For sure this is fine, financially.
Not to mention the Model Y is EXTREMELY safe, beyond the "fun" of driving it.
Pay no attention to those who saying you don't have enough money to buy it, some people are misers.
In general, I'd argue you have too much in your HYSA and should be investing more in equities, if nothing else. For sure you want to keep some money ready in cash but between the two of you, you have $200,000 in HYSAs, that seems to be too much.
Search found 2846 matches
- Fri Dec 22, 2023 7:58 am
- Forum: Personal Consumer Issues
- Topic: Can I afford to splurge on a Tesla?
- Replies: 92
- Views: 9563
- Tue Sep 07, 2021 6:27 pm
- Forum: Personal Investments
- Topic: Low need to take risk - low allocation to stocks
- Replies: 39
- Views: 4546
Re: Low need to take risk - low allocation to stocks
He grew to that point (buying companies) by following Graham's security analysis techniques so successfully that he had so much money to do so. But I'm sure you know that already.UpperNwGuy wrote: ↑Mon Sep 06, 2021 4:26 pm Doesn't bother me. I have never considered Warren Buffet to be a model for the individual investor. His expertise is in running a large company that buys controlling interests in other companies. It really has nothing to do with Benjamin Graham.
He could have stopped and retired into the sunset in his 30's if he wanted to do so. He was simply more ambitious.
- Mon Sep 06, 2021 1:31 pm
- Forum: Personal Investments
- Topic: Low need to take risk - low allocation to stocks
- Replies: 39
- Views: 4546
Re: Low need to take risk - low allocation to stocks
Although his best student does not follow that advice.
- Sun Sep 05, 2021 6:28 pm
- Forum: Personal Investments
- Topic: Low need to take risk - low allocation to stocks
- Replies: 39
- Views: 4546
Re: Low need to take risk - low allocation to stocks
Volatility is FAR from the only risk.
If you plan on investing for a couple of more decades it is basically not a risk at all and actually helps someone while they DCA.
If you plan on investing for a couple of more decades it is basically not a risk at all and actually helps someone while they DCA.
- Sat Sep 12, 2020 11:01 am
- Forum: Personal Finance (Not Investing)
- Topic: Projected inflation rate and equity rate of return
- Replies: 27
- Views: 1841
Re: Projected inflation rate and equity rate of return
2010-2019 was supposed to be the "lost decade" of low returns. People were saying we were in for 4% returns on equities. Fast forward for the 10 years Jan. 2010 through Dec. 2019 well we had 13.43% nominal returns, 11.47% inflation adjusted (according to portfolio visualizer on VTI). 2010 to 2019 had a CAGR of about 13.3% for the total US equity market, so roughly 13% nominal annual growth. Average yearly inflation was sub 2% for that time frame. We averaged >10% yearly real growth in the last decade. Yes perhaps. I put into the website 2010 through 2019. Not to 2019, for VTI. I didn't make these numbers up but just put them in the website. I get that. I am saying that we didn't have 4% real returns from 2010 through 2019. Your o...
- Fri Sep 11, 2020 8:57 am
- Forum: Investing - Theory, News & General
- Topic: Index Funds - Dangerous?
- Replies: 46
- Views: 4482
Re: Index Funds - Dangerous?
Hi guys, I ran across this video of a YouTuber talking about the dangers of index funds: https://youtu.be/W8ZfdKYpKbM He also mentioned that out of the top 5 companies in the sp 500 in 2009, only Microsoft right now is still there, the rest have declined. I thought that was a bit scary 😮 What are your thoughts on the video? Disclaimer: I didn't watch the video. But to respond to the "scary" thought. If the top 4 declined, and the index is higher today than 2009, that means the old top 4/5 were replaced with a "better" top 4/5. That's good news, not scary. Beyond that: The idea of "indexing" is that originally the DJIA index, now more so the S&P 500 index, was/is considered as the "standard" for &...
- Fri Sep 11, 2020 8:03 am
- Forum: Personal Consumer Issues
- Topic: Cardio alternatives to treadmills?
