Support NeoGAF

[juliushandle]

do you know about FIRE, your age to reach financial independence, what about your net worth?

why must personal finances be so personal? most of my friends don't even wanna discuss the issue until they're in their 50s. this discussion should begin once someone enters the workforce so they can start investing long term and begin compounding.

so What Is the F.I.R.E. Movement?

F.I.R.E. stands for “Financial Independence, Retire Early.” the goal is to save and invest very aggressively—somewhere between 50–75% of your income—so you can retire sometime in your 30s or 40s.

your financial independence number is a benchmark to determine retirement preparedness. it’s also known as the FI number.

financial independence is achieved by:

1. building enough passive income to cover annual expenses,

2. or a massing a lump sum of enough savings and investments to cover living expenses through withdrawals,

3. or a combination of #1 and #2.

the financial independence number is the target lump sum. calculating the amount answers the question, how much money do I need to stop working full-time.

net worth is the value of all the non-financial and financial assets owned by an individual or institution minus the value of all its outstanding liabilities. you can find calculators online for this.

 

[12Goblins]

Do you just invest in total stock market index funds and live off the earnings? and depending on how much your lifestyle costs is how much you need to save up

Been reading JL collins which seems to be a similar philosophy

 

[greyshark]

I’m a big proponent of starting early with your retirement plan, but I am skeptical about FIRE. Can you really live that frugally for so long, and how is that impacting your quality of life?

There are too many unknowns in my mind to confidently say 25x my planned expenses is enough to quit working as early as 40.

 

[12Goblins]

I’m a big proponent of starting early with your retirement plan, but I am skeptical about FIRE. Can you really live that frugally for so long, and how is that impacting your quality of life?

There are too many unknowns in my mind to confidently say 25x my planned expenses is enough to quit working as early as 40.

All the best things in life are free, my friend

 

[DESTROYA]

I’m already there after selling a business of mine a couple of years ago, I probably can retire right now but I get bored easily and I’m not even close to my 40’s yet.
People don’t realize but you have to start this shit early ( in my younger days before starting my business I regularly worked 2-3 jobs at the same time weekly working 80-90+ hours )and have some semblance of will power to not buy everything you want ( fuck credit cards they have fucked more people than helped ) .
People get into the bad habit of charging everything on a CC and then shit their pants at the end of the month when they overspend and can’t cover it so they just roll over interest that keep on piling on.
One of my rule of thumbs was if I couldn’t pay in cash or at least pay it off by the end of the month I wouldn’t buy something.

 

[Cyberpunkd]

All the best things in life are free, my friend

False words if anything I see. What is free has no value. FIRE is a fad perpetuated by Youtubers who laugh on the way to the bank to pick up the ad check from people really believing this stuff, same with all the ‘minimalist experts’ who happen to be students fully decked in Macs and expensive equipment to make said videos.

 

[juliushandle]

"retirement" doesn't mean sit your ass on the couch and do nothing til you die. being financially independence should mean that you no longer needing a paycheck to pay bills. personally, my FI number is 50, in 5 years, and I still plan to work in some form just on my own time and at a tax bracket that makes sense to me.

 

[12Goblins]

False words if anything I see. What is free has no value. FIRE is a fad perpetuated by Youtubers who laugh on the way to the bank to pick up the ad check from people really believing this stuff, same with all the ‘minimalist experts’ who happen to be students fully decked in Macs and expensive equipment to make said videos.

maybe the dumbest shit I read in a while. relationships have no value? self cultivation has no value? Your Health? Truth? You probably think helping others has no inherent value either

 

[greyshark]

maybe the dumbest shit I read in a while. relationships have no value? self cultivation has no value? Your Health? Truth? You probably think helping others has no inherent value either

Of course those things have tons of value - priceless even. But the context of this discussion is being able to live with financial independence. The most valuable part of my life is my family, but I still need to work to put food on the table and a roof over our heads.

 

[Taxexemption]

50% of your income seems ridiculous unless you are a high earner. I think most people would need to live with their parents to do that cause of how much of their income would go to rent and other essentials. I do agree with the idea of saving and investing to try to retire early, I just think that goal might be unreachable for a large percentage of people.

 

[greyshark]

"retirement" doesn't mean sit your ass on the couch and do nothing til you die. being financially independence should mean that you no longer needing a paycheck to pay bills. personally, my FI number is 50, in 5 years, and I still plan to work in some form just on my own time and at a tax bracket that makes sense to me.

Do you have kids? If so do you plan to pay for their college? What is your plan if there’s a market downturn 10-15 years from now?

