Financial Independence Daily FI discussion thread - Thursday, March 04, 2021 |
- Daily FI discussion thread - Thursday, March 04, 2021
- One more year syndrome with high savings rates
- Roth or Traditional
- Roth IRA at 19
- For those heavily weighted in real estate, how do you calculate and plan your SWR?
- Renting Long-term as a "vacation" in retirement.
- Using FIRE to re-invent yourself?
| Daily FI discussion thread - Thursday, March 04, 2021 Posted: 04 Mar 2021 02:00 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]  |
| One more year syndrome with high savings rates Posted: 04 Mar 2021 06:24 AM PST Some background, I am 27 working as an Accountant (industry, no CPA) in a HCOL area making about 70k/year pretax. Last year my expenses were split about 35% needs, 15% wants, 50% savings. No kids/house and no plans on either (spouse agrees) I discovered FIRE about 3 years ago but thanks to family being financially knowledgeable I have been investing since 21 when I entered the workforce Something that is often talked about is how especially in the early years, the growth of your portfolio has more to do with contributions than how the market is doing. Because of this, it seems like the fastest way to "jumpstart" your FIRE journey is to save aggressively for many years early on and then once compounding starts to have more of an impact, back off some and let your money work for you. This is where my conundrum comes in. At what point do you start to back off? One year of aggressive savings early on can easily shave several years off of FIRE and early in life the future value of a dollar is incredible. This can often make it hard to justify buying things with a higher price tag such as trips, upgrading my computer (6 years old), etc. I have found in the short term this isn't a big deal, but over several years it starts to wear on you. I am not miserable, or anything, more just feel like I live in a bit of a groundhogs day, and considering how even a couple more years of this could shrink my fire date by 5+ years it can feel hard to justify lowering my savings rate by anything significant. Have any of you dealt with this? The one more year syndrome of a high savings rate early in your saving careers? How did you start to wean yourself off to something more "reasonable". [link] [comments]  |
| Posted: 04 Mar 2021 02:08 PM PST The question above stands for the following reasons. I am 33 and make 150K or so a year. With this income, I am able to save about 40% of my income which allows me to max out my Roth 401K, my wife's, and I Roth IRAs and still contribute $800 to a taxable brokerage account per month. I don't want to pay down my 2.25% mortgage faster than what is required. I am debt-free except for the house, I also do not plan to stay here long term and would rather let my money grow and be more liquid. Back to the original question, I know that conventional Roth advice is best followed because it is easy for those who may not have the phycological willpower to follow more complicated plans. However, I think I would end up with more money by the time I retire if I maxed out the traditional 401K, then moved to the Traditional IRA, then invested the savings I get with deferring taxes into my brokerage account. I have read in-depth analysis from three different sources that seem to bear the math out. Since we do not know what tax rates are going to do in the future, and if one is indeed disciplined enough to invest the savings from the traditional tax deferral strategy, wouldn't it be better to invest in the traditional sense? Finally, I plan to retire in my early to mid-50s. Wouldn't that also more difficult with a majority of Roth contributions with the current rules in place? [link] [comments]  |
| Posted: 04 Mar 2021 03:53 PM PST So I just opened a Roth IRA and plan to max it out every year. I did some calculations and it said that if I max out my Roth IRA and have a good annual return I'll have 30 mil at retirement. Are the Roth IRA calculators correct or am I just dumb af .I'm currently in the navy and put a lot into the tsp so I'm prepping for retirement early. [link] [comments]  |
| For those heavily weighted in real estate, how do you calculate and plan your SWR? Posted: 04 Mar 2021 08:04 AM PST I currently have ~75% of my holdings in real estate (and remainder in XEQT). As I move towards RE I was wondering how others understand/utilize their SWR. The obvious answer is get to a point where I can withdraw from investments to top up what I need after rental income; but like with all things fire, the road is boring and I'm craving some discussion! Cheers! [link] [comments]  |
| Renting Long-term as a "vacation" in retirement. Posted: 04 Mar 2021 11:06 AM PST Has anyone had a destination they liked, and instead of purchasing a vacation home or going on a month long vacation, just found a normal apartment to rent? My SO and I have a handful of cities that we'd like to buy a second property in, but it would never be a rental property, just ours. Our lives and careers are busy where we are now, so it wouldn't make sense to buy anytime soon. But I was wondering, what are the drawbacks to just annual or semi-annual rentals? Our house is going to be paid off well before FIRE, if we ever FIRE or just retire normally, so would it be economical to just skip town to town, spending a few months here and there, while always having a home base? I'm just thinking of the opportunity cost of purchasing and upkeeping a property for when we FIRE, versus putting that money into the market, or hedging against us changing our minds about a city or that city not being retirement-friendly in the future. We don't have kids, and reading from FIRE and /r/fatfire I see that for a lot of people lakehouse and beachhouses only really make sense when they are inter-generational: either something semi or fully inherited or something they are looking to pass down or have extended family use. [link] [comments]  |
| Using FIRE to re-invent yourself? Posted: 04 Mar 2021 12:31 PM PST So, I'm a high savings rate individual, making ~200k at 28years old, with parents who recently came into multiple millions. The reality is that by the time I'm 35-40, I will probably be a multi-millionaire because they will pass away and the money will get split between my sister and I. Some of that money is also ear-marked for education for myself or my kids (of which I have none), to the tune of hundreds of thousands. What this basically means is that I am fully capable of going back to school and reinventing myself. Acting, writing, becoming a twitch streamer, or other options are all possibilities. Something that doesn't have a guaranteed rate of return or might take some ramp up time to achieve. All while pulling a comfortable living purely from dividends, let alone other market gains. Has anyone here done something similar? Or have any thoughts on it in general? I'm sure I'd wind up traveling a bit at some point too, but I can't imagine I would be happy traveling forever. I would want to be doing something, but that something doesn't have to be profitable in and of itself. [link] [comments]  |
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