Financial Independence Daily FI discussion thread - June 13, 2019 |
- Daily FI discussion thread - June 13, 2019
- Timing the market: The absolute worst vs absolute best vs slow and steady
- World Economic Forum: World's Retirees Risk Running Out of Money a Decade Before Death
- Would you be honest with your employer about where you see yourself in 5/10 years?
- Side hustle ideas?
- Is it better to move to an area with a higher cost of living but also higher wages? Am I missing something?
- Entrepreneur interview #1
- Up and moving to another country
- Taking a mid-career break?
- Should we sell our rental property and put money into our new mortgage?
- What are your dreams? What might you do if job/money was no concern?
- Another benefit of FIREing without kids - reverse mortgages
- Looking to start a blog/pod documenting my journey to FIRE over time (22M). What should I include?
- Take note - Tough lesson learned about working for a private company and IPO
| Daily FI discussion thread - June 13, 2019 Posted: 13 Jun 2019 01:08 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]  |
| Timing the market: The absolute worst vs absolute best vs slow and steady Posted: 13 Jun 2019 12:06 AM PDT Here's this same info as a visual journey for those visual learners: https://imgur.com/gallery/BlK4jzM I downloaded the historic S&P 500 data going back 40 years. I dumped everything in Google Sheets and modeled the three different portfolios, named after three fictional friends Tiffany, Brittany and Sarah. All three saved $200 of their income per month for 40 years for a total of $96,000 each. But after 40 years they all ended up with different amounts based on their investment strategies. Tiffany's Terrible TimingTiffany is the world's worst market timing. She saves $200/month in a savings account getting 3% interest until the worst possible times. She started by saving for 8 years only to put her money in at the absolute market peak in 1987, right before Black Monday and the resulting 33% crash. But she never sold, and instead started saving her cash again, only to do the same at the next three market peaks. Each time she invested the full amount of her saved cash only to watch the market crash immediately after. Most recently she put all her money in the day before the 2007 financial crisis. She's been saving cash ever since waiting for the next market peak. With this perfectly bad market timing, Tiffany still didn't do too bad. Her $96,000 she saved and invested over the last 40 years is now worth $663,594. Even though she invested only at each market peak, her big nest egg is thanks to the power of buying and holding. Since she never sold, her investment always recovered and flourished as the market inevitably recovered far surpassing her original entry points. Brittany Buys at the BottomBrittany, in stark contrast to Tiffany, was omniscient. She also saved her money in a savings account earning 3% interest, but she correctly predicted the exact bottom of each of the four crashes and invested all of her saved cash on those days. Once invested, she also held her index fund while saving up for the next market crash. It can't be overstated, how hard it is to predict the bottom of a market. In 1990 with war breaking out in the Middle East, Brittany decided to dump all her cash in when the market was only down 19%. But in 2007, the market dropped 19% and she didn't jump in until it fell all the way down to a 56% drop, again perfectly predicting the exact moment it had no further to fall and dumped in all of her cash just in time for the recovery. For this impossibly perfect market timing, Brittany Bottom was rewarded. Her $96,000 of savings has grown to $956,838 today. It's certainly an improvement, but interesting to note that when comparing the absolute worst market timing versus the absolute best, the difference is only a 44% gain. Both Brittany and Tiffany have the vast majority of their growth thanks to buying and holding a low cost index fund. Slow and Steady SarahSarah was different from her friends. She didn't try to time market peaks or valleys. She didn't watch stock prices or listen to doomsday predictions. In fact, she only did one thing. On the day she opened her account in 1979, she set up a $200 per month auto investment in an S&P 500 index fund. Then she never looked at her account again. Each month her account would automatically invest $200 more in her index fund at whatever the current price happened to be. She invested at every market peak and every market bottom. She invested the first month and the last month and every month in between. But her money never sat in a savings account earning 3% interest. When Sarah Steady was ready to retire, she signed up for online access to her account (since the internet had been invented since she last looked at it). She was pleasantly surprised with what she found. Her slow and steady approach had grown her nest egg to $1,386,429. Even though she didn't have Brittany's impossibly perfect ability to know the bottom of the market, Sarah's investment crushed Brittany's by more than $400,000. Recap
So if you're worried the market is too high and we're due for a crash. Or you want to wait for the inevitable drop before you put your money in. Think about whether you're so good at predicting the market you can do it better than Brittany who knew when to invest down to the exact day. And even if you are that good, realize that it's still a losing strategy to the early and often approach that Sarah executed so flawlessly. Here's the spreadsheet for anyone who wants to see the numbers in action! :) Edit: Some of you might remember me from my how I retired at 36 post. For those interested in seeing more stuff like this, feel free to check out my instagram. I'm not selling anything, make no money from it, etc. If linking to this is too self-promotey I'll happily take it down. :) [link] [comments]  |
| World Economic Forum: World's Retirees Risk Running Out of Money a Decade Before Death Posted: 13 Jun 2019 07:28 AM PDT Interesting read and I think topical for this board. Basically, retirement savings are not keeping up with increases in life-expectancy, so previously funded retirements might now not be sufficient I thought this quote was interesting from another article that summarized the report about Japan " While Japanese workers save no less than others, they tend to invest in very safe assets that produce few gains over time, Yik said. As a result, average savings in Japan are only enough to cover 4.5 years of retirement. " Article summarizing is: https://www.webwire.com/ViewPressRel.asp?aId=242159 Actual report is here: http://www3.weforum.org/docs/WEF_Investing_in_our_Future_report_2019.pdf [link] [comments]  |
| Would you be honest with your employer about where you see yourself in 5/10 years? Posted: 13 Jun 2019 07:47 AM PDT I don't mean during a job interview, but I have my first annual review tomorrow and one of the questions on the self evaluation asks where I want my career to be in 5 and 10 years. However, if all goes well, in 5 years I'll be retired, or (more likely) working part time/short term contracts at most. I enjoy what I do, which I why I'd probably still do it to some degree to fill my time even when I don't have to, but I definitely don't feel the need to plan for an advancing career for the years to come. However, my employers really stress personal/professional development goals that include taking classes, etc (partially subsidized) and want to know my long term plans. Should I just lie and make up career plans, say I never want to do anything other than what I'm doing right now, or just tell the truth? [link] [comments]  |
| Posted: 13 Jun 2019 04:13 PM PDT I'm 24m living with parents & saving towards my first house. Will have £30k-35k by the end of the year including savings my parents helped me collect at a young age. I earn £26k a year which isn't really the best as a uni graduate (I work in marketing). My job is very seasonal - busy in the winter and extremely quiet in the summer. I've realised my chances of a promotion/pay rise are slim and when I move out I'll change jobs/move to a new city but that's a whole new story. Anyway, now that it's summer and so quiet in the office I feel I could make extra money at work/in the evenings (I know it's unethical to make money when already at work but if there's nothing to do it's better than twiddling my thumbs). Currently I've made money on the side through switching to different banks (made about £600) and about £400 through affiliate/referral schemes (shamelessly sharing my links where I earn money to apps/websites when people join). I've also done one paid study near me where I got £70. I've almost done all the bank switches and feel I've shared my referral links in the same places so many times there's no new people to reach. Plus I'd like my side hustle to require more brains - anyone can share referral links or do bank switches assuming they meet the minimum pay ins. My 2 biggest problems are: 1) I live in the middle of no where - it's very rural. Otherwise I would've happily got a job as a Deliveroo/Uber driver. I know it doesn't pay much but I quite enjoy driving and also do a lot of cycling anyway. There's not many shops/restaurants to work in and not sure how much retail is for me. 2) I don't know where my skills are. I'd say I'm fairly unskilled. Even though I work in marketing and went to uni I wouldn't go as far as saying I'm anything special at it. What I do is fairly common sense and simple. It's fairly unskilled. So I doubt I can use this as a side hustle. I write fairly well but I wouldn't go as far as saying I'm going to be the next JK Rowling. Perhaps