my current situation and something has to change, so I'm 90% sure that I'm walking come January. I think I'd like another gig later, but worried that I'll never get one. I know this is all silly, but.... Thanks in advance! [link] [comments]  |
| The NEXT Millionaire Next Door -- many references to this community Posted: 06 Oct 2018 07:49 AM PDT I'm through the preface and about 20 pages so far, and I'm certain that this book will be a great read for the community. It's updated with a ton of research, was actually finished by Thomas Stanley's daughter as he was killed by a drunk driver in 2015. There are a ton of references to this community and the lifestyle. [link] [comments]  |
| People who left a job they enjoyed for a higher salary, was it worth it? Posted: 06 Oct 2018 06:20 AM PDT Every day in the daily thread it seems like there's at least a few posts from people who are contemplating moving on for a higher salary. I'm curious, for the people who were happy where they were, do you regret making the move? How has it changed your timeline for FIRE? Any lifestyle inflation? [link] [comments]  |
| The role of dividends in FIRE? Posted: 05 Oct 2018 10:07 PM PDT Hi, I've been lurking here for a bit and something has been on my mind. It seems like most people who have achieved FIRE are withdrawing gains from a mutual fund after it has reached their principal target. However, I haven't heard anyone mention dividends from a mutual fund (which would pay quarterly dividends) or a bond fund (which would likely pay monthly dividends) as an alternative to this. So what I'm asking is: is there any place in FIRE for a dividend-paying fund rather than withdrawing principal? Is there a benefit to one over the other? I had thought that in regards to taxes, dividends would be less of a tax burden than withdrawing from a fund. You would need to have a very low cost of living, but if you had $150,000 in a high yield bond that yielded ~4%, you could make $6000 a year in dividends to supplement a post-retirement part-time job or passive income, etc. Maybe mutual funds grow faster and therefore withdrawing the principal is a better option, but I thought I'd ask since I've been wondering about this for a while now. Thanks! [link] [comments]  |
| Posted: 06 Oct 2018 02:32 AM PDT Quick background:26years old, married, 2 kids. 6 year TIS and a line # for E6. Saving ~450 a month. 2 vehicle loans at about 6k each. 11k in savings, 4k with of physical silver, 12k in TSP. Just started a Roth IRA with Schwab and will use that instead of my TSP moving forward. Using the rule of %3 for some perspective, an E7 retirement pension in today's money would be about 2,312.5 per month or 27,750 per year. That amount divided by 3% gives us a value of 925k. So, a civilian would need $925k in investments to earn a passive income equal to a MSgt pension. My wife and I spend about 1,900-2,200 per month on expenses not counting rent (we live on base) assuming in retirement we buy a home worth ~180k our mortgage should be around 1k a month. So let's say 3,200 a month in expenses (conservative I am thinking since our 2 kids will be out of the house) That's 38,400 a month in expenses, plus travel and hobbies in retirement... Let's say 55k a year is what I want to live off of. So I need another 27,250 per year to meet that goal. Using the rule of %3 I need another $908k to make that happen. I have about 12k in my IRA right now. $896,333 left to save and I have 14-15 years left to do it. Using mustachecalc.com Ive got a figure of $32,200 per year for 15 years as a savings goal assuming %4 withdrawal rate and 7% interest in earnings on average. I think about 10k a year right now is feasible. Once my wife starts working, we will need to save ~35k per year to FIRE at 21 years of service. PLEASE call me out if I am way off base here. I am trying to come up with a legit plan, worst case scenario if I can't make it past E7 or earn a commission. [link] [comments]  |
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