Tag: stocks

Hello, I am 21 years old and have been lurking on this sub for about 5 years whilst pursuing my own FIRE. I am curious if anyone has a decent idea to offer to a young person trying to get a good start on FIRE. I get that this is incredibly dependent on a wide range of factors. I will list the more significant parts of my situation so there is something specific to refer to, but I also welcome generic advice. I would also appreciate if like-minded people with a bit more life experience than me could poke holes or maybe even validate some of the ideas I have that tend to earn me unconstructive criticism from most of the people I meet in real life. **My specific situation:** 21M with long term girlfriend and no dependents Bachelor's degree in CS ML Engineer for government outside of Seattle area. Current salary 70k, but is all but guaranteed to ramp up to 100k by April 2026, and 150k by 2036(capped here). Salary is based on GS payscale which automatically adjusts for inflation. I intend for this to primarily be a housing discussion, but I'd be happy to field "get a better job" comments as well. I will say though that the appeal of FIRE to me is time=freedom and this is basically a part time job. I will need to pull the trigger on one of these options at the end of the year, when I actually move to the area. I estimate that I will have roughly 70k liquid by the end of the year with the ability to save 40k in 2025 and 45k until 2028, then linearly approaching 80k yearly savings by 2036 assuming no job change **and assuming no rent or mortgage**. **Housing in my area(oversimplified):** Rent 1bdrm apt 1200/month Buildable 1/2acre+ lot 100k Trailer park unit 125k Condo 225k Townhomes and crack shacks 250k "starter" homes 275-350k "respectable" homes 450-500k **Options and Constraints:** I have a long term girlfriend and we'd love to have 3 kids within the next 8 years. We'd love to have a decent place to raise them by the time the firstborn is old enough to walk (not apartment/"creative" living arrangement). Basically, move into a house in the next 3 years as a stretch target. Option A: Rent for $1500/month for 3 years, aggressively save, put down as big of a down payment as we can muster on "starter" home with 30 year mortgage. Option B: Put as little down as possible now on starter home and ride out mortgage. Option C: Rent indefinitely until the housing market crashes. Option D: Go full throttle toward getting a remote job and move to Kentucky where I can buy a house in cash tomorrow. Option E (why I made this post at all): Stretch to buy land outright or put 70% down on it by the end of the year, borrow parent's RV and live out of that while buying materials/minimum necessary contractor assistance to DIY build house for roughly 150k (Finish in 3ish years). I've been a hobby carpenter for awhile, but this would still be a massive step up in complexity/difficulty. I am fairly confident I could do this time-wise while working for the government, if I went private sector this option is no longer on the table. I am budgeting roughly 3k hours to get the house "mostly" finished and good enough to raise kids in which I believe I could spare over the 3-3.5 year period necessary to raise funds for it. Option E-2: same but use house-kit or prefab instead of raw materials **Summary:** Home prices are very high and I feel like signing a mortgage would all but murder my FIRE goals. I am a very motivated, high energy individual who feels up to the challenge of building my own house. This was actually one of my main motivators for RE in the first place, to build a house while I was still young enough to do so (though the original plan was to spend my first year "retired" working construction to gain experience). After getting a gov job, the wheels started turning in my head that I could do whilst working. If I need to get pulled down to earth, please don't be subtle. I'm pretty hell bent on this, but I'm trying really hard to be open minded. It's just really hard to stomach getting locked into a $3500-4000 monthly payment where like 1/3 of it is going into the equity of an asset priced more relatively expensive now than in 2008 and the other 2/3 is evaporating. submitted by /u/CelestialChicken [link] [comments]

Can someone help me think through variable financial withdrawal rates and what the equivalent of the 4% rule is. Standard 4% Rule - I begin by withdrawing a fixed sum of 4% from my portfolio every month. I adjust this amount with inflation yearly. I continue indefinitely. Variable X% withdrawal - This approach makes more sense to me, I withdraw 4% / 12 = .33% of my total portfolio on a repeating basis each month. Questions What is the likelihood my purchasing power remains the same over a 30 year period? Obviously I won’t ever deplete to 0, because of how %’s work. But curious odds that purchasing power remains reasonable. Is there a way to model or factor in lowering the withdrawal amounts by 10-20% during months/periods of market decline? Would this allow a higher rate otherwise? Anyone else planning to follow this pattern? It seems more ‘human’ for lack of a better term than attempting to follow a rigid 4% inflation adjusted withdrawal blindly. submitted by /u/6rhodesian6 [link] [comments]

Hello /r/financialindependence, I'm seeking financial independence advice as a recent newlywed. I'm 37 and partner is 31, together we make a modest joint income (~150K) in a HCOL- NYC. Cash: 65K Vanguard brokerage: 60K 401K & Roth: 300K Home equity: 1.2M, 0 mortgage FAFSA student loan & interest: (145K) With the changing landscape of student loan forgiveness, is there much incentive to pay down the FAFSA student loan as soon as possible (using cash, selling from brokerage/401K accounts, taking out a home equity loan, etc.)? We also plan to start a family and hopefully have a child together by next year. Any financial planning tips for recent newlyweds would be most appreciated! Thank you submitted by /u/WalletPhoneKeysPump [link] [comments]

