Financial Independence A Note About Dividends |
- A Note About Dividends
- I finally asked for a raise!
- Journey from 0 to 450K in 5 Years, Plan to 1MM 2025
- Sharing information with kids
- Daily FI discussion thread - December 08, 2018
- What is your main motivation for FIRE? What do you plan on doing with all that free time and a limited budget?
- Saving up while working in a HCOL, then moving back to LCOL hometown
- Any reason NOT to open a Traditional IRA?
- Is it worth buying my own companies shares?
- Begin FIRE journey in college or wait until I'm employed full time? Is there much difference?
- Philadelphia vs Cincinnati
- [Unpopular Opinion] The statement 'all funds in retirement accounts can be accessed penalty-free before retirement age' is misleading.
- The optimal allocation between pre-tax and post-tax contributions.
- Maxing out SEP-IRA and Traditional+Roth Solo 401k Contributions
- Happyness
- FIRE as civil servant with a PERS plan
- LeanFIRE is Depressing Me. How do I FatFIRE?
- Why wait with life till you retire?
| Posted: 08 Dec 2018 09:29 AM PST I have noticed a few questions popping up about the 4% rule and dividends. Some people surmise that investing in a company that yields 5 or 6% is the perfect way to generate 4% returns forever. I would caution this approach for multiple reasons. Oftentimes, there is actually an inverse correlation between the strength of a company and dividend yield. Just sort by the highest paying dividend companies on an investing site. The vast majority of companies paying over a 5% dividend are extremely risky. The other companies have almost no expected growth in the future. Dividends also do not protect investors if the underlying asset (stock price) falls. For example, XOM is a company with a healthy 4% dividend. Over the past 4 years, the total return on this investment (including dividends) is actually negative. This is during a time when the S&P has doubled. Although dividends are a nice bonus, dividend yield should not be a primary factor when purchasing a single stock. I will finish my thought with a quote I stole from someone else, "More money has been lost chasing yield than chasing gold." [link] [comments]  |
| Posted: 08 Dec 2018 12:41 PM PST I know this isn't strictly a FIRE-related post, but a lot of people talk on here about how their journey to FI has helped their confidence and allowed them to take chances in their career. That's certainly been the case with me. I'm not a high-earning software developer or anything - I live in a MCOL city in Canada and my income is very middle-class (roughly $60K salary and $17K rental income). But in my pursuit of FI, I've realized that I need to be realistic about what I'm asking for for a salary, and making an argument that I deserve to be compensated for the work I do. Otherwise, with the amount I've saved, I could easily walk away from the position at the end of the day. At first, I didn't see how I would have a path forward to asking for a higher salary. But lately, I've had more and more profit-generating work piled on me. It's been great in a lot of ways - I've learned a lot, and my boss and coworkers are appreciative and helpful. At the end of the day, though, it's made me realize that there's a certain number I need (or anyone would need) in order to stick with this line of work. It's stressful, and if there's no money in it, I could definitely use my knowledge/skills to get a much less stressful position, or get a position where there was more opportunity for career growth. So I wrote out a very diplomatic e-mail (complete with Excel charts of how much profit I generate for the company), and gave the number that I thought was appropriate given the roles I've taken on. I also said that it would be really good to have a conversation at this point about what my role could look like over the next 3-5 years as things develop. I'm cautiously optimistic because things have been developing really well. Initially I was worried about the fact that I live in a medium-sized city, and there aren't as many job options as in larger centers. But then I realized, it also goes both ways - just like we don't have a large number of employers we could move to if we didn't like our jobs, our employer also has a very limited pool of applicants to choose from in the area. It's hard attracting people to come out to our neck of the woods, and the fact that we've had some vacancies take a long time to fill really says something. I'm not sure what the results are going to be for a few months yet, but I'm really glad that FI helped me build the confidence to say, without any negativity - I do need to earn a salary of $X to continue on this career path, and I would like to continue growing my career in this way. Just thought I'd share my story and experience as I know there's not always midde-class non-tech professional career stories on this forum. [link] [comments]  |