- Replies: 115
- Views: 10210
Re: Cardio alternatives to treadmills?
So think of how our ancestors did it - barefoot - over longer distances. The path I walk is slightly undulating, but I just have an easier time staying in posture; but to think of it, I'm outside in a park with natural areas and trees as opposed to a treadmill inside staring at a wall or looking down at the dashboard. A lot of people on treadmills tend to look at the dashboard, or a phone/iPad, therefore looking down rather than staring straight ahead with a slightly hunched posture. The concrete surface is maybe not more natural, but walking outdoors on it is more natural to me than a treadmill going nowhere inside a house. Mount a TV on the wall eye level, open a window. When it comes to your LBP it isn't the lack of "fresh air and ...
- Fri Sep 11, 2020 8:01 am
- Forum: Personal Finance (Not Investing)
- Topic: Projected inflation rate and equity rate of return
- Replies: 27
- Views: 1841
Re: Projected inflation rate and equity rate of return
Yes perhaps. I put into the website 2010 through 2019. Not to 2019, for VTI. I didn't make these numbers up but just put them in the website.SDLinguist wrote: ↑Thu Sep 10, 2020 7:24 pm2010 to 2019 had a CAGR of about 13.3% for the total US equity market, so roughly 13% nominal annual growth. Average yearly inflation was sub 2% for that time frame. We averaged >10% yearly real growth in the last decade.knpstr wrote: ↑Thu Sep 10, 2020 9:53 am 2010-2019 was supposed to be the "lost decade" of low returns. People were saying we were in for 4% returns on equities.
Fast forward for the 10 years Jan. 2010 through Dec. 2019 well we had 13.43% nominal returns, 11.47% inflation adjusted (according to portfolio visualizer on VTI).
- Thu Sep 10, 2020 3:52 pm
- Forum: Personal Consumer Issues
- Topic: Cardio alternatives to treadmills?
- Replies: 115
- Views: 10210
Re: Cardio alternatives to treadmills?
Not sure how walking on a treadmill would be less forgiving or less natural than "power walking" on flat concrete. Could be a shoe/arch problem translating to lower back pain. Flat surfaces, whatever material they may be, are not natural (the reason why shoes have arches built up in them) to be on all the time. The most "natural" way to walk would be barefoot (not "barefoot" shoes) on ground that has not been touched by grading. You'll have to watch out for sprained ankles and lacerations from twigs/sharp rocks/snake bites/etc. Plenty of undulations for your foot to conform to and for your lower leg ankle to compensate/stabilize. Chiropractors have been shown to be more cost effective in treating/reducing chron...
- Thu Sep 10, 2020 9:53 am
- Forum: Personal Finance (Not Investing)
- Topic: Projected inflation rate and equity rate of return
- Replies: 27
- Views: 1841
Re: Projected inflation rate and equity rate of return
2010-2019 was supposed to be the "lost decade" of low returns. People were saying we were in for 4% returns on equities.
Fast forward for the 10 years Jan. 2010 through Dec. 2019 well we had 13.43% nominal returns, 11.47% inflation adjusted (according to portfolio visualizer on VTI).
Fast forward for the 10 years Jan. 2010 through Dec. 2019 well we had 13.43% nominal returns, 11.47% inflation adjusted (according to portfolio visualizer on VTI).
- Tue Sep 08, 2020 10:24 am
- Forum: Investing - Theory, News & General
- Topic: Is it really passive index if S&P actively excludes Tesla?
- Replies: 160
- Views: 14308
Re: S&P snubs Tesla
The iPhone is essentially a ~$1T business. (roughly 50% more or less of apple's business)
Tesla would love to be an iPhone on wheels.
I don't think it has been proven to be such. Nearly all new vehicles are "iPhones on wheels" in my opinion. For example, we recently bought an Explorer ST and that has a LOT of tech in it.
What differentiates Tesla is it being all electric.
The "self-driving" (while advancing) is still a bit of a gimmick at this point.