Not trying to call you out, legit curious how you are handling questions like the above - I ask myself those questions constantly when thinking about my own retirement plans.

 

[Starlight Lotice]

Watched about FIRE months ago and honestly think it is a great way to retire early, but you need some luck to find those great young companies to 10 or even 100x your returns in 10 to 20 years.

Tracking an Index will get you decent returns but may not change your live overall.

Trying to get some great Growth Stocks to then pay into my Dividend Stocks in the future to make a Wage from it!

Unrealistic Goal for me is to retire at 45 (14 years time), but realistically it will be before 60 if I can invest for the next 29 years.

 

[Pagusas]

My wife and I could retire now, both in our mid 30’s, but we both love our jobs and love fancy things. We already normally take 4-6 vacations a year and buy or do whatever we want, not sure what more we’d honestly do during retirement? Our jobs already give us way more time off then we can possibly use, and we are so far up in our careers we no longer work set hours, rather we work till the deadlines are met then relax.

 

[12Goblins]

My wife and I could retire now, both in our mid 30’s, but we both love our jobs and love fancy things. We already normally take 4-6 vacations a year and buy or do whatever we want, not sure what more we’d honestly do during retirement? Our jobs already give us way more time off then we can possibly use, and we are so far up in our careers we no longer work set hours, rather we work till the deadlines are met then relax.

can I ask what you guys do for a living? are you in the US?

 

[Pagusas]

can I ask what you guys do for a living? are you in the US?

Both in the US (Texas), I'm a Upper-level Marketing Strategist for an international medical science company and have my own side business as a Commerical Video Director for large budget productions. My wife's a high-end commercial insurance manager for fortune 100 companies. We both worked extremely hard in our 20's and early 30's to become known in our fields and specialize in specific areas that were high value and gave us a lot of down time. Basically, our careers require us to work smart and efficient, if you're griding 40 hours a week you'd fail hard at these jobs as it means you managed your workflows and systems extremely badly.

I followed the Jay Leno model for my finances from an early age: Always have TWO jobs, one that pays the bills and fills savings, and another that you use for your fun money and quality of life. When we got married, we made sure ALL of our expenses fit on a single income, and the other incomes were used for building retirement, savings, and lots of fun like building the house of our dreams and vacations.

 

[MaestroMike]

I've come to the conclusion that I need to move my as$ and be active for the rest of my life for good heart health no matter what & since thats the case I'll probably work until the end even if it tapers down a bit as I get older and if there are periods when I'm out of a job, I'm still going to be doing a lot of low intensity exercise regularly (high intensity less frequently). Pretty sure lot of people this past year sabotaged themselves when everything was locked down & they had to stay home & didn't keep up regular cardio. Sedentary lifestyles are hidden killers.

 

[juliushandle]

Do you have kids? If so do you plan to pay for their college? What is your plan if there’s a market downturn 10-15 years from now?

Not trying to call you out, legit curious how you are handling questions like the above - I ask myself those questions constantly when thinking about my own retirement plans.

married no kids so yes dual income helps a ton and my wife is in line with me financially. she is younger so she doesn't have the nest egg that I have so she will continue to work for another 5 years after I quit my job.

as far as downturn, I have robo advisors and pay a 401k management company and both will move $ from riskier stock funds to safer bond funds.

I also have a good amount in my emergency fund and haven't been in debt for over 2 decades besides mortgages on rental property that I bought in my 20s.

we also live in California so when I quit we decided to move to another state where real estate is more affordable. if we stay in California I calculated I'd have to extend my employment for another 5 yrs which I don't wanna do.

I see early retirement as me working part time and doing things I enjoy like train jiu jitsu and indoor rock climb.

 

[poppabk]

If you retire early where is your health insurance coming from? My health insurance if I was paying my employer's share would be 25k a year for a family.

 

[Maiden Voyage]

The wife and I are already financially independent. No debt, house paid off, etc. Our retirement accounts are currently enough that we could completely stop contributing today and should have enough to live off when retirement comes (assuming the market continues to average the same amounts as the last 100 years).

We're keeping our jobs though and continuing toward fat fire. This should help cover any unforeseen medical or other expenses. With that figure in mind, 2033 is the current year we expect to fully retire (again, assuming the market is fine). This is a fairly conservative estimate as we tend to out perform my numbers every year.

Finance is super personal and people tend to assume the worst when it comes to money. I don't know well other people's circumstances either, but if they aren't saving or do not understand investing, they probably don't understand how others can accumulate wealth.

