Financial Independence Daily FI discussion thread - June 04, 2020 |
- Daily FI discussion thread - June 04, 2020
- [2 year update] 38/m/single. $2.3 million. Submitted my resignation letter today. Thank you guys for the encouragement all these years.
- three years into early retirement
- Portfolio
| Daily FI discussion thread - June 04, 2020 Posted: 04 Jun 2020 01:07 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]  |
| Posted: 04 Jun 2020 06:57 AM PDT Hi, r/financialindependence. I'm the guy who quit his job in the US in June 2018 with naive dreams of frugally solo traveling the world by air, frugally solo traveling North America via van camper and spending more time with my friends and family in between. Background: I'm 40 now, ethnically Chinese guy in Texas. I started working in my early 20s after getting out of grad school. Salary varied anywhere from $70,000 to $130,000 during those 14 years or so. I live in a state with low cost of living and no state income tax, so I knew when I started that I could save a majority of my income if I stayed frugal and resisted lifestyle inflation. I live in the same starter home I bought around 2010 and drive an old Camry. I did a bunch of set-it-and-forget-it buying of large cap US index funds and Berkshire Hathaway and I did some individual buying of large cap bank and technology names before and after the Great Recession ten years ago. I spent my first year in Thailand, I accepted a non-paid, volunteer teaching position with a Ministry of Justice program there that teaches English and job skills to low-level convicts and former prostitutes. Click my previous thread below to get a breakdown of my expenses and experiences living in Bangkok, traveling weekends through SE Asia on dirt cheap airfare costing as little as $20 a flight sometimes, the cheap street food and so forth. https://old.reddit.com/r/financialindependence/comments/bk1rco/1_year_update_38msingle_23_million_submitted_my/ My monthly expenses came out to about $850 with free housing. Would have been up to $1,350/month if I got a fancy flat and paid my own utilities, which is still crazy cheap by western standards. That includes heath insurance, eating out every meal, mass transit/taxi fare and spending money for shows and nicknacks. My net worth increased from $2.3 million from when I quit to $2.6 million when I came home from Thailand one year later, entirely from paper stock gains. Year 1 went almost 100 percent according to plan. The first six months of Year 2 did, too. I took separate trips from the US to the UK, Spain, Mexico, Florida, New York and Minnesota, all on heavily discounted fares. Because when you're retired, you can take all of the odd-hour fares discounted at over 60-70 percent off, right? I stayed with friends, got cheap Airbnbs or used my hotel points to cut costs. It was great. 2020 comes and COVID-19 hits. My trip to Taiwan and Hong Kong was cancelled. A trip to Italy soon after, too. Then separate trips to Nevada and Boston, too. My net worth skyrocketed to over $3 million thanks to the post-China trade deal rally and the market assuming COVID-19 is contained. The abrupt, panicked selloff as the world went into lockdown knocked me back down to $2.1 million. Painful, but I rode the Great Recession all the way down and back ten years ago, so I had that experience to rely on to resist panic selling. I've since rode the April/May rally back up to $2.6 million. https://i.imgur.com/Wg7c74L.jpg My current expenses ... I own the house outright so no rent is great. Health insurance is covered by my old employer (while still in SE Asia, I was offered a remote work job by my old boss, like set aside 60-90 minutes a day to answer email and have him bounce ideas off of me. I originally said no but was swayed when told I could get health insurance covered and my 401k matching when I moved back to the states, have done it since. A nice side hustle for a fraction of my old salary.)