- Thu Sep 03, 2020 4:15 pm
- Forum: Investing - Theory, News & General
- Topic: Bear Cub Smells Bubble
- Replies: 406
- Views: 36577
Re: Bear Cub Smells Bubble
Top 5 companies in the S&P500 now make up 25%, not concerning to anyone? Has happened during huge bubbles near the peak No. If I was a market timer I'd almost have surely sold very early this year when the pandemic was coming in full force, would still be sitting on the sidelines (pandemic is still "here" right, why buy now?). Vanguard says I'm up ~20% from this time last year. Buy and hold by DCA'ing every week, requires zero effort and as the peaks and valleys come I buy more shares low than I buy high. Simple and effective. Many many decades of investing to go in my life (God willing), so a correction/crash in the next few years is of no concern. Fair enough, lets see what happens in the next decade For people who can dive...
- Thu Sep 03, 2020 6:52 am
- Forum: Investing - Theory, News & General
- Topic: Bear Cub Smells Bubble
- Replies: 406
- Views: 36577
Re: Bear Cub Smells Bubble
Top 5 companies in the S&P500 now make up 25%, not concerning to anyone? Has happened during huge bubbles near the peak Gambling 25% of one's worth (in the case of 100/0 investors) on five individual stocks is typically discouraged on this board. Gambling 25% of one's money on individual stocks period is discouraged. Yet when those 5 stocks are part of the SP500 it is accepted. This seems somewhat funny. Your first sentence makes an assumption that is false for many if not most. 100% of my net worth is not in my 100/0 portfolio. Other than that, the nature of index fund investing is the investor doesn't make any individual stock decisions, they just cast their lot in with the market at large and accept the results trying to do this at ...
- Thu Sep 03, 2020 6:49 am
- Forum: Investing - Theory, News & General
- Topic: Bear Cub Smells Bubble
- Replies: 406
- Views: 36577
Re: Bear Cub Smells Bubble
No. If I was a market timer I'd almost have surely sold very early this year when the pandemic was coming in full force, would still be sitting on the sidelines (pandemic is still "here" right, why buy now?). Vanguard says I'm up ~20% from this time last year. Buy and hold by DCA'ing every week, requires zero effort and as the peaks and valleys come I buy more shares low than I buy high. Simple and effective.
Many many decades of investing to go in my life (God willing), so a correction/crash in the next few years is of no concern.
- Wed Sep 02, 2020 3:22 pm
- Forum: Investing - Theory, News & General
- Topic: Bear Cub Smells Bubble
- Replies: 406
- Views: 36577
Re: Bear Cub Smells Bubble
Corona crisis: Fed pounces massively and very quickly with unprecedented action. They took massive steps incredibly quickly flooding the system with liquidity. My understanding is that this works in the short run, but it's just a bridge to economic recovery. If the economy doesn't recover at the end of this bridge, then we still fall down the cliff because this bridge can't be extended indefinitely - the Fed can't prop up the asset prices enough in the long run. We still need to get over this COVID recession within a reasonable amount of time. Hopefully, there will be a good vaccine soon. It's important to remember the only thing that was ever holding the economy back (this time) was the government ban on working. We came from a red hot ec...
- Mon Aug 31, 2020 10:02 pm
- Forum: Investing - Theory, News & General
- Topic: Bear Cub Smells Bubble
- Replies: 406
- Views: 36577
Re: Bear Cub Smells Bubble
Stocks in ‘Euphoric Land’ With Nasdaq 100 Surging Past 12,000 https://www.bloomberg.com/news/articles/2020-08-31/stocks-in-euphoric-land-with-nasdaq-100-surging-past-12-000?srnd=premium "A sentiment gauge, Citigroup’s panic/euphoria model, which tracks metrics from options trading to short sales and newsletter bullishness, is having its longest run of extreme bullishness since the early 2000s. At around 1.1, the current reading is almost three times the level that denotes euphoria...Investors are willing to pay up for earnings, sending the S&P 500’s price-earnings ratio to the highest level in two decades...While a dovish Fed offers support to the market, it’s worth noting that similar readings in the panic/euphoria model historic...
