Author Topic: FIRE'd because I got fired  (Read 4213 times)

retire

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FIRE'd because I got fired
« on: July 11, 2018, 07:18:29 AM »
Just lost my job this week so in a way forced into early retirement.  Thought i'd work at least until i turned 50 but now want to see if i can just fully retire and enjoy life.  Worked in finance 20yrs yet unsure how to handle my own finances.  Stupid i know.  Would love some advice on how to invest for financial freedom if you were in my shoes.  Need at least 5% returns to meet lifestyle.

Family of 4 (wife and 2 kids)
age 43, wife 39, kids 8 and 5
cash 6.5mm
property - house 700k, mortgage 225k (will prob pay off), investment properties 400k mortgage free.
rollover IRA 200k
pension cashed out 300k but will use to fund kids' college fund

Don't know why but extremely nervous as i've never really invested before.  Would like safety of principal as i will no longer be earning an income. 

Raenia

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Re: FIRE'd because I got fired
« Reply #1 on: July 11, 2018, 07:40:34 AM »
Wow.  My first impulse was to say "Congrats, you're free!"  Then I re-read and saw that you're saying you need a 5% return on a stache of 6.5 mill - which equates to 325,000 annual spend, PLUS your income from the investment properties.  Is that correct?  I'm really hoping I misread something in there, or maybe there's a typo, misplaced decimal point, something...

If all that's correct, my advice is to focus on looking at your lifestyle and costs.  It's much easier to cut costs than chase returns, especially as you're sounding very risk averse.  There's nothing that can guarantee a 5% return and also guarantee safety of the principal.  A good mix of stocks and bonds is relatively safe (something like this might be good), but nothing is guaranteed.

I recommend posting a full case study for more detailed advice tailored to your situation, but at that spending level, there are definitely going to be things you can trim.

ETA: Working from the assumption that the poster is genuine, of course.  If they're a troll, then nothing will help them.
« Last Edit: July 11, 2018, 09:08:32 AM by Raenia »

mak1277

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Re: FIRE'd because I got fired
« Reply #2 on: July 11, 2018, 07:48:47 AM »
Post this on bogleheads too, if you haven't already.

Bird In Hand

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Re: FIRE'd because I got fired
« Reply #3 on: July 11, 2018, 08:58:14 AM »
This is fascinating to me.  Strictly out of curiosity -- I'm not here to judge -- can you tell us more about your lifestyle and how it adds up to $300k+/yr in spending?

Also, congratulations: amassing $8MM in net worth in 20 yrs, most of it in cash is an impressive accomplishment.  I imagine it significantly eases the pain of being fired from your job!
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Dicey

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Re: FIRE'd because I got fired
« Reply #4 on: July 11, 2018, 09:04:00 AM »
Dunno, my spidey sense isn't buying this one...
I did it! I have a journal!
A Lot Like This
And hell yes, I am still moving confidently in the direction of my dreams...

Bird In Hand

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Re: FIRE'd because I got fired
« Reply #5 on: July 11, 2018, 09:06:40 AM »
Dunno, my spidey sense isn't buying this one...

Lol, the same thought occurred to me, as it often does with bizarro topics by OP's with 1 post only.  We'll see though.  I'm hoping it's legit because I'm really fascinated by someone with a $700k house but a $300k+ spend rate.
"Overcoming the inertia of procrastination since tomorrow"

Liberty Stache

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Re: FIRE'd because I got fired
« Reply #6 on: July 11, 2018, 09:15:26 AM »
Dunno, my spidey sense isn't buying this one...

+1

Worked in finance 20yrs yet unsure how to handle my own finances.  Stupid i know. 

Really stupid.

Some basic math:

-Assume $400K average income over the past 20 years = $8MM total pre tax (maybe $5-6MM post tax). (Managing Directors will typically make $400-600K/yr so I'm being generous assuming MD salary+bonus from day 1)
-Assume almost no investment return (say $400K from RE portfolio e.g. 5-10% return over 10-20 years)
-Assume $6.5MM cash position

$6MM post tax income + $0.4MM RE returns - living expenses = $6.5MM --> living expenses (for 20 years) = -$100,000 or -$5K/year

So with a family of 4 with a $700K house in (I'm guessing) a presumably HCOL area the OP spent nothing on a yearly basis? Highly doubtful.

I'm calling troll.

OP / retire - Prove me wrong with a full case study.
« Last Edit: July 11, 2018, 09:19:40 AM by Liberty Stache »
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WSUCoug1994

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Re: FIRE'd because I got fired
« Reply #7 on: July 11, 2018, 09:17:59 AM »
I have to ignore this thread - troll or not - simply on the fact that $6.5M in cash is giving me a panic attack.

Sibley

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Re: FIRE'd because I got fired
« Reply #8 on: July 11, 2018, 09:19:08 AM »
Dunno, my spidey sense isn't buying this one...

