NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

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JAZZISCOOL
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NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by JAZZISCOOL »

The "FIRE" movement is mentioned.

https://www.nytimes.com/2020/02/17/busi ... e=Homepage

Some highlights:

"There’s even a movement — Financial Independence, Retire Early, or “FIRE” — dedicated to frugality in pursuit of quitting the work force as soon as possible.

Scott Rieckens, 36, and his wife Taylor, 35, began following a FIRE plan in 2017. The couple, who have one child, ditched their leased cars and $3,000-a-month apartment in San Diego to move to Bend, Ore. They save more than 50 percent of their income and aim to have the $1.7 million they think they’d need to retire by their early 40s, though Mr. Rieckens doesn’t plan to completely stop working then.

He recently produced a documentary on the FIRE movement, released last year, which drew more than 10,000 people to screenings in over 200 cities. The audience skewed younger, Mr. Rieckens said, explaining that FIRE appeals to millennials partly because they have faced precarious jobs without pensions.

“You start to get this sense of lack of control, and fear,” he said. “You can take control of your life.”

The Rieckens may be extreme savers, but many millennials with means are prioritizing saving. According to a recent Bank of America survey, 25 percent of millennial savers had amassed more than $100,000, up from 16 percent in 2018."

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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Unladen_Swallow »

This article made my eyes roll.

Millennials should forgo their own early retirement for the greater good of supporting those that don't retire early, and the larger economy? And because businesses won't invest in equipment and technology anymore?

FIRE is largely supported by equipment and technology. Ask any young FIRE blogger that is writing from all over the world. Many of my peers wish people retired early when we were young. Then there would have been room to grow. Instead all the higher positions are held in by people not letting go until.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by tooluser »

I tried twice, but have found that I can't reply to this without being snarky in many different ways.
I guess this is all I have to say: Peace unto all.
columbia
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by columbia »

If you continue to work, you haven’t retired...
harvestbook
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by harvestbook »

What if you make money doing something that doesn't feel like work? Do people get resentful over that, too?
I'm not smart enough to know, and I can't afford to guess.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by bryanm »

JAZZISCOOL wrote: Mon Feb 17, 2020 6:45 pm "The Rieckens may be extreme savers, but many millennials with means are prioritizing saving. According to a recent Bank of America survey, 25 percent of millennial savers had amassed more than $100,000, up from 16 percent in 2018."
Articles like this always strike me as being written by someone to whom "millenials" are perpetually the young upstarts in the workforce. It shouldn't be surprising that as people age their savings increase. The average millennial is into their 30s at this point, with 10+ years in the workforce. Paired with years of a strong market, it's not exactly mind blowing that some have saved for retirement.
aristotelian
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by aristotelian »

Somehow I dont think Millenials oversaving is on the top 1000 list of things the Fed is worried about. Very disappointing the editors of the Paper of Record would let something like that through to press.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by TropikThunder »

columbia wrote: Mon Feb 17, 2020 7:01 pm If you continue to work, you haven’t retired...
“I retired early to write a blog on how to retire early. Please click here to subscribe so that I don’t have to go back to work.”

“Oh, and I forgot to mention that my spouse still works full-time and covers the family with their employer-sponsored health insurance.”

I almost wrote “wife” in the second comment but changed it to “spouse” because either spouse can retire early (we just used to call it “stop work to stay home with the kids”).
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JoMoney
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by JoMoney »

Alternate/archive of source http://archive.is/FGVyf
...Millennials, already accused of killing everything from paper napkins to mayonnaise, would happily exacerbate the drop in interest rates, which baby boomers have driven to date...
As a member of Gen X, I approve of blaming Millennials and Boomers for everything wrong, or that might go wrong, in society.
:P
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by leeks »

Just read this ridiculous article and came here to see what bogleheads are saying. So much of it seems like complete BS to me. Does the NYTimes even have editors who review and check sources on this stuff? Obviously written by a millenial....

A few anecdotes about FIRE bloggers are not representative of an entire generation's actual behavior.

