Race from $2M to $4M...and Beyond!

[soccerluvof4]

I am not sure how I feel overall but whatever it is it beats going to work so I guess that is all I need to feel. April was ridiculously expensive for me spending 30k when our budget is 8500 a month and we usually don't spend that. I needed a new riding Lawn mower and with all the crap that was 5k. Took the family to Florida for our first family trip in ages and that was easily another 5k. Paid for my Sons knee surgery deductible another 6k and so on. The fact I could do it and the market was going up at the time made me feel rich. Now with the market seemingly on shaky ground I feel like I need to reign things in a bit but I cant and wont as it is more important for me to wrap some projects up that I need to and start enjoying our house that I have been remodeling for a year and a half but probably realistically have another year and a half. I do feel I am better off than most as I have no debt and to me that is I guess the same as someone else feeling rich. I would have a lot more with the run up in the market over the years if I didnt buy the house and didnt live life but I didnt retire young to disappear so its all about balance. I think having a couple kids still at home and having to think about college with them even though that money I dont include in our wealth since its in 529's and I look at as spent to some point puts weight on my thinking as well. I'd be lying if I said I wish I would of waited a little longer and put a little more away BUT i think one can always say that and I feel even more than ever I made the right decision. Not worried about the market going down as I would buy the dip but going down and sideways for a lengthy time might be trying which is why I have moved to more cash than normal. ..........ramble!

I always find your postings thought provoking. If you can afford it, money spent improving your house is generally a good thing. We don't have a big house but we do fully make use of every room in the house. We spent about $100k fixing up our house over this past winter and I have to say that its the best money I've ever spent. I got my long-desired hobby room out of this project. I spend a few hours there almost every day. In fact, I am just taking a break from an enjoyable morning wiring up the new model train layout that I am building :-)

I OMY'd to pay for an $80k home remodel two years ago. It seemed pretty wasteful at the time, but when COVID hit it seemed like the best money we ever spent. If we had been stuck at home for the last year in with the old kitchen, flooring and paint it would have been really depressing. Instead we got to really enjoy it.
We said we wouldn't do anything else major to the house besides regular maintenance and now we're talking about doing a small basement remodel once the boys hit the teen years.
So I agree, money on your home when you use it and enjoy it, is money well spent.

When we first bought the house A year ago December and the  Pandemic hit, we said "Wouldn't you know it we buy a house and a pandemic hits" shortly after we said "We are Lucky to have bought the house" because at least we could go out on the water and be outside all the time. Its a lot of work but once I get it all done it will just be general maintenance the house was exactly 25 years old when we bought it so I am redoing pretty much the entire home inside and out but this year from June 1st till we put the boats away I am not doing anything unless I have to. But yeah its the best investment we made but day by day its a lot of work till its not! :-) and as I have said I will get every penny back and then some.

[Bateaux]

I am not sure how I feel overall but whatever it is it beats going to work so I guess that is all I need to feel. April was ridiculously expensive for me spending 30k when our budget is 8500 a month and we usually don't spend that. I needed a new riding Lawn mower and with all the crap that was 5k. Took the family to Florida for our first family trip in ages and that was easily another 5k. Paid for my Sons knee surgery deductible another 6k and so on. The fact I could do it and the market was going up at the time made me feel rich. Now with the market seemingly on shaky ground I feel like I need to reign things in a bit but I cant and wont as it is more important for me to wrap some projects up that I need to and start enjoying our house that I have been remodeling for a year and a half but probably realistically have another year and a half. I do feel I am better off than most as I have no debt and to me that is I guess the same as someone else feeling rich. I would have a lot more with the run up in the market over the years if I didnt buy the house and didnt live life but I didnt retire young to disappear so its all about balance. I think having a couple kids still at home and having to think about college with them even though that money I dont include in our wealth since its in 529's and I look at as spent to some point puts weight on my thinking as well. I'd be lying if I said I wish I would of waited a little longer and put a little more away BUT i think one can always say that and I feel even more than ever I made the right decision. Not worried about the market going down as I would buy the dip but going down and sideways for a lengthy time might be trying which is why I have moved to more cash than normal. ..........ramble!

I always find your postings thought provoking. If you can afford it, money spent improving your house is generally a good thing. We don't have a big house but we do fully make use of every room in the house. We spent about $100k fixing up our house over this past winter and I have to say that its the best money I've ever spent. I got my long-desired hobby room out of this project. I spend a few hours there almost every day. In fact, I am just taking a break from an enjoyable morning wiring up the new model train layout that I am building :-)

I OMY'd to pay for an $80k home remodel two years ago. It seemed pretty wasteful at the time, but when COVID hit it seemed like the best money we ever spent. If we had been stuck at home for the last year in with the old kitchen, flooring and paint it would have been really depressing. Instead we got to really enjoy it.
We said we wouldn't do anything else major to the house besides regular maintenance and now we're talking about doing a small basement remodel once the boys hit the teen years.
So I agree, money on your home when you use it and enjoy it, is money well spent.

When we first bought the house A year ago December and the  Pandemic hit, we said "Wouldn't you know it we buy a house and a pandemic hits" shortly after we said "We are Lucky to have bought the house" because at least we could go out on the water and be outside all the time. Its a lot of work but once I get it all done it will just be general maintenance the house was exactly 25 years old when we bought it so I am redoing pretty much the entire home inside and out but this year from June 1st till we put the boats away I am not doing anything unless I have to. But yeah its the best investment we made but day by day its a lot of work till its not! :-) and as I have said I will get every penny back and then some.

It can be a blast living on the water.  It's great weather today and people are out in their boats.  Sucks for me because, I'm working night number 10 out of 11.   Life on the water is the only life my grown children know. Have fun with your well earned investment.

Adding a tag here:

Holy crap!  Florida homeowners insurance just took a huge leap!   Last year $1800.   Now nearly $2600!  I'm leaving the waterfront in Louisiana because my insurance Flood/Homeowners insurance is over $4000.  Louisiana insurance policy renewal in July.  Hopefully it doesn't go up as much.  All these people celebrating the increase in home values had better factor in the potential insurance costs.

[ysette9]

On some level shouldn’t you expect home owner’s insurance in places like coastal Florida and Louisiana to be expensive due to climate change and rising sea levels? I wonder if there will be a time in the not distant future when you aren’t able to get insurance at all.

[2sk22]

On some level shouldn’t you expect home owner’s insurance in places like coastal Florida and Louisiana to be expensive due to climate change and rising sea levels? I wonder if there will be a time in the not distant future when you aren’t able to get insurance at all.

My understanding is that all private insurers have pulled out of the wind damage insurance business in Florida and such insurance is only available through the state - Citizens insurance?

[UnleashHell]

florida insurance is going up. the only way to keep the premiums reasonable is to have a recent 4 point inspection done that includes a wind mitigation report.
my other halfs townhouse went up by 100% (a townhouse where the hoa are responsible for the outside and roof!). and she is currently having it done up so she can get a 4 point done before trying to get the insurance down.
My current house had one done and the renewal will be due in August. It'll be interesting to see what they do here as we do have a recent 4 point inspection.

current rates for the house are just over 1K a year. I still expect an large increase.

Part of the issue is the number of crappy roofing claims where companies find "hail or storm" damage to the properties and promise that the insurance will pay for most of the work of a new roof. The number of claims have therefore increased dramatically. Home owners are then surprised that the insurance doesn't pay out as much as promised and their rates shoot up!!

D'oh...

[Bateaux]

florida insurance is going up. the only way to keep the premiums reasonable is to have a recent 4 point inspection done that includes a wind mitigation report.
my other halfs townhouse went up by 100% (a townhouse where the hoa are responsible for the outside and roof!). and she is currently having it done up so she can get a 4 point done before trying to get the insurance down.
My current house had one done and the renewal will be due in August. It'll be interesting to see what they do here as we do have a recent 4 point inspection.

current rates for the house are just over 1K a year. I still expect an large increase.

Part of the issue is the number of crappy roofing claims where companies find "hail or storm" damage to the properties and promise that the insurance will pay for most of the work of a new roof. The number of claims have therefore increased dramatically. Home owners are then surprised that the insurance doesn't pay out as much as promised and their rates shoot up!!

D'oh...

We had a new roof put on in 2019.  All the updates and inspection were done.  It saves over $1000 a year.  I can easily afford the $2600 annual cost.  Our Louisiana house which lesser value is much higher.  Hopefully by the end of 2023 someone else is paying the Louisiana house expenses.

[MishMash]

I am not sure how I feel overall but whatever it is it beats going to work so I guess that is all I need to feel. April was ridiculously expensive for me spending 30k when our budget is 8500 a month and we usually don't spend that. I needed a new riding Lawn mower and with all the crap that was 5k. Took the family to Florida for our first family trip in ages and that was easily another 5k. Paid for my Sons knee surgery deductible another 6k and so on. The fact I could do it and the market was going up at the time made me feel rich. Now with the market seemingly on shaky ground I feel like I need to reign things in a bit but I cant and wont as it is more important for me to wrap some projects up that I need to and start enjoying our house that I have been remodeling for a year and a half but probably realistically have another year and a half. I do feel I am better off than most as I have no debt and to me that is I guess the same as someone else feeling rich. I would have a lot more with the run up in the market over the years if I didnt buy the house and didnt live life but I didnt retire young to disappear so its all about balance. I think having a couple kids still at home and having to think about college with them even though that money I dont include in our wealth since its in 529's and I look at as spent to some point puts weight on my thinking as well. I'd be lying if I said I wish I would of waited a little longer and put a little more away BUT i think one can always say that and I feel even more than ever I made the right decision. Not worried about the market going down as I would buy the dip but going down and sideways for a lengthy time might be trying which is why I have moved to more cash than normal. ..........ramble!

I always find your postings thought provoking. If you can afford it, money spent improving your house is generally a good thing. We don't have a big house but we do fully make use of every room in the house. We spent about $100k fixing up our house over this past winter and I have to say that its the best money I've ever spent. I got my long-desired hobby room out of this project. I spend a few hours there almost every day. In fact, I am just taking a break from an enjoyable morning wiring up the new model train layout that I am building :-)

I OMY'd to pay for an $80k home remodel two years ago. It seemed pretty wasteful at the time, but when COVID hit it seemed like the best money we ever spent. If we had been stuck at home for the last year in with the old kitchen, flooring and paint it would have been really depressing. Instead we got to really enjoy it.
We said we wouldn't do anything else major to the house besides regular maintenance and now we're talking about doing a small basement remodel once the boys hit the teen years.
So I agree, money on your home when you use it and enjoy it, is money well spent.

When we first bought the house A year ago December and the  Pandemic hit, we said "Wouldn't you know it we buy a house and a pandemic hits" shortly after we said "We are Lucky to have bought the house" because at least we could go out on the water and be outside all the time. Its a lot of work but once I get it all done it will just be general maintenance the house was exactly 25 years old when we bought it so I am redoing pretty much the entire home inside and out but this year from June 1st till we put the boats away I am not doing anything unless I have to. But yeah its the best investment we made but day by day its a lot of work till its not! :-) and as I have said I will get every penny back and then some.