Lol, the same thought occurred to me, as it often does with bizarro topics by OP's with 1 post only.  We'll see though.  I'm hoping it's legit because I'm really fascinated by someone with a $700k house but a $300k+ spend rate.

And $6.5 million in cash.

OP, assuming you're not a troll (sorry, but the chances are high), google and read J Collins stock series. That'll get you a decent primer in investments.

If you really spend $300k a year, you are either on the wrong website and need to go to Bogleheads, or you're in for some extremely painful facepunches here. Your spending should probably be closer to $50k a year.

retire

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Re: FIRE'd because I got fired
« Reply #9 on: July 11, 2018, 09:40:58 AM »
thanks for your replies.  def not a troll.  Everything is correct.  didn't post to upset people.  i was sincere and serious in looking for advice.

Investment property only generates about 24k a year pretax but i am planning on using that to buy more investment properties rather than fund my income.  the 325k is pretax as well so actual income will be less.  my cost of living is not that extravagant.  i don't have any material goods like fancy car, watches, jewelry etc.  it's just that i also help take care of some extended family as well. 

my ave annual income over the past 10yrs was ~1.25-1.5mm/yr.  live in very high rent area (HK) so ~10k/mth.  private school for kids 50k/yr.  did spend on few luxury vacations a yr.  ave cost of lifestyle is about 315k/yr post tax.  despite that, given high income, i was still able to save a bit.  ave tax rate was only ~35% given living abroad and didn't have to pay state/city tax.

did plan on buying another house (2mm) when i thought i was going to work longer but thank goodness i didn't. 

i asked for redundancy as i wanted to come back to the states and received a nice severance package.

I really just want to hear what investment options there are.  i've generally been unable to invest given my role in finance.  honestly i could have invested but subject to lengthy holding periods and approval/reporting processes but i was a bit lazy and didn't want to deal with the hassle.  now i'm free and clear to do what i want.

neo von retorch

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Re: FIRE'd because I got fired
« Reply #10 on: July 11, 2018, 10:29:16 AM »
thanks for your replies.  def not a troll.  Everything is correct.  didn't post to upset people.  i was sincere and serious in looking for advice.

Investment property only generates about 24k a year pretax but i am planning on using that to buy more investment properties rather than fund my income.  the 325k is pretax as well so actual income will be less.  my cost of living is not that extravagant.  i don't have any material goods like fancy car, watches, jewelry etc.  it's just that i also help take care of some extended family as well. 

my ave annual income over the past 10yrs was ~1.25-1.5mm/yr.  live in very high rent area (HK) so ~10k/mth.  private school for kids 50k/yr.  did spend on few luxury vacations a yrave cost of lifestyle is about 315k/yr post tax.  despite that, given high income, i was still able to save a bit.  ave tax rate was only ~35% given living abroad and didn't have to pay state/city tax.

...

I really just want to hear what investment options there are.  i've generally been unable to invest given my role in finance.  honestly i could have invested but subject to lengthy holding periods and approval/reporting processes but i was a bit lazy and didn't want to deal with the hassle.  now i'm free and clear to do what i want.

I'm really confused. But you don't need investment advice. You just need to stop finding ways to spend ONE THOUSAND DOLLARS A DAY.

1. Reduce living expenses to something distantly, remotely reasonable... let's say $200k! (OMG)
2. Keep 2.5 years of living expenses in cash - $500k.
3. Figure out your Investment Policy Statement / pick your asset allocation. Let's say "reverse equity glidepath" since you're starting retirement Right Now, but should increase your equities once you're past the Sequence of Returns Risk period. Something like 80/20 Stocks/bonds but move towards 95/5 or even 100/0 once you have so much money you couldn't possibly run out. (If stocks crash, spend down your bonds until they recover. I think. Someone will correct me.)
4. Just buy Total Stock / Total Bond funds. Don't put another second into "figuring out investing."

Threshkin

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Re: FIRE'd because I got fired
« Reply #11 on: July 11, 2018, 10:42:22 AM »
thanks for your replies.  def not a troll.  Everything is correct.  didn't post to upset people.  i was sincere and serious in looking for advice.

Investment property only generates about 24k a year pretax but i am planning on using that to buy more investment properties rather than fund my income.  the 325k is pretax as well so actual income will be less.  my cost of living is not that extravagant.  i don't have any material goods like fancy car, watches, jewelry etc.  it's just that i also help take care of some extended family as well. 

my ave annual income over the past 10yrs was ~1.25-1.5mm/yr.  live in very high rent area (HK) so ~10k/mth.  private school for kids 50k/yr.  did spend on few luxury vacations a yr.  ave cost of lifestyle is about 315k/yr post tax.  despite that, given high income, i was still able to save a bit.  ave tax rate was only ~35% given living abroad and didn't have to pay state/city tax.

did plan on buying another house (2mm) when i thought i was going to work longer but thank goodness i didn't. 

i asked for redundancy as i wanted to come back to the states and received a nice severance package.