It says 25% of millenials have saved more than $100K, but I can't believe that is true. Even if it is true, shouldn't we expect more in 401K savings because many fewer millenials will have pensions compared to the prior generation? And what about net worth - how does that $100K savings compare to student loan debt and crazy high mortgages?

My favorite is:

"Millennials, who are roughly between the ages of 24 and 39 and have not lived through pronounced price spikes, already have the lowest inflation expectations of any adult generation. Their belief that costs will not increase could eventually slow actual price gains by making it hard for businesses to charge more. The Fed’s main interest rate includes inflation, so that would leave it with even less room to cut."

So inflation only happens if you believe in it?

If so, my retirement plan will include not believing in inflation starting now. I will tell vendors I will never pay more for something than what it cost in 2020. And somehow they will not be able to charge more?
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by sailaway »

bryanm wrote: Mon Feb 17, 2020 7:06 pm
JAZZISCOOL wrote: Mon Feb 17, 2020 6:45 pm "The Rieckens may be extreme savers, but many millennials with means are prioritizing saving. According to a recent Bank of America survey, 25 percent of millennial savers had amassed more than $100,000, up from 16 percent in 2018."
Articles like this always strike me as being written by someone to whom "millenials" are perpetually the young upstarts in the workforce. It shouldn't be surprising that as people age their savings increase. The average millennial is into their 30s at this point, with 10+ years in the workforce. Paired with years of a strong market, it's not exactly mind blowing that some have saved for retirement.
Funny thing is, that is the same percentage of millenials that have not amassed anything.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Unladen_Swallow »

JoMoney wrote: Mon Feb 17, 2020 7:14 pm Alternate/archive of source http://archive.is/FGVyf
...Millennials, already accused of killing everything from paper napkins to mayonnaise, would happily exacerbate the drop in interest rates, which baby boomers have driven to date...
As a member of Gen X, I approve of blaming Millennials and Boomers for everything wrong, or that might go wrong, in society.
:P
I second this. :happy

*even though I thought the article was crock full of crap.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by HawkeyePierce »

leeks wrote: Mon Feb 17, 2020 7:18 pm Just read this ridiculous article and came here to see what bogleheads are saying. So much of it seems like complete BS to me. Does the NYTimes even have editors who review and check sources on this stuff? Obviously written by a millenial....

A few anecdotes about FIRE bloggers are not representative of an entire generation's actual behavior.

It says 25% of millenials have saved more than $100K, but I can't believe that is true. Even if it is true, shouldn't we expect more in 401K savings because many fewer millenials will have pensions compared to the prior generation? And what about net worth - how does that $100K savings compare to student loan debt and crazy high mortgages?

My favorite is:

"Millennials, who are roughly between the ages of 24 and 39 and have not lived through pronounced price spikes, already have the lowest inflation expectations of any adult generation. Their belief that costs will not increase could eventually slow actual price gains by making it hard for businesses to charge more. The Fed’s main interest rate includes inflation, so that would leave it with even less room to cut."

So inflation only happens if you believe in it?

If so, my retirement plan will include not believing in inflation starting now. I will tell vendors I will never pay more for something than what it cost in 2020. And somehow they will not be able to charge more?
Why is it so hard to believe that 25% of Americans ages 24-39 have at least $100k saved up? According to this calculator, which is based on 2016 data from the Fed, $100k in net worth is the 74th percentile for people ages 30-34: https://dqydj.com/net-worth-by-age-calc ... ed-states/

Inflation has been rock bottom for most of a millenial's adult life, of course they expect it to stay low. Boomers expect it to come roaring back any minute now since they came of age during a period of high inflation. The article doesn't say that this cohort believes their power of thought will influence inflation, it just says they don't expect it to increase. Why is that hard to swallow?
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by manatee2005 »

aristotelian wrote: Mon Feb 17, 2020 7:08 pm Somehow I dont think Millenials oversaving is on the top 1000 list of things the Fed is worried about. Very disappointing the editors of the Paper of Record would let something like that through to press.
Paper of record? For me it's bird cage liner :-)
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by HEDGEFUNDIE »

leeks wrote: Mon Feb 17, 2020 7:18 pm
"Millennials, who are roughly between the ages of 24 and 39 and have not lived through pronounced price spikes, already have the lowest inflation expectations of any adult generation. Their belief that costs will not increase could eventually slow actual price gains by making it hard for businesses to charge more. The Fed’s main interest rate includes inflation, so that would leave it with even less room to cut."

