Author Topic: 2019 fire cohort  (Read 31946 times)

PhilB

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Two years to go!
« Reply #300 on: June 30, 2017, 01:22:34 AM »
Only 2 more years to go to RE and I am now most definitely FI.  The last 2 years are just adding to my (already more than adequate) contingency fund to help me sleep better.  So it occurs to me, If my existing retirement funds can already support my lifestyle then all my post tax earnings are effectively just being added to savings - a 100% savings rate ! :-)

Linda_Norway

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Re: Two years to go!
« Reply #301 on: June 30, 2017, 02:03:43 AM »
Only 2 more years to go to RE and I am now most definitely FI.  The last 2 years are just adding to my (already more than adequate) contingency fund to help me sleep better.  So it occurs to me, If my existing retirement funds can already support my lifestyle then all my post tax earnings are effectively just being added to savings - a 100% savings rate ! :-)

Congrats on being FI!

Itchyfeet

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Re: Two years to go!
« Reply #302 on: June 30, 2017, 03:26:27 AM »
Only 2 more years to go to RE and I am now most definitely FI.  The last 2 years are just adding to my (already more than adequate) contingency fund to help me sleep better.  So it occurs to me, If my existing retirement funds can already support my lifestyle then all my post tax earnings are effectively just being added to savings - a 100% savings rate ! :-)

Totally awesome that you are set financially.... but I can't agree with the maths 😜

I do get the sentiment, but if you are not spending your salary you are drawing on the returns from your stash. So yes a 100% savings rate of salary, but a negative saving rate elsewhere.

I have seen others here include investment returns + salary in calculating their savings rate e.g.: salary 100k + investment returns 100k = 200k. Expenditure = 50k. Therefore savings rate =75%.

Others just look at their salary and spending, not including investment gains. I think this is more common.

I guess both are valid, but your method hmmmm 😬.

 I suspect 2017 won't be the first year that investment returns were greater than spending. It will be our 3 year. This certainly adds confidence to FIREing.

PhilB

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Re: Two years to go!
« Reply #303 on: June 30, 2017, 04:15:54 AM »
Totally awesome that you are set financially.... but I can't agree with the maths 😜

I do get the sentiment, but if you are not spending your salary you are drawing on the returns from your stash. So yes a 100% savings rate of salary, but a negative saving rate elsewhere.

I have seen others here include investment returns + salary in calculating their savings rate e.g.: salary 100k + investment returns 100k = 200k. Expenditure = 50k. Therefore savings rate =75%.

Others just look at their salary and spending, not including investment gains. I think this is more common.

I guess both are valid, but your method hmmmm 😬.
My '100% savings rate' comment was very tongue-in-cheek and isn't a methodology I'd recommend generally - and certainly not before FI - but I think it does have some validity in my case.  As I am FI, when analysing my decision to keep working probably the most relevant question is 'what percentage of those earnings will be translated to an increase in my contingency fund?' and the rather delightful answer is 100%. 
My Excel model is telling me that if I retire today I should be able to support a spending level roughly 10% higher than my actuals for the last couple of years.  I don't expect much lifestyle inflation so anything extra just fattens the contingencies and increases inheritance. 
Quote
I suspect 2017 won't be the first year that investment returns were greater than spending. It will be our 3 year. This certainly adds confidence to FIREing.
Congratulations, that definitely helps.  I'm not very trusting of recent investment returns so that isn't a number I've particularly looked at against spending - in fact my retirement model has been using a 4% real return for the last 3 years rather than marking to market.  Actuals are currently about 8% above the number in my model and I wouldn't feel comfortable 'banking' that to the model as valuations are looking rather high.

cerat0n1a

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Re: Two years to go!
« Reply #304 on: June 30, 2017, 05:00:28 AM »
Only 2 more years to go to RE and I am now most definitely FI.  The last 2 years are just adding to my (already more than adequate) contingency fund to help me sleep better.  So it occurs to me, If my existing retirement funds can already support my lifestyle then all my post tax earnings are effectively just being added to savings - a 100% savings rate ! :-)

I'm effectively in the same situation. On the one hand, it's nice to see the total fund size growing so rapidly compared to when starting out. The first 10k (or 100k) truly is the hardest. On the other hand, when the size of your 'stache can easily vary by a month or two's salary during any given day, it's good to keep the discipline of not checking too often.

PhilB

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Re: Two years to go!
« Reply #305 on: June 30, 2017, 06:05:36 AM »
I'm effectively in the same situation. On the one hand, it's nice to see the total fund size growing so rapidly compared to when starting out. The first 10k (or 100k) truly is the hardest. On the other hand, when the size of your 'stache can easily vary by a month or two's salary during any given day, it's good to keep the discipline of not checking too often.
Yep.  It's a tricky thing to get your head around when the numbers get to be both big and bouncy.  What's worked for me is checking on the same day every week and plotting actuals against budget on a graph (geeky or what?).  After watching that for a few years I can now maintain my equanimity whilst watching the numbers go up and down and concentrate on the trends rather than the noise.

VoteCthulu

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Re: 2019 fire cohort
« Reply #306 on: June 30, 2017, 01:06:20 PM »
I track my savings once a month, mostly for personal motivation. I'm waiting for healthcare to become a bit more certain before I review my number to make sure I won't need OMY. Or if the Obamacare subsidies stick around, perhaps even OLY.

Linda_Norway

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Re: 2019 fire cohort
« Reply #307 on: June 30, 2017, 01:12:49 PM »
I tracked my stock investments day. It. Is all invested in foreign indexfunds for speading risk, as I live in a country with a small valuta. Earlier all my stock was at 7% or more profit. Currently my European index fund and the fastgrowing markets funds are in the negative! I guess it has something to do with the value of the Norwegian crown.bmy Asian index fund is still doing very well, as is my world index fund.  On all funds I am currently 10% in the positive after 1,5 year with investing. Still on schedule for the future 4% rule. And I presume those negative funds will climb again at some time in the future.

Itchyfeet

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Re: 2019 fire cohort
« Reply #308 on: July 01, 2017, 12:26:08 AM »
I tracked my stock investments day. It. Is all invested in foreign indexfunds for speading risk, as I live in a country with a small valuta. Earlier all my stock was at 7% or more profit. Currently my European index fund and the fastgrowing markets funds are in the negative! I guess it has something to do with the value of the Norwegian crown.bmy Asian index fund is still doing very well, as is my world index fund.  On all funds I am currently 10% in the positive after 1,5 year with investing. Still on schedule for the future 4% rule. And I presume those negative funds will climb again at some time in the future.

Yeah, the weaker USD impacted me a little this month too.

Bateaux

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Re: 2019 fire cohort
« Reply #309 on: July 01, 2017, 10:28:29 PM »
If my investments return 5% annually for the next two years then I will meet my goal.  Sure would appreciate having some idea what health care costs will be then.
“Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.”
 ― Antoine de Saint-

Class of 2019

Itchyfeet

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Re: 2019 fire cohort
« Reply #310 on: July 02, 2017, 02:53:06 AM »
June proved to be a great month on the road to FIRE, more than offsetting my stash shrinkage from May by adding a handy sum more.

I am now at 22x my post FIRE planned spending, or a withdrawal rate of 4.5% if I FIRED today.

So far this year my stash has generated very impressive annualized returns of 12.9%, primarily due to leveraged property investments.

My equity investments have only given me an annualized return of around 5% due to a flat Australian stock market and the weaker US dollar diminishing otherwise great returns on my international investments.

The annualized returns from property for the 6 months were 10%, but with leverage I gained 18% annualized. These numbers includes both rent and cap gains, and all costs including finance.

I really can't imagine any further gains on property this year beyond rent, so will be hoping for Australian equities to do some of the heavy lifting, like they did in H2 2016. Fingers crossed. At least dividends should be higher in H2.