I really just want to hear what investment options there are.  i've generally been unable to invest given my role in finance.  honestly i could have invested but subject to lengthy holding periods and approval/reporting processes but i was a bit lazy and didn't want to deal with the hassle.  now i'm free and clear to do what i want.

Are these USD numbers or HKD numbers?

martyconlonontherun

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Re: FIRE'd because I got fired
« Reply #12 on: July 11, 2018, 10:43:55 AM »
If you are coming back to the states, shouldn't your living expenses go down? It looks like $170k was for private school and rent. Just move to a district with the best schools. Pay for the house in cash and your living expenses are down to $150k without changing your lifestyle.


Sibley

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Re: FIRE'd because I got fired
« Reply #13 on: July 11, 2018, 10:52:10 AM »
OK, that makes more sense. You've got some homework to do.

1. J Collin's Stock Series - good investment primer. Then what neo von retorch said.
2. Figure out what you actually spend. Not income - spend. Track every dollar, look at it, analyze it. You've been in finance, you know how to do this. Use whatever tracking method works for you. You need hard data.
3. Decide what lifestyle works for you and your family, what do you value? This is how you're going to design your life, and use it to align your finances to your life. Needs vs. wants is an important concept here too.
4. Compare #2 and #3. Find the gaps. If you're spending a ton of money on something you don't value, then either eliminate it or drastically reduce the outflow. Example: you don't value tv, but you're spending X a year on cable tv. Get rid of cable tv. Example: you don't want an expensive house, but housing is required. Thus you find somewhere to live that meets your needs but is lower cost.
5. You say you're supporting family members. Within reason, that's fine. What is NOT within reason is you supporting someone who is fully capable of supporting themselves but won't because it's easier for you to give them money. So, go back through the list of who you're supporting and why. This will be very difficult. If you have messed up family dynamics, you may need professional help. Anyone who can support themselves needs to be informed that the gravy train is ending and they need to pick up the slack. For family that it makes sense for you to assist, again, there is a within reason component here. Examine the lifestyle. Their lifestyle under no circumstances should be more luxurious or glamorous than yours. Again, depending on family dynamics, professional assistance may be needed.
   Cheat sheet: in general, acceptable reasons to assist someone financially are: elderly and no longer able to earn. Disabled and unable to earn. Children without parental adults to provide for them. If someone is eligible for public assistance of some sort, then that assistance should be obtained and exhausted PRIOR to you sending money.

Raenia

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Re: FIRE'd because I got fired
« Reply #14 on: July 11, 2018, 10:58:47 AM »
You're renting at 10k/month and also have a 700k house with a mortgage?  Or is that house one of the investment properties?

I agree with the above poster that once you move back to the US and are no longer paying absurd amounts for housing and schooling, you should be fine.

SimpleCycle

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Re: FIRE'd because I got fired
« Reply #15 on: July 11, 2018, 11:00:59 AM »
If I had $6.5m in cash, I would be finding a very good financial advisor, as you obviously don't know what you are doing (people in finance can invest personally, btw) and will need some serious hand holding.  The chances you are able to go from a $315k/year spending habit with no investing experience to happily early retired seem nil to me.  If you find an hourly fee only planner you'll save a bundle.  You don't want to pay a % of assets under management.

NomadMonad

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Re: FIRE'd because I got fired
« Reply #16 on: July 11, 2018, 11:07:31 AM »
So you spend $120k on rent and $50k on private school.  As the posters above said, neither of those are necessary.  But that still only adds up to $170k.  How are you managing to spend another $145k on top of that?  That's almost three times most people's income, so you must be doing something very unusual to spend that much.  We can't really help you if you don't tell us where that money is going.

dogboyslim

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Re: FIRE'd because I got fired
« Reply #17 on: July 11, 2018, 11:25:28 AM »
... i've generally been unable to invest given my role in finance.  honestly i could have invested but subject to lengthy holding periods and approval/reporting processes but i was a bit lazy and didn't want to deal with the hassle.  ...

This is history so likely doesn't matter, but this doesn't generally apply to index fund investment.  I'm an insider so subject to similar constraints, but regular investments into index funds are excluded from reporting requirements for me.  Also, If I choose to invest in individual stocks, I have to use specific brokers, but part of the deal with those brokers is that they handle the reporting and the holding periods.  If after this period you decide to go back into the working world, be sure you check out your options fully before just giving up and accumulating cash.

MilesTeg

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Re: FIRE'd because I got fired
« Reply #18 on: July 11, 2018, 11:34:56 AM »
OP seems to be talking about hong kong dollars, which are currently worth 0.13 USD.

So the revised numbers are:

6.5m in cash -> $845,000 USD
$320k a year in spending -> $41,600 USD a year


FreelanceToFreedom

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Re: FIRE'd because I got fired
« Reply #19 on: July 11, 2018, 11:35:59 AM »
OP seems to be talking about hong kong dollars, which are currently worth 0.13 USD.

So the revised numbers are:

6.5m in cash -> $845,000 USD
$320k a year in spending -> $41,600 USD a year


I was about to say this. Makes WAY more sense if he's talking in HKD.

Mother Fussbudget

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Re: FIRE'd because I got fired
« Reply #20 on: July 11, 2018, 11:56:48 AM »
Focus on a tax strategy.  Do everything you can to legally minimize taxable income. After this year, you'll probably be living on capital gains with little-to-no "earned income".
See the Investing Order recommendations from the 'Investing' forum, and decide whether these recommendations apply to your situation.
If following the advice to invest in VTSAX, open a brokerage account(s) at Vanguard to pay zero commissions.
Research why so many retirees invest in real estate.  Some possible reasons: 
  1) Depreciation & its positive impact on taxable income (deduct investment property value over 27.5 years),
  2) Housing market price stability & value long-term  (i.e. you don't lose half your home's value overnight as can happen in stocks),
  3) Real-estate-investing setup as a pass-through company enjoys new tax treatment.
Read. Read. Read.   

And hopefully you now have time for reading.  All the best!  MFB
« Last Edit: July 11, 2018, 11:58:20 AM by Mother Fussbudget »



Slee_stack

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Re: FIRE'd because I got fired
« Reply #21 on: July 11, 2018, 12:13:22 PM »
Glad to see the OP taking control of his/her idle money.

I suspect being let go may end up a very positive thing in the long run....

Padonak

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Re: FIRE'd because I got fired
« Reply #22 on: July 11, 2018, 12:21:04 PM »
I'm probably a billionaire in Zimbabwean dollars. Should I post a case study too without mentioning what kind of dollar I'm referring to?

Davids

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Re: FIRE'd because I got fired
« Reply #23 on: July 11, 2018, 12:21:39 PM »
Sounds fake to me. OP worked in Finance for 20 years, has 6.5MM cash laying around and never invested.

Cromacster

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Re: FIRE'd because I got fired
« Reply #24 on: July 11, 2018, 12:32:46 PM »
I'm probably a billionaire in Zimbabwean dollars. Should I post a case study too without mentioning what kind of dollar I'm referring to?

Would need approx 2.75 million for this to be true.  ZWD: USD is currently .00276

But yes, OP should clarify what currency he is referring to.
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Mother Fussbudget

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Re: FIRE'd because I got fired
« Reply #25 on: July 11, 2018, 12:37:57 PM »
Sounds fake to me. OP worked in Finance for 20 years, has 6.5MM cash laying around and never invested.
OP is in Hong Kong.  I assume different rules apply.  $6.5MM-HK = ~$850K-US.



terran

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Re: FIRE'd because I got fired
« Reply #26 on: July 11, 2018, 12:38:25 PM »
OP seems to be talking about hong kong dollars, which are currently worth 0.13 USD.

So the revised numbers are:

6.5m in cash -> $845,000 USD
$320k a year in spending -> $41,600 USD a year
I was about to say this. Makes WAY more sense if he's talking in HKD.

Given that (per google) average rent in Hong Kong is 44,000HKD, I doubt this is the situation. Seems more likely that the OP is spending a little less than twice the average on rent ($10k US = 77k HKD according to MilesTeg's exchange rate) than 1/4 the average.

MilesTeg

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Re: FIRE'd because I got fired
« Reply #27 on: July 11, 2018, 12:52:01 PM »
OP seems to be talking about hong kong dollars, which are currently worth 0.13 USD.

So the revised numbers are:

6.5m in cash -> $845,000 USD
$320k a year in spending -> $41,600 USD a year
I was about to say this. Makes WAY more sense if he's talking in HKD.

Given that (per google) average rent in Hong Kong is 44,000HKD, I doubt this is the situation. Seems more likely that the OP is spending a little less than twice the average on rent ($10k US = 77k HKD according to MilesTeg's exchange rate) than 1/4 the average.

Google says that for the city center, and averages drop significantly outside that. While I agree some numbers are still a bit wonky according to US norms, his post makes a LOT more sense if he is using HKD. Perhaps we should provide him the opportunity to clarify before launching into various forms of assumption, eh?

mak1277

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Re: FIRE'd because I got fired
« Reply #28 on: July 11, 2018, 12:58:02 PM »
Sounds fake to me. OP worked in Finance for 20 years, has 6.5MM cash laying around and never invested.
OP is in Hong Kong.  I assume different rules apply.  $6.5MM-HK = ~$850K-US.