It can be a blast living on the water.  It's great weather today and people are out in their boats.  Sucks for me because, I'm working night number 10 out of 11.   Life on the water is the only life my grown children know. Have fun with your well earned investment.

Adding a tag here:

Holy crap!  Florida homeowners insurance just took a huge leap!   Last year $1800.   Now nearly $2600!  I'm leaving the waterfront in Louisiana because my insurance Flood/Homeowners insurance is over $4000.  Louisiana insurance policy renewal in July.  Hopefully it doesn't go up as much.  All these people celebrating the increase in home values had better factor in the potential insurance costs.

We went up from 1670 to 2100, we are in a zone X.  Thankfully we are homesteaded, the Tampa area is looking at a 10% property tax minimum increase this year as well. And our house is only 2 years old, fully up to date will all hurricane codes and with all the safety bells and whistles.

[thedigitalone]

FEMA is actively raising rates until they are realistic to cover properties adjusting for climate change with their new Risk Rating 2.0 program.
https://www.fema.gov/flood-insurance/work-with-nfip/risk-rating

Flood insurance is going to get very expensive for some folks.

[JoJoP]

We had a $3500+ increase in our wildfire insurance this year.   Four of our properties are on the very edge of the Wildfire hazard zone designation.   We had the agent look for other carriers, but, turns out that even with the increase, we've still got the best rate in town.   

I did go peruse the FATFIRE forum on Reddit... yikes, those folks have serious money ambitions. 

[Bateaux]

Louisiana and Texas are flooding right now.  We may take a little water into our downstairs.  But it's an easy repair if less than a foot deep and not worthy of exciting FEMA.  One more flood and we're forced into mitigation.  Leaving that to the next owner.

[2sk22]

I did go peruse the FATFIRE forum on Reddit... yikes, those folks have serious money ambitions.

I love lurking on the FatFire subreddit too. Very entertaining to see how the nouveau riche view wealth. One thing that strikes me about that subreddit is that despite nailing the FAT part of the equation, almost nobody there actually seems to be retired.

[JoJoP]

I did go peruse the FATFIRE forum on Reddit... yikes, those folks have serious money ambitions.

I love lurking on the FatFire subreddit too. Very entertaining to see how the nouveau riche view wealth. One thing that strikes me about that subreddit is that despite nailing the FAT part of the equation, almost nobody there actually seems to be retired.

The thing about the internet is that it's really easy to make things up, out of delusion or amusement or both. A lot of those Reddit posts strain credulity.  Way too many people with $20M net worth making $850K per year who are looking for someone on Reddit to explain to them one of those IRA thingies is.

More than once I've thought about sh*tposting there just for kicks just to see how ridiculously implausible a post you can make and still be taken seriously.

I see your point.   It's hard to believe that there are that many 30 somethings with 20 million +  dollars.   They were tripping over themselves on the threads I looked at.   

[2Birds1Stone]

Louisiana and Texas are flooding right now.  We may take a little water into our downstairs.  But it's an easy repair if less than a foot deep and not worthy of exciting FEMA.  One more flood and we're forced into mitigation.  Leaving that to the next owner.

Is the Amite flooding into your house, or just a ton of rain with nowhere to go?

[Bateaux]

Louisiana and Texas are flooding right now.  We may take a little water into our downstairs.  But it's an easy repair if less than a foot deep and not worthy of exciting FEMA.  One more flood and we're forced into mitigation.  Leaving that to the next owner.

Is the Amite flooding into your house, or just a ton of rain with nowhere to go?

Latest projections say it will crest before flooding us.    If more rain comes all bets are off.  South Louisiana and East Texas is saturated.

[FireLane]

On some level shouldn’t you expect home owner’s insurance in places like coastal Florida and Louisiana to be expensive due to climate change and rising sea levels? I wonder if there will be a time in the not distant future when you aren’t able to get insurance at all.

Yep. There was a good article in ProPublica about this:

https://www.propublica.org/article/climate-change-will-force-a-new-american-migration

There are already many places in the U.S. where it makes no economic sense for people to live - places that are all but uninhabitable now, or will be in the very near future. The only reason that settlements still exist there is because federal or state programs are acting as a backstop when private insurers pull out, allowing homes that are repeatedly burned down or flooded out to be rebuilt. But even a country as rich as America won't be able to pay the bills forever:

That’s what happened in Florida. Hurricane Andrew reduced parts of cities to landfill and cost insurers nearly $16 billion in payouts. Many insurance companies, recognizing the likelihood that it would happen again, declined to renew policies and left the state. So the Florida Legislature created a state-run company to insure properties itself, preventing both an exodus and an economic collapse by essentially pretending that the climate vulnerabilities didn’t exist.

As a result, Florida’s taxpayers by 2012 had assumed liabilities worth some $511 billion — more than seven times the state’s total budget — as the value of coastal property topped $2.8 trillion. Another direct hurricane risked bankrupting the state. Florida, concerned that it had taken on too much risk, has since scaled back its self-insurance plan. But the development that resulted is still in place.

In the next few decades, there are places that will have to be abandoned. Whoever buys land there now is acquiring a soon-to-be-stranded asset.

[pecunia]

Interesting article about the climate change migration.  Here's a few selected paragraphs:

"Then what? One influential 2018 study, published in the Journal of the Association of Environmental and Resource Economists, suggests that 1 in 12 Americans in the Southern half of the country will move toward California, the Mountain West or the Northwest over the next 45 years because of climate influences alone."