- Thu Aug 27, 2020 1:54 pm
- Forum: Investing - Theory, News & General
- Topic: Bear Cub Smells Bubble
- Replies: 406
- Views: 36577
Re: Bear Cub Smells Bubble
Ultimately interest rates and valuations are intertwined. And with the historic low interest rates we have today we should see historic high valuations. Except for Europe and Japan and much of the rest of the developed world markets, where interest are as low or lower than US rates, yet valuations are 1/3 to 1/2 those of US stocks. There are other factors. But if nothing else changed and Europe and Japan had higher rates than they do today, their valuations would (or should) go down accordingly. Interest rates and valuations aren't so closely related that x% interest rate must always equal $y valuation. So what is the rationale for Japan having high double digit valuations in the 1980s when interest rates were in the 4-8% range? And intere...
- Thu Aug 27, 2020 6:52 am
- Forum: Investing - Theory, News & General
- Topic: Bear Cub Smells Bubble
- Replies: 406
- Views: 36577
Re: Bear Cub Smells Bubble
There are other factors.
But if nothing else changed and Europe and Japan had higher rates than they do today, their valuations would (or should) go down accordingly.
Interest rates and valuations aren't so closely related that x% interest rate must always equal $y valuation.
- Wed Aug 26, 2020 1:06 pm
- Forum: Investing - Theory, News & General
- Topic: Bear Cub Smells Bubble
- Replies: 406
- Views: 36577
Re: Bear Cub Smells Bubble
Where are you finding the data to make statements 6 and 7?
It seems more people are piling into stocks ever since pensions have been going the way of the dodo.
I don't doubt that at anytime people are day trading, but how do you know it is more so than usual?
Ultimately interest rates and valuations are intertwined. And with the historic low interest rates we have today we should see historic high valuations.
It seems more people are piling into stocks ever since pensions have been going the way of the dodo.
I don't doubt that at anytime people are day trading, but how do you know it is more so than usual?
Ultimately interest rates and valuations are intertwined. And with the historic low interest rates we have today we should see historic high valuations.
- Tue Aug 25, 2020 6:22 pm
- Forum: Personal Investments
- Topic: As a 30 year old with extremely high risk tolerance should I even be holding bonds any more or should I go 100% stock?
- Replies: 215
- Views: 8695
Re: As a 30 year old with extremely high risk tolerance should I even be holding bonds any more or should I go 100% stoc
In mid 30s I have never owned any bonds. I only own a stocks and rental real estate.
- Tue Aug 25, 2020 3:18 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
You never know, that family of 4 turn into a family of 24.smitcat wrote: ↑Tue Aug 25, 2020 3:08 pm How do these numbers work?
"To recap: 20x income or 33x expected expenses whichever is higher is a nice rule of thumb for high earners with currently low expenses when ballparking a target amount for FIRE.
Since you cannot, having a 2nd sanity check isn't a bad thing to have."
How does the sanity check work with these numbers:
$600K gross income
$90K expenses
20 X $600K gross = $12 Million
33 X $90K expenses = $2.97 Million
Using the 'higher' number means they need $12 million in savings - how rediculous is that.
- Tue Aug 25, 2020 3:15 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
If you want to use median income of family of 4 for your target of ideal expenses that is fine.... but you're still ultimately estimating expenses. Nope. It's not estimating expenses at all. It's having a desired income goal for retirement and just LBYM. Have 5 kids instead of 2? Expenses will be higher so you'll need to be more frugal. Have no kids? No financial worries and will likely have enough to leave behind to some charity. Or just blow the extra every year on living large. It's the same thing! In "retirement" you don't budget to "save for retirement" so income=expenses! If you want to estimate that you'll have a family of 4 just in case, that is fine, but your still estimating future.... expenses! In the same wa...
