Financial Independence Daily FI discussion thread - August 01, 2019 |
- Daily FI discussion thread - August 01, 2019
- Does anyone else feel like FI is a requirement and not just an option?
- Going nomad to drastically increase savings rate
- Is FI your final goal or something else?
- Basing retirement-readiness on CAPE ratios/valuation of stocks at the time of retirement?
- Anyone else alone on the road to FI?
- People who will be receiving a monthly pension, what is your FIRE number ?
- Reverse Mortgages/Home Equity Loans in Dynamic Withdrawal Strategies
- July Expenses - Case Study: Living aboard a sailboat while rebuilding it
- FIRE and kids
| Daily FI discussion thread - August 01, 2019 Posted: 01 Aug 2019 01:09 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]  |
| Does anyone else feel like FI is a requirement and not just an option? Posted: 01 Aug 2019 08:50 AM PDT I'm in my 30s and work in a field that will probably not exist in the next 20-30 years or will be drastically different. Hell I'm not even sure I have 10 more years. I'm making good money now (just over $100K) so I'm squirreling as much as I can into savings and retirement accounts. I'm preparing pretty well...my house is almost paid off and I have no other debt. I'm well ahead of where I should be in retirement accounts for my age according to various money articles. The only thing I haven't figured out is a job I would want to transition to but being financially secure takes out a lot of stress. I'm basically doomsday prepping for my industry. [link] [comments]  |
| Going nomad to drastically increase savings rate Posted: 31 Jul 2019 05:11 PM PDT Hello all, This is my first post but I've been following the thread for a little while now, and my wife and I have just put in motion a plan to drastically increase our savings that I though I would share here as it could apply to others. To start with a little bit of context: we're in our early 30s, no kids yet and only one income. I work as a consultant/CPA and the pay is good but I spend most of my weeks travelling while my wife stays in our apartment in LA.This creates two problems for us: we have expensive fixed costs from renting and living in LA, and we spend most our time apart. The plan: my company offers a road warrior status, where the expectation is that you constantly travel, but in return are paid 30% on top of your ordinary salary. All housing / food / car costs are taken care of by the company.So we've crunched the numbers and if my wife follows me everywhere I'm assigned, we can give up the apartment, the car, and most of our monthly expenses, thereby bringing our monthly spending budget from $5k to $1.5k, and getting the additional 30% in income.With this, we would be looking at a savings rate of 86% (of take home pay), vs. $57% today! Combined with our current assets, we can hit our FIRE target (30 times annual spending) in 6 years only! The obvious downside is that its much harder building your social network when you only spend a couple of months at each location .. but we're hoping that the prospect of financial independence in our 30s is worth that much. So if you job gives you that opportunity you should go for it! If not and you're a CPA, send me a private message because I know we're always recruiting! If anyone has suggestions on how to make the nomadic lifestyle work best, I would love to hear them. Cheers [link] [comments]  |
| Is FI your final goal or something else? Posted: 01 Aug 2019 06:38 AM PDT https://accidentalfire.com/2019/07/30/financial-independence-false-summit/ I came across this article today and it once again struck me that everyone's motivations to reach FI and image of FI is different. The author raises an important point in his perspective that once you reach FI you will find something else that keeps you awake albeit not as stressfully. For me I look at FI more as a new foundation to build the rest of my life upon. I've built other foundations in the past mainly with my education and experiences. This would be another pillar added for support or strengthening of the existing ground work to build taller and wider sustainably (forgive my imprecise civil engineering analogy). I have always been a person who values preparation being fully aware that I can't prepare for every thing and the pursuit of FI has the exact mix to draw me in. What are your motivations for FI and what do you see FI as? P.S.: apologies for formatting, sent from mobile [link] [comments]  |
| Basing retirement-readiness on CAPE ratios/valuation of stocks at the time of retirement? Posted: 01 Aug 2019 02:10 AM PDT While reading this Fortune article about the high CAPE ratios we're experiencing today (essentially tracking if stocks are overvalued) this quote stood out to me: "Going back to 1926, the average 10-year return on the S&P 500 is roughly 10.4% per year. When the CAPE ratio was below 10, the average return jumps to more than 18% per year. But when the CAPE was 25 or higher, the average 10-year return falls to just 4.2% per year. So the fact that valuations are stretched today means investors should likely rein in their performance expectations. However, it's also worth noting the range of outcomes investors have experienced within overvalued markets. The worst 10-year return when the CAPE was above 25 was an annual loss of nearly 5% per year while the best 10-year return was 9.3% per year." I know the Trinity study and similar projections look at the worst case scenario for stepping into early retirement while still coming out "ahead"... but does anyone look at things like the CAPE ratio as a more fine-tuned look at what their future returns will be? For instance, I might look at the expected 10 year returns for situations where CAPE ratios are above 25% if I was stepping into retirement today, which would be an average of 4.2%/year (with a range of -5%-9.3%) and tweak my target numbers more conservatively than if I was stepping into retirement in a CAPE ratio of 10% environment. til;dr: Is anyone keeping an eye on things like CAPE ratios as a more detailed indication of future returns/retirement-readiness? Or are you thinking "Trinity study has my back regardless of what the market looks like at the time of retirement. Forget the endless efforts to predict the market and the financial news BS"? [link] [comments]  |
| Anyone else alone on the road to FI? Posted: 01 Aug 2019 10:42 AM PDT Just wondering how many of you are more or less alone on their way to FI. I'm not talking about your SO being on board or not but more about friends/family/coworkers. I'm not being pushy to anyone about this topic, i just casually bring up FIRE sometimes if the conversation is about finances/freedom/dreams etc. Often times people like the idea and even read some articles on blogs like MMM but not a single one of them actually started to work towards FI. I mean not even friends that I consider being pretty smart and open for new ideas do it. Guess it's just "normal" this way? [link] [comments]  |
| People who will be receiving a monthly pension, what is your FIRE number ? Posted: 01 Aug 2019 01:11 AM PDT Often posts in this subreddit assume that (early) retirement needs to be full self-funded, though I expect there's a rather large group of people that will have a monthly pension once they turn 65+ (e.g. most Europeans get a government pension, or people in certain jobs) For all of you who will be receiving such a monthly pension once you're retired, what's your FIRE number you strive for in the meantime and how do you split it between before and after the government pension kicks in ? [link] [comments]  |
| Reverse Mortgages/Home Equity Loans in Dynamic Withdrawal Strategies Posted: 01 Aug 2019 12:09 PM PDT For those who have read Big ERNs series on safe withdrawal rate, he has a very interesting set on dynamic withdrawal rate strategies. He covers various techniques including constant percentage, CAPE rule based, and guyton-klinger as a way to mitigate sequence of return risk. The key being how you can adjust your spending during market downturns to (1) prevent depleting your portfolio and running out of money and (2) allowing you to raise your initial SWR and accelerating your path to FIRE. This got me thinking about alternatives to drastically reducing spending during bear markets. Has anyone explored using Home Equity Loans or reverse mortgages to accomplish this? For example, consider the early retiree who owns their own home and spends around $50k per year. Rather than take a 20% spending cut during a market downturn, you could take out a $10k home equity loan (or maybe $10k plus enough to cover your interest) or reverse mortgage to maintain your current spending. The idea being that when the market recovers, your portfolio will be able to pay back the loan plus interest easily (at today's rates) and you won't have to sell equities at low prices during market downturns for your living expenses. I haven't yet crunched any numbers on this, but I wanted to see if anyone has considered this as part of their FIRE dynamic withdrawal rate strategy. [link] [comments]  |
| July Expenses - Case Study: Living aboard a sailboat while rebuilding it Posted: 01 Aug 2019 10:54 AM PDT Last Month's Case Study Post: June 2019 July's Months Summary:
Boat details:
I was hoping that the anchor would be the only "big" purchase, but unfortunately, that was not the case. I am hoping I'll get a refund from Home Depot for the burned up Ryobi tools.
Individual amounts of each Pre-tax deductions: Me(bi-weekly):
Wife:
INCOME: ---------------------------
TOTAL: $7,940.93
TOTAL: $784.53
TOTAL: $222.87
TOTAL: $6465.40
TOTAL: $583.40 Assets: Car: 1996 Toyota 4Runner - $3500 TOTAL: $177,609.48 [link] [comments]  |
| Posted: 31 Jul 2019 10:58 AM PDT Planning out my budget projections, I realized that I would hit my FIRE goals anywhere from 3 to 9 years from now, even under fairly fat FIRE assumptions. Problem is, I am planning on children (and expecting the first in a few weeks), and well, going from conception to being an empty nester takes a lot longer than 9 years. Is there any point in the RE part of the FIRE if there are school aged children at home? Life would still be strictly regimented because of school requirements, and restrictions around travelling will still be there. Waiting to actually be an empty nester will take me until roughly 50-55, which doesn't really do much for the RE part of FIRE by much. [link] [comments]  |
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