Financial Independence Daily FI discussion thread - Wednesday, June 02, 2021 |
- Daily FI discussion thread - Wednesday, June 02, 2021
- 10 years after graduating. ~$775K NW. Military.
- Weekly Self-Promotion Thread - June 02, 2021
- ESG/SRI ETFs vs standard ETFs
- Unconventional insights from an unconventional path
| Daily FI discussion thread - Wednesday, June 02, 2021 Posted: 02 Jun 2021 02:00 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]  |
| 10 years after graduating. ~$775K NW. Military. Posted: 02 Jun 2021 02:08 PM PDT I recently turned 34, am single, do not have any kids, and serve in the US military. While I consider myself financially responsible since an early age, I did not discover FIRE until COVID began. I didn't get serious with FIRE until 2020. Now that I am serious, I am leaning hard into the lifestyle. I have changed MANY of my bad habits. I started my career debt-free because the military paid for my associates when I was enlisted, paid for my bachelors to commission, and recently just paid for my masters as a full-time student. This helped catapult me into a saving/investing which was exacerbated by a $11k inheritance at 18 years old. Yea, totally a trust-fund baby :) jk (RIP Grammy). But seriously, it helped a lot. I am and have always been an index fund investor with a few individual stocks (currently 10). 90% of my money is parked between S&P, Nasdaq, and small-cap funds. I also do not believe in debt, so all major purchases besides my home was with cash. My emergency fund was always a few months salary. Current breakdown:
For starters - at 18 when I inherited that $11k -- I invested it all into APPL, MSFT, HD, and MO (important later). I opened a brokerage account at the direction and help of my father. He was a major influence in my financial behavior from a young age. I invested in what I knew and after that I did not really invest any money until I graduated with my bachelors about 6 years later. I was young and either deploying [then blowing my money when I got home], or just enjoying the college experience. Honestly, I would not change anything because I was losing friends left and right during that period and that set a tone for me for the rest of my life. I wanted to find a happy medium between saving/investing and living. One thing I am constantly reminded of in my career is -- the only thing guaranteed in life, is death. I think the FIRE community often overlooks this. Just to be clear, I have never lived paycheck-to-paycheck, always kept an emergency fund and never dipped into that. 2011-2015: Ok, so I graduated undergrad and got serious. I was making $65k-$85k during my early years. Deployments always skew results because of tax-free money. Also, since a portion of military pay is not taxed, we "make more" or so it feels. My mentality once I graduated was to max my TSP (401k) and Roth. I stuck to this. Remember how I said I wanted a happy medium? Well, my thought process was max both vehicles and spend the rest - toys, travel, experiences. I did just that. Do I regret it now? No. I knew what I was doing. Could I have invested more? Yes. Oh well, I digress. Furthermore, since my account met the threshold, I hired a broker to manage my money - another mistake I do not recommend. The USAA broker sucked and their mutual funds generally sucked. It was a waste of money. Also, took me two years of investing into my TSP to realize that the money was just going into a bond fund. I switched the allocation to the S&P fund immediately. OUCH! 2016-2020: Sticking true to my happy medium, I continued to max my TSP and Roth -- and spend the rest. I bought my first home in 2016 (basically zero money down because VA loan) and had grand plans to rent it when I moved duty stations. I also fired my broker in 2017 and took over. I liquidated everything in my Roth and moved it to S&P and Nasdaq funds. My salary continued to increase as well so that meant more spending. Ok, I do regret some of my excess spending these years - primarily the sports car. I was making $85k-$115k during this timeframe. I made a fatal mistake during 2017-2018. I sold most of my APPL, MSFT, HD, MO. Yup - BIG MISTAKE. Do not do it. I sold stocks to take a profit and purchase that car with cash. I also rotated some of the money into some other tech stocks. I discovered FIRE during 2020 as well which made me constantly look back at this and get mad. I bought as much as I could afford during the COVID dip. Buffet engrained in me that the market was on sale so I took his advice. 2021: Not only discovered FIRE, but discovered Reddit and actively listen. Thank you! My salary increased now to $135k. I sold my car that I purchased in 2018 because of the used car market and I had my fun with it. It's also important to note that I always lease my daily driver because I deploy a lot and am able to break the lease no questions asked. Ok, so technically I am carrying some debt here but it seems to be more efficient than letting a car sit and depreciate. I am basically renting a new car to drive for 12-18 months. Never put any money down, though. Also, decided to take advantage of my primary home and sell it during this market since I had to move to a place I can only rent at. House value doubled in five years. I plan to buy a multi-family home at my next duty station and hack it. Unless I settle down. Then I'll have to buy a SFH with my VA loan and then buy a duplex with a conventional loan. A boy can dream! Portfolio (EOY totals):
In sum - Avoid debt. Save/invest early and often. Did I say "avoid debt?" Find a balance between health, wealth, and happiness. Buy and hold. More specifically, never sell an asset just to purchase a liability. If you cannot save for it and budget, you don't deserve it (blunt). Buy more when the market corrects/dips. Do not hire a broker. Invest in index funds that match the market. Make sure your 401k etc. is not being invested into a bonds/MMA. Be proactive with it. Spread financial literacy wherever possible. Clearly, my situation is different because I do not have kids and have medical. Thanks for tuning in. Hope some of my stupidity helps you. [link] [comments]  |