| Journey from 0 to 450K in 5 Years, Plan to 1MM 2025 Posted: 07 Dec 2018 04:56 PM PST Hey All, I posted her a while back on my $250K Problem, in which I am holding way too much cash at the moment. For the lazy, I am a divorced 37 Year old single male with 1 child, living in a HCOL area. 6 Years ago I had a -40K net worth after a tough divorce, and I was out of work. I am in software sales, and fortunately since then I had a good couple of years, where I was able to learn to earn and save and to get where I am today. I currently have fluctuating net worth of between 440-460K, depending on the market. I have saved every penny I could, rented out my apartment on Airbnb during business trips, flipped goods on ebay, lived a very minimalist life, with the plan of retiring at the age of 45, with a million in the bank. I cant stress enough that the lessons that I learned while broke have taught me financial discipline. My current assets look like: IRA: 60K (Vanguard diversified ETFS) 529: 10K (age based plan) 401K: 128K (Max contributions, 3% match, 2045 Target Retirement Mix Fund) Play Investments: SPY 12K, FB 1K, CAD 3K, XOM 1K Bank: 14K Money Market: 211K I wanted to share my plan with you, and get your general feedback on how to achieve my goals, and if these are attainable, based on my modeling:
Does anyone think Im crazy? Any way to put my money to work with minimal risk to hit that 4% YoY growth? Thanks for all of your support [link] [comments]  |
| Posted: 08 Dec 2018 10:14 AM PST Those with rich parents - do you know what they are worth, did they tell you? Did that affect how you struggled (or not) in life? Are you better or worse off with the knowledge of their wealth? [link] [comments]  |
| Daily FI discussion thread - December 08, 2018 Posted: 08 Dec 2018 03:08 AM PST 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: 08 Dec 2018 02:41 PM PST My main motivation: I am a huge reader and I looove learning. I want to spend all my time learning more about the world: math, physics, chemistry, astronomy, geology, computers, you name it. I've been reading a lot in my free time since I started my career but with job stress sometimes I'm just not in the headspace to sit down and concentrate, so I waste most work days on reddit/TV. But if I were retired, I could do this 'full-time' for 40-60 hours a week instead of maybe 6-10. It's not an expensive thing to do at all, it's something I can do with my wife since she likes reading as well, and it's all I really wanna do. Well that and sink a few hours a day into RDRII. I really don't have any expensive interests to speak of - I'd be perfectly fine with something like a $1k a year budget to spend on new books and video games. What about you? What would you spend all your days doing (or what do you do currently if already FIREd)? I'm sure this is asked a lot, so feel free to link me any other posts where this has already been discussed :) [link] [comments]  |
| Saving up while working in a HCOL, then moving back to LCOL hometown Posted: 08 Dec 2018 03:37 PM PST Is this a good plan? I'm currently living in the SF Bay area working as a software engineer. Been here for 2 years. As much as I enjoy saving up money to become FI, I can't help but feel like this place is not my home. I feel disconnected with my family. I don't enjoy being married and sharing an apartment with a roommate. Has anyone else been down this road? Any regrets? Any advice? [link] [comments]  |
| Any reason NOT to open a Traditional IRA? Posted: 08 Dec 2018 11:36 AM PST I read something in the past that left me thinking I should avoid opening/contributing to a Traditional IRA. I am trying to remember the reason, since I now have some motivation to open one. I'm aware of the complication it could cause with the Backdoor Roth IRA strategy (see the caution section here), but that doesn't seem terribly relevant to my situation. Perhaps that's all it was, but does anyone know of any other reason NOT to contribute to one? ----- In case context matters, here's a summary of my situation:
[link] [comments]  |
| Is it worth buying my own companies shares? Posted: 08 Dec 2018 12:43 PM PST Hey guys, I am trying for next months getting into heavy incoming high risk tryouts. One of them is getting shares. My company incentives me to buy its shares on USA stock market and for each amount that I buy I get 15% more in shares. Example: If I buy usd 100 in shares, I receive instantly usd 115. Even though I can't choose whenever to buy it as a common stock market purchase: I choose an amount to be deducted monthly from my wage. Since I am from Brazil, I have two commodities to pay attention: xchange rate BRL/USD and trend for my company share but my timing to sell or stop buying is monthly. Recently the company have announced a reduction on shares for round about usd 0.04 per share. The scrip price two years ago was usd 35 and now it is usd 7. Still descending. My best guess is that may recover in next years Do you guys thinks that, given the monthly way of purchase, this 15% incentive is helpful to dive in shares of the company to bet in a big recovery in a near future? [link] [comments]  |
| Begin FIRE journey in college or wait until I'm employed full time? Is there much difference? Posted: 08 Dec 2018 12:14 PM PST I'll preface this post by saying I'm very lucky and I'm not trying to humble brag, I just want to make the most out of the good hand I've been dealt. I'm currently a sophomore studying computer science at a state school in the US. My tuition and living expenses are all paid for by my parents; so in a couple years I'll graduate debt free. I have about $10,000 in liquid savings and another 6,000ish in a checking account I use for rent and other expenses. I drive my dad's old truck that's old but way under-mileage, and I think I'll get at least 4-5 more years out of it before I need to finance a new vehicle out of my own pocket. I work a couple jobs sparingly alongside my studies that generate maybe $80-100 a week altogether, and I squander a lot of that on fast food. Essentially I'm just wondering if there's much difference between investing now, vs holding off until I have a full time job. For instance, I could open a Roth IRA and max it out for 2017, and if I get an internship this summer I might be able to max out 2018, and so on, without dipping too hard into my savings if I make it a priority. I appreciate any input. I don't have anyone I can really talk to about this. [link] [comments]  |
| Posted: 08 Dec 2018 11:34 AM PST I have the opportunity to relocate from Cincinnati to Philadelphia. We are actually happy in Cincinnati but would like to be back on the east coast. Salary would be the same It seems like there are a lot of people on the forum familiar with Philadelphia. Is it a good place to live for FI? How about in terms of value you get for your money? Are the schools good? Which do you think provides a better lifestyle in terms of culture, trips etc. Thank you for your thoughts. [link] [comments]  |
| Posted: 08 Dec 2018 12:16 PM PST This post isn't meant to detract from the wisdom of this sub, which is to prioritize investing in retirement accounts (keep doing that). This post is about educating on the limits of pre-retirement withdrawal strategies. I think people mis-interpret the following FAQ entry:
To mean, I have 100% unfettered access to these accounts by employing the mechanisms, which is not the case. Let's outline a couple limitations (by no means is this an exhaustive list):
My takeaway: plan appropriately. Have a withdrawal plan. These limits shouldn't dissuade usage of retirement accounts (though it's reasonable to see why they may lead to one's initial gut reaction to 'avoid'). [link] [comments]  |
| The optimal allocation between pre-tax and post-tax contributions. Posted: 08 Dec 2018 05:59 AM PST So after learning about the Roth Conversion Ladder from the Mad FIentist website, I became interested in the following question: If I'm going to need both pre-tax and post-tax investments for this to work, how much should I be saving in each? I created a program in MatLab that would answer this question for me. The optimization problem is to minimize the number of years to retirement, where you can retire when you have at least 5 years of living expenses in after tax accounts and if you have enough in pretax accounts such that after 5 years of returns you will have 25 years worth of living expenses (which may be a bit incautious, but I'll also talk about my results if you assume a 4% return over these years instead, but the results don't change drastically from this). I assume some level initial investments in pretax and post tax accounts, for this example I'll use 0. Then you save a certain dollar amount each year, some split between pretax and post tax accounts, with a cap on how much you can save in pretax accounts. For simplicity I assume that you invest the same real amount every year, but the end result doesn't change unless at a certain point you would be maxing out all possible pretax accounts. I also assume a 7% constant real return in the stock market. The end result (depending on the exact specification which will shift the number +/- 2%) is about 80%. You should be investing 80% of your savings in pretax accounts and 20% of your savings in after tax accounts. The large caveat to this is that if you are going to be saving more than (1/.8)*25000 (25000 is the max you can save pretax between 19k in 401k and 6k in IRA next year) at any time on your journey to FI, you cannot hit this optimal allocation and will be under funding your pretax accounts relative to the optimal amount. So if you think you will be planning on saving more than this amount in the future you actually want to be putting more than 80% in pretax accounts now to offset the relative under funding in your pretax accounts in the future. [link] [comments]  |