So inflation only happens if you believe in it?
Pretty much.

https://www.google.com/amp/s/www.wsj.co ... 1578837600
In recent years, Mr. Kuroda has pointed to research suggesting inflation expectations are adaptive: People predict future prices based on what they have seen in recent years. In practice, that means Japanese consumers have accustomed themselves to seeing everyday goods at low prices and punish any retailer that tries to raise them.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by manatee2005 »

HawkeyePierce wrote: Mon Feb 17, 2020 7:28 pm
leeks wrote: Mon Feb 17, 2020 7:18 pm Just read this ridiculous article and came here to see what bogleheads are saying. So much of it seems like complete BS to me. Does the NYTimes even have editors who review and check sources on this stuff? Obviously written by a millenial....

A few anecdotes about FIRE bloggers are not representative of an entire generation's actual behavior.

It says 25% of millenials have saved more than $100K, but I can't believe that is true. Even if it is true, shouldn't we expect more in 401K savings because many fewer millenials will have pensions compared to the prior generation? And what about net worth - how does that $100K savings compare to student loan debt and crazy high mortgages?

My favorite is:

"Millennials, who are roughly between the ages of 24 and 39 and have not lived through pronounced price spikes, already have the lowest inflation expectations of any adult generation. Their belief that costs will not increase could eventually slow actual price gains by making it hard for businesses to charge more. The Fed’s main interest rate includes inflation, so that would leave it with even less room to cut."

So inflation only happens if you believe in it?

If so, my retirement plan will include not believing in inflation starting now. I will tell vendors I will never pay more for something than what it cost in 2020. And somehow they will not be able to charge more?
Why is it so hard to believe that 25% of Americans ages 24-39 have at least $100k saved up? According to this calculator, which is based on 2016 data from the Fed, $100k in net worth is the 74th percentile for people ages 30-34: https://dqydj.com/net-worth-by-age-calc ... ed-states/

Inflation has been rock bottom for most of a millenial's adult life, of course they expect it to stay low. Boomers expect it to come roaring back any minute now since they came of age during a period of high inflation. The article doesn't say that this cohort believes their power of thought will influence inflation, it just says they don't expect it to increase. Why is that hard to swallow?
I'd like a break down of 24-39 into 24-29, 30-34 and 34-39. Thirty nine year old has had 15 more work experience than a 24 year old.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by stan1 »

leeks wrote: Mon Feb 17, 2020 7:18 pm It says 25% of millenials have saved more than $100K, but I can't believe that is true.
Actually you left out a word -- the quote was 25% of millenial "savers" -- whatever the Bank of America survey means by that, but non-savers are already excluded.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by HEDGEFUNDIE »

The discussion of FIRE is the least interesting thing about this article. I, for one, will be reading the academic papers mentioned regarding the secular decline in interest rates.

https://www.aeaweb.org/conference/2020/ ... xrawGlCArI

This line of research confirms what I have believed for some time now, which is that interest rates will remain low for the rest of my lifetime.

Let’s make this actionable: what would you do if you knew interest rates would never rise in any meaningful way?

For me the answer is clear: leverage up.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by langlands »

Very one sided thread so far. I'll simply mention the concept of "paradox of thrift," which refers to the idea that a savings glut can result in a self-perpetuating cycle of economic contraction. Think about why the economy grows and why the stock market goes up. You need labor and you need consumers to have a healthy economy. It is understandable why the FIRE movement is so popular. Certainly wealth inequality and the notion that capitalism no longer works for everyday Americans are major factors. But young people wanting desperately to exit the work force is a very unhealthy trend. A society in which FIRE is mainstream is not sustainable until we've achieved a truly post-scarcity economy in which AI/robots run everything. Unfortunately, we are still very far away from this and will need human productivity/creativity/resourcefulness for the foreseeable future to drive our capitalistic society forward.