My money is on the whole post being in USD...US$6.5 million

terran

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Re: FIRE'd because I got fired
« Reply #29 on: July 11, 2018, 01:46:17 PM »
OP seems to be talking about hong kong dollars, which are currently worth 0.13 USD.

So the revised numbers are:

6.5m in cash -> $845,000 USD
$320k a year in spending -> $41,600 USD a year
I was about to say this. Makes WAY more sense if he's talking in HKD.

Given that (per google) average rent in Hong Kong is 44,000HKD, I doubt this is the situation. Seems more likely that the OP is spending a little less than twice the average on rent ($10k US = 77k HKD according to MilesTeg's exchange rate) than 1/4 the average.

Google says that for the city center, and averages drop significantly outside that. While I agree some numbers are still a bit wonky according to US norms, his post makes a LOT more sense if he is using HKD. Perhaps we should provide him the opportunity to clarify before launching into various forms of assumption, eh?

Agreed. That's why I posted. Things seemed to be going down the path of assuming his numbers were in HKD.

Ryancanderson23

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Re: FIRE'd because I got fired
« Reply #30 on: July 11, 2018, 02:41:57 PM »
OP seems to be talking about hong kong dollars, which are currently worth 0.13 USD.

So the revised numbers are:

6.5m in cash -> $845,000 USD
$320k a year in spending -> $41,600 USD a year
I was about to say this. Makes WAY more sense if he's talking in HKD.

Given that (per google) average rent in Hong Kong is 44,000HKD, I doubt this is the situation. Seems more likely that the OP is spending a little less than twice the average on rent ($10k US = 77k HKD according to MilesTeg's exchange rate) than 1/4 the average.

Google says that for the city center, and averages drop significantly outside that. While I agree some numbers are still a bit wonky according to US norms, his post makes a LOT more sense if he is using HKD. Perhaps we should provide him the opportunity to clarify before launching into various forms of assumption, eh?

Agreed. That's why I posted. Things seemed to be going down the path of assuming his numbers were in HKD.

Either way if this guy worked in finance long enough to a mass close to FIRE level of savings and doesn't know how to invest personally and doesn't know to specify HKD on a US based forum, he needs a lot more help than a couple forum responses will give him.
« Last Edit: July 11, 2018, 02:46:38 PM by Ryancanderson23 »

retire

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Re: FIRE'd because I got fired
« Reply #31 on: July 11, 2018, 05:07:34 PM »
appreciate the genuine replies.  all numbers are in USD.  as seen by the rent figures, cost of living is extremely high.  for instance, quart of organic milk is 60 hkd or dozen organic eggs is 120 hkd.  we do this as we are scared to eat products from china given rampant tampering with food products there. 

i understand people's concern about adjusting cost of living but from a percentage perspective, i was living on less than ~25% of my income and banking the rest which is how i was amass that much cash.  clearly if i tightened the belt a bit more, i could have saved an extra 1-1.5mm but living abroad away from home, i didn't want to put that kind of stress on my family.  most of my big spending has been on family vacations which have been priceless times spent with wife and kids. 

i certainly have more time now which is how i found this site and i'm very open to hear more sincere advice as i'd like to learn more about personal investing so i can grow my knowledge base. 

btw, even index funds/etf's had to be approved at my work and i was too lazy/busy to deal with this.  also, being an american citizen, no asian banks would open a private bank account for me as they want to avoid the reporting to the US.  and more frustrating, US brokerage houses wouldn't help as i was overseas and they would say they weren't licensed outside of US.  Even simple tasks like rolling over my 401K to IRA was nightmarish and took me a month to do.  had to be on calls at dawn with fidelity/schwabb to try.  my only option was interactive brokers but their interface is absolutely crap but now i'm doing my fx with them as they provide basically spot rates so i can transfer my money.  know it's an excuse but i've been a very hands on dad and between work/family had little time to focus on this or rather i focused little on this given my income.  I do wish i was smarter about it looking at the returns on equity indices over the past 5yrs but that's water under the bridge.  i'm now in a situation i can focus and would like to learn as much as i can to move forward. 

appreciate all the help!

bacchi

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Re: FIRE'd because I got fired
« Reply #32 on: July 11, 2018, 05:28:37 PM »
Your original post has you paying off your mortgage but your #2 post has you wanting to come back to the states. Why would you pay off your mortgage if you're leaving the country? Do you plan on keeping your house as another investment and managing it internationally?

There's also no way you'll have safety of principal and earn 5%. Or, to put it another, way, you can't retire with your current expenses and especially not with a conservative asset allocation.

