Author Topic: FIRE within 5 years with high income?  (Read 938 times)

cantstopwontstop

  • 5 O'Clock Shadow
  • *
  • Posts: 4
FIRE within 5 years with high income?
« on: August 15, 2018, 11:41:25 AM »
Hi All,

I've been thinking very hard about things lately, and I've come to terms that I'm not sure I feel comfortable with a potential 50% drop in overall assets, especially if I'd like be FIRE within 5 years or less. I don't know if I'll actually leave my job, as I love it, but that can obviously change quickly...new boss, new projects, bad ideas, etc. I'm currently 32 years old.

Anyways, here's where I stand:

Retirement Accounts:
401k work - $135K in Voya Target Retirement 2050 Fund (95/5) and 0.77 ER (https://individuals.voya.com/product/mu ... erformance)

Personal Roth IRA
$15K - VSTAX (haven't submitted due to income limits)

---

Taxable Brokerage Accounts: $265K (a mix of dividend growth how I first started, now indexing...) and Betterment/VASGX
Betterment is at 90/10 which is $35k of the above, and VASGX is 80/20 and is $25K of the above

---

Cash: $130K in High Yeild Online Savings (1.8%)

---
More complicated stated here:
https://forum.mrmoneymustache.com/ask-a-mustachian/am-i-on-track-for-fi-(review-with-questions)/

Here's the kicker...the income levels are staying steady at $200K+ and rising (many side hustles), and I'm only spending $25-30K year right now, so all is being saved or invested...which may make sense to lower risk amount?

A few questions for the Mustacians here, your help is incredibly appreciated:

1. What stock/bond ratio would you recommend for someone in this situation? I was quite pleased when reviewing long term gains for 80/20 or 70/30 vs. 100% stocks (which I'm near)...

2. In Betterment if I switch from 90/10 to say 80/20, how do they handle that? Will there be a lot of taxable events created? Has anyone changed their allocation within the app?

3. I plan to use Personal Capital to get the overall picture with everything combined, but expect it to be 95/5 or higher. Does anyone have a referral link? Happy to use the first one provided.

4. My plan is to continue to contribute to VASGX which is 80/20, and breakdown shown here: https://investor.vanguard.com/mutual-fu ... file/VASGX

48% Total Stock Market, 32% Int Stock Market, 20% Bonds

This seems pretty ideal, for a long term "set and forget" approach, right? I was surprised when I got into this one, how solid the breakdown is. Is the 32% too much International? I keep seeing people say 20% International max, is that 20% of the stock allocation (20% of the 80%, which would be 16% intl?), or 20% overall? Hopefully I didn't make that too confusing...

5. Lastly, I finally got a chance to look at my plans from Voya, and they seemed to finally have a really good option, I'm currently in the 95/5 target date fund with a high ER (.77), but found they have:

Voya Target Solution Income   
Voya Target Solution 2020 through 2060 (multiple funds - too many to list, all in 5 year increments)   
Stable Value Fund
BlackRock US Debt Index   
Fidelity Total Bond
Vanguard Balanced Index
American Funds Washington Mutual   
BlackRock Russell 3000 Index
Voya Large Cap Growth Port
JHancock Dspl Val Mid Cap
T.Rowe Mid Cap Growth   
Federated Clover Sm Cap Val   
T. Rowe Price New Horizons
BlackRock Global Equity Ex US   
American Funds EuroPacific   

I was thinking of putting everything into "Vanguard Balanced Index" which is VBINX and 0.07% (a full .70 points lower than my existing fund!!!), and 60/40 allocation instead of 95/5 (my current target date fund), looks like a very strong fund, and I believe having the 40% bonds in the 401k would be a good move.

What are your thoughts on this change? Is there any taxes, fees, or penalties by taking everything out of target date into this Vanguard fund? (so happy there's now a Vanguard fund available).

Oddly enough, the 60/40 V Balanced Index is beating the 95/5 Target Date Fund YTD...is that just due to the ER, or another reason? I couldn't believe it, I thought it would have been much lower. I know YTD isn't anything strong to go by, just was interesting to see!

Thanks to all in advance, I can't thank you guys enough, I'm forever grateful for your help!

- Billy
« Last Edit: August 17, 2018, 12:32:24 PM by cantstopwontstop »

MDM

  • Walrus Stache
  • *******
  • Posts: 9720
Re: FIRE within 5 years with high income?
« Reply #1 on: August 15, 2018, 08:54:25 PM »
A few questions for the Bogleheads here, your help is incredibly appreciated:
Will you be summarizing the differences in feedback between the MMM and Bogleheads sites? ;)

Quote
1. What stock/bond ratio would you recommend for someone in this situation? I was quite pleased when reviewing long term gains for 80/20 or 70/30 vs. 100% stocks (which I'm near)...
Any of those would be reasonable.

Quote
4. My plan is to continue to contribute to VASGX which is 80/20, and breakdown shown here: https://investor.vanguard.com/mutual-fu ... file/VASGX
That's a fine fund.  If you want to sharpen your pencil more (not required, but you could), consider Tax-efficient fund placement.

Quote
5. Lastly, I finally got a chance to look at my plans from Voya, and they seemed to finally have a really good option, I'm currently in the 95/5 target date fund with a high ER (.77), but found they have:
<snip>
I was thinking of putting everything into "Vanguard Balanced Index" which is VBINX and 0.07% (a full .70 points lower than my existing fund!!!), and 60/40 allocation instead of 95/5 (my current target date fund), looks like a very strong fund, and I believe having the 40% bonds in the 401k would be a good move.

What are your thoughts on this change? Is there any taxes, fees, or penalties by taking everything out of target date into this Vanguard fund? (so happy there's now a Vanguard fund available).

Oddly enough, the 60/40 V Balanced Index is beating the 95/5 Target Date Fund YTD...is that just due to the ER, or another reason? I couldn't believe it, I thought it would have been much lower. I know YTD isn't anything strong to go by, just was interesting to see!
If that is consistent with your desired asset allocation, it seems a fine choice.

Classical_Liberal

  • Handlebar Stache
  • *****
  • Posts: 1151
  • Age: 43
Re: FIRE within 5 years with high income?
« Reply #2 on: August 15, 2018, 09:47:55 PM »
Hi All,

I've been thinking very hard about things lately, and I've come to terms that I'm not sure I feel comfortable with a potential 50% drop in overall assets, especially if I'd like be FIRE within 5 years or less.

Yes, you should tailor your investments to meet your financial goals and your risk tolerance.  If your not sure how to achieve that, I would suggest a lot of reading.  One thing you should NOT do is listen to me, some random guy on the internet opinion.  If you don't have confidence in your portfolio, you do not understand you portfolio, that leads to bad things.