Edit: Whoops, I didn't bother to finish reading the article before posting and see paradox of thrift is mentioned in the article itself.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by muffins14 »

So in 2018 millennials were lazy, didn't work hard enough, spent all their money on avocado toast instead of mortgages, and were basically useless. Now in 2020 they work too hard, are too good at saving and conservatively providing for their families that people are worried they are too self-sufficient?
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by lostdog »

The FIRE movement is so small and won't even put a dent in the economy. Out of touch article.


Most millennials are riddled with school loan debt.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by MindBogler »

muffins14 wrote: Mon Feb 17, 2020 7:55 pm So in 2018 millennials were lazy, didn't work hard enough, spent all their money on avocado toast instead of mortgages, and were basically useless. Now in 2020 they work too hard, are too good at saving and conservatively providing for their families that people are worried they are too self-sufficient?
Even reading what goes for news these days requires suspension of disbelief. :shock:
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Teague »

JAZZISCOOL wrote: Mon Feb 17, 2020 6:45 pm
"The Rieckens may be extreme savers, but many millennials with means are prioritizing saving. According to a recent Bank of America survey, 25 percent of millennial savers had amassed more than $100,000, up from 16 percent in 2018."
This bit strikes me as rather useless unless they offer an argument for just how this increase to 25% was unexpected.

If we define millennials as all those having been born between years X and Y, then that cohort of course continues to get older as time marches on. People on the whole have more money as they get older. But maybe I'm making something out of nothing? Let's take a look:

From the cited 2020 report: For the purposes of this report, millennials were defined as ages 24-41.
https://about.bankofamerica.com/assets/ ... report.pdf

From the compared-to 2018 report: For the purposes of this report, millennials are defined as ages 23–37.
https://bettermoneyhabits.bankofamerica ... report.pdf

So the 2020 cohort bottom end increased by 1 year, and the top end was 4 years older!
Is it really surprising that they had significantly more savings?

I like and subscribe to the NYT, but omitting the above context was poor journalism, in my opinion.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Grt2bOutdoors »

I didn't read the article, but Investment from my economics days is a plus for the economy, not a negative.
As far as any segment of the population making it difficult, Millennials don't have nearly the amount of wealth and savings as other cohorts out there, namely Baby Boomers and the Greatest Generation. It's those two parts of the population which tends to spend less in their older years, the Millennials are consuming plenty especially with money they don't have, they are going into hock for education and living.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Naris »

HEDGEFUNDIE wrote: Mon Feb 17, 2020 7:34 pm The discussion of FIRE is the least interesting thing about this article. I, for one, will be reading the academic papers mentioned regarding the secular decline in interest rates.

https://www.aeaweb.org/conference/2020/ ... xrawGlCArI

This line of research confirms what I have believed for some time now, which is that interest rates will remain low for the rest of my lifetime.

Let’s make this actionable: what would you do if you knew interest rates would never rise in any meaningful way?

For me the answer is clear: leverage up.
I think this is a good question. My answer is: be more willing to take out adjustable rate debt rather than fixed rate debt.

I have put this into practice when refinancing my mortgage and student loans, all of which are now on adjustable rates (and short terms; my mortgage is a 5/1 ARM). Of course, this partially works because I save a significant amount of what I earn and my payments would remain manageable even if rates skyrocketed (at which point I would prioritize paying down any newly-high interest rate debt ASAP), so my strategy is safer than just hoping that rates rise.

I like to think of this approach as "not buying insurance I don't need" -- i.e. I don't need the interest rate "insurance" provided by a traditional 30 year fixed rate mortgage, so I'm saving money by not buying it and getting an ARM instead.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by HEDGEFUNDIE »

Naris wrote: Mon Feb 17, 2020 9:54 pm
HEDGEFUNDIE wrote: Mon Feb 17, 2020 7:34 pm The discussion of FIRE is the least interesting thing about this article. I, for one, will be reading the academic papers mentioned regarding the secular decline in interest rates.

https://www.aeaweb.org/conference/2020/ ... xrawGlCArI

This line of research confirms what I have believed for some time now, which is that interest rates will remain low for the rest of my lifetime.

