Author Topic: The best post I saw today on the Mr Money Mustache forums was...  (Read 44929 times)

CowboyAndIndian

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #150 on: July 13, 2017, 10:13:12 AM »
When RyanRyan asks about holding cash until the bottom of the recession, SmokyStache hits this one out of the ball park!

RyanRyan,
It is a very compelling goal - I too would love to be able to save myself some money and maximize returns. I believe that looking back (below is a 20 year S&P returns example), that it seems so obvious that we could sell "somewhere" the top and buy "somewhere" near the bottom (it doesn't have to be perfect, after all, look how much difference is between the highs and the lows!!!). After all, I realize that I can't pick the exact high and the exact low, but even getting close looks like it would be a huge advantage. Right!?!



Unfortunately that's wrong. One reason is the power of just a handful days. One of the most compelling realizations for me to avoid trying to buy/sell into highs/lows is when I learned about the power of missing out on the X (5, 20, etc.) best days in the market over a period of time and how that would affect my long term returns. For example, the graph below shows that if you miss out on just the 10 best days over 20 years and your return would drop 3.75% (From almost ~10% return to ~6%). Ouch.

Miss out on the next best 10 days and your returns drop even further to 3.6% (Obviously, this is just one example).

So among other factors, the question is NOT "Can I see when the market is kinda close to the top and kinda close to the bottom" - the real question is: "Can I predict the 1 day every two years when I will get huge returns?" And then during the next bull/bear cycle, can you do it again, and again....  Because if you don't, you'll lose out on huge gains.



arebelspy

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #151 on: July 16, 2017, 08:41:42 AM »
Talking to someone who is considering OMY:

I was very much where you are, until an irresistable redundancy offer pushed me over the cliff.

My friend, you are institutionalised.  You have been in a prison called "working at X500 Corp" for the last 15 years.  That is a life sentence.  Now you have all the problems that anyone coming out of prison has: resetting your life, and doing it without that externally imposed timetable that says that every Monday at 9am you have to be in the prison laundry and every Tuesday at 10.30 am you have to be in the prison exercise yard.

It's great that you have a project to move on to.  But my recommendation would be to spend at least a month after you retire doing exactly nothing (possibly doing nothing in a favourite place in the world), just to let the reality of your life reset sink into your pores while the prison stink leaches out.

You are young (relatively), educated, healthy and wealthy.  You can press the button on your retirement now and be fine.  You can always earn more money, you can never earn more years.

Good luck.
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Double Yu

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #152 on: July 16, 2017, 06:36:34 PM »
following

thanks for starting this - lots of great linked-to reading here and much food for thought!
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arebelspy

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #153 on: July 18, 2017, 09:57:40 PM »
Written in regards to worrying about eking out a slightly lower WR for fear of running out of money, and working extra years to do so, to help "ensure" you don't fail at FIRE:



What I am saying is having the money you planned to spend each year in FIRE is only one element to being successful at retiring. There are lots of ways you can fail at FIRE that don't involve running out of money.

- poor health [physical and/or mental]
- dying early
- damaging important relationships
- not developing any other interests outside of work to transition to in retirement
- etc...

Not only are these ^^^ types of issues not mitigated by a low WR, but if you work extra years you are likely to exacerbate them. People focus on money because it's easy to calculate, spreadsheet and there is a lot of fear in our society around money, but it's far from the most important risk FIRE success. I'd put your health and time ahead of money if I was prioritizing FIRE risks, but that's not what I read about on MMM much.

Awesome chart thanks to Maizeman. It always helps me put things in perspective.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

nereo

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #154 on: July 19, 2017, 05:52:13 AM »
can anyone tell me what graphing program Maizeman used?  I love the look
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Vindicated

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #155 on: July 19, 2017, 06:28:50 AM »
can anyone tell me what graphing program Maizeman used?  I love the look

He has mentioned it before in his journal, but I don't recall off-hand.  Most of his data work is over my head :)
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jooniFLORisploo

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #156 on: July 19, 2017, 06:51:28 AM »
PTF.

nereo

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #157 on: July 19, 2017, 06:55:00 AM »
PTF.
PTF?  Full name please...?  Sorry, not familiar with that.
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jooniFLORisploo

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #158 on: July 19, 2017, 06:55:46 AM »
:)     Just "posting to follow".

arebelspy

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Re: The best post I saw today on the Mr Money Mustache forums was...
« Reply #159 on: July 19, 2017, 07:56:43 AM »
can anyone tell me what graphing program Maizeman used?  I love the look

He has mentioned it before in his journal, but I don't recall off-hand.  Most of his data work is over my head :)

Yep, check his journal. It's only 3 or 4 pages, pretty short, and worth reading anyways.

IIRC it's matlab with an xkcd plugin (which you can google and I think it's on github, or the journal has the exact link if you can't find it there).  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."