My savings rate in June was not great. Clearly DW and I have work to do on tightening spending ahead of FIRE. The hole in June was spending on our summer vacation in July, which is not every month I suppose. However, after 6 months my spending this year is a couple of grand above the target, so we will want to reel that in over the coming months.

FIRE 2019 is certainly on track!!!


VoteCthulu

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Re: 2019 fire cohort
« Reply #311 on: July 03, 2017, 01:21:00 PM »
Yeah, the US index funds have done great this year. I find myself hoping for a little recession before I retire, so I can start off with the recovery. I'm pretty sure the market will tank 3- 6 months after whatever date I retire at, though.

Itchyfeet

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Re: 2019 fire cohort
« Reply #312 on: July 03, 2017, 01:35:48 PM »
Yes, I will certainly never t be starting FIRE with 100% equities. Some cash and some bonds for at least the first few years will help me sleep better. I also have rental property that I'll prob keep post FIRE to provide a steady income.

Linda_Norway

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Re: 2019 fire cohort
« Reply #313 on: July 04, 2017, 02:09:26 AM »
Yes, I will certainly never t be starting FIRE with 100% equities. Some cash and some bonds for at least the first few years will help me sleep better. I also have rental property that I'll prob keep post FIRE to provide a steady income.

I haven't really been realizing this. Although for the last to weeks I have been thinking about buying bonds in the future. But we have such a large portion of our money put into property (our current house and hut) that the risk is already spread. We are investing in funds now to spread in into something else than property.
I haven seen a Norwegian bond fund (Rentefond) that has generated 4,5% in the past years. That doesn't sound too bad. Although most stock funds are between 8 and 18%. I think I'll wait before doing that until either the rent goes up or we really start working part time.

Vegasgirl

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Re: 2019 fire cohort
« Reply #314 on: July 07, 2017, 07:20:24 AM »
Just looking at my pay stub this morning and seeing that I got an award of 40 hours annual leave.   Makes my day since I decided back at the beginning of the year I had no problem using most, if not all of my AL prior to leaving in 2019 !! What fun !!  I think I'll just be off for the remainder of the Fridays this year !!! 

Livingthedream55

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Re: 2019 fire cohort
« Reply #315 on: July 07, 2017, 07:42:22 AM »
Just looking at my pay stub this morning and seeing that I got an award of 40 hours annual leave.   Makes my day since I decided back at the beginning of the year I had no problem using most, if not all of my AL prior to leaving in 2019 !! What fun !!  I think I'll just be off for the remainder of the Fridays this year !!!

Sweet!



TartanTallulah

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Re: 2019 fire cohort
« Reply #316 on: July 07, 2017, 09:09:22 AM »
Just looking at my pay stub this morning and seeing that I got an award of 40 hours annual leave.   Makes my day since I decided back at the beginning of the year I had no problem using most, if not all of my AL prior to leaving in 2019 !! What fun !!  I think I'll just be off for the remainder of the Fridays this year !!!

Result! Congratulations :-)

Cornbread OMalley

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Re: 2019 fire cohort
« Reply #317 on: July 09, 2017, 09:36:37 AM »
Just looking at my pay stub this morning and seeing that I got an award of 40 hours annual leave.   Makes my day since I decided back at the beginning of the year I had no problem using most, if not all of my AL prior to leaving in 2019 !! What fun !!  I think I'll just be off for the remainder of the Fridays this year !!!
That is awesome!

Cornbread OMalley

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Re: 2019 fire cohort
« Reply #318 on: July 09, 2017, 09:42:36 AM »
Yes, I will certainly never t be starting FIRE with 100% equities. Some cash and some bonds for at least the first few years will help me sleep better. I also have rental property that I'll prob keep post FIRE to provide a steady income.
I will hit FIRE with 100% equities and stay that way indefinitely.  At least that's my thinking for now.  Upon FIRE I get a pension worth $40K annually that fits the role as bond income.  This gives me the flexibility to keep the allocation in equities very high.  So my thinking is if there is a downturn in the markets I rely on the monies from that pension and my cash reserves to ride out the downturn and give my equities the time needed to recover.

