Financial Independence Daily FI discussion thread - January 30, 2020 |
- Daily FI discussion thread - January 30, 2020
- Healthcare is a legitimate FIRE hazard
- SWR Insurance?
- TSLA Bump Puts me in the Dos Commas Club - not sure if legit?
| Daily FI discussion thread - January 30, 2020 Posted: 30 Jan 2020 12:07 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]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Healthcare is a legitimate FIRE hazard Posted: 30 Jan 2020 07:34 AM PST Stories like below remind us that just because you have insurance, doesn't mean you are covered: Anytime you go to a doc office or a hospital, you sign an agreement that essentially says "whatever the insurance company doesn't pay, I will". At that point it doesn't matter whether your maximum out of pocket is 10k or whatever. The hospital can charge pretty much whatever the fck they want (the chargemasters are KNOWN to be fictional & unquestionable). If they charge 10x the Medicare rate and the insurance company tells them to take 2x or fuck off, then guess who is on the hook for the rest? In my state ONE organization has already bought up nearly all the hospitals. So much for competition, and they can now charge however they want. Regular retirement typically offers Medicare protections. Early retirement serves up this ever-present risk of being on the hook for a surprise medical bill that can ruin early retirement plans (not to mention the difficulty of getting back into work after such an event, both in terms of gap and medical needs). Am posting this to vent my frustration at this BS, but also to see if there are any tips to mitigate such risks. I understand that people generally don't care about this until this happens to them. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 29 Jan 2020 06:22 PM PST Sorry if my ignorance really shows in this question. As I understand it, "sequence of returns risk" is why a safe withdrawal rate of at most 4% is recommended (and usually on this sub to be 3.x%), while the average return over a 30 year period of time might be closer to 6 - 7%. That makes sense to me because I understand the math behind the sequence of returns risk. What I don't understand is why this isn't something that can't just be insured against? With deciding a safe withdrawal rate you have kind of two problems - 1) running out of money before you die. and 2)having more money than you used when you die At a 4% rate, isn't it much more likely that you'll end up with problem 2? But as individuals we fear problem 1 so much that it's not worth the risk? Seems like a perfect case for insurance. Say you have a $1 million dollar nest egg and withdraw 4% over 30 years. According to Trinity study assumptions there are a few scenarios you could run out of money entirely. But there are also a few scenarios where you end up with like $6-9 million. In only 10% of the scenarios do the ending balances even result in balances under the starting balance. The majority end up making quite a bit of money. Couldn't there be an insurance that managed everything for you? Allowing for a fixed 4.5% or 5% withdrawal rate and assuming you ran out of money could payout accordingly to keep you receiving the previously arranged payouts until you died? But on the flip side assuming the markets exhibit upside (which is on paper more likely) the insurance provider captured anything above the withdrawal rate? 4.5-5% vs 3.5-4% withdrawal rate is a pretty considerable increase in quality of life. Not to mention it provides built-in catastrophe insurance. I'd guess you could also contractually work out some amount of money left over for some type of estate planning (depending on the rate offered). Why is this a bad idea? Or does something like this already exist? Edit : Looks like this already exists in the idea of an annuity. I'd still love some discussion regarding the pros and cons of this strategy. And if there are specifics that lead to greater than 4%. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TSLA Bump Puts me in the Dos Commas Club - not sure if legit? Posted: 30 Jan 2020 03:57 PM PST TL;DR - Most people are aware of the recent jumps in TSLA stock value. I own a modest number, but that was enough to bump my net worth into the Dos Commas club today. MY FI target was $1 Mil, but I am not sure if I have truly reached FI or not! Anyone else in the same boat? If a substantial part of our portfolios are stocks and we have such bumps, when can we consider that the bump has stuck for good, and we have truly reached the target? Rest of the stuff below is just for comparison with my previous post from 2.5 years ago, and can be safely ignored if you are not interested. Just under 2.5 years ago, in Aug 2017, I had reported that I reached the half mil milestone. I am shocked how quickly I reached $1 Mil. My previous post has all the background info. Only a few things have changed since Aug 2017 when I made that post:
No. 2 through no. 4 increased by net worth by $228,880.38. That is almost half of the increase since Aug 2017! Comparing the Aug 2017 and Jan 2020 numbers: Net Worth Growth
401 K Growth I started maxing out my 401 K only from 2013, although I had been contributing since 2007. See below how much money I personally put into my 401 K each year. My company match (75% of the first 6% of my pay) and the market returns have more than doubled my $157 K personal contributions to $343 K. This doesn't even take into account the taxes saved. IMO, the 401 K with company match is one of the most fantastic financial instruments out there!
Asset Allocation Here's how my assets are distributed. As you can see, I continue to be heavy on equities, especially US equities and TSLA is 19% of my net worth!
Biggest non-FIRE behaviors
Future I used to have a lean FIRE target of $600 K ($2000 per month at 4% SWR). In Aug 2017, I revised that target to $800 K and estimated it would take 3-4 years to get there. Now that I have gotten to $1 Mil in 2.5 years, I wonder if it is better to achieve 2 more targets before RE:
In Aug 2017, I had also mentioned that I am seriously considering joining a nonprofit I support. I am happy to report that they are willing to take me on as a full time paid employee. However, they survive on year to year donation. So, they can only promise to pay me for one year at a time. So, I can't join them until I reach the above 2 additional targets. Concluding thoughts Absolutely nothing has changed in my lifestyle (other than buying the house) nor my attitude between the $100 K mark and the half mil mark and the Dos Commas mark. I continue to be busy at work and outside work activities. [link] [comments]  |
| You are subscribed to email updates from financial independence / early retirement. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment