Financial Independence Daily FI discussion thread - Saturday, October 02, 2021 |
- Daily FI discussion thread - Saturday, October 02, 2021
- Risky FIRE, a way to reach your goal way earlier… most of the time… Why is this a dumb idea?
- I think I wasted my teenage years
| Daily FI discussion thread - Saturday, October 02, 2021 Posted: 02 Oct 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]  |
| Risky FIRE, a way to reach your goal way earlier… most of the time… Why is this a dumb idea? Posted: 02 Oct 2021 03:14 PM PDT So the typical road to financial independence involves living below your means, working for a good paying job, and investing extra income into stable growth assets like diversified stock ETFs or real-estate. This process typically takes over a decade from start to finish as the market as a whole only grows about 10% per year or even less with inflation factored in, which means that you will have to save up millions of dollars to live off the growth with around a 4% drawdown rate. But what if you wanted to get there faster, in under a decade, well there is a strategy for that. Basically until you hit your number, you invest everything into a 3x s&p500 ETF like UPRO and invest extra income monthly. If the underlying falls below the 200 day moving average, you sell everything and hold cash until it goes above the 200 day average where you buy back everything. This post goes into more detail and is where I learned about this strategy. This has produced an insane 30% return rate back tested since 1929. I thought this would be perfect for this sub as it requires consistent monthly contributions and a relatively long holding period with no withdrawals. I'm currently using this strategy and plan to move all my money to safer investments when I retire. My question is what's the catch here? 30% returns with less drawdowns than just buying and holding 3x ETFs would allow you to retire several years earlier than usual. The only potential issue I could see is if you planned to retire during very bad market years but you could always just wait another year or two for the recovery if you had to. I had thought of the tax implications of buying and selling but that wouldn't eat too far into returns in the earliest and most important years and the governmentmay make you pay taxes on ETF transactions anyways where this strategy wouldn't make much of a difference in tax payments vs holding. What do you all think? What did I miss here? Edit: found a different article without a paywall [link] [comments]  |
| I think I wasted my teenage years Posted: 02 Oct 2021 02:14 PM PDT Currently I am 18, I wish during HS I spent more time studying coding and less on useless things. I cared too much about grades, AP's, going to college, going out with friends. I also spent too much time gaming with my friends and fun stuff rather than what mattered. I think I should have just tried to graduate a year early instead and do a coding boot camp instead of going to college for software engineering, I think I could have achieved FIRE way earlier in my life. [link] [comments]  |
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