Financial Independence Daily FI discussion thread - September 22, 2020 |
- Daily FI discussion thread - September 22, 2020
- Lesson learned: do not share your net worth or any other specific financial information or goals with family or friends.
- Has the Affordable Care Act affected your ability or plans for FIRE and would your FIRE plans change if it was repealed?
- Where to start?
- Should we be embracing alternative withdrawal methods?
- PSA - You probably don't have Golden Handcuffs
| Daily FI discussion thread - September 22, 2020 Posted: 22 Sep 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: 22 Sep 2020 12:25 AM PDT Do not tell your friends and family specific details like your salary, net worth, savings rate, etc, even if they ask. Its fine to talk personal finance and encourage people to also pursue FIRE. Share strategy and general goals, but don't go into your specifics. I wish I would have received this advice early in the FI journey. Money has suddenly become a contentious issue with a family member after that person asked me for a substantial loan. I never would have anticipated this person making such a request or being upset by my refusal. I greatly regret ever sharing my financial situation. [link] [comments]  |
| Posted: 22 Sep 2020 12:07 PM PDT The NY Times just posted an article that explicitly stated that a repeal of the ACA will affect retiring early "... protections for pre-existing conditions are particularly important during an economic downturn or to those who want to start their own businesses or retire early. ". It seems like healthcare portability is also essential to FIRE for those under 65. What about your plans? https://www.nytimes.com/article/supreme-court-obamacare-case.html?referringSource=articleShare. [link] [comments]  |
| Posted: 22 Sep 2020 03:56 PM PDT How do you guys start financial independence? What kind of investment is the best for current situation? Thanks [link] [comments]  |
| Should we be embracing alternative withdrawal methods? Posted: 22 Sep 2020 01:47 PM PDT TLDR: Alternative withdrawal method leads to considerably increased real terms withdrawals, with identical failure rates to the traditional method, at the expense of final portfolio values. As I'm sure everyone in here is familiar with by now, the traditional withdrawal method is to take x% from a portfolio in year one of retirement, and then adjust the £ amount for inflation every year after that. In this post, I would like to contrast this method with a method where the retiree periodically resets their withdrawal rate % to the new portfolio value, with the inflation adjusted £ amount from their starting portfolio acting as a minimum/floor for withdrawals. As demonstrated by the data below, over an extended timeframe, the latter withdrawal method allowed comparable real terms withdrawals in worst case scenarios, and massively increased withdrawals in median and best case scenarios. This was achieved while maintaining identical failure rates across the board. The downside of this method of course is that the retiree would, on average, end the period with a significantly increased portfolio value in either scenario, but it would be considerably lower in virtually all cases using the latter withdrawal method. This is, in a majority of scenarios, likely to be a more than worthwhile trade off for the retiree in question. Assuming 100% equities, and a £1m starting portfolio, for the sake of simplicity, the failure rates for these two methods, over a 60 year timeframe, for 3%, 3.25%, 3.5%, 3.75%, 4%, 4.25% and 4.5% withdrawal rates, are as follows. Traditional: 0%, 0%, 1.18%, 2.35%, 5.88%, 15.29% and 18.82% Resetting: 0%, 0%, 1.18%, 2.35%, 5.88%, 15.29% and 18.82% The highest, lowest and median withdrawals, and final portfolio value, for each method, at 3%, 3.5% and 4% (as the impact remains pretty much the same), are as follows. Traditional, 3% withdrawal: Lowest- £1.83m Highest- £1.83m Median- £1.83m Final value: Lowest- £3.7m Highest- £54.8m Median- £23.1m Traditional, 3.5% withdrawal: Lowest- £2.14m Highest- £2.14m Median- £2.14m Final value: Lowest- Failed Highest- £50.0m Median- £18.6m Traditional, 4% withdrawal: Lowest- £2.44m Highest- £2.44m Median- £2.44m Final value- Lowest- Failed Highest- £45.2m Median- £14.8m Resetting, 3% withdrawal: Lowest- £2.4m Highest- £13.0m Median- £5.8m Final value- Lowest- £2.4m Highest- £15.1m Median- £7.2m Resetting, 3.5% withdrawal: Lowest- £2.1m Highest- £12.3m Median- £5.2m Final Value: Lowest- Failed Highest- £10.9m Median- £5.0m Resetting, 4% withdrawal: Lowest- £2.4m Highest- £11.5m Median- £4.6m Final value: Lowest- Failed Highest- £7.8m Median- £3.6m [link] [comments]  |
| PSA - You probably don't have Golden Handcuffs Posted: 22 Sep 2020 07:10 AM PDT A trend I've been seeing over the last couple of weeks is a bunch of folks on here talking about their "Golden Handcuffs". The thing is, I bet maybe 1% of commenters here actually have them. If you care about semantics, read on. If not, tl;dr stop saying you have golden handcuffs unless From Wikipedia:
From /u/ColorsMayInTimeFade:
These are examples of Golden Handcuffs:
Golden handcuffs are almost exclusively used on C-Level employees. Sometimes one level down at President or Vice President (not at a bank, they hand out VP like candy). Very rarely anything below that. Just because you are a highly compensated employee does not mean you have golden handcuffs. If you leave tomorrow, you don't forfeit a metric shit ton of future money (aside from salaried compensation). Sources: Investopedia, Wikipedia, and a general understanding of what very large publicly traded companies do when they hire new CEO/CFO/COOs. [link] [comments]  |
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