Raenia

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Re: FIRE'd because I got fired
« Reply #33 on: July 11, 2018, 05:34:02 PM »
I'm still confused if you're renting or living in a house with a mortgage, as you've listed costs for both these things.  Regardless of that, though, I'd recommend to sell the real estate (assuming it is all in HK) before moving back to the states.  Managing rental properties internationally is going to be a nightmare, the more so as you've already experienced problems with HK banking.

retire

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Re: FIRE'd because I got fired
« Reply #34 on: July 11, 2018, 09:33:38 PM »
to clarify, i'm moving back to the states end of the month.  rented in HK as property prices are astronomical.  all property owned is in US.  Moving into the house i own in US and paying off mortgage to reduce costs.  I'm being conservative but once i get back to the states, money saved on education will probably go right into healthcare (been quoted 20-40k usd/yr for adequate private coverage) and a couple cars plus insurance.  So will save on rent but then a big chunk will be offset by the higher tax i'd pay in US vs in HK.  I used to pay around 50% tax in US vs 30% in HK.  will schedule a meeting with an accountant once i get back to US to see what best way to reduce taxes are given my new situation.  anyone with similar experience or good tax advice, i welcome your feedback.


undercover

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Re: FIRE'd because I got fired
« Reply #35 on: July 11, 2018, 09:52:43 PM »
Makes no sense to me why as an American citizen with property (not to mention a financial background/career) you couldn't have opened a brokerage account with any broker at any point in time. I must be missing something?

Also, as it's an insignificant portion of your net worth and it looks like a terrible investment, I'd dump all your property.
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retire

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Re: FIRE'd because I got fired
« Reply #36 on: July 11, 2018, 11:10:33 PM »
as stated before, i did open an interactive brokers account as other US shops refused as my residence/employer was outside the US.  try opening an IRA account and you will see.  there isn't even a way to declare a non-US employer in the financial industry in the account form online which is required and when i call, i got the run around.  frustrating but US is very US centric sometimes. 

not sure what dumping my property would resolve.  the investment property is yielding at least 6% which is above my hurdle unless you can tell me better options.  and my house in the states will become my primary residence now so not sure why I would sell.

Little Aussie Battler

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Re: FIRE'd because I got fired
« Reply #37 on: July 11, 2018, 11:26:42 PM »
Your HK tax rate sounds high - isn't it closer to 15%?  What kind of role did you have?

I actually completely understand the lack of equity exposure. I face similar restrictions, and when I was offshore it was almost impossible to invest. Even now it has been a painful process just to buy an index ETF.

You need to work out what your true cost of living will be once you move back. You can then work backwards to an appropriate investment strategy.

gpyros85

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Re: FIRE'd because I got fired
« Reply #38 on: July 11, 2018, 11:36:57 PM »
10k/month in rent is very easy to do in Hong Kong.

I am in Suzhou which is a suburb of Shanghai and some high end places can easily get to 5-8k USD/month (35k-50k RMB/month). Suzhou is nothing compared to Hong Kong. However, average place here is around 1k-2k/month.

retire

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Re: FIRE'd because I got fired
« Reply #39 on: July 11, 2018, 11:49:15 PM »
HK tax rate is 15% but given i'm a US citizen and US has global taxation, i have to pay federal tax 39.7%.

expatartist

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Re: FIRE'd because I got fired
« Reply #40 on: July 11, 2018, 11:49:22 PM »
Makes no sense to me why as an American citizen with property (not to mention a financial background/career) you couldn't have opened a brokerage account with any broker at any point in time. I must be missing something?

Also, as it's an insignificant portion of your net worth and it looks like a terrible investment, I'd dump all your property.

As a US citizens overseas it is a giant PITA to invest in markets - both in the US AND wherever overseas you are living. I am having to lie to US Vanguard to set up an account and am having to be very careful about things. I am not allowed to invest in stocks in Hong Kong where I live, aside from the small amount allowable in the Mandatory Provident Fund from work. This puts many US residents overseas into a bind. Property in the US can be an appealing alternative to stash $ while giving a sense of connectedness to the home country.

US$10k /month rent is not uncommon for finance/law etc workers with a family. Given the crazy hours many of them work, it can be important to be centrally located near work / schools.


If an overseas hire, typically expenses like private schooling and rent are covered by the employer. Private school is a necessity and US$50K is a typical tuition rate - the education org where I work charges that much, as well as the insanely high debentures required.
 
Your HK tax rate sounds high - isn't it closer to 15%?  What kind of role did you have?

HK's maximum is IIRC 17%. For US citizens, income over ~$100k is taxable.

Have a look at Expatistan and Numbeo to get an idea of what your expenses in the US will be.There are some great US schools with good IB and AP programs to continue your children's international education. How long were you and family in HK? Best of luck on your transitions.


Villanelle

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Re: FIRE'd because I got fired
« Reply #41 on: July 12, 2018, 12:08:59 AM »
Like others, I am confused on several of the details.

But bottom line, a 5% withdraw rate* is beyond what most consider safe, especially if you don't ever want to make real cuts during down markets or have to go back to work.