I avoid telling most people I want to retire early or that I'm saving 60% of my earnings because they think I either live in total poverty (I don't) or that I must have gotten it from my parents (definitely not).

I like the fire movement but there are a lot of followers who themselves don't understand the process or how the outcomes could go.

 

[Mihos]

If you retire early where is your health insurance coming from? My health insurance if I was paying my employer's share would be 25k a year for a family.

Your not retiring early if you have to cover more than yourself and a spouse

 

[Maiden Voyage]

I should add as well that I don't use the 25 times your salary/expenses route. I use Monte Carlo to determine likelihood of my nest egg surviving, which is itself more conservative.

Learn about money

retirementplans.vanguard.com

25x my expenses has an 89% chance of surviving at 50 years, whereas the number I want has a 95% chance. Your personal comfort can dictate your own number, but I don't like to leave things to chance when possible.

 

[NahaNago]

I was a big follower of the fire movement but then I got the travel bug 2 years ago and the bug has been getting worse. I plan on traveling sometime this year as soon as countries allow. I feel like I've wasted enough of my life. I like the idea of fire and I've been watching what I spending a lot more. It is amazing now that I think about how much money I was wasting.

 

[Amory]

So you save all your money when you're young, and forego a lot of the fun of youth. Then you retire very early, probably with a fairly modest nest egg, and can't really afford to have fun later?

Eh.

To each their own but it seems very extreme to me. And you'd need a lot of hobbies to keep yourself busy for all those years

 

[Pagusas]

I was a big follower of the fire movement but then I got the travel bug 2 years ago and the bug has been getting worse. I plan on traveling sometime this year as soon as countries allow. I feel like I've wasted enough of my life. I like the idea of fire and I've been watching what I spending a lot more. It is amazing now that I think about how much money I was wasting.

It really is a balancing act. One of my groomsmen died this year of Covid, 40 years old, biggest saver and most frugal guy ever, his dream was to retire and travel the world. He never got to do that because he spent his whole life planning for it but not doing it.

Fire is great... but if you died next week and all you have amounted to is a number in a bank... well then you screwed yourself out of living. Don't forget the present by living for an unpromised future.

 

[juliushandle]

it doesn't have to be extreme. find your own balance.

key is to manage debt to a minimum, start investing early, and keep the investing compounding. the rest is easy after that. the level of fun and spending is really personal preference.

 

[juliushandle]

I hear of extreme levels of saving where people are eating top ramen every night; that isn't for me, I still enjoying nice outing$ with friends while still investing over 50% of my income.

 

[jufonuk]

I work every other week. So kind of semi retired is how I look at it.
Five days at work one week it’s 12 hour shifts mon - Tuesday (weds Thursday off) and I work the weekend

Then one full week off and repeat.

tbh I like the pattern and working is good for me. Because as much as I want to imagine myself not working and just chilling I think I will go stir crazy sooner or later.
But paying the mortgage off and maybe buying a property near me to rent out will help. Otherwise anything I can do to save extra money and pay some into my kids accounts is a bonus
My wife also works so we make sure we do what we can and we live within our means.

 

[Maiden Voyage]

So you save all your money when you're young, and forego a lot of the fun of youth. Then you retire very early, probably with a fairly modest nest egg, and can't really afford to have fun later?

Eh.

To each their own but it seems very extreme to me. And you'd need a lot of hobbies to keep yourself busy for all those years

Not really. You just spend your money on what actually matters to you vs spending without thinking.

 

[Rengoku]

I’m a big proponent of starting early with your retirement plan, but I am skeptical about FIRE. Can you really live that frugally for so long, and how is that impacting your quality of life?

There are too many unknowns in my mind to confidently say 25x my planned expenses is enough to quit working as early as 40.

I should add as well that I don't use the 25 times your salary/expenses route. I use Monte Carlo to determine likelihood of my nest egg surviving, which is itself more conservative.

Learn about money

retirementplans.vanguard.com

25x my expenses has an 89% chance of surviving at 50 years, whereas the number I want has a 95% chance. Your personal comfort can dictate your own number, but I don't like to leave things to chance when possible.

Just to be clear for those using the 25x rule (4% rule), it was based on the Trinity study, and only covers a retirement span of around 30 years. If you're planning on retiring earlier, you need to factor in a longer retirement, and use something like the Monte Carlo simulation as suggested by Maiden Voyage above.

 

[Rengoku]

So you save all your money when you're young, and forego a lot of the fun of youth. Then you retire very early, probably with a fairly modest nest egg, and can't really afford to have fun later?