| Maxing out SEP-IRA and Traditional+Roth Solo 401k Contributions Posted: 08 Dec 2018 02:50 AM PST If you're self-employed can you max out SEP-IRA $55k as employER AND Traditional Solo 401k of $18,500 as emploYEE? Totaling $73,500 in tax-deductible contributions? And THEN also put $18,500 in a Roth Solo 401k (etrade)? I've read 100 articles and no one seems to address this head-on.. Thanks for any insight! [link] [comments]  |
| Posted: 08 Dec 2018 10:05 AM PST Did pursuit of FIRE, or its attainment, change your baseline happiness? Did something else help you increase it? [link] [comments]  |
| FIRE as civil servant with a PERS plan Posted: 07 Dec 2018 10:34 PM PST I don't understand a lot of this retirement stuff. I've read through FAQ and other sites to try to wrap my head around this, but I've not seen anything really helpful as it relates to public employees and our pay and retirement systems. I'm going to make an appointment with a retirement counselor to try to teach me about this but they're really hard to schedule especially since they prioritize people who are about to retire. I really feel like I need an ELI5 with this stuff and I am hoping to get some insight or advice what we should do. What kind of advice is there for people with PERS (public employee retirement system)? My husband (35) and I (33) are both government employees with PERS, so we don't get traditional retirement/pension. We hope to migrate to the private sector in a couple of years, once our retirement is fully vested and I get some more experience in my job to make me eligible for better private sector jobs. But I don't even know what to do with our retirement once we depart from government service. Do we keep it and not touch it? Cash it out and pay the taxes? Transfer to a ROTH or whatever? Has anyone had good success FIREing with public service or ideas how to maximize the PERS option? Also, do I suck it up and stay in a government job until I reach 10 years of service (5.5 years from now) to keep insurance after retirement? [link] [comments]  |
| LeanFIRE is Depressing Me. How do I FatFIRE? Posted: 08 Dec 2018 04:40 AM PST I (25m) live in a very expensive city on a pretty low income, but if I am very careful with my money I can put away a decent amount. I live in a single room near my work to optimise rent / travel costs against one another and work an extra day outside my 9-5 on freelancing to pull in extra cash. Problem is this lifestyle is kind of depressing. So I end up spending not much time at home and blow most or all of my FIRE savings each month on small quality of life luxuries like dating, drinks, eating out. I'm getting probably around a 25% payrise next month and the first thing I am gonna do is upgrade my living space. What I want is to get my working hours down a bit and generate some passive income. In other words to maintain a decent quality of life while being able to FIRE. I'm getting too old for this crap. What's the best way to go about FIRE while maintaining a lifestyle that doesn't make me sad or ill with stress? [link] [comments]  |
| Why wait with life till you retire? Posted: 07 Dec 2018 07:22 PM PST Imagine you are a 20 year old starting your career, you want to travel and be FI. You have three options. Option 1: FIRE. Work hard, save as much as possible and retire as early as possible. Result: Retire at 45. Option 2: Work hard and save money, then use all of it to travel. Rinse and repeat until you are old or tired. If you are structured you can probably travel for at least a year after working for one year. Result: Retire at 70, but you have traveled for 25 of your working years. Option 3: Work hard, save as much as possible, but take sabbaticals. Result: Retire at 50, but have spent a few years traveling. If you have the flexibility and opportunity for option 3, that's an easy choice for me. Yet I feel most people here are aiming for option 1. And I've met a lot of people doing option 2 during my travels. So the question is, why isn't more people pursuing option 3? [link] [comments]  |
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