- Tue Aug 25, 2020 3:04 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
It's not my number, it's from Sam. Reading the links to past blog posts it appears based largely on NW targets by age and happens to be the average NW target for age 60 and an expected 80% of final income for retirement expenses planning . I'm guessing on 80% part since he doesn't explicitly say anything about that other than: "If you’re used to making $50,000 a year for your working career, then you should be use to making a similar or less amount during retirement. Same goes for those who make more." So it's based on income because the basis of estimate is target net worth by age and income. Prior posts talk about NW. https://www.financialsamurai.com/how-much-should-my-net-worth-or-savings-be-based-on-income/ That's likely how ...
- Tue Aug 25, 2020 1:34 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
It's not my number, it's from Sam. Reading the links to past blog posts it appears based largely on NW targets by age and happens to be the average NW target for age 60 and an expected 80% of final income for retirement expenses planning. I'm guessing on 80% part since he doesn't explicitly say anything about that other than: "If you’re used to making $50,000 a year for your working career, then you should be use to making a similar or less amount during retirement. Same goes for those who make more." So it's based on income because the basis of estimate is target net worth by age and income. Prior posts talk about NW. https://www.financialsamurai.com/how-much-should-my-net-worth-or-savings-be-based-on-income/ That's likely how h...
- Mon Aug 24, 2020 1:23 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
How does your income rule work with these numbers then..... "20x income isn’t perfect but for high earners it’s safer than 25x expenses." How does that work for a couple with these %'s then? - 45% gross is taxes - 35% gross is savings - 20% of gross is expenses while working - 15% of gross income when retired Sorry, your question made no sense and doesn't appear related to the quoted text in any manner so got no answer and will continue to get no answer as asked. To recap: 20x income or 33x expected expenses whichever is higher is a nice rule of thumb for high earners with currently low expenses when ballparking a target amount for FIRE. If you're trying to catch me in some weird corner case don't bother. 20x income is a double c...
- Mon Aug 24, 2020 6:39 am
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
What I was saying is $1M is in all likelihood way too much money if you just want $30K a year and adjusted for inflation.
The idea that 3% is some kind of wildly high withdrawal rate is nonsense. It is ultra-conservative already.
- Mon Aug 24, 2020 6:36 am
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
It is all just opinions.I say live your life financially in a way that you sleep well at night.Whatever you are comfortable with risk wise is personal. I really do not see the problem with being more cautious with your projections when choosing to retire at a young age.I am 68 and have had 4 major unexpected life events in the past 3 years.Our current pandemic should be a warning to those who believe they have a good grasp of projecting out 40 or 50 years of life. My experience in life tells me most people believe what they want to believe,especially if it is about something they want. Overly conservative for sure, but I sleep well. I think 3 pct is great for a normal retirement age and probably just fine for a younger retirement. There is...
- Sun Aug 23, 2020 7:36 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
You can disagree without making up ridiculous things that were not said or implied. But that is ok. I think it is a reasonable thing for a young retiree to figure what they think they need to last for 40 ,maybe 50 years and add a cushion. I guess it is easy for some to predict 40 years of spending,expenses and every other unknown. Agree or not,the ideal would be to retire with enough money to live on fixed income.The reality for most is that is not possible.My main point has been if you make a CHOICE to retire at a young age, do not base it on the stock market HAVING to do wonderful things for obvious reasons. Like I said,Bernstein has a great opinion on this which I agree with. If my son wanted to retire at 45 and said he can do it using ...
- Sat Aug 22, 2020 7:29 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Yup. So whatever money you think you may need at 100% fixed income, double it. And once you double it, that is the new number you think you need, so double it. And once you double it, that is the new number you think you need, so double it, etchoops777 wrote: ↑Sat Aug 22, 2020 4:42 pmThus the reason to make sure you have a lot more money than you thInk you need before you empty the bench at a younger age.randomguy wrote: ↑Sat Aug 22, 2020 3:06 pm The thing is most people aren't close to the buzzer. They are still 1-1.5 quarter from the end of the game for most people. The prevent D approach works until it doesn't.... Obviously all analogies have limits but with 20-40 year time frames it is really hard to know if you have won the game or if you just have a good lead.