Let’s make this actionable: what would you do if you knew interest rates would never rise in any meaningful way?

For me the answer is clear: leverage up.
I think this is a good question. My answer is: be more willing to take out adjustable rate debt rather than fixed rate debt.

I have put this into practice when refinancing my mortgage and student loans, all of which are now on adjustable rates (and short terms; my mortgage is a 5/1 ARM). Of course, this partially works because I save a significant amount of what I earn and my payments would remain manageable even if rates skyrocketed (at which point I would prioritize paying down any newly-high interest rate debt ASAP), so my strategy is safer than just hoping that rates rise.

I like to think of this approach as "not buying insurance I don't need" -- i.e. I don't need the interest rate "insurance" provided by a traditional 30 year fixed rate mortgage, so I'm saving money by not buying it and getting an ARM instead.
Great example. I agree. My 5/1 ARM at 2.65% is saving me $7k/yr for at least five years, compared to the 30 year fixed mortgage I was also considering at the time.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by JAZZISCOOL »

I don’t sense that the FIRE movement will cause capitalism to implode in the near term. As someone else noted, the FIRE devotees are a small percentage of Millenials. Many continue to spend and consume goods and services, buy houses and pay down their student loans in addition to saving.

It seems to me the structural changes that have impacted lower expected return assumptions have been going on longer than the recent FIRE movement (although Vicki Robin, a member of an older, early-FIRE generation, has been around for decades; she is the co-author of “Your Money or Your Life” and has been interviewed by a number of Millenial FIRE podcasters while MMM wrote the foreward of the latest edition of her book).

I don’t think many/most people have the desire to pursue the FIRE lifestyle full-throttle, but it will always attract a certain percentage of people. I also don’t think the FIRE movement will become a large enough percentage to cause massive decreases in corporate profits and US GDP, etc. Topics such as AI are a different discussion IMO. Even one-offs like the recent corona virus may have a greater impact on the global economy as evidenced by Apple warning on revenue today (2/17/20.)
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by ARoseByAnyOtherName »

HEDGEFUNDIE wrote: Mon Feb 17, 2020 9:57 pm
Naris wrote: Mon Feb 17, 2020 9:54 pm
HEDGEFUNDIE wrote: Mon Feb 17, 2020 7:34 pm The discussion of FIRE is the least interesting thing about this article. I, for one, will be reading the academic papers mentioned regarding the secular decline in interest rates.

https://www.aeaweb.org/conference/2020/ ... xrawGlCArI

This line of research confirms what I have believed for some time now, which is that interest rates will remain low for the rest of my lifetime.

Let’s make this actionable: what would you do if you knew interest rates would never rise in any meaningful way?

For me the answer is clear: leverage up.
I think this is a good question. My answer is: be more willing to take out adjustable rate debt rather than fixed rate debt.

I have put this into practice when refinancing my mortgage and student loans, all of which are now on adjustable rates (and short terms; my mortgage is a 5/1 ARM). Of course, this partially works because I save a significant amount of what I earn and my payments would remain manageable even if rates skyrocketed (at which point I would prioritize paying down any newly-high interest rate debt ASAP), so my strategy is safer than just hoping that rates rise.

I like to think of this approach as "not buying insurance I don't need" -- i.e. I don't need the interest rate "insurance" provided by a traditional 30 year fixed rate mortgage, so I'm saving money by not buying it and getting an ARM instead.
Great example. I agree. My 5/1 ARM at 2.65% is saving me $7k/yr for at least five years, compared to the 30 year fixed mortgage I was also considering at the time.
In a highly inflationary environment one would want to leverage up by taking out fixed-rate debt and buying up as many inflation-prone assets as they can, without defaulting on those loans, with the idea that the inflation will increase the value of the assets relative to the fixed cost of the debt.

