Financial Independence Weekly “Help Me FIRE!” thread. Post your detailed information for highly specific advice - November 01, 2021 |
- Weekly “Help Me FIRE!” thread. Post your detailed information for highly specific advice - November 01, 2021
- Daily FI discussion thread - Monday, November 01, 2021
- I-Bonds are paying 7% interest, inflation is crazy this year.
- FIRErs: How much do kids actually cost?
- Quantifying the insidious effect of inflation
- Weekly FI Monday Milestone thread - November 01, 2021
- Retiring early what to expect from Social Security?
- Is it worth having Personal Capital manage my assets?
| Posted: 01 Nov 2021 02:01 AM PDT Need help applying broader FIRE principles to your own situation? We're here for you! Post your detailed personal "case study" and ask as many questions as you like, or help others who've done the same. Not sure if your questions pertain? Post them anyway…you might be surprised. It'll be helpful to use our suggested format. Simply copy/paste/fill in/etc. But since everybody's situation is different, feel free to tailor your layout to your needs. -Introduce yourself -Age / Industry / Location -General goals -Target FIRE Age / Amount / Withdrawal Rate / Location -Educational background and plans -Career situation and plans -Current and future income breakdown, including one-time events -Budget breakdown -Asset breakdown, including home, cars, etc. -Debt breakdown -Health concerns -Family: current situation / future plans / special needs / elderly parents -Other info -Questions? [link] [comments]  |
| Daily FI discussion thread - Monday, November 01, 2021 Posted: 01 Nov 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]  |
| I-Bonds are paying 7% interest, inflation is crazy this year. Posted: 01 Nov 2021 02:03 PM PDT So I was just checking the composite rate of I-Bonds today and was literally shocked to see that they are paying 7% interest for the next 6 months: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#compositerate Bonds issued before 2000 are paying 10% interest, I don't think I've ever seen a composite rate this high before but admittedly I'm young. Just wanted to share that with the community, I've been mentioning using I-Bonds as an emergency fund for a while, it turns out that wasn't a bad idea for the last few years but damn, this rampant inflation is out of control. [link] [comments]  |
| FIRErs: How much do kids actually cost? Posted: 01 Nov 2021 07:11 AM PDT EDIT: I am really looking for perspectives from people who have FIREd with young kids or are close to FIRE with young children. I've been planning my FIRE as a 26 F Financial Services professional. FI is within reach in a few years, and while I don't have kids and don't know that I will want them, I've been budgeting child related expenses into my FIRE number. However I'm seeing estimates for childcare in this and related subs that I don't understand. I'm seeing people estimate 30-40k a year per child, which seems astronomically high to me. As a child of immigrants, I went to public school, and while I had some afterschool activities, there's no way my parents' expenses ever got close to this high. Are these high figures lifestyle creep, or am I out of touch with the realities of childcare nowadays? Does a kid coming out of public school not have a chance of getting into a good college nowadays? What else gets wrapped into this cost, and how does it change with the age of your kid? FWIW I'm not considering savings for a kid's college fund in this number- I'm asking about pure expenses. For those who have FIREd or are close to FIRE, how much money do you budget toward your kids? [link] [comments]  |
| Quantifying the insidious effect of inflation Posted: 01 Nov 2021 06:12 AM PDT This grew out of an interesting effect I noticed in a model I had built to forecast out my NW. Namely, there were some scenarios where my forecast net worth would grow for decades before suddenly "flipping": experiencing stalling growth, then declining and dropping to zero. At first I thought that this was a mistake in my model, but the math checked out so I decided to mathematically tackle this issue, and thought my findings might be of interest to the broader community. My model was quite simple: take net worth in year T, increment it by a nominal rate of return r%, subtract from it an inflation-adjusted amount $E (i.e. $E is incremented each year by i% to represent increased spending due to inflation), to then get net worth in year T+1. There were only four inputs into this model: the initial net worth $N, the assumed nominal rate of return r%, the initial annual expenditure $E, and the rate at which annual expenditure was assumed to grow, i%. The key finding is that inflation snowballs, which can lead to a declining nest egg years down the road, even in a steady-state market environment (i.e. no changes to inflation or return on investment). Both net worth and inflation grow exponentially, but NW has a has a chunk taken out of it each year to cover living expenses, so expenses can eventually grow to surpass your return on investment. Notably, it doesn't take any market shock for this to happen: even in a steady-state market with constant nominal return on investment and inflation rates, your nest egg might grow for 20 years, then draw down to zero in another 25 (a scenario with 6% return, 3% inflation, 4% WR). After crunching the numbers, I came up with two formulas that I think are useful. 1. The first quantifies, for a given nominal rate of return and inflation rate, the SWR that will allow your investments to grow in perpetuity. This will be quite close to your nominal return on investment less inflation, but slightly lower than just the simple difference (provided inflation is not zero).
