Financial Independence Daily FI discussion thread - Thursday, August 05, 2021 |
- Daily FI discussion thread - Thursday, August 05, 2021
- Why do people act like it is impossible to make money after FIRE?
- FOMO is killing my consistency
- 3.5% withdrawal rate (28X annual spend) is plenty safe
- Advice for a new college grad who is apartment hunting?
- I always thought Roth/Traditional depended on current marginal tax rate vs effective tax rate in retirement - why do all the online calculators show a different story?
- Sacrificing your youth for an even longer FIRE later? Striking a balance
- Pay off credit cards, or robo-investor?
- Age 35 Net Worth 2 Million, can I retire in a third world country?
| Daily FI discussion thread - Thursday, August 05, 2021 Posted: 05 Aug 2021 02:02 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]  |
| Why do people act like it is impossible to make money after FIRE? Posted: 05 Aug 2021 04:39 AM PDT I am a bit surprised by often it is said that you will not be able to make money after being out of work for several years. Therefore you should aim for a 2-3% withdrawal rate instead of 4%. But even if you aim for 4% or even a riskier 5%, I can't imagine it would be so hard to get back into the job market if the market crashes or something happens. It might not be as well paying as the job you had before, but with technical skills and the ability to learn, would really an employer say no? If they did, could you not do a gig job, drive uber, work for Amazon, etc? Or start a company mowing lawns? For me, it seems like people here are stuck in boring jobs for years because they want to feel 100% secure, but the fact is that you can never be 100% secure no matter how much money you have. You can get cancer, get in an accident, etc. As time goes by, the changes get higher and higher for something to happen. Therefore, it seems safer to retire earlier with a higher withdrawal rate to enjoy life now, than to work longer and risk something happening to your health or life. [link] [comments]  |
| FOMO is killing my consistency Posted: 04 Aug 2021 08:59 PM PDT Fear of missing out. I'm a woman. I was raised poor and I mean POOR. My mother was a stripper meth addict with a severe personality disorder and my dad was a heroine addict who hated himself, as one does at 18. They met at a rave in 1990 something after my mom was released from a psych ward. I wouldn't meet him until I was 6. Then again when I was 16. I was raised in the streets, while my mom was working for whatever illegal crime mob boss for the week. I learned to cook, clean, shower, take care of myself, go to school, do my homework, go to after school programs, come home and get ready for bed by the time I was in 2nd grade. As an adult life has been a lot easier. I met my husband when I was 18 and we fell in love. I went to Europe at 19 and solo traveled for three months. I wasn't raised with stability or financial intelligence at all. I'm street smart, always have been. I want what I've always dreamed about. Freedom, financial freedom. I'm trying SO hard to learn about social media's, content creating, algorithms, NFTs, digital art, real estate, investing, stocks, and on top of that my emotional fucking childhood trauma, being a good wife, our struggle with infertility, keeping the house clean, laundry, cooking, and exercise! All at 24!! It's a lot but funny enough not the craziest shit that's been thrown at me. I use to walk into stores knowing I had to steal food, school clothes, school supplies etc at 7. If you made it through this far, thank you. I guess I just want to know if someone's out here who feels like they're missing out on the big wave of being financially wealthy. I'm tired of feeling like I'm in this glass box made out of a one-way mirror. Edit: Wow!! I woke up this morning to some amazing stories, personal achievements, and some serious kick ass advice! I can't say how much I appreciate all of the time and effort you spent to reply to my post. I have read every single comment and I will continue to do so. I've ordered the books you've recommended and I've made a list of terms that I will research more about. THANK YOU SO MUCH!! [link] [comments]  |
| 3.5% withdrawal rate (28X annual spend) is plenty safe Posted: 04 Aug 2021 07:23 PM PDT Based on Portfolio Charts and Early Retirement Now's analysis of the last 150 or so years of the US stock market data, it's overwhelmingly likely that you will never need to go lower than a 3.5% WR with a portfolio that is mostly equities (like VTI) for early retirement (40+ year horizon). For those with a long retirement horizon, it's advisable to stay between 80 to 90% equities based on this research in addition to choosing your preferred withdrawal method. Even through world wars, depressions, high inflation, etc. there hasn't been a need to go below 4% withdrawal rate for a less than 30 year retirement windows, and very few cases where you would need to go below 3.5% withdrawal rate for a longer than 30 year retirement window. For you early retirees, if you invest 28-33 times your long term annual spending you will be in excellent shape. It can be tough to know how much you will spend long-term, so bake that into your calculation (if you plan to have kids, etc.). I am planning to only have to withdraw around 3% of my portfolio per year because I will have some side income after leaving corporate America. Nothing is guaranteed in the market, but this withdrawal rate takes into account the worst case scenarios in our history. And while I want to make sure my family is well provided for, I also don't want to trade more of my life than I have to in order to be free. Some additional diversification with other asset classes or passive income streams can help with flexibility during market volatility, but it's nice to know that the core equity portfolio should carry you through at this savings level. Best wishes on your path to FI! [link] [comments]  |