Let’s start with some basics. Across the country, it’s going to get hot. Buffalo, New York, may feel in a few decades like Tempe, Arizona, does today, and Tempe itself will sustain 100-degree average summer temperatures by the end of the century.

Crop yields, though, will drop sharply with every degree of warming. By 2050, researchers at the University of Chicago and the NASA Goddard Institute for Space Studies found, Dust Bowl-era yields will be the norm, even as demand for scarce water jumps by as much as 20%. Another extreme drought would drive near-total crop losses worse than the Dust Bowl, kneecapping the broader economy. At that point, the authors write, “abandonment is one option.”

Once you accept that climate change is fast making large parts of the United States nearly uninhabitable, the future looks like this: With time, the bottom half of the country grows inhospitable, dangerous and hot. Something like a tenth of the people who live in the South and the Southwest — from South Carolina to Alabama to Texas to Southern California — decide to move north in search of a better economy and a more temperate environment. Those who stay behind are disproportionately poor and elderly.

The author believes that people will migrate to places like Rochester, Detroit, Milwaukee and Duluth, Minn.  The rust belt may shine again.




 

[ysette9]

I believe that was the same article I read a few months back. It talked about climate change migrants and I believe it makes perfect sense. In a way my family is living it.

In the past year my immediate family moved from the Bay Area to seattle. We had Reasons but one that is important to me deep down inside is going someplace cooler and wetter. I’ve seen my hometown get hotter and drier since I was a kid. My parents and sister saw that as well as the wildfires and decided to sell everything and move out of the country.

If we read the same article then another part of it imagined a future where the bottom part of the country is emptying out due to heat and water scarcity and increased hurricane activity and cities like Seattle being big winners as people move north.

[Bateaux]

If it comes to it I can self insure in Florida for wind, fire, etc.  There is no flood risk ever.  I'd just need liability insurance to cover potential liability lawsuits.  Nice being a fresking millionaire isn't it.

[soccerluvof4]

Unfortunately for you/our friends to the South the predicted yesterday Hurricane season to be higher than average this year and might start early. Not that there very good at forecasting but not something you ever really want to hear. We are experiencing Deep South weather in WI right now. Close to 90 today and humid.  Our lake is going to warm up in a hurry . Was in the mid 60's about a week ago but after this week it will be easily in the high 70's. Its amazing how fast it can warm up being an inland lake. And last two days no wind so its been flat as can be. We don't have to pay additional insurances like wind or flood insurance but our taxes are higher usually than not living on a lake and its a lot of work. Expenses are higher for sure taking care of your property as well as your boat , dock etc.. and people stopping by but that's all part of the lifestyle one choses.

[pecunia]

With this climate change thing, I may need to run the air conditioner more than the 10-12 hours I ran it last Summer.

[2sk22]

Unfortunately for you/our friends to the South the predicted yesterday Hurricane season to be higher than average this year and might start early. Not that there very good at forecasting but not something you ever really want to hear. We are experiencing Deep South weather in WI right now. Close to 90 today and humid.  Our lake is going to warm up in a hurry . Was in the mid 60's about a week ago but after this week it will be easily in the high 70's. Its amazing how fast it can warm up being an inland lake. And last two days no wind so its been flat as can be. We don't have to pay additional insurances like wind or flood insurance but our taxes are higher usually than not living on a lake and its a lot of work. Expenses are higher for sure taking care of your property as well as your boat , dock etc.. and people stopping by but that's all part of the lifestyle one choses.

Here is an interesting tool to help you understand how climate change is likely to affect you in the next 30 odd years: https://fitzlab.shinyapps.io/cityapp/

I'm not sure exactly where in Wisconsin you live but Milwaukee, WI of 2050 will be like Chester, PA of 2020

[EscapeVelocity2020]

If it comes to it I can self insure in Florida for wind, fire, etc.  There is no flood risk ever.  I'd just need liability insurance to cover potential liability lawsuits.  Nice being a fresking millionaire isn't it.

After paying off my home mortgage I thought long and hard about how much I'm willing to pay and what coverage / deductible I'm willing to have.  Long story short, it's pretty easy to justify the cost of insurance vs. self-insuring.  I'm even more convinced of that after winter storm Uri destroyed homes due to pipes bursting, and that was only in a one year sample.  There were also all of those hurricanes last summer and quite likely this summer and every summer going forward... 

Maybe you save 10 or 20 thousand dollars over 5-10 years... In one adverse event, you can easily lose 50k...

I'll keep my eye on it if home insurance rates go bonkers - and flood insurance probably will here in Houston, but that's a whole separate discussion and I don't live in a flood area nor have flood insurance...  I'm even starting to rethink how long I'll gamble on that one...

[Dancin'Dog]

It looks like Alaska, Canada & Russia will be the big winners as the climate continues to get warmer.  Might not be a bad idea to buy a few acres in Alaska or Canada sooner than later. 

[Bateaux]

It looks like Alaska, Canada & Russia will be the big winners as the climate continues to get warmer.  Might not be a bad idea to buy a few acres in Alaska or Canada sooner than later.

There is a break over point where the insurance is no longer worth it.  The $2600 I'll be paying now in Florida can double and still be worth it.  If it rises to $10,000 a year I'll have to consider just putting that into rainy day savings instead.

