Budget Be Damned

[a64pilot]

Originally Posted by daletournier

Exactly, and this is where I find fault with the "FIRE" movement.

I had never heard of it before, I had to look it up.
What’s wrong with it, except maybe for putting all of your eggs in one basket, it’s pretty much what I did for the last five years or so before Retirement, maybe not to the extreme they say, but close.
It sounds like a logical Retirement plan to me, actually it sounds like the very old way for planning to retire, what maybe my Grandparents did etc.
I guess I’m missing something?

[daletournier]

Originally Posted by a64pilot

I had never heard of it before, I had to look it up.
What’s wrong with it, except maybe for putting all of your eggs in one basket, it’s pretty much what I did for the last five years or so before Retirement, maybe not to the extreme they say, but close.
It sounds like a logical Retirement plan to me, actually it sounds like the very old way for planning to retire, what maybe my Grandparents did etc.
I guess I’m missing something?

To be clear I admire the general philosophy and the fact that a growing number of young are adopting a frugal saving approach to life with the plan of retiring early rather than a materialistic approach that has no end.

The only part of their mantra that I struggle with is as you say "all their eggs in one basket". Most are 100% invested in index funds and are convinced they can't go wrong, most have known nothing but good years and as yet have never had to draw down on those funds while they are going backwards. As a previous poster pointed out average returns don't paint a full picture, if there's a 5-10 year period of zero or minimum returns and your drawing down on your funds? IMHO alot of current views are based on the last 20 years of central bank blown asset bubbles, buy something and it just keeps going up..... Forever.

So to summarise I have no issue with the movement, in fact I think it's cool, yet I think there's quite alot of naivety and a tad of arrogance that has come from knowing nothing but good times.

One of their gurus is "Mr Money Mustache"... good on him he's done well BUT once again I see a lack of humility that concerns me. A majority of their wealth is paper wealth that can go away if Trump tweets enough.

Originally Posted by a64pilot

I had never heard of it before, I had to look it up.
What’s wrong with it, except maybe for putting all of your eggs in one basket, it’s pretty much what I did for the last five years or so before Retirement, maybe not to the extreme they say, but close.
It sounds like a logical Retirement plan to me, actually it sounds like the very old way for planning to retire, what maybe my Grandparents did etc.
I guess I’m missing something?

[CapnJesse]

I'm glad you are debt free, and have managed to finance your cruising for a few years with your investments. Just remember, it's all 'paper' money until you actually sell the stock and put it into the bank. 10 years ago the market sold off 50% and took a long time to recover. History will repeat, and not when you are expecting.

'A rising tide floats all boats'
'When taxi (or uber now) drivers start giving stock advice, its time to sell'

[a64pilot]

Originally Posted by CapnJesse

I'm glad you are debt free, and have managed to finance your cruising for a few years with your investments. Just remember, it's all 'paper' money until you actually sell the stock and put it into the bank. 10 years ago the market sold off 50% and took a long time to recover. History will repeat, and not when you are expecting.

'A rising tide floats all boats'
'When taxi (or uber now) drivers start giving stock advice, its time to sell'

It’s all paper money, even what’s in the bank, let inflation go rampant, and of course money on the bank may not be worth much, ask a German from WWI, if you can find one alive still.

The survivalist supposed hedge is gold, but who wants gold, what can you do with it?

Point is although very unlikely, most anything can become almost worthless, even land.

[letsgetsailing3]

Originally Posted by CapnJesse

I'm glad you are debt free, and have managed to finance your cruising for a few years with your investments. Just remember, it's all 'paper' money until you actually sell the stock and put it into the bank. 10 years ago the market sold off 50% and took a long time to recover. History will repeat, and not when you are expecting.

'A rising tide floats all boats'
'When taxi (or uber now) drivers start giving stock advice, its time to sell'

The second you put it all in the bank, it starts becoming worth less.

Inflation > savings interest rates.

[Kenomac]

Back in 2006, we met a guy who claimed that he was “all set and retired with 8 rental properties down in Florida;” another customer I knew had over $1,000,000 in his retirement account that was invested in stocks... he’d just retired.

2008.... all eight of the first guy’s rental properties were being auctioned off by the bank along with his 9th which was his primary residence, and the newly retired guy who now had only $400k remaining in stock was looking for a job in a very down job market at age 62.... hopeless, for someone in engineering at the time. His wife’s horses were up for sale.

[Checkswrecks]

The problem with the buy and hold, it'll always recover philosophy is that recovery may take longer than we have to live. For example from the 30s till 50s and late 60s till early 90s. Meanwhile, inflation doesn't cease so getting back to the same number will buy you far less amount of food or other goods.


As for those planning and wondering about changing market conditions (mostly inflation), try using the https://www.firecalc.com calculator. Use the tabs along the top (not where it says Start here in red letters) input your own variables. You don't need to just say I need a pot of a million dollars, you can input your expected income.

The idea is that we've had periods through history with low inflation, high inflation, and everything in between. This calculator will model your variables with a 30 year (can be edited) retirement forecast which begins in each year from 1871. The models always start with the savings and the income you put in, but market conditions for time periods will be the variable. In this way you know if your money would last if you retired in the conditions which followed 1871, then 1872, then if you retired in 1873, etc, right up to 30 years ago.

The idea is that you don't want any of the individual models to go negative for however long you expect to be retired.

This example started with $1,000,000 and went 40 years. Usually this example comes out well, but if retirement were started in some years, this person would have lost it all.



