Financial Independence Proud of myself this year - doubled my savings & dropped my expenses! |
- Proud of myself this year - doubled my savings & dropped my expenses!
- The S&P 500 has entered a bear market.
- Daily FI discussion thread - December 24, 2018
- At times like this data always makes me feel better
- I really want to get started early!
- On Time in the Market (A Christmas Story)
- Weekly FI Monday Milestone thread - December 24, 2018
- Trusts as a tool for financial independence?
- Questions about my FI Journey? Am I doing this right?
- Help with FIRE allocation
- For those already fired with no side jobs, are you worried?
- 26 [M] - $300k NW, $500k+ Annual Income
- Lots of no recommendations in community info, what about your favorite FI podcasts?
- Market Downturns
- Investing now so my 7 year old can be FI (and not know it)
- Does going to college make it more difficult to achieve FI?
| Proud of myself this year - doubled my savings & dropped my expenses! Posted: 24 Dec 2018 05:20 AM PST I discovered this sub in 2016 and realized that FI is important to me, so much that it's now one of my two goals in life. But in 2017 I did miserably - only saving 18% of my income when I'd planned for 40%. This year I got really close - did 33% which in numbers was double the amount!! There were some medical expenses that prevented more saving + I really love going out drinking and I didn't have the discipline to reduce it as much as I wanted. New things that I did this year:
So basically in 2016 42% of my income went to savings + supporting my parents and 58% to general expenses whereas this year I reversed it and 58% is going to savings and parents. For next year I'll be looking to do maybe 45% saved (at least 40%) and definitely reduce what I can in expenses. I'll also shop around for better interest rates with banks. I'll try to get seasonal work that I could do during vacation - this would help for small extras. I will also try to get a decent raise from work. I don't know what I could do further, I already live with parents and don't have a car. Might you guys have some ideas? Info (lmk if more is needed): Income was 28K in 2018 (25K in 2017 so a 10% increase) Have a savings account with 25K The capital of the retirement account is now at 45K (I put in 100$ a month) [link] [comments]  |
| The S&P 500 has entered a bear market. Posted: 24 Dec 2018 10:21 AM PST ATH is $2,940.91, minus 20% is $2,352.73. S&P500 closed at $2,351.25. The most recent bull charging so long was starting to make me uncomfortable. Of course no one welcomes a downturn, but still. Gotta rip the bandaid off at some point. Also, this is an official reminder to not panic sell! Happy holidays =) [link] [comments]  |
| Daily FI discussion thread - December 24, 2018 Posted: 24 Dec 2018 03:09 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]  |
| At times like this data always makes me feel better Posted: 24 Dec 2018 09:09 AM PST I know the majority of us have the long view anyway, but after the way this quarter has gone I like reading articles like this so I thought I'd share: https://www.marketwatch.com/story/heres-how-the-stock-market-has-fared-after-similarly-brutal-losses-in-a-quarter-2018-12-24?siteid=rss&rss=1 [link] [comments]  |
| I really want to get started early! Posted: 24 Dec 2018 03:17 PM PST TLDR: Turning 18 soon, What is the best way for me to invest 8,000 annually for future financial stability I turn 18 in August, I currently run my own online e-commerce business and I have about $15,000 saved up from the number of things I have been selling, however, it is my goal in 2019 to generate $4,000 monthly and possibly more depending on my circumstances. I know $4,000 monthly may not seem like a lot but I have no payments what so ever and I will be keeping things that way. Next year I will be attending college but I have enough in scholarships and grants to have that paid for. So I have read up on things like Mutual Funds, Roth IRA, and stocks that pay dividends. My goal is to invest $8,000 dollar annually during my time in college. My question is what is the best way to do it tax-free, and what way can I stretch my money the furthest. I'm open to hearing long-term investment strategies or short-term investment, whatever you think will work the best for me. I want to hear from you guys! [link] [comments]  |
| On Time in the Market (A Christmas Story) Posted: 24 Dec 2018 10:00 AM PST On Time in the Market (A Christmas Story) The story starts with our friend Stanley, working hard in Santa's workshop, up in the North Pole. You see, Stanly has been working in Santa's factory for many, many years. And, while other elves have come and gone from the workshop, Stanley has stuck around, fastidiously maintaining a savings rate of 40%, with dreams of retirement sugarplums and Caribbean island abodes dancing in his head. However, this year will be Stanley's 10th Christmas in the workshop, a notable milestone indeed. Not only will Stanley be recognized by the Elven Association of Toymakers at their upcoming luncheon, he will also be receiving a significant lump-sum payment from Santa himself, as his prior ten years of profit-sharing becomes vested and payable this very Christmas Eve night (you didn't think Santa just ran this thing as a non-profit, did you?). He resolves himself to do, in his eyes, the most pragmatic thing he can do with this expected, but significant, windfall: invest. After all, he's got aspirations for a comfortable retirement outside of the workshop, sooner