Eh.

To each their own but it seems very extreme to me. And you'd need a lot of hobbies to keep yourself busy for all those years

There are certainly many different levels of FIRE, and what you're talking about is more towards the extreme level.

My view is somewhere in the middle, where you're accumulating to get to a level of having "Fuck You" money. Where having enough of a nest egg that allows you to walk away from shitty jobs and dealing with shitty people.

 

[Unknown Soldier]

This is helpful. Read the directions and know how it works before you dive in.

FIRECalc: A different kind of retirement calculator

www.firecalc.com

 

[NahaNago]

It really is a balancing act. One of my groomsmen died this year of Covid, 40 years old, biggest saver and most frugal guy ever, his dream was to retire and travel the world. He never got to do that because he spent his whole life planning for it but not doing it.

Fire is great... but if you died next week and all you have amounted to is a number in a bank... well then you screwed yourself out of living. Don't forget the present by living for an unpromised future.

Yeah, I figured if I aggressively worked and saved I would be able to almost fire retire in 8 years and travel but that is too long so I want to leave as soon as possible and honestly kinda wing it. I've got family I can move back in with if things fail so I'm not that stressed. Then again I need to have the mindset that failure is not an option and i'm not going back.

 

[ipukespiders]

Collecting dividends FTW!

 

[StreetsofBeige]

Any kind of quick rich retirement plan always assume the following:

1. You make good money and can invest a bunch every month

2. (which relates to #1), you dont have a big family which you need to save for a rainy day, and pay for kids stuff

3. The stock market keeps going up (index fund) and you got in at a good time

4. The stocks you pick keep going up and don't go broke. You picked them at the right time

And if you only have a little money to invest, you either go index fund (slower growth), or roll the dice on picking a couple stocks and they do well (all eggs in one basket).

People will say. Well, look at the indexes and company stock prices. Impossible to lose. They always go up. Ya, they do for good companies that survive. The ones that are stagnant or die disappear so you hear about them anymore. Also, indexes are made to naturally go up since they rotate companies in and out cherry picking good ones. It is a total lie that "these companies represent the economy" since the economy is also based off small companies and losers.

Check out the list of Dow Components. The farther you go back, the more crud you see. But at some point Dow cuts the cord and subs in a better company.

Historical components of the Dow Jones Industrial Average - Wikipedia

en.wikipedia.org

 

[Maiden Voyage]

What tools does FinanceGAF use to track net worth or other finances? I've been using a custom spreadsheet that I have been slowly developing over the last 5 or so years to consolidate all info in one place.

I was updating the monthly totals this morning to get a feel for how the month has fared and I'm absolutely in blown away by the progress made these past 5 years. What once took several months to see big movements in total net worth now takes 1 month.

 

[StreetsofBeige]

What tools does FinanceGAF use to track net worth or other finances? I've been using a custom spreadsheet that I have been slowly developing over the last 5 or so years to consolidate all info in one place.

I was updating the monthly totals this morning to get a feel for how the month has fared and I'm absolutely in blown away by the progress made these past 5 years. What once took several months to see big movements in total net worth now takes 1 month.

I do a spreadsheet as well. Just good old Excel. I update it a couple times a year.

 

[sackings]

I mean its possible depending on your starting point. But some kid starting from nothing? Pretty much impossible unless you invested in BTC or something. As we all know wealth gain isnt linear and the first "chunk", say 100k, is the one that takes the most effort.

 

[AJUMP23]

What tools does FinanceGAF use to track net worth or other finances? I've been using a custom spreadsheet that I have been slowly developing over the last 5 or so years to consolidate all info in one place.

Personal Finance Tools, Wealth Management, Guides | Personal Capital

Some good tools. I do have some import errors on one of my accounts, but I am not sure why. If you do use it they will call you and want you to give them a shot at being the manager. But you can just say no. IF you do want to sign up let me use my referral code.

Referral CODE: https://pcap.rocks/a45552

 

[Raven117]

it doesn't have to be extreme. find your own balance.

key is to manage debt to a minimum, start investing early, and keep the investing compounding. the rest is easy after that. the level of fun and spending is really personal preference.

This.

Just eating ramen is not a great plan as you will likely go crazy. You need to find a balance of enjoying some of the fruits of your labor, but heavily investing, no debt, live frugally otherwise.

sooner the better on all of that.

 

[KielCasto]

I learned about FIRE from The Plain Bagel.

I don’t like the extremes of FIRE, but I do think it can teach someone how to be mindful of their personal finance. Like me

 

[Raven117]

I learned about FIRE from The Plain Bagel.