In an environment where interest rates are low and stable if not falling, it sounds like you are collectively arguing that one should:

1) take out adjustable rate debt to get the lowest interest rate,

and

2) leverage up on the equity portion of your investments, on the theory that low bond yields will cause investors to move to equities as they chase performance, thereby increasing equity gains

Am I understanding this right?
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by HEDGEFUNDIE »

ARoseByAnyOtherName wrote: Mon Feb 17, 2020 10:09 pm In an environment where interest rates are low and stable if not falling, it sounds like you are collectively arguing that one should:

1) take out adjustable rate debt to get the lowest interest rate,

and

2) leverage up on the equity portion of your investments, on the theory that low bond yields will cause investors to move to equities as they chase performance, thereby increasing equity gains

Am I understanding this right?
Pretty much, although #2 does not require one to assume anything about yield-seeking behavior. Rather, as long as the equity risk premium is positive, leverage should be profitable.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by rockstar »

This reminds me of #vanlife. As a gen x these articles get on my nerves. I’m pretty sure I can retire early and live in my parent’s backyard in a tent until they die. Give me a break. Most people can’t fire because healthcare is too expensive.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by OnTrack »

langlands wrote: Mon Feb 17, 2020 7:46 pm ... I'll simply mention the concept of "paradox of thrift," which refers to the idea that a savings glut can result in a self-perpetuating cycle of economic contraction. ... A society in which FIRE is mainstream is not sustainable until we've achieved a truly post-scarcity economy in which AI/robots run everything. ...
FIRE is not sustainable in a society in which FIRE is mainstream. We may be saying the same thing. I don't think we are anywhere near having too much thrift; we need labor and consumers, but we also need capital.
Last edited by OnTrack on Mon Feb 17, 2020 11:13 pm, edited 2 times in total.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by jayk238 »

rockstar wrote: Mon Feb 17, 2020 10:38 pm This reminds me of #vanlife. As a gen x these articles get on my nerves. I’m pretty sure I can retire early and live in my parent’s backyard in a tent until they die. Give me a break. Most people can’t fire because healthcare is too expensive.
You can fire. Do you think its any easier in europe? Income over 80k euros is taxed at 42 % go to a church in germany? Add 14%. Add a local society tax of 7 % and a vat everytime you purchase something and that 14k a year high deductible plan starts to sound reasonable.

If you have enough to retire and its 3 million or more then you can retire even with 14k a year health insurance. Any less and we are all welcome to work harder save more or change jobs to something less stressful and still get insurance.
Financologist
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Financologist »

I think it's worth thinking through the potential economic impacts of a growing FIRE movement.

And perhaps there's some irony here. If the movement reaches critical mass then it's possible that as a result, the stock market performance required to achieve FIRE won't materialize. In other words, the trade-off of reduced consumption in exchange for increased market investment will become less attractive as reduced consumption hurts market performance. And the FIRE trend will consequently reverse itself.
EddyB
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by EddyB »

jayk238 wrote: Mon Feb 17, 2020 11:04 pm The comments here are rich with snark and condescension about my generation.

I can tell you that many of my fellow millenials are indeed worried about saving.

We certainly do care about saving and the evidence is clear that statistically we are saving more than other generations at the same age.
The statistics also suggest lower rates of home ownership and that the average millennial has a lower net worth than prior recent generations did, so I think a focus on “saving more” may be narrowly correct in a way that obscures the bigger picture.
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Cubicle
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Cubicle »

So millennials are all drowning & stiffled by student loans, can't get jobs related to their college degree, only 1 in 4 have over $100,000 saved, & but going to seize the gears of the economy because they are going to retire early?

Pick 1 & only 1.

[paraphrasing]If there is too much saving & not enough spending, there will be chaos & catastrophe.[/paraphrasing] Sounds a lot like the passive index fear mongerers: If too many people are only passively indexing, there will be chaos & catastrophe.
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Portfolio7
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Portfolio7 »

EddyB wrote: Mon Feb 17, 2020 11:21 pm
jayk238 wrote: Mon Feb 17, 2020 11:04 pm The comments here are rich with snark and condescension about my generation.

I can tell you that many of my fellow millenials are indeed worried about saving.