A while back I made a post (linked below) about how safe withdrawal rates are impacted by valuations. At the time, I also did a shallow dive into asset allocation impacts, and found some pretty interesting stuff. I finally got around to creating a deep dive summary of my findings. This particular post is only concerning 10 year annualized returns, but my findings were quite similar for safe withdrawal rates. I plan on doing a follow up soon with just SWR impacts, which should be much shorter, but this felt like a good jumping off point. O.G. POST Introduction As of this writing, first drafted on April 22 2024, the Shiller PE sits at 33.27. Many analysts and investment managers will tell you to fear this number. In his latest memo, Jeremy Grantham says that today’s price-to-earnings metrics sit in the top 1% of modern history, sounding the alarm for U.S. equity bubble territory. Well, the U.S. is really enjoying itself if you go by stock prices. A Shiller P/E of 34 (as of March 1st) is in the top 1% of history. Total profits (as a percent of almost anything) are at near-record levels as well. Remember, if margins and multiples are both at record levels at the same time, it really is double counting and double jeopardy – for waiting somewhere in the future is another July 1982 or March 2009 with simultaneous record low multiples and badly depressed margins. I don’t think it’s quite so simple; it might not be appropriate to look at a single asset class in a vacuum the way that many in the investment community do. Is a 30+ PE high? Objectively, it sounds pretty frothy. If bonds were yielding 10%, I’d almost certainly say that bonds were more attractive. If they were yielding sub-2% like much of the post GFC decade, it might not be as straight forward. At a Shiller PE in the low 30’s, we have a very conservative 3% earnings yield (remember, Shiller averages the past 10 years of earnings) before even accounting for earnings growth. One might conclude that stocks have the slight edge in this case. The point is, we can’t look at a single valuation metric and make an informed decision. We have to consider valuations of equities against the universe of other asset types. With this post, my aim is to take a more holistic look at valuations - particularly valuation spreads - and see if we can’t make investment decisions based on our findings. A Simple Visualization A great place to start with this analysis, and the place that I started when I first began exploring this topic, is a quick visualization plotting stock yields vs bond yields. By doing so, we can start to form a picture on where we are in respect with history. PICTURE It’s important to point out what inferences we might try to gage from this chart. First, intuition tells us that high earnings yields and high bond yields (as defined by the 10-year treasury, in this case) would lead to high forward equity and bond returns, respectively. So the further right on the plot we are, the higher the future equity returns might be. Likewise, the higher (vertically) the point is, the higher the bond returns should be. With further inspection, the right most points correspond with the years surrounding the late 1910’s and early 1920’s; leading into what has been monikered the roaring 20’s. 1982 is also highlighted on this plot; which was the kickoff to one of the strongest bond and bull markets in history. These are in-line with our expectations: high returns happen when yields are high. Duh. Don’t worry, there’s more. More generally, the further up and to the right we are on the aforementioned graph, the better we can expect forward returns to be for a diversified portfolio. It’s apt to point out that 2022 was basically the inverse of 1982, having the lowest bond & stock yield combination in the modern era. In fact, the post-GFC era was essentially hugging the lower bounds of both stock and bond yields compared to the pre-GFC era. We can also start to see a shadow of how bonds and stocks might be related. Perhaps when bonds are yielding higher than stocks, stock returns suffer in relation to bonds. We see that the year 2000 (the dotcom bubble top) had equity earnings yields just over 2% (the lowest in history) while treasuries were yielding nearly 7%. We all know how that turned out. On that note, one might hypothesize that the spread between stock earnings yields and bond yields might be a predictor on how portfolios perform over time. More on that later. Historical Equity-Bond Spreads Let’s first define what the Equity-Bond Spread is: Equity-Bond Spread = (1 / CAPE) - (10 Year Treasury Yield) PICTURE Again, the implication is that the higher the equity-bond spread (simply referred to as “spread” moving forward) the more attractive equities are in comparison to bonds (i.e., equity earnings yield of 10% looks more attractive than a 3% bond yield, the spread being 10% - 3% = 7%) The figure below shows us the historical distributions of equity-bond spreads. Also noted, that today’s valuations lie in the left side of the distribution. Excess Returns The goal of this study is to see if we can find some indication on whether the spread between stock and bond yields is predictive of future returns. The easiest way to accomplish this is to compare a stock heavy portfolio to a bond heavy portfolio. One might argue between something super stock heavy like a 90/10 (stock / bond) vs 60/40. But let’s first look at complete opposites of the spectrum: 90/10 vs 10/90. We’ll define “excess return” as follows: Excess Return = (10 year annualized return of 90 / 10 portfolio) - (10 year annualized return of a 10 / 90 portfolio) As an example, in the year 1990, a 90/10 portfolio had a 10 year annualized return of 13.6% while a 10/90 portfolio had a 10 year annualized return of 5.3%, giving an excess return of 8.3%. Also, in the year 1990, the Shiller PE was 17.05 giving a equity earnings yield of 5.87%. The 10 year treasury yield was 8.21% at that time. This gives a spread of -2.34%. The point for 1990 is shown on the plot below at (-2.34% , 8.3%). The red arrow denotes where we are in 2024. PICTURE The big takeaway from this plot is that 1) stocks outperform bonds almost always and 2) there is a decent correlation between the equity-bond spread and excess returns. When stocks yield much higher than bonds, stock heavy portfolios tend to do better, in comparison, vs when the spread is low or negative. But we already knew that stocks typically perform better than bonds. The better assessment might be when to overweight stocks compared to a more traditional portfolio. Or, better yet, when to take the foot off the gas on a stock heavy portfolio. So let’s do the same exercise, this time comparing a 90/10 to a more traditional 60/40. PICTURE I’ve left the original 10/90 comparison on the plot for the visualization. As expected, the excess returns, across the board, are less pronounced because we’re comparing a stock heavy portfolio to a slightly less stock heavy portfolio. But the conclusion is clear. The spread does appear to have an impact on excess returns. In negative spread environments, we’re not paid nearly as much for the extra risk as when spreads are positive and wide. In highly positive spread environments, excess returns can be in the range of 3 - 5%. Which, we all know, can be very impactful over the long-run. Understanding Valuation Drivers For bonds, valuation is pretty easy: an investor can purchase a bond for a given yield-to-maturity (although returns on bonds aren’t quite as simple). For equities, we should examine the components of the discounted cash flow model. In the long run, a PE ratio might be estimated as follows (this is the terminal value equation): PE = (1+g) / (d-g) Above, “g” is the long run earnings growth rate, and “d” is the discount rate. In the case of price-to-earnings, “d” will be the cost of equity. I won’t cover these more in depth here because this is a very simplified look, but cost of equity is essentially a measure of risk or the required expected return for the asset. From this, we can actually glean a lot of useful information. If the security is considered very safe (ie low risk), the discount rate “d” will be low (since the required rate of return is typically lower for a safe asset). A low discount rate in the equation above will lead to a higher PE ratio. Conversely, a risky security will have a high discount rate, which will lead to a lower PE. A high long run growth rate, “g”, will increase the numerator and decrease the denominator, leading to a higher PE for a given discount rate. From these three ideas, we see that risk and growth are comingled in valuations. Something that’s low risk and has low earnings growth might actually have the same high PE valuation as something that’s high risk and high earnings growth. But the expected return will actually be higher for the high risk security. This all just to say that while PE ratios are related to forward expected returns, they don’t tell the full story. This is an important caveat to the next section. Current Valuations By Asset Classes The following data was pulled from Vanguards Website. VOO = S&P 500 BND = Bond Index VEA = Developed International VNQ = REITs VWO = Emerging Markets PICTURE This chart isn’t meant to be used to decide what asset mixture to make your portfolio. Instead, it’s meant to be used, qualitatively, as a starting point to see what asset mixes might make sense to hold. Typically, in terms of valuations, the further up and to the right (high starting yield + high earnings growth) on this graph indicates higher predicted forward returns. But there are trade offs. Namely, this doesn’t account, directly, for risk. Bonds (BND) is considered ‘risk-free’, but it doesn’t offer any potential for earnings (or coupon) growth. Developed international (VEA) looks attractive compared to the S&P 500 (VOO) on a starting yield basis, but it has offered less earnings growth, and comes with extra baggage in terms of geopolitical risk. But high risk does typically mean higher potential returns. The same goes for Emerging Markets (VWO), but to an even greater extent. Does History Have to Look Like the Past Something else to consider, especially when looking back at the first couple of sections, is “does today have to look like the past?” Do current market environment have stocks overvalued, or is it that historic valuations had stocks inordinately undervalued? Maybe stocks aren’t as risky as we first thought. Especially in the U.S., the largest companies might not carry a ton of risk at all. In that sense, maybe it was the early days of modern capitalism that were inefficient, and we’re now getting to a more balanced regime in terms of valuations, where risk-free bonds yield in the 3-5% range, and slightly riskier stocks return in the 5-7% range. In this case, the current spread environment would make sense, where starting yields are much closer, and the earnings growth potential of stocks makes up the difference in forward expected returns. But this would be all the more reason to hold a diversified portfolio. Why hold only stocks, when stocks and bonds will give a similar range of outcomes. Stocks also offer other advantages over bonds. Namely inflation protection. If inflation spikes, bonds an investor is currently holding will not only lose value due to rising interest rates, but the purchasing power of the dollars tied to those bonds will decline over time. Stocks are somewhat more resilient in that revenues and earnings (assuming steady margins) will rise with inflation. In this sense, stocks are actually less risky than bonds or cash. Inflation also affects the spread in another way. The CAPE ratio uses inflation adjusted earnings from the past. What this means is that in a high inflation environment, the CAPE ratio comes down without any correction in price. We saw this in 2022 where the CAPE fell nearly 30% while the S&P 500 only fell 18%. Due to this phenomena, in a high inflation environment, the metrics used above can correct themselves even while equity prices are climbing. Another potential issue with this study is that accounting standards have changed over time. Earnings today may not be comparable to earnings of the past. I haven’t explored these potential differences here, but it might be prudent to do so if you were to use this study for actionable advice. Conclusions Are we in a Bubble? To give Jeremy Grantham a rebuttal (although, I’m sure he’s not asking for one). No, I don’t think we’re in an outright bubble. U.S. markets might be frothy, and forward returns will probably be lower for U.S. stocks, but we’ve seen in the data above that 10 year returns have been fine given any market spread and valuation. Would I be surprised if we had another bear market? No. But I’d be just as un-surprised if we average 6-8% equity returns for the next decade. Asset Allocations To me, when presented with the data above, it doesn’t seem likely that we’ll be rewarded for holding an overweight U.S. equity portfolio. While equities should continue to outperform bonds for the next ten years, if today’s environment rhymes with history, holding an underweight stock portfolio won’t cost us much in terms of returns. But it may come with the added benefit of lower volatility and overall risk. An underweight portfolio also still has some potential to outperform. That all seems like a good trade-off. In addition, international (both developed and emerging) markets have relatively enticing valuations and return prospects. While there’s no guarantee that either will outperform U.S. equities, they may offer uncorrelated returns that also won’t drag too much on the overall portfolio. In general, given the current valuation environment, a balanced portfolio might be the best path forward for risk adjusted returns. Citations Shiller PE and Treasury Yield Data: https://www.multpl.com/shiller-pe Historical Return Data: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html submitted by /u/beerion [link] [comments]

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first time poster…divorced at 47 and started fresh with net worth around 90k. Had a steady job (160k) that helped with alimony and child support payments. Currently supporting second/last kid in college costing 70k per year (3 more years to go). I have no one else to share and seek suggestions on how I am doing or needs to change investments/allocations in preparation for retiring at 62 or earlier. Here is the breakdown of my portfolio: Condo: valued 525k (bought in 2019, refied to 15 fixed @2.5%), mortgage balance 265k payoff date 10/2035 total monthly payment 3k 401k: 585k (70/30 stocks/bonds) 529: 80k HYSA: 125k Trad IRA: 62k (random stocks/etfs down 35k) Roth IRA: 97k (random stocks/etfs down 40k) Brokerage: 200k mostly in money market HSA: 20k (not contributing now bcos of health issues and can’t afford high deductible plan) Checking: 9k Auto loan: balance 34k@2.5% Current net worth 1.25m Yearly contributions: 401k: max at 30,500. Match 18k. Mega back door Roth IRA: 20k Gross pay+bonus: 240k Net take home pay: 7.5k Current expenses: 4k mortgage+auto loan payments, 2k to 3.5k other expenses Planning to retire at 62 if health permits and I can hold on to my job Social Security payments at 62 is estimated at 2.5k Estimated expenses at 62 is 80k annually submitted by /u/Far-Court-5517 [link] [comments]