= $1,220/month. I'm not including eating out or going to shows or movies because I'm inside the house all day every day. My $20 gym membership is suspended, I don't want to work out in an enclosed space until there's a vaccine or proven treatment. Plans for Year 3 are wait out the pandemic for a vaccine or treatment. Stay home in the meantime. I miss flying. I fully expect flying to be a more miserable experience with less competition and higher prices when is does bounce back. It's unavoidable, I get it. I'm still looking at a van to custom build a camper for one to travel to state and national parks in. I've ridden in my friend's Sprinter a few times and I'm now convinced it's too much room for one person. I've also decided that a camper van with on-board water, shower and toilet is unnecessary for me, I can just use a Planet Fitness membership or pay for showers at truck stops or campsites. The custom builds being offered for Nissan NV200 cargo vans with pop-top roofs are intriguing. Would cost about $23,000 for a new NV200, then another $20,000 to $30,000 for the camper build. https://www.youtube.com/watch?v=VLVcZpmuzMs I am also intrigued by the "camper mode" being offered in the Tesla Model 3. It basically allows you to run the car's AC all night without killing the battery, meaning a climate controlled room. The backseat can be folded down and you have a completely flat floor to lie on, with your legs in the trunk of the car. Third-party vendors now sell mattress and bedding kits for you to use to sleep in the back of your Tesla all night, it's amazing. https://www.youtube.com/watch?v=KjC_ggNqbWA Big drawbacks to a Model 3 for a "camper" is the lack of space and the sparse Supercharger network. We'll see, I'm in no rush. $38,000 for the standard range 250 miler. $43,000 for the 320-mile version. [link] [comments]  |
| three years into early retirement Posted: 04 Jun 2020 03:08 PM PDT BACKGROUND Introduction: As my desire to spend nearly an entire day on reddit has significantly waned, my responses might be limited. Please check comments and posts from my history to find answers to potential questions. I genuinely appreciate all of the positive comments, even though I might no longer take the time to say so individually. I apologize if I don't remember you individually. The usernames and stories run together. Please remind me of a discussion we had or provide a link if it's relevant to something you want to know. The road of questions about what I do for health care (subsidies and their ambiguous morality), why retail pharmacy is so bad (below), and whether my situation is from determination or privilege (a lot of both) has been well tread. Model: I wish to maintain a portfolio that began in June 2017 at $1,025,772. My net worth at that time was $1,333,772 (portfolio plus home). My original model was a simple 3% withdrawal rate of the portfolio value. Our actual withdrawal rate has been much lower due to: occasionally earning additional income in 2017-2019; receiving an unexpected $30k windfall in 2018; and a retool of the model due to purchasing my parents home at a greatly reduced price in 2019 (more below). The maximum withdrawal amount allowed for 2020 is $5217/mo or $62,604/yr (3% of current net worth). In 2017, it was $2564/mo ($2682/mo adjusted for inflation). We're so far out of danger by historical precedent that spending is no longer a thought. Career: I am a former retail pharmacist who hated both his job and profession for the following reasons: unacceptable amounts of stress, lack of civility from the general public, capitalism gone amok, fundamental disagreement with the overuse of pharmacotherapy as an answer for underlying health issues, and a severe opiate crisis that few have yet to appreciate. I attended college for eight years to earn a bachelors (1997-2001) and a doctorate (2001-2005) before joining the workforce for nearly twelve years (2005-2017, entirely with CVS). $150k in education costs were covered by academic scholarships ($25k), employment during college ($20k), prior savings from high school employment ($5k), and revenue from an eBay business while in college ($10k). My parents initially promised to cover the remaining $90k of education expenses out of what they deemed to be pure principle, but we assumed the loan as part of the deal when purchasing their home at a reduced rate in 2019 (explanation upcoming). My salary plus compensation went from $115k in 2005 to $150k in 2017. Our savings rate was about 70% on average. Finances: I retired at the age of 38 on June 6, 2017, the day before the twentieth anniversary of my high school graduation. I am married with no kids and generated over 95% of the family income while employed. We live in LCOL rural TN. Our asset allocation was approximately 60% VTSAX (total US stock market) / 20% VFWAX (total INTL stock market) / 20% VWLUX (US municipal bonds). After the purchase of my parents' home/farm, our net worth is closer to 55% real estate (one house with 28 acres and another with 66 acres) / 44% VTSAX (total US stock market) / 1% cash. We also hold roughly $50k in belongings not included in the portfolio. My spending model places no dependence upon possible future employment (outside pharmacy?), social security ($10k/yr?), other inheritances ($???), universal health care (probable?), or universal basic income (possible?). The final balance will be left to charities and worthy causes. YEAR THREE RECAP Performance: Living expenses for the third year came to $42,812 (max budget $62,604). We generated $9,514 of income this year primarily from my wife's previous fun job and the stimulus payment. Our investment withdrawal was $33,298 this year, thus our pro-rated, annually-adjusted withdrawal rate was 1.59% for the year. Without the additional income stream, our withdrawal rate would have been 2.05% for the year. Our net worth went from $1,333,772 (year zero) to $1,471,164 (year one) to $1,488,092 (year two) to $2,010,995 (year three, as of June 1, technically up another $40k since then). The large jump this year was primarily due to the de facto reverse mortgage purchase on my parents' home/farm, as well as an approximate 10% increase in VTSAX over the past 12 months. Purchase: I purchased my parents' home/farm for $460k and gave them a guarantee of free rent for life. At the time of purchase, it was worth an estimated $750k (now estimated at $835k – Zillow has our zip code increasing 30% in value in 2019 alone – crazy out here). The difference in FMV for taxation purposes is covered by the equal exchange of rent for interest (complicated, not getting into it). So why did they sell? Basically they just wanted extra cash, a guarantee of housing for life, removing the house from their name in case they ever needed means-tested assistance, and to be able to pre-gift an inheritance to their children while still alive. $250k went to them; I bought my sister out for $210k; the difference in true value and sale price was my gift; everyone is happy. Reflections: I'm not particularly interested in spinning comedy this time, but it's been a crazy year for a whole lot of reasons. Did I panic when the market corrected 40%? No. Howling monkeys are always gonna howl. I rode it out and have gotten 70-75% of the losses back. I also had to liquidate a lot of post-tax stocks in order to buy my parents' place before the crash, so that was fortunate timing. I was re-interviewed by the NYT in a follow-up for their piece on FI. I seem to recall being the only subject who had made reasonable gains. I therefore was only a minor footnote in the piece. Experiences: I ran over 3000 miles, won a few more races, and saw my competitive running career come to a close (personal records set in each distance this year: 5:12 mile, 17:37 5k, 36:39 10k, 1:17:38 HM, 2:43:12 marathon). I'm proudest of having set the fastest time ever for a 40+ year old in my hometown HM race. I continued to write in my daily journal every single day since retirement without exception (focusing on weird dreams), went back to teaching as a volunteer ESL teacher for a semester before COVID-19 (teaching intermediate level classes in English), volunteered as a three hour marathon pacer for a few charity races, squandered 300 hours playing video games (Persona 4, Persona 3, FF7 Remake, Witcher 3, Horizon: Zero Dawn), collected some more vintage sports cards (pictures of men with moustaches), spent more time with friends, participated in a financial pharmacist podcast (early retirement, if I recall the topic correctly), visited Alaska/Washington/Victoria for two weeks with my wife, revisited Japan by myself for two weeks (averaged 40k steps per day), got back into some television (Hoarders, After Life, Space Ghost: Coast to Coast, COPS, Star Trek: Picard), spent way too much time on social media trying to correct misinformation on COVID-19, and took up cycling on a pretty serious basis two months ago (marathon training carried over, so my wattage [261w / 3.6 FTP] would put me around a good Cat 4 or bad Cat 3 racer if I ever were to compete). Upcoming: What lies ahead in year four? I can't say for sure. Definitely more cycling. Possibly learn to swim without a snorkel. Triathlon? Campaign volunteering for the rational party. Definitely not returning to monthly updates. I'm kind of stuck in a rut since I've done most everything I wanted to do. A lot of the stuff I didn't tackle is what I've lost interest in. Oh…also whatever the fuck I want. I'm supposed to say that. But seriously, I let this pandemic be an excuse for a drop in productivity. That changes now. [link] [comments]  |
| Posted: 04 Jun 2020 03:26 PM PDT Hey guys, 18 year-old Small fry here. Just wondering what's a good way to diversify my portfolio. It's a small amount but it's just something I can afford to compound or risk since I've no summer job. I don't have a lot so I can't really do a well balanced Portfolio like the all seasons. Currently I have about 50% of that in Crypto in which I use to swing trade a lot. Mainly ETH etc... The rest is in Trading 212. I shorted Tesla a few times and Alibaba but never held long positions. I currently only own a large amount of my portfolio in CLNY (colony capital) and that's doing pretty well. I plan to sell however to rebalance it and focus on long term. But I mean with 50% in stocks/equites, is it wise to spread that out between 2 or 3 different companies? I think maybe 2-3 companies is best but how many different long positions do you actually need to have for it to be eligible as "diversified" Cheers [link] [comments]  |
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