- Fri Aug 21, 2020 9:31 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
Mo money, mo problems.zaboomafoozarg wrote: ↑Fri Aug 21, 2020 8:35 pm That seems pretty close to the audience of this forum over the last 10 years
Of which I am admittedly one. This place has helped me make and save money, but the more I get the more I worry.
Around every corner lurks a black swan just waiting to decimate me.
- Fri Aug 21, 2020 9:29 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
You are 100 pct correct. I purchased a couple myga’s and there is some risk there. I have some GO muni’s, same there. I have a good amount of IBonds which have, I guess, no risk minus the end of the world.I have a lot of CD’s that have reinvestment risk, which is why I bought the myga’s to help with. Risk is everywhere in varying degrees. Figure out your needs and make your choice. The real problem now is not FIRE it is retired people who are being forced to take more risk. Yes. Also one must define what risk is, since Warren Buffett, for example says, for an investor with a long-term investment horizon (10+ years), that bonds are far riskier than stocks. Seems to me it is less a question of taking on "more risk", and more a ques...
- Fri Aug 21, 2020 6:42 am
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
Yes. Be able to live on fixed income investments. I am talking about a person who has a CHOICE to retire.With today’s fixed income return it is a lot more difficult of course. As I said earlier, better make sure you have a lot more money than you think you will need. Put it under the mattress amount of money or hope that stocks perform well and do not have a lost decade or more. I am in the minority of course, but I look at the world of today and I do not put much faith into historical returns. I completely understand the majority of people need to invest in stocks and hope for the best. I like William Bernstein and his won the game philosophy. Just make sure the game is won and there is no chance for a Hail Mary or a 3 at the buzzer. The ...
- Thu Aug 20, 2020 3:15 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
What do you mean "without depending on the stock market?". Do you mean with no stock investments and all money in bonds?hoops777 wrote: ↑Thu Aug 20, 2020 3:02 pm Certainly not needing to draw 3 or4 pct of your portfolio and choosing to retire early, choosing being the key word.
I would say having your expenses covered so that you can live a comfortable life without having to depend on the stock market. I understand that I am being ultra conservative and that is my choice. I personally would not fill comfortable retiring early knowing that stocks have to return x amount or I am in trouble. I also understand historically my view is not correct and 99.9 pct here disagree which is fine.
- Thu Aug 20, 2020 2:45 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
In the presence of an uncertain future, what does it mean to be "financially bulletproof"?hoops777 wrote: ↑Thu Aug 20, 2020 2:34 pmNever said that. I retired unexpectedly but happily at 65.
My point is the younger you are the more risk you take retiring early so make sure you are you are fianciallly bulletproof before you do it. Trying to do it arguing if you can pull it off with a 3.5 or 4 pct withdrawal rate at 45 is not that. Just my opinion.
- Thu Aug 20, 2020 2:19 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
If you don't know if $97.5k is the right number, then How can you possibly know if your $3M is even close to the right number? What if your expense end up double that amount? How does considering income help in any way? It doesn't. Thinking in terms of income just adds more steps to getting to your expenses. He is in a mental block. One can arbitrarily decided that it is better to have 20x income instead of 33x expenses when 20x income > than 33x expenses. Well "duh". If 20x income = 40x expenses, then 40x expenses is "safer" than 33x expenses. That much is obvious. Is it necessary for 40x? Maybe, maybe not. Ultimately it all boils down to WR which is how much you spend out of your nest egg. That means your expenses. Ba...
- Thu Aug 20, 2020 1:17 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
... Point being, argue all you want but the best laid plans are subject to so many unknowns the more you extend the years. So before you decide to quit that job because some calculator says you can, just make sure you have way more money than you think you need. Generally speaking this is what those calculators do, they give a "success rate" and those with high success rates show that in all likelihood a person is going to end up with WAY more than they started with (obviously success is not guaranteed). Beyond that, if extremely large expenses come up, you may have to cut back on other luxuries for a while, just like people we all do while we are still working and something comes up. That's called life adapting to new situations...