| Weekly Self-Promotion Thread - June 02, 2021 Posted: 02 Jun 2021 02:00 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]  |
| Posted: 02 Jun 2021 04:05 PM PDT What are everyone's thoughts about standard ETFs (eg IWDA) versus their comparable Environmental, Social and Governance screened funds (eg SAWD or EEWD), or the even stricter Socially Responsible Investing funds (eg SUSW)? On the one hand I like the idea of not investing in sectors with bad ethics/sustainability/etc. However, I'm aware that this also decreases diversification. Because these funds are smaller, it also means less liquidity within them at any given time. Lastly, when it comes to SRI funds, the composition of the fund and therefore its performance would possibly be so different from the full market that it has more uncertainty in terms of risk and reward, which seems less FIRE compatible. [link] [comments]  |
| Unconventional insights from an unconventional path Posted: 02 Jun 2021 03:13 PM PDT I'm sharing my story, at least at a high level, to share another of many unconventional ways there. I'm a married parent, just crossed some financial thresholds in recent months and have moved away from vhcol (although we will maintain working in careers with money changing hands in creative ways going forward). My partner and I both had the majority of our careers spent in non-profits, healthcare and finance, varying levels of leadership. We both have degrees. We both spent about 20 years working thus far. And here we are, having lived lives of purpose and intention, but also having built the ability to step away from needing to sell our labor as a transaction. Part of that was a willingness to live simply, part of it was saving our income aggressively (through delaying children, living in smaller spaces, etc), part of it was growing income within our creative limits. Rather than share the numbers, etc which you can mostly guess, I wanted to share reflections on what we are learning and becoming through this process. As context, we are not from the US, but live there now. Our worldview is more connected to taoist and buddhist approaches, ecology, systems theory, and broader theories of human development. That's played a role in how we are thinking of our professional lives. We are strongly asking how to live in more alignment with nature and natural rhythms, and are quite weary of 'the religion of innovation/infinite growth.' While all that may be true, we were also interested in a robust way to step back that wasn't just about 'living off the land,' and allowed for little ones to choose their own path. I'm taking the time to write all this because this isn't the sort of thing that I see written about here frequently, and while my family has received much from this community, we wanted to add to the ground in a way that may help others like us. That being said, I will not be very specific here because this path is already so idiosyncratic that it becomes identifiable with too much on detail. Consequently, think of these as rabbit holes to dive into in your own journey if they support you. Purpose as a path for health As much as I heard about the importance of maintaining mental and physical health, in our context it was connected to purpose-driven work. We maintained an interest in doing things that had some connection to a north star of values that we held, rather than wait till some later point. In some cases this meant carving out volunteer opportunities with meager free time. The biggest reason for this was to stay in touch with our continued development as people through a financial accumulation phase - that part could not be put on 'pause.' It wasn't just about the day to day, but about asking what the big picture was that we were helping support in the world, and trying to remain connected to that. The benefit of this was 1-staying in connection with the idea of service/sacrifice, 2-engaging with life at our 'growing' edge such that for people with a growth mindset, we kept evolving our perspectives. That second one is a big deal as its not just growing in nuance of a perspective but potentially wholesale changes over time. For instance, you try to 'help' people through healthcare, and over time wonder if pharmaceuticals are really providing that help (along with all the negative externalities), and start to look into 'alternative' modalities of healing and wellness. This sort of thing has been particularly meaningful for me, as I realized that living a path trying to be true to oneself means that I get feedback readily when I'm not being true. Everything from dry heaving to serious health problems, which I have experienced, when i did things that were more about creating conditions to save rather than conditions to grow. Over time, I realized that was my body talking to me, and it was important that I listen, but in a more nuanced way than 'yes or no,' 'this or that.' Aligning financial savings with human and collective development Building on the above. There are many theories of individual and group development out there. The idea is that you're not done 'growing up' at 18, its just that fitting in westernized society doesn't demand any further growth. This doesn't just mean 'learning more', but more 'becoming a different person' continually. In our case, saving up as much as we could was not something that could happen without regard to our continued growth as people. That meant everything from taking more and more time out from our lives for personal growth work (in a variety of ways) and also consistently inquiring about what kinds of groups we wanted to associate with. Companies we work with, but also employee associations, volunteer groups, and community groups. We found that over time we kept taking 'leaps of faith' that were about continuing to align our inner understandings with the way we were showing up in the world. Each step of the way, we could do this because of foundational insight as it related to our finances. Voluntary simplicity, resilient design financially and non-financially, and the willingness to walk away from a given context if it didn't feel like the right fit for where we were internally. Giving and receiving The primary goal wasn't financial independence. I'm not even