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Posts in here often analyze various withdrawal strategies for those with steady yearly expenses, that some of which can be cut back in tough times. But I never see how people handle a known lumpy expense in retirement like funding a child's college education. Let's assume the average cost of attendance of a state school of $25k/yr, and you have 2-3 kids that you're wanting to pay for all 4 years. I know there are opportunities for other scholarships, financial aid and other ways to bring the costs down, but let's assume your kids don't receive those and are on the hook for $200k or 300k all in total. For those who aren't going for r/chubbyfire or r/fatfire and have more financial flexibility, this figure makes up more than 10% of your NW and can make or break your retirement if not properly planned for ahead of time. Unlike retirement, paying for college is a fixed 4-year period and if the market tanks 50% like it did in 2008-09 you don't have the luxury of delaying until the market recovers, so you can't go with 100% stocks. Many Millennials in here were in or about to start college and can relate to this scenario and would've hated if their parents took too many risks with their college funds that jeopardized their future. Assuming that you never want to go back to work or alter these college plans in a GFC like scenario, what does your optimal asset allocation look like? How does it fit in with the rest of your retirement withdrawal strategy? Do you do a glide path/tent to cash/bonds a few years before, and when does that start? Edit: I'm aware of the concept of slowly moving to bonds or cash to preserve capital, but at what rate? Does anyone have any back tests or mathematical evidence for starting 1 year before vs 10 years before etc. What percent in equities etc? Obviously it probably can't be as risky as in retirement since its such a short spending timeframe submitted by /u/9stl [link] [comments]

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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. submitted by /u/AutoModerator [link] [comments]

In tax sheltered accounts like 401ks and IRAs, re-balancing is straightforward since there are no tax implications until you withdraw. Is there any way to rebalance a non-tax sheltered, individual brokerage account in a tax-efficient way? I don’t think this exists, but thought I would ask the community at least. My individual investments are too skewed towards a few individual stocks for my liking, but I think if I’d want to rebalance I’d just have to sell some and eat the capital gains that year, right? What do y’all do when your holdings are uncomfortably skewed toward a few stocks aside from avoiding that situation in the first place? (I have only been doing broad index funds like VOO and VTI for a long time now and plan to only invest in these in the future, until it’s time for bonds). Thanks in advance! submitted by /u/robo_capybara [link] [comments]

Hi, I recently discovered the FIRE idea and have done a bit of reading but am a bit confused about balance "during" achieving FIRE. I guess I'm wondering if it's another workaholic scam of some sort or can actually be attained sustainably. What I mean is, to achieve FIRE is it sufficient to just be diligent in your work and frugal with your earnings, or is it about putting in 60-hour weeks for 10 years and "sacrificing" your 20s/30s for your 40s+? I was recently talking to a gentleman I've known for a while, who is around 30, and he was telling me he hasn't been home before 6PM from work since he started in his early 20s. I don't agree with this mentality, as you can't "save up" your time and live it later, once it's gone it's gone; you never get your youthful 20s/30s back. I recently quit/resigned from medical school where this "scam" was super prevalent also; "sacrifice 10+ years of your life putting in 60+ hour weeks and when you're 35/40 you can begin to live life a little". I'm the type of person that would much rather put in a steady 35/40 hours per week and live well steadily along the way, enjoying every week, than do some sort of burnout scheme for a potential reward when I'm too old to enjoy it properly. Anyways. thoughts? Is FIRE a reasonable idea to pursue while maintaining a healthy/balanced work-life balance? Thanks. submitted by /u/Post_Base [link] [comments]

Hoping to get an early sanity check on retirement trajectory! My dad died of liver cancer this past year and he was 68 years old. It really makes the standard retirement age of 65-67 look insane to me when it seems like I have a good chance of dying of cancer at the same age as him. My wife and I have a mortgage on a house we want to live in until we are very old. It has an attached in-law apartment we rent out for supplemental income. Debt: Student Loan 3.375% $9,026.48 Car Loan 3.900% $24,584.97 Couch Loan 0.000% $6,092.66 Mortgage 3.125% $470,998.72 Current monthly budget: +Job Income (Pre-tax): $14,834 +Rent Income: $1,925 -Taxes and Insurance $3,343.81 -Retirement: $2,400 -Mortgage: $2,101 -Mortgage escrow: $865.59 -Car Expenses (Gas, insurance, maintenance, care): $372 -Utilities: $835 -Car payment: $553 -Couch Payment: $120 -Student Loans: $53.56 -Food and misc: $1,548 Expenses Total: $6,449 Investments and Investment Activity Monthly 401k Contributions with Employer match: $2909 (Does not include Roth IRA which we just maxed out for 2024 and might into the future) Retirement accounts sum of balances (401ks, Roth IRAs, IRAs): $152,845 Regular Retail Investment Account: $48,794.00 Goals We want to be able to stop working without losing our home or decent standard of living. Age is up in the air, but it would be great to stop working at 55. We want a couple kids. I hear this is an earth shattering financial decision but we have personal intrinsic reasons for this. I am unsure of how much money we will need in retirement as our budget doesn't really include healthcare. Is it too early to forecast monthly retirement expenses? If we paid off our mortgage and continued to collect rent today, we would only have $2500 left in expenses to cover with job income. Of course we would want to travel on some level in retirement. submitted by /u/Zephyr4813 [link] [comments]