a proofreading business though? Not sure how that'll pay. My only other skill I can think of is I'm pretty fit/active/healthy so perhaps a physical job. I'm good at running/cycling and fairly strong from the gym. However, I'm fairly busy most weekends and I doubt this is something I can do in the evenings. I'd happily do tutoring. I have a degree in a sport related course and could probably teach business studies or marketing however there's not really much of a demand for tutors in these 3 subjects plus I don't hold any teaching qualifications. I don't want to start flipping (buying things and selling them for a profit) as I worry my money will get tied up in the stock plus there's not a post office too close to me. I'm not particularly practical so wouldn't be good at DIY, making things, fixing things or generally using my hands. Any ideas? It's quite hard to convey the sort of person I am (I've probably missed several points) but hopefully that gives a start. Feel free to ask any questions to spark potential ideas! Cheers [link] [comments]  |
| Posted: 13 Jun 2019 06:07 AM PDT I feel like I'm missing something basic that's going to make this post look stupid but here we go. I'm 24, no kids, no debt, and in a long term, live in relationship with my partner. I currently live in a low cost area in the midwest. My expenses are low so im able to put aside 50% of my take home pay in an investment account every month ($1000) I've been at my job for 2 years and am planning on moving out of the midwest to a larger city. However, as we all know, large cities are expensive. However, with a higher cost of living comes higher wages. If I'm able to secure a job that gives me proportionally equal wages to my higher cost of living, so I'm able to save what I'm saving now (50% of my income), that's better, right? Even tho my expenses would be higher, I'd be saving the same percentage of a larger share of money, and able to probably double my $1000 investments Am I missing something here? The only thing I can think of is that wages in a large city do scale to cost of living, but perhaps not 1:1, so it might be tough to find a job that will pay me enough to keep my savings the same. Any advice from people who moved from a low cost of living place to a higher one? EDIT: Thank you for all the advice everyone, I appreciate the feedback, it's been incredibly helpful and reinforces a lot of the thoughts I had [link] [comments]  |
| Posted: 13 Jun 2019 03:56 PM PDT I'm not sure if this is the right place to post this article I wrote, but I've recently decided to start interviewing other enraptures as a source of inspiration on my own financial independence journey. Please feel free to share your thoughts below. A veterinarian from VA beach that discovered real estate investing when tragedy struck the neighborhood. The street's aging matriarch had recently passed away, and the house quickly went up for sale. One morning while Aline was headed to work she thought to herself, "I should buy that house" and so she did. From that point forward she was hooked on real estate investing, and all while still maintain a full-time job! How is investing in a full-time career possible? The short answer: People. Over the course of the year, Aline was able to involve herself with the local chapters of Fortune Builders as well as VA's very own Tidewater Real Estate Group. The network she formed dramatically decreased the learning curve and allowed her to quickly begin buying and flipping homes in the Tidewater area. With each interview I take a few minutes to ask the following three questions:
Aline's responses to each are below:
Simply put, involving yourself with like-minded individuals is a complete game-changer. From these groups, you can formulate a business strategy and begin syndicating deals in real estate. As of our meeting she had 4 houses under contract. [link] [comments]  |
| Up and moving to another country Posted: 13 Jun 2019 02:07 PM PDT Hi all, I'm fairly new to the idea of FIRE so this might not be the best place to post this, so if there's a subreddit that can better answer this question let me know. I see a lot of posts on here casually mentioning moving to another country for any number of reasons, such as better QoL, lower CoL, lower taxes, etc. This was something I strongly considered doing a few years ago, but I was deterred by the (at least what I perceived as) extreme difficulty involved in moving to another country. There are work visas and residency permits and all sorts of other barriers that make it harder than just hopping on a plane and starting a new life in another country. There's also the seeming catch-22 of needing a work visa to apply for jobs, and the best way to get a work visa is to have a job. So the question is: for those of you who did manage to move to another country, how did you do it? Is navigating the international bureaucracy as difficult as it seems, or am I imagining hurdles where there are none? Any insight/advice would be greatly appreciated! BTW I'm currently in the US, and I have a fairly in-demand college degree (computer science). [link] [comments]  |