2. The second tells you, if your withdrawal rate is above the "perpetual withdrawal rate" described above, how long (in years) your nest egg would continue to grow before starting to decline.
For the math nerds out there, to get these formulas, I converted my recursive equation into a function, took the derivative with respect to time and set it to zero, then solved for the time variable in terms of the other parameters (r%, i%, E, N) to get formula 2. Formula 1 I then got by finding the necessary conditions of the other parameters such that a solution would not exist, i.e. derivative would never equal zero and net worth would indefinitely increase. Math is here: https://imgur.com/a/cX2607v The interesting fact here is that for a fixed investment return to inflation spread, the withdrawal rate necessary for growth into perpetuity decreases as inflation rises. In other words, your investments might be outperforming inflation by 5%, but it matters if inflation is 1% and your investments are earning 6%, or if inflation is 3% and your investments are earning 8% - the 1%/6% scenario permits you to withdraw more of your nest egg since inflation is lower and your expenses will scale up more slowly. These findings are most relevant to fixed-income assets held to maturity where the investor essentially "locks in" a return, but I think it's an important tidbit to keep in mind in any case, particularly as fears of higher inflation have begun to resurface. The situation (constant nominal ROI, constant inflation) is admittedly a bit contrived, but I think isn't that inappropriate since the level of inflation in one period tends to be correlated that of the prior period, and since central banks target specific levels. In any case, it's an interesting thought exercise. If you read this far, I hope that you found this information useful. Thank you for reading. [link] [comments]  |
| Weekly FI Monday Milestone thread - November 01, 2021 Posted: 01 Nov 2021 02:00 AM PDT Please use this thread to post your milestones, humblebrags and status updates 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! 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]  |
| Retiring early what to expect from Social Security? Posted: 01 Nov 2021 02:58 PM PDT If someone worked until 55 made 100K or higher Salary for about 35 Years, stopped working (at 55) and was considering just to trade stocks until retirement age. What could that person expect to receive from Social Security when at the legal retirement age? [link] [comments]  |
| Is it worth having Personal Capital manage my assets? Posted: 01 Nov 2021 01:49 PM PDT Hey folks! I've been using Personal Captial for 2yrs now to just see all my investment and savings accounts in one place and how my assets are spread across stocks vs bonds, US vs International. I was contacted by them to have a quick phone call to get my financial picture and goals, and then next week they want to call me back for a 1hr appointment going over how we can better manage this money for growth. This 1hr phone call is free, and no obligation. If I choose to use them to manage my assists, it's an annual 0.89% fee. We have $217k invested and $43k in cash savings so that would be $2314/yr fee for their fiduciary services, about $192/mo. Is it worth the money to work with them? Here's the breakdown of our accounts: I (30F) am a field biologist and am married (29M) to a military pilot. We're in Hawaii until 2023 then likely going east coast and plan to buy a house. No kids now, but talk of one in 2-3yrs. TSP: $93k half in C fund, half in L2060. About $6-8k is traditional, the rest is Roth. Roth IRAs: $66k, all in Vanguard 2055 403b: $21k, all US stocks, traditional. Brokerage: $37k, 95/5 stocks n bonds. All vanguard index funds Thanks for reading! [link] [comments]  |
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