[pecunia]

Might be time to make that trip to the Matanuska Valley.

https://www.amusingplanet.com/2015/10/alaskas-giant-vegetables.html

[soccerluvof4]

Unfortunately for you/our friends to the South the predicted yesterday Hurricane season to be higher than average this year and might start early. Not that there very good at forecasting but not something you ever really want to hear. We are experiencing Deep South weather in WI right now. Close to 90 today and humid.  Our lake is going to warm up in a hurry . Was in the mid 60's about a week ago but after this week it will be easily in the high 70's. Its amazing how fast it can warm up being an inland lake. And last two days no wind so its been flat as can be. We don't have to pay additional insurances like wind or flood insurance but our taxes are higher usually than not living on a lake and its a lot of work. Expenses are higher for sure taking care of your property as well as your boat , dock etc.. and people stopping by but that's all part of the lifestyle one choses.

Here is an interesting tool to help you understand how climate change is likely to affect you in the next 30 odd years: https://fitzlab.shinyapps.io/cityapp/

I'm not sure exactly where in Wisconsin you live but Milwaukee, WI of 2050 will be like Chester, PA of 2020

Almost dead center between Milwaukee and Madison- 5.8 Degree increase in Temperature in 59 years. I wont be around but if it was in the winter I would take it!!

[Allie]

Might be time to make that trip to the Matanuska Valley.

https://www.amusingplanet.com/2015/10/alaskas-giant-vegetables.html

You could be next door to Sarah Palin and have hundreds lbs of cabbage.  Livin’ the dream! 

I only joke because we have tons of friends and family there.  It’s beautiful and amazing...and also conservative and odd...

[JoJoP]

I did a deep dive when exploring where to buy more rental homes last year.   We ended up in the Pacific Northwest, but not before doing a huge amount of research in many other areas.   Purchase price, return on investment, local economy, likely appreciation/gentrification,  crime rates and climate all figured into our choices.  Climate change was a new addition to my checklist, and quickly eliminated the West's desert areas, like Phoenix, or any areas sourced by the Colorado River water.  The short list worked down to the Carolinas, Pacific Northwest and Great Lakes region.   The Great Lakes are considered a climate change refuge, but it seems to be that it will get warmer, not change less than other places.    I took the Carolina's off our list, partially because of hurricanes.   I still obsessively review the listings in Michigan, Minnesota and Wisconsin.   If we buy more investment properties, I'd love to have holdings in one of those states. 

I was surprised to read this article as part of my research.   The Minnesota flora and fauna will change with a warming climate. 
https://mspmag.com/arts-and-culture/climate-change-minnesota/

[omachi]

Yeah, there are a lot of changes coming to Minnesota, and a lot of them aren't going to be great. Plenty already well evident, like the increase in temperatures and bigger rain events compared to the past. Not looking forward to that getting worse yet. Temperatures seem to be up more in winter and with higher overnight lows, but it's still evident the rest of the time. Fewer nights where it is comfortable to sleep with the windows open or fans off in the summer now. Switching from winter to summer wardrobe sooner. We do at least have plenty of water and few major natural disasters. I'm planning on sticking it out here, but it's clearly not going to be the same.

[BeanCounter]

I may post this in the general forum too, but I thought you smart folks would have some insight-
 I was playing around with cFIREsim today.  I dumped my results down to CSV to look at the detail and I noticed that the dividends in each simulation were really high. The average was 4.6% on a portfolio of 80% equities, 15% bonds and 5% cash. IRL my portfolio has returned on average 2%-3% annually.

Is this a flaw of cFIREsim? 4.6% (of equities) in dividends seems really high to me. Are there other flaws of cFIREsim that I should be aware of?

[JoJoP]

I may post this in the general forum too, but I thought you smart folks would have some insight-
 I was playing around with cFIREsim today.  I dumped my results down to CSV to look at the detail and I noticed that the dividends in each simulation were really high. The average was 4.6% on a portfolio of 80% equities, 15% bonds and 5% cash. IRL my portfolio has returned on average 2%-3% annually.

Is this a flaw of cFIREsim? 4.6% (of equities) in dividends seems really high to me. Are there other flaws of cFIREsim that I should be aware of?

What is cFIRE?

[G-dog]

I may post this in the general forum too, but I thought you smart folks would have some insight-
 I was playing around with cFIREsim today.  I dumped my results down to CSV to look at the detail and I noticed that the dividends in each simulation were really high. The average was 4.6% on a portfolio of 80% equities, 15% bonds and 5% cash. IRL my portfolio has returned on average 2%-3% annually.

Is this a flaw of cFIREsim? 4.6% (of equities) in dividends seems really high to me. Are there other flaws of cFIREsim that I should be aware of?

What is cFIRE?

CFIREsim is a free web-based program that models your future portfolio and FIRE success based on various inputs.  You can do pretty simple scenarios with few inputs, or use some other optional inputs for more complex scenarios.

[secondcor521]

I may post this in the general forum too, but I thought you smart folks would have some insight-
 I was playing around with cFIREsim today.  I dumped my results down to CSV to look at the detail and I noticed that the dividends in each simulation were really high. The average was 4.6% on a portfolio of 80% equities, 15% bonds and 5% cash. IRL my portfolio has returned on average 2%-3% annually.

Is this a flaw of cFIREsim? 4.6% (of equities) in dividends seems really high to me. Are there other flaws of cFIREsim that I should be aware of?

Probably depends on the time frame you were using.  Dividends have recently been a bit under 2%, but historically (like pre-1990s) were in the 4%+ area.

I also don't know how the data in your CSV file is adjusted for inflation or not with the various figures, and whether your 4.6% number is calculated as of the portfolio value at the time or of the original portfolio starting value, and how exactly you calculated the 4.6% average.

I doubt it's a problem with cFIREsim.

If you want to, you could double check your numbers in FIREcalc, of which cFIREsim is a loose copy.  The results should be fairly close (but not exact; cFIREsim does some things slightly differently).

