Financial Independence Daily FI discussion thread - April 01, 2020 |
- Daily FI discussion thread - April 01, 2020
- Perspective for those shaken by this market
- A Few Observations from a "Bad" Spreadsheet Day
- Weekly Self-Promotion Thread - April 01, 2020
| Daily FI discussion thread - April 01, 2020 Posted: 01 Apr 2020 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]  |
| Perspective for those shaken by this market Posted: 01 Apr 2020 10:04 AM PDT It is the end of the month, and I just finished up spreadsheet day here in my house. The news is in, we are down over $60,000 this month. Sounds pretty bad right? Well I updated my projection charts with my new net worth, and well this has pushed my FIRE date out by a whole 3 months! Interestingly, each additional $370 spend per year forever pushes my FIRE date out 1 month. So the impact of the market drawdown is equal to additional expenses of $92.50 per month. Every day people tack on these little extra expenses (car lease, gym membership, food delivery service) and they don't lose their shit over their lifestyle inflation, while the impact is the same as a global pandemic. On the bright side, this also means that if I can cut $93 of monthly spend from my budget, I'd completely offset this tragedy in my FIRE journey. I can easily do that by cooking more, or biking to work, or some combination of both. Just some perspective. [link] [comments]  |
| A Few Observations from a "Bad" Spreadsheet Day Posted: 01 Apr 2020 08:41 AM PDT 1) It's rarely as bad as the headlines. This was the worst quarter since the GFC, with the S&P500 down about 20%. Peak-to-trough decline was about 35.5%, which makes a great headline. I'm "only" down 14.6% YTD due to continued savings. I'm reminded of Root of Good's net worth graph, which has a surprisingly modest dip in 08/09 due to continued savings and a lower portfolio size. Obviously those with larger portfolios will be hit harder, but most of us are probably somewhere around the boring middle. 2) Maintain a consistent record keeping schedule Re-calculate your net worth in regular intervals: monthly, quarterly, annually, whatever. This consistency keeps you from comparing your your top-to-bottom loss. If I do this exercise I "lost" >$100k top-to-bottom, but when just looking at my month-end numbers, my portfolio is "only" down $67k over the past 2 months and down $57k YTD. Not great, but much better than $100k+. No need to distract yourself with intra-month volatility chatter. 3) Spending matters With shelter-in-place for most of March, my spending is down 26% relative to my average. If I was currently retired, I'd actually be better off from a SWR standpoint because my spending has declined more than my portfolio. Cutting spending is always easier said than done, and in the absence of a global pandemic it might not be so easy to avoid social events, restaurants, concerts, bars, and what have you. But this does show that reduced non-essential spending can be done and does have a very positive impact on SWR. I'd also imagine many of us are baking in a somewhat hefty discretionary spending budget into our FIRE number, which just provides more flexibility to rein in spending if necessary. 4) The bigger the dip, the larger the gain If you buy a fund at a 25% "discount", when the price increases back to normal, you will see a 33.33% gain. Down 33%? Your back-to-normal gain will be +50%. Additionally, the dividend yield will likely be higher. A fund with a 2% yield will have an effective yield of 2.67% if you're able to buy the stock at a 25% dip. You're locked into this price and will reap this higher yield until you sell. A counterargument is that companies cut dividends in poor economic conditions, which can sometimes be the case, but if we look at the dividend yield during 08/09, it actually increased. How was your spreadsheet day? [link] [comments]  |
| Weekly Self-Promotion Thread - April 01, 2020 Posted: 01 Apr 2020 01:09 AM PDT Self-promotion (ie posting about projects/businesses that you operate and can profit from) is typically a practice that is discouraged in /r/financialindependence, and these posts are removed through moderation. This is a thread where those rules do not apply. However, please do not post referral links in this thread. Use this thread to talk about your blog, talk about your business, ask for feedback, etc. If the self-promotion starts to leak outside of this thread, we will once again return to a time where 100% of self-promotion posts are banned. Please use this space wisely. Link-only posts will be removed. Put some effort into it. [link] [comments]  |
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