• Breaking News

    Tuesday, March 24, 2020

    Home Unlabelled Financial Independence Daily FI discussion thread - March 24, 2020

    Financial Independence Daily FI discussion thread - March 24, 2020

    March 24, 2020

    Financial Independence Daily FI discussion thread - March 24, 2020

    Daily FI discussion thread - March 24, 2020

    Posted: 24 Mar 2020 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.

    submitted by /u/AutoModerator
    [link] [comments]

    Welp...I'm back in the workforce, and my timing was impeccable.

    Posted: 24 Mar 2020 06:43 AM PDT

    I FIRE'd about 18 months ago, with expected buying power of ~45K/year. Last month I decided I wanted to do a few fatFIRE things, so on a lark I texted my old boss and asked if he was interested in me returning. He said yes.

    And then the bottom fell out of everything.

    Random thoughts:

    • I'm down ~33%. This puts me on the upper end of leanFIRE territory. Another 33% and I'd have had to get a job anyway, just to avoid chewing my savings completely out of FIRE territory.

    • Happily, I wasn't wrong about my value to my former company. I asked to resume at my old salary, which was very high, and that was accepted without negotiation.

    • I did negotiate away the things I hated about my job before, so I don't expect to hate it now. I told my boss I was expecting to work maybe 3-5 years.

    • I can work from home, which is ideal. My industry is not directly affected by covid-19, although it does depend on consumption in general. I expect job security for as long as I want to remain.

    • I'm very risk tolerant when it comes to the market, so I'm hardly phased at the loss of value. I'm not even certain it'll come back at all.

    • I have very little confidence that anyone knows what the world will even look like in 20 years. For this reason I see little point in stressing about it. We'll roll with things as they evolve. I've been poor before and I'm not afraid of it.

    • I'll go back to maxing my 401K, HSA/etc, but I'm not going to save aggressively like before. Instead I'm going to travel to some exotic places (assuming they ever fly a plane again), and buy myself some very nice toys. I mainly just want to avoid selling in this market, in case it ever springs back.

    submitted by /u/NotLegallyBinding
    [link] [comments]

    How many on this sub are solely interested in FI and not RE?

    Posted: 24 Mar 2020 09:03 AM PDT

    Hello all,

    FIrst post here from a very long time lurker and follower of FIRE principles. I want to give a huge thanks to this community for all of the highly valuable information you've shared over the years - I'm sure I would be many years behind if I didn't have the many examples of those who have already went FIRE or shared details of their journey on the path to FIRE available to me.

    I am obsessed with becoming FI and use a combination of rental properties and low cost index funds in tax-advantaged retirement accounts (401k and IRA) to get me there. This is pretty normal compared to most here; where I expect to be a bit different is that I have no desire to leave my job. I am a data analyst and I love my career. I also am very excited for my future growth in this field and plan on becoming a Program Manager in the near term, in which case my salary will increase substantially.

    I want to become FI so that I have the complete freedom to pursue jobs/positions based off of my interest in them and not solely the salary. I also want to know that if I were to get laid off, I would be completely fine living off of the income from my investments. Although I am not planning on living off of them indefinitely (until my 60s or so), I have a strong desire to have the ability to FIRE at any point. Currently, I am just shy of 2/3 the way there ($3000 net income from rental properties vs $5000 monthly expenses in a HCOL area) and plan on getting to 100% within the next few years by using the Buy, Rehab, Rent, Refinance, Repeat method.

    If there are others out there who are on a similar path, what methods talked about on this sub are you doubling down on and which are you ignoring? Are you following the standard path to FIRE (reduce all expenses as much as you can while still having a good life and maximizing investments) or are you taking a different route? I am personally some where in-between, with a moderate focus on maintaining a high savings rate to pump into cashflowing rental properties, while also maxing out 401k/IRA.

    TL;DR: I am very curious to see if there are others on this sub like me who are primarily interested in FI and not RE.

    Thanks!

    submitted by /u/FIMindset
    [link] [comments]

    I'm surprised Security Backed Loans are not discussed more among FI/RE planners in times of need

    Posted: 24 Mar 2020 10:51 AM PDT

    It seems some people within the community aren't aware they can utilize the strength of their portfolio as a line of credit.

    If you need access to liquidity (for example a mortgage downpayment, a purchase, supporting a relative etc.) and don't want to either use your emergency fund nor sell your stocks - something that would be greatly advisable at the moment - you can use your portfolio to set up a line of credit.

    Say you have a $500k portfolio and need $50k right now. You can likely set up a $300k line of credit, letting you easily borrow $50k out of the $300k, no questions asked (you can go all the way to 300, but that's a little riskier). This loan is variable at a % over Prime, which in moments like now is very attractive since rates are so low (under 3%), and you can repay at your own pace (in full next day, monthly payments, or next year). Just bear in mind the variability means you don't know what the rate will be next year.

    As long as your stocks are worth more than the line of credit and can be used to repay your debt, you can hold the credit. Of course, you have to pay the interest on it, but it may not be a bad option for some in certain circumstances without having to worry about liquidating assets you don't want to touch.

    Some important considerations include:

    • read the fine print as the loaner has the right to sell stocks without your approval in case they go below a certain threshold. Make sure there is enough buffer for extreme scenarios.

    • you cannot use that money to invest in the stock market, so don't think of it as a way to get cash to buy cheap stocks (generally this would be a very risky move anyway).

    • the bigger your portfolio/line of credit the better the rate you can get, even if you use a portion of it.

    Of course, it means debt, and it has some risks attached to it, but it is an advantage to own wealth allowing you to do something like this. In times like now, I find this kind of solution a relief as I know I can weather unplanned circumstances - even if my emergency fund isn't enough.

    FYI it's also something widely used among executives who receive pay in stocks, allowing them to spend money against their wealth without having to sell (and pay taxes) on it.

    submitted by /u/shannister
    [link] [comments]

    Thoughts on an alternative goal to FIRE ( explained in post )

    Posted: 24 Mar 2020 04:05 PM PDT

    I understand that the goal to FIRE is being free of needing to work anymore.

    I'm curious to hear thoughts on a different goal - being free of needing to invest and save.

    Example - say someone is lucky and fortunate enough to save $100k by 25 and enjoys a 6% return on investment. At 65, With nothing additional invested, they'll have an inflation-adjusted 1 Million, enough for FIRE.

    This person from ages 25-65 will still have to work and won't be financially independent, but they'll have a different freedom. The ability to fully spend their income without concern for saving.

    Personally, this is appealing to me. I'll have to work in my 40s and 50s but I'll be able to travel/work off and on in my late 20s and 30s.

    Any thoughts? Does this resonate with anyone else, does this not make sense in anyway?

    submitted by /u/ExtraFirmpillow
    [link] [comments]

    If congress lets you withdraw your 401k penalty free and pay taxes over three years is it a good idea?

    Posted: 24 Mar 2020 04:00 PM PDT

    Wondering if this is a good idea? Obviously not spending, but moving the money to a brokerage account instead. https://www.cnbc.com/2020/03/23/congress-may-let-you-take-100000-from-your-401k.html

    submitted by /u/penecow290
    [link] [comments]
    Read more
    at

    No comments:

    Post a Comment