We certainly do care about saving and the evidence is clear that statistically we are saving more than other generations at the same age.
The statistics also suggest lower rates of home ownership and that the average millennial has a lower net worth than prior recent generations did, so I think a focus on “saving more” may be narrowly correct in a way that obscures the bigger picture.
Hey, I think the kids are alright. Plus, I think a lot of the condescension is directed to the article rather than young adults, even if some people cross the line. Anyways, I have plenty of millenials pushing me hard at work, and that's a good thing. Besides, I'm Gen-X, so I'm not just lazy and entitled, I'm also invisible. Anyways, this paragraph below from CNBC suggests that millenials are indeed behind the other generations when it comes to building wealth. I figure this represents a lack of opportunity more than a generational flaw of some sort, but that's just my 2 cents.

"While young adults in general do not have much accumulated wealth, millennials have slightly less wealth than boomers did,” the Pew Research Center explains in a 2019 report. The median net worth of millennial households was about $12,500 in 2016, while boomers had $20,700 at the same age in 1983. Gen X households had about $15,100 at the same age in 2001. (Pew’s analysis of net worth is in 2017 dollars.)"

I would also note that 401k enrollment has become a 'pushed' option, such that many young workers are automatically enrolled. That's not to take anything away from them, but I think it will tend to push assets into the market, while home ownership may be delayed... so the structure of NW may be different, as noted by EddyB
Last edited by Portfolio7 on Mon Feb 17, 2020 11:47 pm, edited 1 time in total.
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firebirdparts
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by firebirdparts »

JoMoney wrote: Mon Feb 17, 2020 7:14 pm Alternate/archive of source http://archive.is/FGVyf
...Millennials, already accused of killing everything from paper napkins to mayonnaise, would happily exacerbate the drop in interest rates, which baby boomers have driven to date...
As a member of Gen X, I approve of blaming Millennials and Boomers for everything wrong, or that might go wrong, in society.
:P
yes, please, clickbaiters, pajama-wearing bloggers, and list articlers, please don't let up. Wait, this was the new york times?
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Lyrrad
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Lyrrad »

While reading the article, it seemed to me that it was missing convincing statistics that could help determine if the premise (increased savings & lowered spending by millennials causing economic problems) is actually happening. I didn't think the evidence in the article provided supported the idea that the FIRE movement is widespread or is having a significant impact on the savings rate of millennials.

The BEA does track the overall personal savings rate over time, but doesn't appear to track it by age group. While the overall savings rate has increased in recent years, it does seem pretty low by historical standards, generally lower than the rates before the 1990s.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Silence Dogood »

lostdog wrote: Mon Feb 17, 2020 7:57 pm The FIRE movement is so small and won't even put a dent in the economy. Out of touch article.
I agree.

Anecdotal, of course, but I'm a "millennial" and the "FIRE" movement is just not a topic of discussion.

What I do hear my peers discussing is their student loan debt.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by Silence Dogood »

stan1 wrote: Mon Feb 17, 2020 7:31 pm
leeks wrote: Mon Feb 17, 2020 7:18 pm It says 25% of millenials have saved more than $100K, but I can't believe that is true.
Actually you left out a word -- the quote was 25% of millenial "savers" -- whatever the Bank of America survey means by that, but non-savers are already excluded.
This is such an important point.

According to this article (October 2019) 55% of millennials don't have a retirement account.

So is it 25% of the 45% who do have a retirement account? 11.25% overall?
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by MathIsMyWayr »

Why so much excitement about the article on FIRE? Isn't the overwhelming theme on this board saving aggressively to retire as early as possible? Pot calling the kettle?
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by mrspock »

JoMoney wrote: Mon Feb 17, 2020 7:14 pm Alternate/archive of source http://archive.is/FGVyf
...Millennials, already accused of killing everything from paper napkins to mayonnaise, would happily exacerbate the drop in interest rates, which baby boomers have driven to date...
As a member of Gen X, I approve of blaming Millennials and Boomers for everything wrong, or that might go wrong, in society.
:P
Agreed. I also keep a small but high quality case of torches and kerosene ready for when/if things get “real”.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by fujiters »

HEDGEFUNDIE wrote: Mon Feb 17, 2020 7:34 pm The discussion of FIRE is the least interesting thing about this article. I, for one, will be reading the academic papers mentioned regarding the secular decline in interest rates.

https://www.aeaweb.org/conference/2020/ ... xrawGlCArI

This line of research confirms what I have believed for some time now, which is that interest rates will remain low for the rest of my lifetime.