- Thu Aug 20, 2020 12:14 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
Everyone knows their spending can change year to year. You aren’t making any sense. It doesn’t matter how much you earn, it matters how much you spend. I agree. He has himself trapped in some kind of confused thinking. Or maybe I'm not confused and just believe differently based on life experiences? Nah. Easier to just insult someone else and feel superior. Do you actually know what your expenses will be in 30 years? Because I don't think most folks will sucessfully gauge that any more accurately than they can gauge what the market will be doing in 30 years. First of all, it's the same thing. From, 20x income one can figure how many Xx expenses they have. It is the same thing worded differently. For example, if you have a 40% savings rate ...
- Thu Aug 20, 2020 8:52 am
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
I agree. He has himself trapped in some kind of confused thinking.geerhardusvos wrote: ↑Thu Aug 20, 2020 8:24 amEveryone knows their spending can change year to year. You aren’t making any sense. It doesn’t matter how much you earn, it matters how much you spend.
- Thu Aug 20, 2020 7:29 am
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
This is true so long 20x income > than 25x expenses.
I'd argue tracking expenses is much more indicative what you'll "need", however if nothing else it "standardizes the language". So 20x income is effectively meaningless by itself because of that income how much do you need to spend? You need to estimate it and that is to say estimate your expenses.
That is to say the safety comes from the margin of how much you have versus how much you need. You need to know (estimate) how much you need, that is to say you need to estimate expenses. And therefore it is common to say X times expenses.
- Wed Aug 19, 2020 9:27 pm
- Forum: Investing - Theory, News & General
- Topic: Is picking and choosing indexes a bad idea?
- Replies: 8
- Views: 1146
Re: Is picking and choosing indexes a bad idea?
Yes, it would be "anti-bogle" to try to market time individual indexes hoping to buy low then sell them high, like some do with individual stocks. Market timing is market timing no matter the security. It is a bad strategy. Not if rebalancing is the goal, in which case buying low and selling high is the point of the exercise. Many people choose to hold partial indexes of the whole index (e.g., SP500 index and extended market, or large, mid, and small indexes, instead of Total Market...or Total Market and Total International instead of Totla World) because they want to hold different proportions than the fill index, and they benefit from rebalancing. Yules Yeah, the OP isn't talking about re-balancing a portfolio here. He is askin...
- Wed Aug 19, 2020 3:33 pm
- Forum: Personal Consumer Issues
- Topic: Anyone noticed La-Z-Boy quality has declined?
- Replies: 31
- Views: 11736
Re: Anyone noticed La-Z-Boy quality has declined?
Interestingly, prices are about the same. $99 in 1971 is equivalent to $644 today.
We bought two la-z-boy rocker recliners in leather recently and they were $680 each (including tax and delivery).
Super comfortable chairs.
- Mon Aug 17, 2020 6:44 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
- Mon Aug 17, 2020 6:12 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
Assume 3.5% inflation and a 0.5% withdrawal, you have an effective withdrawal rate of 4%. If the money is literally under a mattress, it's gone in 25 years. 25 years might be the length of an average retirement, but it's nowhere near 200 years. 0.5% is ridiculously conservative for any diversified portfolio. Expecting money literally under the mattress to last 200 years is absurd in the other direction. I realize you are arguing for the sake of argument, but just to correct your mistaken math: The effective withdrawal rate is not 4% of the overall portfolio, the adjustment is 0.5%+adjusting for inflation on that amount every year. Plugging into Excel a $200 portfolio assuming 3.5% inflation and .5% WR you will have 60 years of withdrawals ...
- Mon Aug 17, 2020 3:48 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
"If you stick the money under a mattress, a 0.5% withdrawal rate lasts for 200 years. Even if you account for inflation, it sounds overly conservative."
