Author Topic: Financial Independence Thesis Topic  (Read 4948 times)

madfientist

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Financial Independence Thesis Topic
« on: March 17, 2013, 10:33:09 AM »
Hi everyone, I am currently pursuing a master's degree and am starting to plan for my thesis. I anticipate conducting research in the fields of business/finance/economics but I'm struggling to decide on a specific topic.  Ideally, my thesis will have something to do with personal finance and the pursuit of financial independence and early retirement but I'm not exactly sure how I could structure a thesis around the subject.

I'm a math and numbers guy, and also a professional computer programmer, so it'd be great if I can find a topic that allows me to analyze raw data in an interesting way.

I posted this question on the reddit financial independence forum and I got some great replies so I figured I'd post over here too to see if anyone here has any interesting research ideas.

Thanks for your help!
« Last Edit: March 17, 2013, 01:20:31 PM by madfientist »

MooreBonds

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Re: Financial Independence Thesis Topic
« Reply #1 on: March 17, 2013, 10:59:57 AM »

I'm a math and numbers guy, and also a professional computer programmer, so it'd be great if I can find a topic that allows me to analyze raw data in an interesting way.


You might not have to give them the full story, but perhaps research how the average client has performed with some retail shops like Edward Jones versus a Vanguard index fund over the past 10 years, to see how an average 'real world' person ended up performing against a simple buy-and-hold indexer.

Obviously, maybe not tell them the whole angle when you contact them (if they even give you just the account balances and fund prices over time), and just say that you wanted to analyze how the average retail investor fared over the past 10 years (and leave out the part about comparing it to Vanguard).

Then you could extrapolate that and see what the 'average retail investor' would need to truly retire and fun their lifestyle, given how their actual results over the past 10 years compared with a Vanguard low-cost fund portfolio?

arebelspy

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Re: Financial Independence Thesis Topic
« Reply #2 on: March 17, 2013, 11:15:22 AM »
I think research into historical savings rate, expenses versus disposable income, cost of living (cost of food, housing, etc.) and market returns could all be rolled together into a thesis on early retirement today and the possibilities and likelihood of it in today's environment.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Displaced

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Re: Financial Independence Thesis Topic
« Reply #3 on: March 17, 2013, 12:28:50 PM »
I think you should analyze data from willing participants: spending habits before vs after finding this blog (or similar early retirement blog).
You could discuss savings rates comparisons, net worth, etc.  Depending on how long you have for your thesis, you could gather data longitudinally or just do a point data extraction.  I'm sure some people here have their information on spreadsheets of expenditures and could tell you when they started spending less.
You could subcategorize spending on transportation, cell phone, and other topics very common here. 
I'd probably be willing to volunteer my data :)

madfientist

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Re: Financial Independence Thesis Topic
« Reply #4 on: March 17, 2013, 10:11:57 PM »
These are all great suggestions so thanks a lot for taking the time to respond.

I am going to be meeting with my thesis advisor within the next month and your responses have definitely given me some more interesting ideas to discuss.

MooreBonds, I like the idea of comparing different investment strategies and using historical data to determine which would most often lead to the earliest secure retirement.

Arebelspy, your excellent post on MMM (http://www.mrmoneymustache.com/2012/07/08/early-retirement-cant-work-or-id-have-heard-of-it-before/), and the data presented in the MIT essay you referenced in particular, would actually go very nicely with your suggestion.  It'd be interesting to factor increased productivity into the other variables you mentioned to determine what the standard retirement age should be today, had we maintained a more reasonable (i.e. 1950s) level of consumption.

Displaced, I'll be sure to let you know if I need that data of yours!  It would be pretty cool to plot out financial trajectories of people before and after their FI epiphany to determine how big of an impact it actually had on their financial lives.

Great stuff.  Thanks again, guys!

arebelspy

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Re: Financial Independence Thesis Topic
« Reply #5 on: March 17, 2013, 11:30:32 PM »
Arebelspy, your excellent post on MMM (http://www.mrmoneymustache.com/2012/07/08/early-retirement-cant-work-or-id-have-heard-of-it-before/), and the data presented in the MIT essay you referenced in particular, would actually go very nicely with your suggestion.  It'd be interesting to factor increased productivity into the other variables you mentioned to determine what the standard retirement age should be today, had we maintained a more reasonable (i.e. 1950s) level of consumption.

Yeah, I was definitely thinking along those lines - that article was something quick I whipped together, but I think an interesting thesis could be built around the idea, and you could dig a lot more into the data and go in-depth on it.

That's more FIRE related, MooreBond's is more investment related, but sounds really interesting to me as well. 

Whatever you end up coming up with, I hope you share it with us (and/or blog about it), because sounds right up the alley of us financial nerds. :D
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

madfientist

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Re: Financial Independence Thesis Topic
« Reply #6 on: March 18, 2013, 05:48:14 AM »
I'll definitely let you know what topic I end up settling on and will be sure to share the best parts of my thesis when it's finally finished.  My deadline isn't until next May though so don't expect to hear anything about it anytime soon :)

Thanks again for your help!