| Posted: 13 Jun 2019 05:18 AM PDT I recently posted in personal finance about my father's passing and his property that he left me. In short, it's in disrepair and it would take money I don't have to potentially turn a profit. Or, I could sell it for ~900k and just focus on my life. After reading comments, and talking with friends and my therapist, I realized selling it is probably the smart move. This would leave me with a little over 1 million in savings at 33 years old. I just started my Roth IRA a few years ago and it only has 15k. I have around 15k in a pension with my work. I have a long-term girlfriend, but no kids and not married as of yet - but I do plan to marry my girlfriend. My issue now is that I'm at a point of extreme burnout. I finished college at 26, and worked full-time in order to make ends meet, before diving straight into the workforce. After a few years of full-time work, my father developed alzheimer's and he was a property owner/manager for 5 properties - but only one of them was pulling in rental income, he used the other 4 for hoarding. I have spent the past 3-4 years of my life working full time, taking care of my father, cleaning out his homes and selling them in order to pay back all the money he owed on them through mortgages and taxes. This consumed my life, ended my social life, ended a relationship, but I gave my father peace in his final days and I don't regret that I put my time & energy into fixing this. I think I would have regretted not doing it and letting him suffer the consequences of his actions. Financially for me long term, I think it was the smart move for me as well. I still have a lot of work to do on cleaning out the property I'm in, and he has another property left I need to work on selling. I feel like now that he's passed, as morbid as it sounds, I finally have a handle on figuring out what I want to do in life. I don't like the area I work in, so I don't live near it, and I have an hour driving commute, which adds to my stress. I do not think I want to buy another home in this area. I have tried to do the following things in the past year to ease my stress: 1) Take 4 weeks of FMLA to figure out my situation last summer - mostly spent on working on my dad's properties 2) Asked my job for work from home days - which they approved 2/5 days of the week, but it's only short-term 3) Took a two week vacation late last year to explore another country 4) Took two weeks off after my father's death to manage funeral/burial/end of life stuff None of the above really helped my mental health. I appreciate that my job has been so open to remedies to my situation, but none of them are working. I'm in therapy too, and my therapist agrees that maybe I just need an actual break. Like not a few weeks/months off my job to figure everything out - but maybe 6 months to a year of finishing selling my fathers homes, actually seeing my friends, working on myself, and traveling to figure out where I even want to live. I'm a computer science major in a niche field, so every time I've moved up in my career it's only taken me a few weeks or max a month to find a better job. I feel crazy typing this out, and I feel scared because I don't have a path for the first time in my life. But the more I sleep on it, the more I think that maybe that's exactly what I need right now. [link] [comments]  |
| Should we sell our rental property and put money into our new mortgage? Posted: 13 Jun 2019 02:30 PM PDT Not sure what's relevant, so here's a general background: Husband is early 30s, earning ~90k per year (corporate gig). I'm early 30s, earning ~200k per year (business owner). We live in west coast which has surprisingly high cost of living these days. Our total net worth including equity is 1,370,000. We would both like to have the option to retire by the time we are 45, although I am not sure if we actually will then or not. In 2012 we bought a house and lived in it for ~5 years. The house cost 200k and is now worth 330k. We moved out of the house in September of last year and converted it into a rental. We get $1,750 per month for rent. The mortgage is paid off. The house is in good condition and doesn't require much maintenance. We bought a house to live in last year for $675,000. (It nice.) Our mortgage is $530,000 at 4.75%. A big factor here is capital gains tax. If we want to avoid this, we should sell the rental in the next few years as you have to have lived in the house for 2 of the last 5 years. I'm also tempted to sell the rental sooner rather than later as our 4.75% mortgage is pretty high and in my eyes and I'd like to pay it down ASAP. Our tenants' lease is up in September, and I'm thinking about putting them on a month to month at that point and selling next summer if the housing market is still as high as it is now. Husband leans more toward keeping the house as rental into the foreseeable future and feels certain that's the better investment. Frankly, we get confused when doing the math on keeping it versus selling it and putting the money into our current mortgage. So many variables! Any/all advice welcome! [link] [comments]  |