Let’s make this actionable: what would you do if you knew interest rates would never rise in any meaningful way?

For me the answer is clear: leverage up.
Buy EE bonds and hold 20 years.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by HEDGEFUNDIE »

fujiters wrote: Tue Feb 18, 2020 3:41 am
HEDGEFUNDIE wrote: Mon Feb 17, 2020 7:34 pm The discussion of FIRE is the least interesting thing about this article. I, for one, will be reading the academic papers mentioned regarding the secular decline in interest rates.

https://www.aeaweb.org/conference/2020/ ... xrawGlCArI

This line of research confirms what I have believed for some time now, which is that interest rates will remain low for the rest of my lifetime.

Let’s make this actionable: what would you do if you knew interest rates would never rise in any meaningful way?

For me the answer is clear: leverage up.
Buy EE bonds and hold 20 years.
Also a good option.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by smectym »

Unladen_Swallow wrote: Mon Feb 17, 2020 7:25 pm
JoMoney wrote: Mon Feb 17, 2020 7:14 pm Alternate/archive of source http://archive.is/FGVyf
...Millennials, already accused of killing everything from paper napkins to mayonnaise, would happily exacerbate the drop in interest rates, which baby boomers have driven to date...
As a member of Gen X, I approve of blaming Millennials and Boomers for everything wrong, or that might go wrong, in society.
:P
I second this. :happy

*even though I thought the article was crock full of crap.
As a Boomer I blame Greatest Generation (my parents) and Gen X (my kids). Makes SO much sense
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burt
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by burt »

Reminds me of William Bernstein's article "Retirement Calculator from Hell-Part IV".

"If you want to retire early, what matters is not how much you save, but how much more than everyone else you save. In a world where everyone saves as if they’re going to retire at fifty-five, or even at sixty-five, none can."

http://www.efficientfrontier.com/ef/103/hell4.htm
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by onourway »

It’s too bad the quoted text in the first post here only included the bit from the article about FIRE. I had read the article previous to seeing the discussion here, and the FIRE bit is sort of an ancillary point, even though it’s used as a bit of bait. There is a lot more of interest here that I had though would provoke more interesting discussion from this group.

Seemingly insignificant changes in societal behavior can have large ripple effects over decades. That’s what this article is about. It doesn’t take a majority of the population changing their behavior to do this - if a significant number of the potential high-earners in a generation (only a small fraction of the population as a whole) develop a taste for savings and thrift and potentially want shorter careers, that could have real effects for the economy long-term.

But, back to our regular discussion about which savings account should I switch to for an extra ten basis points...
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by winterfan »

bryanm wrote: Mon Feb 17, 2020 7:06 pm Articles like this always strike me as being written by someone to whom "millenials" are perpetually the young upstarts in the workforce. It shouldn't be surprising that as people age their savings increase. The average millennial is into their 30s at this point, with 10+ years in the workforce. Paired with years of a strong market, it's not exactly mind blowing that some have saved for retirement.
I totally agree. The oldest millenials are pretty close to 40. Pretty soon age discrimination in the workplace may be a factor.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by firebirdparts »

I also picked up on the idea that the "savers" had some people who'd made it to $100,000. You'd expect that. I am not sure how many of them are savers but by all reports it's quite a few.
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Re: NY Times - "How Millennials Could Make the Fed’s Job Harder" FIRE mentioned 2/17/20

Post by galving »

tooluser wrote: Mon Feb 17, 2020 6:58 pm I tried twice, but have found that I can't reply to this without being snarky in many different ways.
I guess this is all I have to say: Peace unto all.
Excellent discipline! :D
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