[BeanCounter]

I may post this in the general forum too, but I thought you smart folks would have some insight-
 I was playing around with cFIREsim today.  I dumped my results down to CSV to look at the detail and I noticed that the dividends in each simulation were really high. The average was 4.6% on a portfolio of 80% equities, 15% bonds and 5% cash. IRL my portfolio has returned on average 2%-3% annually.

Is this a flaw of cFIREsim? 4.6% (of equities) in dividends seems really high to me. Are there other flaws of cFIREsim that I should be aware of?

Probably depends on the time frame you were using.  Dividends have recently been a bit under 2%, but historically (like pre-1990s) were in the 4%+ area.

I also don't know how the data in your CSV file is adjusted for inflation or not with the various figures, and whether your 4.6% number is calculated as of the portfolio value at the time or of the original portfolio starting value, and how exactly you calculated the 4.6% average.

I doubt it's a problem with cFIREsim.

If you want to, you could double check your numbers in FIREcalc, of which cFIREsim is a loose copy.  The results should be fairly close (but not exact; cFIREsim does some things slightly differently).

The CSV file is just a data dump of all the outcomes of the simulations from cFIREsim. I pulled it because I was curious of the numbers in detail.
The CSV file shows total dividends for every year and total equity and bond earnings. It's a cool file with lots of data to play with. So I took the total dividends earned for the year divided by the total value of equities at the start of the year and did that for all 93 (57 year) cycles. Then I took the average of all of those.
It does appear that in the pre-crash years dividends were much greater than 3% and then again in the 1945-1950s. And they really start to average 3% or less after 1960.
I just think it's something to note that most of the cycles the cFIREsim is built on include much more returns for dividends than a modern investor is likely to make and I'm surprised that nobody has noticed this before. That I know of anyway.
Also, and I think this has been discussed, but there are no cycles yet that start with 2008 and test that outcome with a rough ten year in the front. I actually don't think it would matter for me, but I'd like to see what it looks like.

At this point I'm just looking at the data for fun. I've used all the calculators and they all say the same thing. Based on historical outcomes, we will never run out of money. We'll likely have to work pretty hard and even spending all the earnings.

[SwordGuy]

Emphasis in the market in earlier years was on dividends, more modern emphasis is on stock appreciation.

I think it all comes out in the wash.   If the company doesn't hand back profits as dividends then it's net worth is higher its stock should go up.

[secondcor521]

I think it all comes out in the wash.   If the company doesn't hand back profits as dividends then it's net worth is higher its stock should go up.

This is approximately true.

In every quarterly statement filed with the SEC, there is something called something like a Cash Flow Statement, which describe how cash flowed into a company and then how they used it.

Companies generally get cash from sales of their products and services, sales of corporate assets (like IP or buildings), and financing activities like IPOs or debt offerings.  They might also get a bit of interest if they have cash in the bank, like AAPL apparently does.

They can use the incoming cash in a few different ways.  Of course they use it to pay expenses, like salaries and COGS and taxes.  They can pay a dividend.  They can use it to buy assets (buildings, other companies, their own stock), or invest in expansion projects like a new product line.

Generally speaking management has the responsibility to direct those cash flows in a way that is most financially beneficial to the shareholders.  It can be a wash, but generally there are better and worse decisions.  Sometimes it is better to pay a dividend, other times it's better to invest in a new product line, other times it's better to buy back stock.  The best decision is not always obvious, and it depends on the specific circumstances of the company at that time.  Over time, cash flow management can have a tremendous positive or negative effect on a company, which is in theory one reason that management gets paid well (although I know on this board it's common to rip on high management pay, and I agree with some of the reasons for that sentiment).

[soccerluvof4]

I think it all comes out in the wash.   If the company doesn't hand back profits as dividends then it's net worth is higher its stock should go up.

This is approximately true.

In every quarterly statement filed with the SEC, there is something called something like a Cash Flow Statement, which describe how cash flowed into a company and then how they used it.

Companies generally get cash from sales of their products and services, sales of corporate assets (like IP or buildings), and financing activities like IPOs or debt offerings.  They might also get a bit of interest if they have cash in the bank, like AAPL apparently does.

They can use the incoming cash in a few different ways.  Of course they use it to pay expenses, like salaries and COGS and taxes.  They can pay a dividend.  They can use it to buy assets (buildings, other companies, their own stock), or invest in expansion projects like a new product line.

Generally speaking management has the responsibility to direct those cash flows in a way that is most financially beneficial to the shareholders.  It can be a wash, but generally there are better and worse decisions.  Sometimes it is better to pay a dividend, other times it's better to invest in a new product line, other times it's better to buy back stock.  The best decision is not always obvious, and it depends on the specific circumstances of the company at that time.  Over time, cash flow management can have a tremendous positive or negative effect on a company, which is in theory one reason that management gets paid well (although I know on this board it's common to rip on high management pay, and I agree with some of the reasons for that sentiment).

And then you have companies like Apple that just sit on there Billions which makes no sense to me

[evme]

I did a deep dive when exploring where to buy more rental homes last year.   We ended up in the Pacific Northwest, but not before doing a huge amount of research in many other areas.   Purchase price, return on investment, local economy, likely appreciation/gentrification,  crime rates and climate all figured into our choices.  Climate change was a new addition to my checklist, and quickly eliminated the West's desert areas, like Phoenix, or any areas sourced by the Colorado River water.  The short list worked down to the Carolinas, Pacific Northwest and Great Lakes region.   The Great Lakes are considered a climate change refuge, but it seems to be that it will get warmer, not change less than other places.    I took the Carolina's off our list, partially because of hurricanes.   I still obsessively review the listings in Michigan, Minnesota and Wisconsin.   If we buy more investment properties, I'd love to have holdings in one of those states.