| What are your dreams? What might you do if job/money was no concern? Posted: 13 Jun 2019 02:36 AM PDT There's so many things in this world. I used to get weirded out with our quest for immortality/reversing aging. Wouldn't mind a few extra decades now though. Anyway, what do you definitely want to do? What might you want to explore? What motivates you for FI/RE? Pursue mastery in Music. Further studies/do research in Neuroscience, maybe a PhD Develop solid understanding in STEM fields. Start a blog/podcast to connect with interesting minds Run health/lifestyle retreats / facility like Onnit for holistic wellnes Set up a NFP or find a way to help underprivileged youths Learn woodworking to craft guitars, maybe furniture, build a cabin Learn to live sustainably - Garden with fruits, veggies, nuts, chickens etc Write sci-fi, and science journalism books Learn about history Learn to paint Learn to snowboard, surf, boulder Learn to cook while living in different region of the world Sleeping in and doing nothing [link] [comments]  |
| Another benefit of FIREing without kids - reverse mortgages Posted: 13 Jun 2019 08:51 AM PDT I know reverse mortgages have a bad rap, and for good reasons. But for those who are diligent and make sure the loan balance can never be higher than the appraisal value, it can be a valuable tool. For those of us without kids, or who do not care about leaving money to the next generation, it is a no-brainer to take one to maximize your FIRE portfolio. [link] [comments]  |
| Looking to start a blog/pod documenting my journey to FIRE over time (22M). What should I include? Posted: 13 Jun 2019 09:07 AM PDT Hope this is the right sub for this. As the title reads I'm looking to document (and potentially monetize down the road) my FIRE journey as I am young and just starting my career but FIRE really interests me. What should I include on this to make this interesting to my audience? I don't want it to just be "heres my income, heres my expenses, I saved this much and I'm X% to my goal". Any thoughts? [link] [comments]  |
| Take note - Tough lesson learned about working for a private company and IPO Posted: 12 Jun 2019 11:47 PM PDT I worked for a company that has IPO'd in the last month. I came in when the company was a couple of years old. Employees had just reached triple digits a few months before. Being raised blue collar, naive and only a few years into my career, I was taken aback by the salary they were providing. Over 100k with generous bonuses. It didn't even cross my mind to do serious research about how to handle stock negotiations at hire or during promotions. "Who cared?" I thought. Companies rarely IPO and I was "making bank". Looking back, at least I asked what percentage of the total shares I'd be getting, but I was so clueless that I wouldn't have known what to do with the info if they even gave it to me. That was my grave mistake. I settled for stock options that were on the lower end for my level. I could not comprehend their worth at the time. I learned later that if I had negotiated well, I could have come out with double the options at hire. I would have even had time to negotiate for more shares at the extremely low strike price back then after the promotion I got, but instead I felt gracious just to get a 5% raise. Looking multiple years forward, the strike price is 50x cheaper than the current stock price. They were basically free. And people who were hired on a year before me will be making between 1 to 5 million depending on their entry level and how much they got promoted. I feel terrible. I feel physically sick. Don't get me wrong, I could make a quarter of a million if the price hangs at where it's at, but I cant help but feel like I missed a once in a lifetime opportunity. This is the difference between hitting retirement 5-10 years early vs simply retiring now. Not only that, but the job was insanely stressful. I can't fathom repeating that. This is quite literally traumatic and I wanted to share this with other people with similar goals as me so they can readjust their expectations if they are still in the shoes I was in. Get your shares, and get them now. Screw 1-15% raises. It doesnt even come close to the stock payout. [link] [comments]  |
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