So, in your shoes, I would do an actual budget with real numbers and figure out what you will need, and then if that would mean a withdraw rate of more than 4%, personally I would try to find work for another couple years while your earning potential is still so high.  Well, really what I would do is cut my budget by about 50%, but assuming you aren't willing to make budget cuts and the number you come up with for your annual spend is hard and fast, that's what I'd do!

And I'd invest in some version of a simple mutual fund profile, using vanguard funds.  A quick google will show you several 3-5 fund options and the allocations.  I might also buy another investment property or two, if I could find things that met the 1% rule (again, if you don't know, google).  Since I'd no longer be working, I'd have time to manage a few properties so I wouldn't need to pay someone to do that.  (And of course, subtract the reasonably expected profits, after *ALL* expenses are accounted for, from the budget to get the amount you actually need to withdraw, which may help you get closer to 4%). 

Hirondelle

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Re: FIRE'd because I got fired
« Reply #42 on: July 12, 2018, 12:16:30 AM »
If you currently spend $315k/yr but $120k of that is your HK rent, wouldn't you expect all your expenses to drop to closer to $200k/yr which is fine with your stash (once invested)?

Assuming you haven't lived in the US for years it will probably take you some time to figure out your US expenses but it would be interesting to see a full case study of your situation.

Exflyboy

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Re: FIRE'd because I got fired
« Reply #43 on: July 12, 2018, 01:24:50 AM »
I think when you get into some stateside numbers you will find you can live much cheaper.

If you think about it the average salary in the US is $53k... With a paid off mortgage, nice (paid for) car and kids sent to public school, you should easily make it on $100k/year.

Now you will pay full freight on Healthcare at that income level.. Unless that is you take money from capital gains.. or you spend after tax cash.. Income in that case is $zero.. In fact you would have to manufacture income to avoid being Medicare! (The rent you will get should avoid this.. which I think you said was $24k)

Low income will mean very low cost for HC.. in the order of say $200 to 400/ month, even for a Silver plan.

If you can live on say $100k (By golly that should be EASY) then simply open a Vanguard account and put 50% in VTSAX and 50% in VBTLX.. Do this after you pull out $100k and keep in cash as your emergency funds.

Put the $100k in CIT Bank (online) and get 1.85%

Thats really all there is to it.. Apart from really figuring how much you might spend.

Congratulations you are in a great place..:)

Linda_Norway

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Re: FIRE'd because I got fired
« Reply #44 on: July 12, 2018, 04:19:49 AM »
to clarify, i'm moving back to the states end of the month.  rented in HK as property prices are astronomical.  all property owned is in US.  Moving into the house i own in US and paying off mortgage to reduce costs.  I'm being conservative but once i get back to the states, money saved on education will probably go right into healthcare (been quoted 20-40k usd/yr for adequate private coverage) and a couple cars plus insurance.  So will save on rent but then a big chunk will be offset by the higher tax i'd pay in US vs in HK.  I used to pay around 50% tax in US vs 30% in HK.  will schedule a meeting with an accountant once i get back to US to see what best way to reduce taxes are given my new situation.  anyone with similar experience or good tax advice, i welcome your feedback.

Why would you need "a couple" cars? If you are retired, you might be able to have only 1 car. Try to move somewhere where you can walk to the nearest necessities, like schools and shops. So you could focus on moving to a good place to live, rather than the house you own right now. You can also make sure it isn't bigger or more expensive than you really need.

I think it can also be smart to get yourself some income, either through "part time" work or a side hustle. Maybe up to the Medicare limit (which I am not familiar with)?? If you have even a low extra income it would take the pressure of your situation.

Reduce the cost of your vacations. Learn to travel hack. Or discover the pleasures of camping on small campsites. Buy vacations on sale in low season.

undercover

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Re: FIRE'd because I got fired
« Reply #45 on: July 12, 2018, 12:43:24 PM »
not sure what dumping my property would resolve.  the investment property is yielding at least 6% which is above my hurdle unless you can tell me better options.  and my house in the states will become my primary residence now so not sure why I would sell.

I wasn't referring to your primary home, sorry. $24k is post-expenses including all deferred maintenance? You said pre-tax but I didn't know if that meant "gross income" or what. Sure, if you're actually netting $24k after all expenses, then that's not too bad.
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bacchi

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Re: FIRE'd because I got fired
« Reply #46 on: July 12, 2018, 12:51:54 PM »
Ok, it makes more sense now.

Don't pay off the mortgage if the rate is at or below 4%, unless it makes you sleep better at night.

I agree about investing. Do a simple 2-4 couch potato/lazy portfolio and call it good. You can small-cap tilt or whatever later after doing some research.

https://www.bogleheads.org/wiki/Lazy_portfolios

ysette9

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Re: FIRE'd because I got fired
« Reply #47 on: July 12, 2018, 01:57:17 PM »
What an amazing situation on so many levels. I encourage the OP to do a full case study (https://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/ ) to get better guidance. I also recommend reviewing the investment order sticky (https://forum.mrmoneymustache.com/investor-alley/investment-order/) and the Bogleheads Investment Startup Kit (https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_start-up_kit). The Bogleheads wiki is a really fantastic source of self-education material that will cover everything pretty comprehensively. It is a lot to digest, so come back and ask questions.

You need to get your cash invested in a simple, LOW COST PASSIVE INDEX FUND portfolio in order for it to last as long as you do (or even longer). When thinking about what asset allocation you should have (usually a combo of stocks and bonds) you need to consider your risk tolerance (i.e. are you going to panic and do something silly like cash out when the market drops?) and your longevity. More bonds will mean less volatility, which makes some people more comfortable. More bonds also means lower average returns and that your money will run out sooner. The general rule of thumb is that you can live off of 4% of your invested assets; a great thread on the robustness of that rule-of-thumb is here (https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/). It is absolutely possible for you to set your situation up like an endowment where your money will live there forever; you need to invest it properly and have a really firm handle on your spending to do this. Obviously you need to get back to the states and figure your new life out to know what your spending will be, but make those choices consciously, as others have talked about.

Finally, I'd recommend studying the Bogleheads wiki entry for how to manage a windfall. I realize that isn't exactly your situation because you've earned and saved this money, but the mechanics are going to be similar. You haven't thought about the money because you haven't had the time, and it isn't invested, so you need to make the same kinds of decisions as if someone just inherited $6.5M. https://www.bogleheads.org/wiki/Managing_a_windfall The key points on this are to: take your time/don't make any hasty decisions, educate yourself, and create a plan.

If you need some hand-holding, then I recommend either the Vanguard investment advisors https://investor.vanguard.com/financial-advisor/financial-advice who will be the very cheapest you can pay for that level of service, or a fiduciary CFP https://www.napfa.org/who is someone who is required to act in your best interest. Be very, very wary of any slick salesperson, anyone who wants to pay for your free meal to talk about advising services, anyone who wants to charge an "assets under management (AUM) fee, anyone who can't very clearly explain how she/he is paid, or wants to charge anything over a TOTAL of 0.3% for investment advising services. If I may be perfectly frank without offending, you would be a wonderful mark for an unscrupulous advisor because you have significant assets and very little personal knowledge of how to manage your money. Ask lots of questions, don't make any sudden decisions, and make sure you understand what you are doing and why. Come back to this community to ask questions and learn; there are a lot of smart people here and on the Bogleheads forums who would be happy to help.
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patchyfacialhair

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Re: FIRE'd because I got fired
« Reply #48 on: July 12, 2018, 02:15:17 PM »
I don't know where you're at, but here's a sample budget for you with some extravagant line items

 $24,000.00    health care
 $2,000.00    property insurance
 $5,000.00    property tax
 $3,600.00    utilities
 $1,200.00    internet
 $144.00            netflix
 $121.00            spotify
 $2,400.00    cell phones
 $1,800.00    car insurance
 $3,120.00    gas
 $10,400.00    food
 $10,400.00    fun
 $5,200.00    misc
   
 $69,385.00    total expenses

So add taxes (which taxes? if you aren't working...capital gains? you haven't been investing...so how?) and you're at $100k per year. $200k with kids in ridiculous private schools.

With $6 million in cash, that's a 3.33% spend rate.

You can go to Vanguard, put 75% in a stock fund, 25% in a bond fund, and you'll be set for life. You could even spend the same money when your kids are done with school and college and still end up dying with dozens of millions of dollars in the bank.
Follow my extremely mundane weight loss journey:

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SimpleCycle

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Re: FIRE'd because I got fired
« Reply #49 on: July 12, 2018, 02:40:05 PM »
I don't know where you're at, but here's a sample budget for you with some extravagant line items

 $24,000.00    health care
 $2,000.00    property insurance
 $5,000.00    property tax
 $3,600.00    utilities
 $1,200.00    internet
 $144.00            netflix
 $121.00            spotify
 $2,400.00    cell phones
 $1,800.00    car insurance
 $3,120.00    gas
 $10,400.00    food
 $10,400.00    fun
 $5,200.00    misc
   
 $69,385.00    total expenses

So add taxes (which taxes? if you aren't working...capital gains? you haven't been investing...so how?) and you're at $100k per year. $200k with kids in ridiculous private schools.

With $6 million in cash, that's a 3.33% spend rate.

You can go to Vanguard, put 75% in a stock fund, 25% in a bond fund, and you'll be set for life. You could even spend the same money when your kids are done with school and college and still end up dying with dozens of millions of dollars in the bank.

OP is spending $120k in rent, $50k in private school, and $145k on everything else.  And based on his posting, he seems to be looking for how to make it work on current levels of spending, not reducing spending.

Honestly, OP, @ysette9 has the best advice - head over to Bogleheads and read their stuff and post there.