rather than later. Unfortunately, as North Pole elves are expressly prohibited from interacting with mankind, Stanley does not have access to the low-fee index funds to which we are all accustomed. Instead, Stanley must make much less abstract decisions, and invest his money in one or more specific North Pole commercial ventures. Because Stanley is a good elf, he doesn't steal company time by browsing reddit on the job. But, at home, he occasionally peruses reddit, where he's heard the oft repeated phrase: "Time in the market > Timing the market" This sounds sensible enough; after all, the phrase has a certain brevity and cadence to it that all true statements typically do. But, Stanley isn't your typical redditor. He took the time to read a white paper often cited when this phrase is bandied about: https://personal.vanguard.com/pdf/s315.pdf. Alas, Stanley is but a simple Toymaker, and doesn't fully understand all that highfalutin mumbo-jumbo. He decides that the collective knowledge of the internet surely exceeds his own, and resolves to invest all the money as quickly as possible in a lump sum. Now, he has to choose an investment. So, he asks himself: what is my goal in all of this? "Aha!" he exclaims aloud, "I've got it! I'll find the investment with the highest expected return!" Stanley phones his friend Homer, who is taking an initial funding round for a commercial bakery off Candy Cane Lane. Homer is delighted to hear from his good friend Stanley, and is eager to share more about this exciting investment opportunity. "Look Stanley," Homer explains, "this could be big. I'm talking REAL BIG. Santa is putting his personal cookie contract up for bid next year, and he's assured us we'll be one of the 10 bakeries whose names will be drawn from a hat and awarded the job! If we get that contract, I can turn your $100,000 into $300,000 overnight! That's a 200% return! And, if we don't get the contract, I'll give you back your initial investment at the end of the year, so no risk to you!" "Wow!" said Stanley. "That sounds exciting, but that's also a lot of money. Let me get back to you on that?" "Sure," said Homer, "and Stanley…Merry Christmas!" After Stanly hung up the phone, he started thinking through the numbers in his head. He's no math wizard, but he knew that a 1 in 10 chance of winning the contract meant only a 1 in 10 change of a 200% return (and a 9 in 10 chance of a 0% return). Doing the math, he figured his expected return would be (1/10)*200% + (9/10) * 0% = 20%. Stanly had been investing for a long time, so he knew a 20% expected return was very high, indeed. As Stanley reflected on his FIRE plans, he realized a 200% return would put him well past his number, while a 0% return, on this sizeable amount of money, would delay his plans at least a year. So, with a sigh, Stanley admitted to himself aloud: "I guess I have to consider more than just the highest expected return." After thinking a bit more, Stanley again exclaimed: "Aha! I've got it! I'll find an investment with the highest expected return per unit of risk" But, just as Stanley began to pat himself on the back, he felt a sinking feeling in his stomach. "How the hell do I measure units of risk?" he muttered feebly to himself. "I am but a toymaker, not a hot shot bank executive with a penthouse apartment off Candy Cane Lane (most things in the North Pole are, in fact, off Candy Cane Lane). But, he redoubled his mental efforts, and thought harder on this question of risk. "Well… well… I guess risk is really uncertainty… and the uncertainty of any investment can be measured by the variance of investment returns, based on either historical or projected investment performance? Yes! That's it!" Ok, I will admit, Stanley is having some borderline unbelievable epiphanies in rapid succession… but, let's be honest with each other. Stanley is an elf, and his friend is building a bakery on Candy Cane Lane. If you valued believable stories, you would have stopped reading already. Now, Stanley thought back on an investment he was pitched last week: an equity stake in a new residential real estate development just south of Santa's workshop (which, come to think of it, describes every location around the North Pole). While that investment did have double the expected variance of Santa Bonds, it had triple the expected return! That was a higher ratio of expected return vs. expected variance of returns! "I've found the perfect investment!" Stanley exclaimed. But after a few moments reflection, Stanley began second-guessing his conclusion. He realized that to hit his FIRE number on time, he only needed a return slightly in excess of what Santa Bonds had to offer. Since Santa Bonds were backed by the full faith and credit (and magic) of Santa himself, they were a sure thing! Further, Stanley realized that the variance of expected returns wasn't a perfect approximation of risk given his personal situation. If the real estate investment performed better than expected, he'd have more money than he needed. He didn't want to blow money on fancy sugarplums and reindeer racing like his peers, so those high return scenarios weren't valuable to him. On the contrary, the low return scenarios were downright frightful. "There's a non-remote chance that I could lose money on this real estate investment, and set back my FIRE date by multiple years!" Stanley was already developing arthritis from the toymaking, so the thought of an longer tour of duty in the workshop made him shudder. "I guess that maximizing the expected return vs. the expected variance of returns (known to humankind as the 'Sharpe Ratio,') isn't a silver bullet rule-of-thumb, either. " Stanley was mentally and emotionally exhausted. After indulging in one-too-many cups of cider, Stanley came to a somber realization. "While rules of thumb and catchy phrases can be helpful sometimes as a starting point, I really need to think about my goals in life, the resulting financial goals, and the nature of my risk appetite before making an investment decision." With a shudder, Stanley realized something else: the argument that lump sum investing is always preferable to dollar cost averaging, when justified, is usually done so on the (true, but incomplete) premise that it offers a higher expected return. And, in the less frequent cases where the argument is justified in more depth, the argument leans heavily on the reasonable, but not universally correct, assumption that an investor should always seek to maximize return per unit of risk. But, Stanley has realized that, in reality, the same risk appetite factors and unique, individual financial goals that determine portfolio allocation and investment choice are also applicable in determining whether to invest as a lump sum or dollar cost average. Stanley exclaimed aloud: "Well, I'm back where I started! But, I suppose, out of all the problems facing North Pole elves this Christmas season, I should be thankful that this is the only one facing me." And, with that, Stanley took off his $500 wooden shoes and hopped in his top-of-the-line sleigh bed (because his mother raised him right and told him to "Always spend more on the things that separate you from the ground"), and he drifted off, peacefully, to sleep. [link] [comments]  |
| Weekly FI Monday Milestone thread - December 24, 2018 Posted: 24 Dec 2018 03:09 AM PST Please use this thread to post your milestones, humblebrags and status updates 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! 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]  |
| Trusts as a tool for financial independence? Posted: 24 Dec 2018 01:35 PM PST As a community, we seem to measure whether we have achieved financial independence by measuring our net worth (and spending). To be truly independent, it seems like we also need to protect our assets as best we can. Does anyone here use a trust or trusts (such as an asset-protection trust, qualified personal residence trust, or private trust) as a part of their planning? It seems like common-law trusts (i.e., trusts based on contract law, not statutes) provide a measure of protection and independence that's not easily matched. In some cases, they also seem to provide significant tax advantages. However, I'm having trouble finding reliable resources about trusts, especially in the context of financial independence (versus, say, estate planning). [link] [comments]  |
| Questions about my FI Journey? Am I doing this right? Posted: 24 Dec 2018 09:53 AM PST Happy Holidays everyone. I wanted to get some feedback from the FI community on my plan. My wife and I are currently pursuing FI and have a goal to retire within the next 10 years. Here is quick rundown on my financials: My wife and I are both disabled veterans and have a passive income of around $5,400 per month from the VA. I am currently employed and make around $4,000 per month after taxes which is $66,000 per year pre-tax salary (I live in Cali unfortunately). My wife makes around $700 per month from her job (she is a graduate student). Currently our expenses are floating around $4,000 to $4,500 per month. Starting last month, we started are investing about $4-5000 per month in low cost index funds (FZROX to be specific). We felt that this was a great opportunity to start investing with 0 fees. We plan to keep up this rate for the next 10 years and increase this rate when my wife is done with school. We are estimating around $7,500-$8,500 per month invested in FZROX. My questions to the community are as follows:
I know I have more questions that I cant think of right now, but feel free to ask me anything that can help you guys better help me. Thank you in advance. [link] [comments]  |
| Posted: 24 Dec 2018 09:52 AM PST I'm not a smart investor. I've followed the advice here and just allocated the money to a bond ETF and a broad stock ETF. I recently came across corporate bond offerings (heard about them on youtube). Some appear to pay 5-10% and are from relatively big names (e.g. Boeing) that I don't think are going bankrupt in 5 years. It feels like I missed a whole class on investing. Does anyone create a "corporate bond ladder" of reasonably strong companies such that they get 5-10% for years and their principal in the end? Or am I missing something crucial here. With stock yields forecasted to be 5-6% over next 10 years - is anyone here recommending to be into senior corporate bonds (perhaps as part of a bond-tent strategy)? [link] [comments]  |
| For those already fired with no side jobs, are you worried? Posted: 24 Dec 2018 11:08 AM PST Given that the S&P has dropped 16% year to date, and probably may take another hit for the next few months, are the already fired folks without side hustles concerned? Honest responses, please. No bravado needed. This is the first major downturn For 95% of the current fire bloggers. Will be interesting to see if they continue to preach the same. [link] [comments]  |