You have 10 years until early retirement. You have $7k each month to invest into real estate or stocks. You cannot invest in IRA/401k/HSA and you have built a strong emergency fund. You started buying real estate 10 years ago and currently own a small real estate portfolio today. How would you invest your money? Do you: 1. Continue to buy real estate. Buy one single/multi family rental each year for the next 10 years 2. Save your money for a few years and buy a larger apartment building closer to retirement 3. Stop buying real estate and Invest in stocks and REITs 4. Stop investing and pay off all mortgages. Currently 65% LTV across my portfolio. 5. Simplify my life, sell off all rental real estate, buy more stocks and live the 4% life 6. Do some combination of things listed 7. Do something else not mentioned here. submitted by /u/False-Ad4427 [link] [comments]

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. submitted by /u/AutoModerator [link] [comments]

Aloha to you all, Always active on these financial Reddit forums and thought I’d finally make my first post in one. I am a 24M born and raised in Hawai’i. If you don’t know, the cost of living here in Hawai’i is higher then most in the US. I sometimes feel I’m behind in my finances at my age and just maybe want some feedback on anything I can do better. I have no car loan , I’ve never went college (so no student loan), and credit cards which are paid off every month. I’m been recently been becoming extremely aggressive with investing my money (I wish I started earlier) . I am a valet driver here in Hawai’i (but surprisingly make enough where I’m in a “comfortable” living situation) . My current investments below. 26k in a taxable brokerage account 20k in my Roth IRA (started in 2022) 14k in 401k (I contribute 12% of paycheck, my job matches up to 6%) 10k in actual gold (I made a bad financial purchase of buying a 14k gold rope chain) 4k in crypto 4k in savings account I’ve set financial goals for myself in the amount I would like to have invested in at some point. One of main goals is that I would like to achieve 100k in my taxable brokerage account alone by my 27th birthday (hoping to get there before that). Currently with the housing market here in Hawai’i, I have no interest in buying a home here anytime soon . I pay about 1300 in rent per month. Let me know what you guys think . Mahalo (thank you) submitted by /u/Keolacampa [link] [comments]

After reaching what felt like FI ($5.0m nw) my husband and I are divorcing. We have been living full-time in an RV travelling the country, so no home and the only debt we have is $250k loan on RV. We are both 60 and retired. I am currently a SD resident so no income tax. Once we divorce I will have about $2.4m in retirement accounts (only about $200k in Roth) and $300k in brokerage account. So from day one I will need to sell securities to fund living expenses - which is basically what we have been doing the last 3 years. My struggle is that I need to buy a home. I've been considering Palm Springs, having wanted to live there all my life. Not a cheap option nor a good time to buy with high mortgage rates. I rationalize that when we bought our condo about 30 years I think our rate was over 8%. Refinanced several times to get rid of PMI and lower rate. I find my myself drawn to properties in the $1.1m range. Does that seem crazy? Although we have had a relatively high NW, we didn't live extravagantly beyond nice vacations, so we never worried about having a budget. So I'm struggling with the thought of selling a big chunk of my investments, incurring the federal tax bill, and taking on a big mortgage. Of course, the current SD residency will help me at least save on any state tax until such time as I move. Am I crazy? Edited to note that I plan to take out a mortgage. I would put down up to $400k potentially. Edited to note I knew it was crazy but getting divorced is difficult and some days you don’t think rationally. Part of it was wanting to have the life I’d imagined as a couple. Also for those that assumed I was the wife in the situation we are both males. I have managed our finances and we did well. This was all about the note above. Appreciate the advice, especially the counsel to not rush and to rent. Trust me I’ve never been one to rush into any decision - drives the STBX crazy. submitted by /u/PositiveLawfulness88 [link] [comments]

I've been loosely following the FIRE community for a couple years and made some good financial decisions with the knowledge but never jumped head first. I've been extremely blessed to have a good paying job that doesn't require a ton of effort (for now). They recently did some layoff and something in me snapped and I have decided to actually lay out a plan for early retirement and am looking for some advise in organizing my contributions. My plan is retire at 53, when my youngest will graduate college. My current salary is about $86.5K and I get an annual bonus which puts me at about $100k. They have a 401k match at 8% so I max that out and it is in a Roth account that is all in an SP500 Index fund. Current balance on that is about $90k. I also have old 401ks that I converted into IRAs Traditional ($68k) and Roth ($22K). Additionally I have an inherited IRA from when my dad passed away several years ago, I have take a RMD every year but I usually take the bare minimum out of it ($66k). On top of that, I have been trying to put my bonuses straight into investments and so far is in a brokerage account which is just a growth index fund ($16k) ​ 401k (roth) $90,000 Traditional & Inherited IRA- $134,000 Roth IRA- $22,000 Non-qualified- $16,000 ​ I think I would be happy with a million but really trying to get 1.5 if I could in 13 years. What should I be prioritizing? I will continue with the 8% employer match and then I think I am going to try to max out my Roth IRA but not sure if the rest should go into the brokerage. Right now my take home pay every month is about $4,400 with estimated expenses (inflated to be safe) of around $3,500, including my kids 529 contributions. I have generally been frugal all my life. I have about $8k in debt due to replacing our AC unit last summer. I want to get a little more aggressive but don't want to screw myself in taxes. submitted by /u/PopularConcept7672 [link] [comments]

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. submitted by /u/AutoModerator [link] [comments]

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. submitted by /u/AutoModerator [link] [comments]