Here's an example that started with very little savings and obviously the person had an income till they started to live on their savings:

[a64pilot]

Originally Posted by Kenomac

Back in 2006, we met a guy who claimed that he was “all set and retired with 8 rental properties down in Florida;” another customer I knew had over $1,000,000 in his retirement account that was invested in stocks... he’d just retired.

2008.... all eight of the first guy’s rental properties were being auctioned off by the bank along with his 9th which was his primary residence, and the newly retired guy who now had only $400k remaining in stock was looking for a job in a very down job market at age 62.... hopeless, for someone in engineering at the time. His wife’s horses were up for sale.

A couple of points.
First a million dollars to Retire on isn’t much, especially if you think your going to live the good life and have horses etc. Probably need at least five times as much for that, first rule in Retiring ought to be no matter how much you do or don’t have, it’s all there is, you have to live within what that amount will return REALISTICALLY.
Wanna bet he was one of the ones that thought he could get a 20% return consistently?

Then on the rental property thing, anything can be mismanaged, as in too high expectations on return, leveraged too heavily by debt etc., etc.

Finally, if you have money and are investing it, unless in some form of real property if I use that term correctly, you can almost bet it’s invested in stocks, you may think of your 401K and think that’s like money in the bank etc, but it’s not, it’s stock I can assure you.
I don’t know if this was your intent, but you pointed out a really big mistake that both made, that was all of their eggs were in one basket.
That may work if your lucky, but you ought to have hopefully multiple baskets.
I have a Military Retirement, a 401K, will have SS, the Wife’s small Retirement and I’d guess she will get SS?, and can live cheaply if need be, no horses etc.
Not saying that it all together is a big sum, it’s not, but it is different unrelated sources.

If any one went bust, I’d hurt, and complain but I’d be OK, if any two, well then things may get tight, but I’d still get by.
More than that assumption would take a collapse of the government, and no we are in prepper territory, guys who wear tin foil hats

[a64pilot]

Ken,
Your not suggesting that you live on what you make as a Nurse working three months out of twelve are you?
You have some form of investments, rental property, trust fund something.
Your not running a drug lab those three months like Heisenberg are you

[thomm225]

Originally Posted by sailorchic34

Well fuschia but I'll take purple too. I am so high class now.

The purple hair thing seems to be catching.

This is Ivy Pochoda ......ex professional Squash player and current writer.

Even though she appears to be doing the purple hair thing temporarily, you know she's making a point

Her books Visitation Street and Wonder Valley are quite good

https://www.ivypochoda.com/novels

[Trimaran Ken]

Originally Posted by Kenomac

Back in 2006, we met a guy who claimed that he was “all set and retired with 8 rental properties down in Florida;” another customer I knew had over $1,000,000 in his retirement account that was invested in stocks... he’d just retired.

2008.... all eight of the first guy’s rental properties were being auctioned off by the bank along with his 9th which was his primary residence, and the newly retired guy who now had only $400k remaining in stock

The S&P dropped 30% between 1/1/2006 and 12/31/2008. You have to be really stupid to have lost 60% of your retirement account when the S&P only lost 30%.

The guy with 9 houses obviously got caught up in greed, thought the FL overvalued housing market would go on forever, and missed the MOST important rule of retirement investing, DIVERSIFICATION.

These are both good lessons to learn from.

1. Don't put all your eggs in one basket. The more money you have the easier it is to break it up into smaller chunks of dissimilar investments.

2. When you see other people making a lot more on their investments than you, think about the higher risk they are taking and decide if your retirement is worth the risk.

Ken
===

[Kenomac]

Originally Posted by a64pilot

Ken,
Your not suggesting that you live on what you make as a Nurse working three months out of twelve are you?
You have some form of investments, rental property, trust fund something.
Your not running a drug lab those three months like Heisenberg are you

I find you post personally offensive on several levels.

I'm giving up on this ridiculousness. Not because of anything Sailorboy has written or attempted to provide information on, but because of all the idiotic responses to anything I write.... yours is a good example. I would never write something like you wrote online about a fellow cf member; you may think it’s funny, but I don’t.

Have a nice day.

[a64pilot]

I can see risky, high return investments bottom falling out when the average drop was 30%, or am I missing something?
I think it’s totally believable.
Guy with nine rental properties, did he own them ought right, or did he do as most “smart” guys do and that’s borrow money to buy them, cause of course they return much more than the payment costs.
You know, use other people’s money to make money.
Last Boss was that way, if he could borrow money no matter what he borrowed it.
I believe he has just about hit bottom now, I’ve heard he is looking for an investor now.

[Trimaran Ken]

Originally Posted by a64pilot

I can see risky, high return investments bottom falling out when the average drop was 30%, or am I missing something? I think it’s totally believable.

Believable, yes. Stupid, yes.

If you have solid investments, they will eventually come back. If you have risky investments, bail out before it is too late.

Ken
===

[FlyingScot]

Originally Posted by daletournier

...
One of their gurus is "Mr Money Mustache"... good on him he's done well BUT once again I see a lack of humility that concerns me. A majority of their wealth is paper wealth that can go away if Trump tweets enough.

MMM IMO is more about 'freedom' and 'self reliance'. Having more free time to learn new skills instead of paying others to do it for you. I think it overlaps nicely with cruising on a sailboat, especially if you live on it.

https://www.mrmoneymustache.com/