Where's your primary residence?

[JoJoP]

I did a deep dive when exploring where to buy more rental homes last year.   We ended up in the Pacific Northwest, but not before doing a huge amount of research in many other areas.   Purchase price, return on investment, local economy, likely appreciation/gentrification,  crime rates and climate all figured into our choices.  Climate change was a new addition to my checklist, and quickly eliminated the West's desert areas, like Phoenix, or any areas sourced by the Colorado River water.  The short list worked down to the Carolinas, Pacific Northwest and Great Lakes region.   The Great Lakes are considered a climate change refuge, but it seems to be that it will get warmer, not change less than other places.    I took the Carolina's off our list, partially because of hurricanes.   I still obsessively review the listings in Michigan, Minnesota and Wisconsin.   If we buy more investment properties, I'd love to have holdings in one of those states.

Where's your primary residence?

We're in California, in a HCOL area. 

[UnleashHell]

accumulation will soon slow down as I'm now unemployed!!
combined with my other half we are now over 2.5m and I have enough that I'm not going back to work.
What does this sort of money do? Well I just paid more for a transatlantic airfare than I have ever paid in my life but I'm able to be in England and assist my father in dealing with my mother  who has dementia. That sort of flexibility is priceless.

[Bateaux]

accumulation will soon slow down as I'm now unemployed!!
combined with my other half we are now over 2.5m and I have enough that I'm not going back to work.
What does this sort of money do? Well I just paid more for a transatlantic airfare than I have ever paid in my life but I'm able to be in England and assist my father in dealing with my mother  who has dementia. That sort of flexibility is priceless.

Good luck with the retirement, flight and family.  Check in with us sometimes.

[UnleashHell]

accumulation will soon slow down as I'm now unemployed!!
combined with my other half we are now over 2.5m and I have enough that I'm not going back to work.
What does this sort of money do? Well I just paid more for a transatlantic airfare than I have ever paid in my life but I'm able to be in England and assist my father in dealing with my mother  who has dementia. That sort of flexibility is priceless.

Good luck with the retirement, flight and family.  Check in with us sometimes.

cheers - I'm in England now and dealing with the stupid quarantine rules.
pre flight covid test. 10 days quarantine. day 2 test. got a day 8 test tomorrow.
being vaxxed means nothing. its very frustrating to be confined to the property.

currently trying to work with the NHS and dementia team, doctor, researching care homes, dealing with my father who is the primary caregiver and too immersed in this to see the paths in front of us and my mother who has now gone from batshit crazy in an endearing way to being unable to hold any meaningful conversation and is on repeat. repeat. repeat.  Its not the most fun I've ever had but it has to be deal with.

[ysette9]

accumulation will soon slow down as I'm now unemployed!!
combined with my other half we are now over 2.5m and I have enough that I'm not going back to work.
What does this sort of money do? Well I just paid more for a transatlantic airfare than I have ever paid in my life but I'm able to be in England and assist my father in dealing with my mother  who has dementia. That sort of flexibility is priceless.

Good luck with the retirement, flight and family.  Check in with us sometimes.

cheers - I'm in England now and dealing with the stupid quarantine rules.
pre flight covid test. 10 days quarantine. day 2 test. got a day 8 test tomorrow.
being vaxxed means nothing. its very frustrating to be confined to the property.

currently trying to work with the NHS and dementia team, doctor, researching care homes, dealing with my father who is the primary caregiver and too immersed in this to see the paths in front of us and my mother who has now gone from batshit crazy in an endearing way to being unable to hold any meaningful conversation and is on repeat. repeat. repeat.  Its not the most fun I've ever had but it has to be deal with.

I’m sorry you are dealing with this as it sounds really difficult, but it is wonderful that you have t he flexibility to take off and help when needed.

When my sister flew over she chose an Airbnb in the countryside on a big property so she could go outside and walk and run while still obeying the quarantine rules.
However she had to leave to post her two Covid tests which was also the rule. There was apparently no physical way to obey all the government Covid rules.

[Finntastic]

ok so I'm joining this club:

As a very much a newbie to investment and to FIRE all guidance highly appreciated. I'm currently living in Thailand with my Thai wife and we are in the process of moving to Finland January 2022 and RE there (or atleast try it out and if we don't like it then look for some other place).

Jan 2021 - 1.19m$
Feb 2021 - 1.23m$
Mar 2021 - 1.28m$
Apr 2021 - 1.35m$
May 2021 - 2.65m$

I can't really see hitting 4m$ anytime soon if ever, but 3m might be possible. By the end of this year my work will mostly dry up (by my own decision) and I might do some consulting here and there (tech), but mostly will try to learn the life that doesn't involve me running around like a headless chicken and getting peptic ulcers from stress.

I still have a lot of my wealth in cash so in the next months I need to start looking how to invest the money safely.

[Bateaux]

ok so I'm joining this club:

As a very much a newbie to investment and to FIRE all guidance highly appreciated. I'm currently living in Thailand with my Thai wife and we are in the process of moving to Finland January 2022 and RE there (or atleast try it out and if we don't like it then look for some other place).

Jan 2021 - 1.19m$
Feb 2021 - 1.23m$
Mar 2021 - 1.28m$
Apr 2021 - 1.35m$
May 2021 - 2.65m$

I can't really see hitting 4m$ anytime soon if ever, but 3m might be possible. By the end of this year my work will mostly dry up (by my own decision) and I might do some consulting here and there (tech), but mostly will try to learn the life that doesn't involve me running around like a headless chicken and getting peptic ulcers from stress.