| 26 [M] - $300k NW, $500k+ Annual Income Posted: 24 Dec 2018 12:11 PM PST Hello and Happy Holidays, As the title mentions, I am a 26 year old male who just hit $250k new worth (all in high yield savings account), and last month hit $500k in annual income and (currently) rising. Almost 2 years ago I started a Social Media Consulting business while driving for Lyft 16 hours daily to pay for rent (LA). I started in the first month with a couple clients, but through referrals and word of mouth it snowballed to $100K annually after 5 months, and so on from there to get to where I am now. The business currently grows at an average rate of $2-3k monthly ($24-36k annual), but I never count on that growth and really only hope that I continue at the size I am now. I am extremely grateful for how much I have built in so little time, but the job is fairly volatile as Social Media is constantly changing and can make my job obsolete in a week. For this reason I want to invest smart so that if that happens I am financially independent or at least close to it. Overall, this is really just a side business that took off more than I could imagine, my true passion is being an artist (which I have a steady but small career as that I am going to be pushing my entire life). With that in mind I dont ever expect to (and dont want to) "retire", just be financially independent as artist work is unpredictable as well. Income: $43,000/mo, after all expenses Savings: $250,000 Discover High Yield Checking Accounts: $20,000 (personal is half and business is half) Second Business Invested: $45,000 Current Holdings: $3000 VOO Shares (Got my feet wet in investing) Crypto: $30,000 in BTC (early adopter) I would greatly appreciate any advice on how I should proceed as I am holding way too much in cash, and it continues to grow at $40,000 monthly that I dont know where to put it. I apologize if I sound arrogant, it is definitely not my intention, and I was hesitant to post because as a long time lurker I have seen posts of younger people like me get downvoted heavily. I have already invested a decent amount of money towards the second business venture passion project above that if successful will become a substantial amount of income as well (I hope of course), but I was thinking about stocks for the remaining income that I put away into savings, or is a better option becoming an accredited investor? I was thinking of a financial advisor, but I am scared of being ripped off by a non authentic one from all the horror stories I read about people being taken advantage of and would appreciate any advice on that as well. Is it dumb to just dump everything in VTSAX? Is that technically diversified or is that still not actually diversified? Growing up my family has always been very poor with money and had stockpiles of CC debt, so I keep my income a secret from them for the most part and its hard to get good advice. I really appreciate your time for reading, have a great Holiday! EDIT: Not sure if I posted something incorrectly or why this comes across as a troll post? Is that why the downvotes? [link] [comments]  |
| Lots of no recommendations in community info, what about your favorite FI podcasts? Posted: 24 Dec 2018 06:59 AM PST Hello all, I'm a podcast listener looking for some FI podcasts. Any recommendations? [link] [comments]  |
| Posted: 24 Dec 2018 07:45 AM PST Posting this here because we are more likely to have higher balances, and are expecting to draw down our accounts at a younger age. I genuinely need help rationalizing why we are supposed to remain 100% invested during downturns when the professionals around us are dumping everything like crazy. I will be honest, since passing 7 figures in the market, I just don't have the stomach to watch 20% evaporate, even if it was 'funny money' gains. I really can't be the only person who sold a bit and bought CD ladders, can I? ETA: I max out my 401(k), do Mega Backdoor Roth, plus a Backdoor Roth IRA every year, in addition to after-tax investments. I'm not stopping any of this, but I will likely look to help diversify in other ways. [link] [comments]  |
| Investing now so my 7 year old can be FI (and not know it) Posted: 23 Dec 2018 08:09 PM PST Hey all, So with my own retirement in check, I have started thinking about how I start getting my 7 year old on financial track to retire early. His financial situation; 7 years old No income (yet) $15k in Vanguard $25k in E*TRADE (stocks) Any thoughts on how much I should be sacking away for him? To be clear, this is by no means to encourage him to be a "freeloader" "trust fund baby" or an excuse to be lazy and not go to school or have a job or be a constructive member of society. I have the means so that's why Thanks!! [link] [comments]  |
| Does going to college make it more difficult to achieve FI? Posted: 23 Dec 2018 06:39 PM PST If your goal is to achieve financial independence by age 40, are your chances really that good if you start life with thousands in debt? One in four Americans is currently paying off student loans, with an average total debt of almost $40k. Considering the huge need for tradespeople right now, as well as other potentially lucrative career options such as a real estate agent that don't require a 4 year degree, is going to university really the best option to achieve FI? College is not a guarantee that you'll land a well paying job, but if you're not getting any help from your family, it is a guarantee that you'll be starting life in a disadventageous position. Does a degree make it more difficult to achieve FI? [link] [comments]  |
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