Hi everyone, I (M23 from Australia) want some insights as to how people managed to be able to afford to "lie flat" financially? Lying flat is where one rejects the culture of overworking, while doing the absolute bare minimum to survive. The reason behind why I asked this question is because I see no future in being forced to work tirelessly for 30+ years and sucking up to the corporate world. I would like to ideally work for 10-15 years, while saving and investing to the point that I can afford to BaristaFIRE (where I can work low-stress jobs or pursue interests for a living). My long-term goal is to potentially own a very small townhome/villa in a low COL area in Australia (anywhere), and eventually "lie flat", obviously while still working, so I have the freedom to not be forced to continue the corporate rat race for my entire life. I honestly just don't see myself working until past the age of 60 in corporate. I mainly posted this to gather everyone's perspectives on the situation. I would really appreciate your advice and wisdom! submitted by /u/Traditional-Emu-2541 [link] [comments]

What are the pros or cons of using a single ETF like $AOA as my core holding? Seems like a easy and simple way to get global exposure. I can see a scenario where I allocate, say, 80% of my money this way and maintain the other 20% rotating between US stocks / Intl stocks / cash depending on if i want a risk on or risk off posture. I know expense ratio is higher than say $VOO or $VTI so that seems like an obvious downside. What are your thoughts? ​ submitted by /u/cpa-grind [link] [comments]

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. submitted by /u/AutoModerator [link] [comments]

Looking for a reality check… We currently have a 2 family that we have made architectural plans to renovate into a single family. Total renovation costs would be up to $275k. It’s also multi year disruptive as we’d renovating in stages. A real alternative is buying something else with $200k of cash that we’ve saved for 1st renovation phase, and renting out the current 2 family home. Current mortgage (2.9%) = $3,500/month Mortgage of the two homes would be about $9,000/month but rent would collect at least $4,500/month. After 30 years, I estimate that the situation where we rent our current home and buy another would net us at least $2MM more in net worth when we sell (in todays dollars), likely closer to $3MM+. The home we currently occupy is in a super prime location in a top school district in a HCOL MA suburb. It was fully rented when we bought and it is very rentable (though we’d probably do about $50k in deferred maintenance upgrades to make it more hassle free). TBH our heart was kind of set on staying and renovating, as homes in this neighborhood are harder to come buy. But the gut check of leaving that much money on the table is setting in. We are high 30s, 2 young kids. Total HHI is about $290k/year, but don’t see a ton of upward income movement frankly. I’m handy but being a landlord for a few years when we occupied just 1 of the units was inconvenient with babies. No significant debt other than mortgage. Currently maxing 401ks, IRAs, and HSAs, plus putting some in 529s and taxable when I feel like it. Am I a total idiot for not just renting out our current house and buying elsewhere (same town different neighborhood)? submitted by /u/benberbanke [link] [comments]

My wife and I are 48 y/o DINKs who didn't meaningfully start saving (edit: which means we had maybe $100K, not including mountains of debt, in 401k up until maybe 41 or 42) until into our early 40s. Despite that, I can see a clear path to FIRE by some time between 4-7 years from now. We don't work in Tech and have (for now) our own student loan debt to pay off. I've seen an increasing number of 20/30-somethings in here and also older late adopters like us. So I thought I'd share this as a little nugget of hope. A few observations: Reddit has incredible communities filled with people who provide independent links to helpful insights. This and the various FIRE subs are invaluable. If you can afford to start saving and investing today, even a little money, do it. Time is better than a big salary/high revenue. If you can't yet save yet, spend less - right away. There are lots of free hobbies. I used to love relatively nice clothes and shoes, now that's all in a thrift store or wherever Salvation Army puts clothing donations. Spending less is habit forming. Learn to be good partners with your spouse if you have one - staying together avoids the biggest wealth killer. We have stared up at six figure debt a couple times. It sucks. But sticking to a good plan got us through. It can be overcome The Money Guy Show. Early Retirement Now. YouTube. All good sources. Being around people who are talking about saving and investing rather than spending makes it easier to focus. You don't have to live like a monk to build your wealth, even if you didn't start early. We have experienced reverse lifestyle creep because what we want most is health and the company of loved ones (and travel, but the travel hack world makes that possible for less). It obviously helps to invest in yourself with an education or skills that have market value. It helps to live in less house than you can afford and to drive paid off vehicles. But I'm just over the last six years applying the lessons more seasoned people on here suggest and have seen the power. If I'd started even 10 years earlier I'd probably be typing this from a flat in Lisbon or a beach some place. But starting late doesn't mean a secure future is out of reach. submitted by /u/chefscounterfan [link] [comments]