I still have a lot of my wealth in cash so in the next months I need to start looking how to invest the money safely.

Welcome aboard.  Wow that's a crazy ascension in net worth.  Good luck with the move and the freedom you'll enjoy from the fruits of your labor.

[SwordGuy]

ok so I'm joining this club:

As a very much a newbie to investment and to FIRE all guidance highly appreciated. I'm currently living in Thailand with my Thai wife and we are in the process of moving to Finland January 2022 and RE there (or atleast try it out and if we don't like it then look for some other place).

Jan 2021 - 1.19m$
Feb 2021 - 1.23m$
Mar 2021 - 1.28m$
Apr 2021 - 1.35m$
May 2021 - 2.65m$

I can't really see hitting 4m$ anytime soon if ever, but 3m might be possible. By the end of this year my work will mostly dry up (by my own decision) and I might do some consulting here and there (tech), but mostly will try to learn the life that doesn't involve me running around like a headless chicken and getting peptic ulcers from stress.

What currency is that in?

Those are some, frankly, pretty unbelievable numbers if it's in dollars.    And if they are accurate, why wouldn't you think you would hit 4 million at that rate of growth?

[Dicey]

Well, I'll be damned. I've got to share this somewhere and this feels like a good spot. Zillow estimates are pretty accurate for our properties these days. Lately, our rentals seem to be zooming up in value, so I ran the numbers on them all. The total estimate is $3.1M. Our mortgage balances are $500k total, so roughly $2.6M net.

I know we don't like to use illiquid assets for this thread, but dang!

Related: I've mentioned before that the Redfin estimate for our primary home is about $300k below Zillow, which is nuts. Because I follow the market, I know that even the Zestimate is low. Weird, but in a good way.

[Finntastic]

ok so I'm joining this club:

As a very much a newbie to investment and to FIRE all guidance highly appreciated. I'm currently living in Thailand with my Thai wife and we are in the process of moving to Finland January 2022 and RE there (or atleast try it out and if we don't like it then look for some other place).

Jan 2021 - 1.19m$
Feb 2021 - 1.23m$
Mar 2021 - 1.28m$
Apr 2021 - 1.35m$
May 2021 - 2.65m$

I can't really see hitting 4m$ anytime soon if ever, but 3m might be possible. By the end of this year my work will mostly dry up (by my own decision) and I might do some consulting here and there (tech), but mostly will try to learn the life that doesn't involve me running around like a headless chicken and getting peptic ulcers from stress.

I still have a lot of my wealth in cash so in the next months I need to start looking how to invest the money safely.

Welcome aboard.  Wow that's a crazy ascension in net worth.  Good luck with the move and the freedom you'll enjoy from the fruits of your labor.

Thanks, the crazy ascension is due to the fact that I didn't list shares in my own company previous to last month as an asset, but now that I sold some and there is agreement for the rest it makes sense to add that as well.

[Finntastic]

ok so I'm joining this club:

As a very much a newbie to investment and to FIRE all guidance highly appreciated. I'm currently living in Thailand with my Thai wife and we are in the process of moving to Finland January 2022 and RE there (or atleast try it out and if we don't like it then look for some other place).

Jan 2021 - 1.19m$
Feb 2021 - 1.23m$
Mar 2021 - 1.28m$
Apr 2021 - 1.35m$
May 2021 - 2.65m$

I can't really see hitting 4m$ anytime soon if ever, but 3m might be possible. By the end of this year my work will mostly dry up (by my own decision) and I might do some consulting here and there (tech), but mostly will try to learn the life that doesn't involve me running around like a headless chicken and getting peptic ulcers from stress.

What currency is that in?

Those are some, frankly, pretty unbelievable numbers if it's in dollars.    And if they are accurate, why wouldn't you think you would hit 4 million at that rate of growth?

Those are USD, I do my math in EUR and then convert to USD for the purpose of this forum. Thing is that my work is drying up and I do some consulting for 120$/hr for next 6-7 months but after that I would have to live from the savings/investments.

[JoJoP]

Well, I'll be damned. I've got to share this somewhere and this feels like a good spot. Zillow estimates are pretty accurate for our properties these days. Lately, our rentals seem to be zooming up in value, so I ran the numbers on them all. The total estimate is $3.1M. Our mortgage balances are $500k total, so roughly $2.6M net.

I know we don't like to use illiquid assets for this thread, but dang!

Related: I've mentioned before that the Redfin estimate for our primary home is about $300k below Zillow, which is nuts. Because I follow the market, I know that even the Zestimate is low. Weird, but in a good way.

Congrats!  This is great news!  Home prices are definitely up nationwide.    I think the mainstream news is saying 10-11% across the board.  If you happen to own real estate in Phoenix or Boise, 10% is old news.   They are up 30% or more year over year. 
 https://www.weknowboise.com/blog/home-prices-up-100k.html 

 Like stock market chatter, the talk is of the housing price bubble and how long can it last.  I just hope that zoning gets a major overhaul in all this flurry, so that home ownership,  a prime wealth building tool for many, is attainable for the average person.  The rise of the largish Single Family Home into the suburbs, and zoning that encourages urban sprawl into outlying areas, has caused a shortage of affordable higher density housing that gives lower income buyers a chance to jump into the game.   They are being left behind, and that's not good for anyone.    I would love to do a "cottage cluster" type development.  Little cute cottages arranged around a courtyard or  shared greenspace were commonplace in the beach town where I grew up.   They were oil worker housing in the 1950"s.  Current zoning would never allow those now, even if they were the most economically sound options, which is doubtful if land costs are high. 

.