There is the original comment that started this back and forth. Hope that helps you out.
There are also no people that retired in 1920 still living. So that seems to be the more pressing "problem" with our 200 years worth of expenses.
- Mon Aug 17, 2020 2:24 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
How can you completely ignore taxation? If taxes eat 1% each year, then your effective withdrawal rate is 1.5%: 0.5% to you plus 1% to Uncle Sam. How would taxes eat 1% If you are only spending 0.5%? That would be some crazy high effective tax rate! Assuming your money is all in taxable accounts, you pay taxes on interest and dividends, even without realizing any capital gains. Actively managed mutual funds can generate a lot of capital gains. Your tax rate is your tax rate on income, not spending. If my mattress is generating taxable income, then I think my wife and I need to have a conversation... A hypo where money is literally under a mattress is ridiculous, unless you're part of the Soprano family. Again, that's the point. That even m...
- Sun Aug 16, 2020 8:27 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
Stock indices do not equal the world economy. The indices do not represent all businesses or production, and in fact are very top heavy. Only a handful of firms need to fail for the indices to fail to provide the return investors may need from them, which I would consider a failure. Additionally, the indices could fail to provide needed return merely by being overvalued at the time the investor invests. Moreover, a change in governance could result in indices going to zero without production going to zero. Although this is not a likely scenario, it has happened before and disproves your assertion that "That means the whole world went out of business and is no longer producing anything". In stock indices as businesses fail/decline...
- Sun Aug 16, 2020 7:44 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
If stocks don’t go up in the long term, what are you doing on this forum? I am following Step 4 of the Bogleheads investment philosophy: Diversify . So you are diversifying away from the most powerful and primary Boglehead asset (equity index funds)? How do you expect this to be received by Bogleheads? The forum's namesake and many prominent posters have suggested portfolios with 20-50%+ in assets other than equity index funds. It has been received fine. Edit: let me note that I have >60% in US and non-US equity index funds because they are the best show in town as far as liquid investments go, but I think the risks are real, and they may underperform or fail over my investing life. I think it's important for us to be honest about the risk...
- Sun Aug 16, 2020 6:13 pm
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
So with your assumption that technological advancements will continue, you think a 4.5-5% withdrawal rate will be good? Again, can you provide data on why you think the safe or perpetual withdrawal rates will go down with these continued incredible technological advancements created by public companies ? Emphasis mine -- this is the one bad assumption that changes the whole analysis. Of course I cannot provide any data as to what will happen in the future, but I think it likely that the bulk of new innovations will come from privately-held ventures, sole proprietors tinkering away in their garages, and open source community projects. Some of the disruptors will profit, others won't, but publicly traded firms are more likely to be the disru...
- Sun Aug 16, 2020 3:17 pm
- Forum: Personal Investments
- Topic: Talk me out of Covid 19 timing
- Replies: 119
- Views: 9695
Re: Talk me out of Covid 19 timing
Shouldn't the fact that you want to be talked out of it be evidence enough to you that you shouldn't do it?
- Sun Aug 16, 2020 9:36 am
- Forum: Investing - Theory, News & General
- Topic: The 0.5% Rule (SWR) [Safe Withdrawal Rate]
- Replies: 419
- Views: 32350
Re: The 0.5% Rule (SWR)
What's the point? Why even plan if that ends up being the result? It's as ludicrous as Suzy Orman saying you need 6$million to retire. Seriously if you get below 3% then people are just gonna blow it off, spend it all on cruises, claim SS early and hope for the best, move back in with the kids, [political comment removed by admin LadyGeek] . Financial Samurai agrees with Suzy Orman. https://www.financialsamurai.com/suze-orman-is-right-you-need-5-million-or-more-to-retire-early/ He's doing early retirement in the San Francisco Bay area without cutting back. If that's not your profile, it might not be for you. Actually, he wouldn't agree anymore according to article in OP. His article you linked above assumes 3-5% SWR, he now says 0.5% SWR. ...