sure it was a secondary goal. Having multiple years of transactional capital to be able to access as necessary was something we identified, in service of being true to ourselves. Beyond that, we tried not to project agency onto money. We choose what we do with our lives, we just have to be willing to live with consequences. This inner spaciousness allowed us to focus as much or more on giving as compared to putting money in accounts. Financial donations, yes, but also giving of our time in various ways, and building trust-based relationships through all this. Turns out that the less we focused on 'securing for ourselves' the more things sort of mysteriously aligned in ways that our bank account grew anyways. In some ways it became a virtuous cycle, but never done with that in mind - like a karmic bank account or something. So now we're sitting here and yes there is money, just enough for a simple life and continued explorations, not about going deeper into a hedonic treadmill. Instead, there's other forms of wealth that have come in the door. The biggest being learning about life, our place in it, and a growing understanding of what we feel we are here for. Life as Alchemical We have found multiple times that what seemed not possible by way of logic happened with our financial lives. The pathway there was understanding how nature works. Planting lots of seeds in the way of relationships. Watering and tending to them without expectation of fruits. Sharing with others how to do the same. Over time, rather than 'getting what was ours,' the fruits simply fell in our lap. For example, I've never asked for a raise - I just operated with this framework and additional income came our way. The operating question in our household is 'how can we give more' - of our wealth (heavily non-financial) and of ourselves. Through that giving we find ourselves anyways, and we build a community that wants to support us back. In this way, I have learned that we are all artists painting on the canvas of life. There are no rules, we can do whatever we want, and the more our values stray from the dominant paradigm, the more such experimentation can be freeing. Cosmology - what happens after 'buying your freedom'? We all live our lives implicitly answering the big questions, but seldom explicitly answering them. What am I here for? What matters? What kind of life is meaningful? What does it mean to have lived well with respect to ones relations? These are the kinds of questions that drive us. We have found that the place we are at naturally puts us in position to focus on these questions more, when money for survival is not an issue. At an earlier stage of life, these questions also mattered, but earning wasn't a big impediment in the process of answering. Now, having the space to live with these questions is really quite important. 20 years ago, my answer of what happens on the other side of not 'needing' to work for money is very different compared to today. Today, my answer is informed by an understanding of ecological systems/ecocide, human development, the limits of current economic approaches, my own sense of wellness, and beyond. I've been preparing for 'freedom' by asking what sort of growth would make me well equipped for it. Interdependence, being part of a constellation Most of our extended family is not well off. This happens a lot with people of the global majority. We are doing best to support as many others as we can. We realize that the pathway that speaks to us regarding this is about supporting their (and our) inner growth. We do not believe this global financial system works. Infinite growth is not possible on a finite planet; consumption is not the pathway to well-being; financial markets create degenerative systems and decreasing commons. We played it anyways, enough to pull back from it with basic food/clothing/shelter. But the general approach is so far away from that which is life giving, in our estimation. Consequently, our hope is not that this broken thing keeps going. Our hope is not just to engage in restitution within a broken paradigm. But we also realize that the paradigm doesn't shift without the continued inner growth of people and collectives. In our case, most of what has been possible for us has been from a process of humbly receiving blessings from the constellations we were connected to - a bow to interdependence. Going forward, we will not be independent. We will not retire. For independence and retirement require a linear, atomic view of life. For us, ending the need to work for our basic survival frees us to be in greater interdependence and relationship. It frees us to work more deeply and more aligned with an intention of loving others and continuing to grow as people. I don't know about you, but I have found the path of compassion (both for individuals and for systems) regularly at odds with the path of maximizing shareholder value. What we have done is started weaning off a delusion. The delusion that our ability to survive and flourish requires selling our time for money. In our next stage, we get to see how our ability to flourish is inhibited by others having to live this way, even if we do not. We also get to see how our flourishing can support others in doing so. Very little of what we have shared is specific. We realize that. Unfort we don't feel comfortable being specific given how easily identifiable we become. We prefer anonymity at this stage. We wrote this partly for ourselves, and partly for others to see how different worldviews can benefit from a wise approach with money. For those who don't share these views (perhaps many who read this?), I understand and have no wish for anyone to change or be different. For myself, it's just been continual shifts in mindset, and usually people that talk like this are bohemian, etc, not people who have helped lead organizations and built financial capacity. I found r/fi when i was about halfway through this, and have really benefited from specific strategies layed out here. Thank you to the many contributors to this sub. Perhaps a few others may also benefit from this small offering. [link] [comments]  |
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