Long time lurker, throwaway account just in case Found out through the grapevine yesterday that I’m gonna get fired later this month. Have been FI for a few years now and honestly haven’t been working as hard as I could be, so guess I don’t really blame them. That being said it was still kind of sudden/shocking so I don’t feel super prepared. Thought I had at least another year, but guess these things happen. Figured I’d use this opportunity to go ahead and try out RE, at least for a few years and see how it feels (For the curious, I’m in my late 30s, NW 3.6mm, annual spend hovers between 80-100k, partner not currently working but may again in the future. Worked in tech that whole time, mostly steady accumulation, had some luck with some startups but not any one huge windfall or anything like that. Happy to share more details too if people are interested) Anything I should be figuring out over the next few months? Some things that came to mind: Stop my vanguard auto invest and figure out how to start selling instead of buying. Thinking of just selling enough every quarter to replenish our bank account, I guess from the oldest tax lots first. Maybe I should take advantage of being in a lower tax bracket these next few years and just sell more than we need though, in case one of us goes back to work later Figure out health insurance - I think I can stay on COBRA for a while but may be cheaper to shop for a marketplace plan? Honestly have no idea so need to look into this more, have just always used the company health insurance since I graduated lol. Need to add this to our budget too Already maxed out 401k for the year luckily so not much to do there (probably no time to make changes anyway though) Maybe tweak our asset allocation - I always envisioned doing a bond tent leading up to RE but guess that requires you to control when you RE lol. Currently ~95% equities (70/30 VTSAX/VTIAX) and the rest in bonds/cash. Not sure I wanna take the tax hit of moving to something like 40% bonds immediately though, so I may just leave it as is. Or sell only from the stocks every quarter so the bond % goes up over time. I feel like we have enough buffer in our SWR that it may be fine to just stay 90%+ equities though, need to think about this more We’re currently renting, we were sort of toying with the idea of buying a house but haven’t found anything we liked. Not enough time before they pull the trigger so guess getting a mortgage will be more annoying if we end up doing that, but guess we’ll figure it out later Get over negative feelings about being fired - kind of surprised myself but I’m more upset about this than I thought I’d be, don’t really blame anyone but still doesn’t feel great. Don’t love that the end note of my career will potentially be being fired. Guess it doesn’t bother me so much that I’m gonna go get another job though 🤣 Sorry if this is a bit rambling haha, actually surprised at how much more existential I’m feeling about not working anymore, so still kind of processing things. I always thought that since I was already FI and not working very hard that it would be a smooth transition, but still feeling a lot more uneasy than I thought. Just keep telling myself to trust the math I guess haha Let me know if there’s anything else major I should be figuring out. Hope it was an interesting read! Promise I’m not just fishing for GFYs lol submitted by /u/More_Supermarket1193 [link] [comments]

Long time lurker first time poster. Sharing my journey thus far partially for myself to reflect on my misguidedness and to update periodically, and partly for anyone who may resonate with my situation. TLDR and graphs at the bottom. For some background - I’m 31M and live in Toronto with my partner. I grew up in a small town and was the first person in my family to go to university. My parents struggled with work and likely instilled many bad money habits in me that I’ve been working to break (more on that later). At my lowest point only a couple years ago I had a NW of -212k mostly in a high interest LOC, and I was sure I would never turn things around and dig myself out of this hole. Now I’m sitting quite happily at just shy of +$15k and hoping to now make up for lost time. Onto the story… The Student Years I’m a pharmacist by training, and currently work in the pharmaceutical industry. I took quite an extended path to get here, and all of my schooling was payed for by myself since my family could barely afford to keep themselves afloat let alone fund my schooling. I guess I never really knew what I wanted to do for work - in fact I didn’t like the idea of working at all and had a vague idea that I’d love to retire early. I loved being a student, and was happy to meander my way through various programs semi-aimlessly simply because I enjoyed learning. And I felt (naively) that since I was studying something in STEM, everything would magically work itself out - no worries. So from 2011-2015 I worked on my bachelor’s degree. During my time in this program I lived at home. This was perhaps one of the few wise financial choices at the time, although sometimes I do still wish from a life experience perspective that I had chosen to live in residence to get the full experience. And I sometimes wonder if having to be responsible for my own cost of living would have lit more of a fire under me (maybe? maybe? probably not.) By the end of this degree I only owed roughly $20k in government provided student loans - thanks to lower tuition up north combined with a few thousand in grants and bursaries because I was low income. Next, I decided to complete a Master’s degree from 2015-2017, essentially to kill time and delay making any real decisions because I hadn’t the slightest clue what I wanted to do. During these years I lived with an ex-partner, and had a modest stipend that I used to pay the bills. By the end of this degree, I now owed around $35k and still didn’t really know what I wanted to do. I ultimately decided that working in a lab was boring as shit and I wanted more human interaction, so I wrote my PCAT and went to pharmacy school in the fall of 2017. At the time I thought this was a smart decision, since at least going to pharmacy school would end in a professional degree and it would lead to a defined job - right?. Turns out the joke was on me - I never actually stepped foot in a pharmacy to get a sense of what the job was really like. Turns out it SUCKS. Now’s not really the time or place to get into how soulcrushing the job is (/r/pharmacy is that way) but at least in the US they pay pharmacists quite well - up here in Toronto by the time I was graduating, there were job postings for <$40 CAD an hour and declining due to oversaturation. Anyway, I digress. I did my 4 years of pharmacy school from 2017-2021 while living on my own in Toronto. The bank gave me a professional LOC of $175k to pay for tuition and living expenses. Someone with better financial sense than me would have treaded carefully with that amount of cash available knowing that it accumulates interest and it would need to eventually be paid back. I was not that person. I took this as a blank cheque to spend $175k and buy whatever dumb shit I wanted. My schooling during these years cost around $90k in tuition - about half of this was covered by government student loans, partially as loans and partially as grants. The other $45k came from my LOC, as did my roughly $20k/yr in living costs. This was already pushing my LOC dangerously high, but during COVID I made the highly regarded decision to take a bunch of money out of my LOC thinking I could make a shit ton of money on memestocks and crypto. Obviously, I did not succeed. My net worth at this time was around -210k. And in case you were wondering, to add the cherry on top of all of the above nonsense, I was not in fact working at all during my schooling. Transitioning to work life Flash forward to 2021. I decided pharmacy sucks, and decided to work in the pharmaceutical industry instead. This was the first actual good decision I made - not just for my own day to day QOL, but I came to realize this would make for a better life down the road as well. Pharmacists often make around $100k, sometimes a bit more or less, and often do not have perks, full benefits, or a fair amount of vacation time. The first step to make this transition was to complete an internship. I made ~55k during this year with no benefits. Enough to live and not much else. Thankfully my government and bank loans still counted this internship as schooling so they weren’t coming to collect on my debt just yet - but I was starting to feel the weight of what was coming my way. I was 29 and felt like I was just starting my life but with a small mortgage hanging over my head with very little to show for it. Once my internship was done, I landed my first gig in pharma. Got a salary bump up to 120k, and shortly after received a COL adjustment to 124k. This job also came with a company car, good benefits, RRSP (401k - i think?) matching, and a 13% bonus. I felt really great when signing the offer letter, but soon enough the debt repayments came around and I felt like I was drowning and didn’t know how I’d ever build myself towards retiring early. My cashflow looked something like this: Gross income: 124k. Take home income (after all taxes and deductions): 72k/yr or 6k/mo Monthly expenses: Government loan repayment: $500 Bank loan repayment: $1450 towards principal on a 10 year payback period + $1000 interest = $2450/mo Rent: 1900 (quite low for 1 bdrm in Toronto now) After these expenses, this left me ~$1100/month to cover utilities, food, home items/toiletries, public transportation, and health costs that my work plan didn’t cover. At this point I saw what my future would look like at it was not at all what I’d been envisioning for myself. I thought when I started working I would be finally free to do all the things I had been postponing through my education - saving for retirement, travelling, going to restaurants. Just living a solid middle class life. Instead, I realized that for the next 10 years, until I was 40, I would be just skating by with $1100/mo to cover my expenses due to the heavy burden of my loan repayments. I was extremely anxious that I wouldn’t be able to retire at all, let alone retire early. Consumer proposal and the recovery If you’re still with me - thank you. I know it’s been a lot but personally it’s been cathartic to write this all out. Based on the situation I described above, in 2023 a few things happened which have been monumental to turning things around. The first is that I decided to file a consumer proposal - which is basically a bankruptcy-lite. It’s specific to certain lenders (in this case, the bank with which I had my private LOC), and the insolvency trustee works to find a middleground debt repayment amount to the lender at the expense of tanking your credit score for a maximum of 6 years, depending how quickly you pay it off. We landed on a repayment total of $70k (out of my almost $175k LOC) which would be paid back over 5 years interest free. This gave me a lot of room to breathe due to lower monthly payments and not throwing $1000/mo into the interest black hole. My focus has been to pay it off as quickly as possible. The second, is that after filing my proposal - I’ve been focusing on increasing my income. I managed to job hop to another company and am now getting paid $141k (up from $124k) and with better benefits. The last, and most important, is that I met my current partner who has been amazing and beyond selfless in helping me recover. We connected very strongly and were aligned on working to build a life together. She entered the relationship coming from a more financially secure position than myself (not a high bar lol), and partway through the year she offered to have me move into her condo that she owns rent free (while still contributing to all our other shared expenses). I initially felt quite guilty about this, but after many conversations, her position was that the sooner I can clear myself of my debt - the better it would be for us as a family. I cannot describe how lucky I am. With that, I’ve been taking all the money I was saving on not paying interest on my loans together with the money I was saving on rent, and have been relentlessly piling on to my debts. As of tomorrow, my consumer proposal will be paid off in full. I now have roughly ~45k left in government student loans that are interest free, so I am in no rush to pay those. Now my focus is on building my wealth through index funds and investing large portions of my income, as well paying back my SO. And so begins my true journey towards financial independence. Bonus: Here’s a chart of my net worth as tracked since I started using YNAB in 2021. TLDR; Came from poor family, made poor choices with schooling and student loans, hit rock bottom at ~212k, filed consumer proposal, got good job, met dream partner, feeling optimistic about the future. submitted by /u/AbsolutBalderdash [link] [comments]