Itchyfeet

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Re: 2019 fire cohort
« Reply #319 on: July 09, 2017, 10:05:15 AM »
A $40k pension would certainly be enough to allow me to sleep soundly every night.

I would value that at $800K in my stash. That's pretty nice to have.

Cornbread OMalley

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Re: 2019 fire cohort
« Reply #320 on: July 09, 2017, 07:14:54 PM »
A $40k pension would certainly be enough to allow me to sleep soundly every night.

I would value that at $800K in my stash. That's pretty nice to have.
Can you explain to me the math you used to equate a $40K pension to $800K stash?

Itchyfeet

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Re: 2019 fire cohort
« Reply #321 on: July 10, 2017, 01:19:37 AM »
A $40k pension would certainly be enough to allow me to sleep soundly every night.

I would value that at $800K in my stash. That's pretty nice to have.
Can you explain to me the math you used to equate a $40K pension to $800K stash?

I am just saying that in the absence of the pension you would need at least 20x the pension saved in your stash to fund life post retirement ie: 20 x 40K = $800K.

Arguably, you could also say that having $40K of certain income is better than having an $800K stash that is subject to sequence of returns risk. In this case you might argue that the pension is worth say 30x its annual value ie: $1.2M. Whatever!!

Ultimately, it really doesn't matter, as I would presume for post FIRE calculations you would take your annual expenditure requirement and then deduct the $40K pension to arrive at the expenses than need to be funded from your stash and then multiply that number by 20-30 to arrive at how big a stash you need outside the pension.

I also will receive a small pension and I like to put a value on it as I consider it part of my net worth. In my case I wont get the pension for 10 more years, so discount the value.



Cornbread OMalley

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Re: 2019 fire cohort
« Reply #322 on: July 15, 2017, 11:17:30 AM »
I am just saying that in the absence of the pension you would need at least 20x the pension saved in your stash to fund life post retirement ie: 20 x 40K = $800K...I also will receive a small pension and I like to put a value on it as I consider it part of my net worth.
Ah, yes.  Some of the other forum members and I have posed the question of how much a pension translates to a number for net worth considerations.  At the end of the discussion we decided the technique you mention is oversimplifying things too much.  There are certain pension plans that don't translate to a set amount to be counted in the net worth stash.  It was better and more accurate to keep the pension amount separate from the net worth stash.

Arguably, you could also say that having $40K of certain income is better than having an $800K stash that is subject to sequence of returns risk. In this case you might argue that the pension is worth say 30x its annual value ie: $1.2M. Whatever!!
I think of my pension as an annuity.

...I would presume for post FIRE calculations you would take your annual expenditure requirement and then deduct the $40K pension to arrive at the expenses than need to be funded from your stash and then multiply that number by 20-30 to arrive at how big a stash you need outside the pension.
That is correct.

powersuitrecall

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Re: 2019 fire cohort
« Reply #323 on: July 17, 2017, 11:25:42 AM »
I'm in a kinda funny situation at work.  A while ago I applied for a promotion pool and have been going through the process (Resume --> Exam --> Interview).  It's all competency based and very procedural. i.e. long and painful.  Given that I'm 2 years away from RE, being promoted at this point wouldn't hasten my departure by much. On paper I'll get there a couple of weeks ahead, a month at most.

I've had many inner conversations between career-man: "You need this! It's important!" and RE-man: "Why are you going through this terrible process!  RE is in the bag! Work sucks! Let someone else have this! You don't need more money!".

At this point career-man seems to be winning.  I want it.  Maybe it's desire for external validation, or wanting to achieve something in my last 2 years.  Regardless, I know it's not for the money, and that is a nice feeling.

Update - I didn't pass the interview.  It's disappointing on a variety of levels but ultimately doesn't impact the FIRE goals.


PhilB

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Re: 2019 fire cohort
« Reply #324 on: July 18, 2017, 05:35:44 AM »
Commiserations on failing the interview, but bigger congratulations on being in a position where you can afford to great the news with: 'Whatever.'