| Advice for a new college grad who is apartment hunting? Posted: 05 Aug 2021 02:57 PM PDT I recently graduated college and am currently in the process of moving to a new VHCOL city for my job. I am currently in the process of apartment hunting online. I frequently find myself tempted by the very fancy, and very expensive, apartments that are included in promo pictures. Moreover, typical advice online suggests 1/3 of your paycheck should go towards rent, and I am fortunate enough to have a job that compensates well. What do you suggest is an appropriate amount to spend on rent as a percent of income? Do you have any advice about what to look for in an apartment? [link] [comments]  |
| Posted: 05 Aug 2021 07:58 AM PDT I was debating with a friend about the merits of Roth/traditional contributions. His financial advisor keeps telling him to "tax the seed - not the harvest". I keep saying that the options are identical if your tax situation remains unchanged in retirement. I also pointed out that most likely you will be in a lower tax bracket in retirement which is where the traditional really shines. He ended up starting a group text with a couple other financial advisor friends and they are all saying stick with the Roth. Then they shared some online calculators which all suggest Roth is the way to go as well. Of course I can't see the math on the calculators and one very important thing I see missing is income in retirement. We're all relatively high earners with ~$200k MFJ income and I would guess in retirement we would be closer to the 75-85k income range. What am I missing? [link] [comments]  |
| Sacrificing your youth for an even longer FIRE later? Striking a balance Posted: 04 Aug 2021 07:28 PM PDT The earlier you start earning, saving, and investing more, the sooner you may FIRE. This encourages you to strive to earn more, work more, and spend less at a young age. Essentially, sacrificing time now for more time later. That may mean working long hours in your young adulthood, as well as sacrificing some more, perhaps expensive, experiences that you may only be able to do in your youth, or simply being too worn out to do them. I worry about working away at the ages at which I'm the most naturally physically capable, mentally sharpest, and so on, just to buy myself even more free time in my older age down the line, when I may not be able to enjoy many things in life to the same level - and, who knows, you could die early as well. I'm worried that my 9ish hours per day at my current job is eating my 20s away. It's hard to find time for leisure and, after the work day/work week, I'm typically totally burnt out and just want to relax. Yes, I get PTO, but as a newer/young/inexperienced employee, you don't get that much. I still want to RE but I assume I won't be able to do super physical things like sprinting or tricking (gymnastics), using a trampoline, hiking, etcetera. I may have over all less time and energy for other exciting things that I could do as a young man but may not be able to do as an older one. I suppose all you can do is try to do those things in what free time you do have. I'm just wondering how you all find, or have found, balance, or if it's just a constant struggle and about any other thoughts you have on the subject. [link] [comments]  |
| Pay off credit cards, or robo-investor? Posted: 05 Aug 2021 04:14 PM PDT I recently received a financial gift from a family member. It just to happens to be similar in amount to my current credit card balance (I don't usually carry one, but the last six months have been the exception to the rule). What I'm trying to decide right now, is whether I should pay the credit cards off immediately in full, or if I should instead take this money and put it into a robo-investment account, like Wealthfront. I had a Wealthfront account last year and achieved about 20 percent returns from it after about four months. I know that credit card interest compounds. But I frankly don't have a good enough understanding of exactly how it works to know what the smart thing to do is in this situation. Suggestions welcomed and appreciated. ✌🏻 [link] [comments]  |
| Age 35 Net Worth 2 Million, can I retire in a third world country? Posted: 05 Aug 2021 03:23 PM PDT Hey everyone. I am in a career I hate. I would love to quit. I am single and have no plans to have a family. Can I live comfortably off the income created from my 2 million in a country like the Republic of Georgia? Is it conceivable I could retire already? [link] [comments]  |
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