THE RESULTS AREN’T IN YET…DON’T ASK… Ok, now that that’s done…again…..go ahead Mike, ask anyway…the official 2023 FI survey is now accepting responses. ALL data will be released in a spreadsheet to the sub. If you’re not comfortable with that, don’t take the survey. Whenever possible, identifying information (such as age) is obscured in ranges. The survey does not ask for location, username, email, or other unique information, so your privacy is reasonably protected. Because there are several numbers involved, here is a preparation spreadsheet you can use to organize your information before opening the survey itself. For previous results, go here. Survey Instructions These instructions are also available on the first screen of the survey, but you may want to keep this post open in a separate tab to refer back to them. Throughout the survey each section includes instructions at the top of the page as well. The survey will take approximately 20 minutes to complete, depending on how prepared you are with your numbers. Enter all annual information for calendar year 2023 (January 1 – December 31, 2023). Enter all point in time data (like account balances) as of December 31, 2023 (or as close thereto as you can get). Enter all amounts in current dollars (or your native currency). The survey asks how many people contribute to your household finances, and thereafter your responses should include all assets, debt, etc. belonging to those people. You determine the number of people who contribute to your finances. Demographic questions include demographics for "contributor 2" and "contributor 3", if you have more than one person contributing to your household income, you can include their demographic information there. Remember that personal finance is personal. Enter your numbers as you interpret them, personally. If you really get stuck, I will be watching this thread and answering interpretation questions as able. Because personal finance is personal, some buckets may not be precisely consistent with your personal buckets. You are able to return to the survey and edit your answers later if needed; just skip to the end and submit to get your return link. The survey will be available for the entire month of April. Enter dollar amounts as a whole number, appropriately rounded. E.G. $32,594.56 is entered as 32595. Enter percentages as a number, not a decimal. For example, 4% is entered as 4 (not .04), 20.5% is entered as 20.5 (not .205), etc. Do not use symbols for dollars ($) or percentages (%). At the end of the survey, you will be asked for any comments on the survey. If you had any confusion or issues with a question, please refer to it in your comments by the question number plus a brief description of the question (question numbers change depending on your circumstances). Because the survey does not ask for identifying information, I will not be able to follow up with you, so please be as specific as you can about the issue or difficulty you encountered. Almost all questions are skippable; if a question does not apply to you or you haven't yet determined the answer, skip it. The survey will ask for an approximation of the cost of living for your area, use this Cost of Living Index and get as close as you can. If you are on mobile, find this number before you open the survey so you don't lose your survey progress. Now that you’ve read all that… you can go take the survey! submitted by /u/Melonbalon [link] [comments]