I don’t like the extremes of FIRE, but I do think it can teach someone how to be mindful of their personal finance. Like me

Good video.

It really does simply come down to "invest as early and as much as you can as often as you can while balancing some sort of lifestyle where you can enjoy some of the fruits of your labor."

 

[Nester99]

The most interesting thing about people who advocate FIRE lifestyle to me is, most of them I talk to had no money in the market in 2001 and 2008.

 

[Omega Supreme Holopsicon]

Can you really live that frugally for so long, and how is that impacting your quality of life?

Frugally? Maybe if there's a long term economic depression. But take O(realty income, think stag is a similar REIT but in another area) for instance, one of my favorite stocks, it pays about 4% dividend annually paid in monthly installments.

Now what happens with realty income? On average for the last 20+ years iirc about every 5 years it has doubled in value, on average again.

What does that mean? Say you have one million saved, on average that pays $40,000 a year in monthly installments. But on average in 5 years it'll be worth 2 million and start paying $80,000 in dividends, just wait about 5 years, in 10 years it'll be worth 4 million and start paying $160,000 a year, and in 15 years on average it'll be worth 8 million and start paying $320,000 a year.

That's just one example the risk is that it is not diversified, and past history does not guarantee future performance, but with such massive sums you can diversify a bit for safety, and invest in index stocks.

 

[Omega Supreme Holopsicon]

The most interesting thing about people who advocate FIRE lifestyle to me is, most of them I talk to had no money in the market in 2001 and 2008.

For reasons out of my control I had no money in market back then, but had I had I'd likely have invested several thousand in my favorite APPLE(fan of series serial experiment lain which takes big inspirations from APPLE), and in AMAZON and left it there at early 2002. (edit also had $8000 a few years back when ether was at $8 and was considering buying 1000 ether but failed to do so, instead paid credit card debt...jejeje )

Even right now I'd invest in amazon and apple, see big future ahead for both.

 

[juliushandle]

The most interesting thing about people who advocate FIRE lifestyle to me is, most of them I talk to had no money in the market in 2001 and 2008.

I had tons of money in my 401k but didn't understand compounding interest and hardly looked at my balances. I recovered like most did.

I did lose 2 investment properties in 2008. win some you lose some.

 

[Maiden Voyage]

The most interesting thing about people who advocate FIRE lifestyle to me is, most of them I talk to had no money in the market in 2001 and 2008.

I had money in the market in '08 and didn't withdraw it. It's still there and I'm pursuing FIRE.

The difference I suppose is that I don't advocate it for others because I know how terrible the vast majority of people are with money. There is no way they will ever move from living paycheck-to-paycheck because their internal need for short-term satisfaction outweighs long-term satisfaction.

 

[p_xavier]

Enjoy your youth while you have it. I was saving and working through my 20s and I regret it. My 30s were all about fun though but working till 50 like I do seems still an early retirement.

 

[Omega Supreme Holopsicon]

Enjoy your youth while you have it. I was saving and working through my 20s and I regret it. My 30s were all about fun though but working till 50 like I do seems still an early retirement.

A small enough sum can have your back protected through compounding.

Take 64~K a measly sum. A 7 year compound of 2~X that is sp500 index means in 35 years you have 2^5=32x multiplier, if I'm not mistaken. That means it turns into near $2million. But a 2~X duplication at 5 years means 2^5 is attained in 25 years instead of 35.

More risky investments can do 30-50+x multiplier turning a small sum into several millions within a few years.

I say enjoy youth, but two things first save a bit the earlier compounding starts the bigger the impact. Second look into lifestyle and nutrition for example Valter Longo's excellent book the longevity diet or David Sinclair's lifespan. You can reach 50s while looking like you're in your 20s. Enough lifestyle and nutritional changes and you will essentially be extremely resistant to cancer, cardiovascular disease, osteoporosis, muscle wasting, neurodegeneration, etc. You will die someday, but you will essentially be ageless, or younglike till very advanced ages.

 

[AJUMP23]

Enjoy your youth while you have it. I was saving and working through my 20s and I regret it. My 30s were all about fun though but working till 50 like I do seems still an early retirement.

You should save, and you should also go enjoy some stuff too. Travel and some other adventures like that, but save for your travel and don't do things on credit....unless you are buying a house.

 

[Raven117]

You should save, and you should also go enjoy some stuff too. Travel and some other adventures like that, but save for your travel and don't do things on credit....unless you are buying a house.

Co-signed.