Author Topic: I'm 25 years old, and saved $80,000 in Cash, want to retire in 10 years, how?  (Read 3000 times)

FreedomIsGoals

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I'm 25 years old, and saved $80,000 in Cash, how should I invest my money if I want to retire in 10 years?

I'm a 25 year old Software Engineer in Silicon Valley. (debt free)

I have a near 100% savings rate, due to being in a rare situation where I don't have a housing payment (long story), not married etc.

I'm EXTREMELY frugal and save abut $60,000-$80,000 a year, in cash. I also work a side job 20 hours a week to get to this level and spend almost no money, only spend to basically keep me alive.

The reason I have been doing this (being so frugal) is because of how much I hate the cubicle/office job environment, and my motivation is fueled by this. (to get out of it)

The problem I am encountering is, I don't know how to invest my money despite tons of research.

I always thought making money was the hardest part, and investing it was the easiest, my current situation is making me feel like its the opposite.

I save about 70k on average per year, and I am planning to have $700,000 invested in the next 10 years, by the age of 35.

I want to make at the very least $2,500 a month in passive monthly income, by the time I'm age 35. I then plan on moving to a poor developing country where this money would stretch much further (I realize this amount of money won't retire me in the USA, as it's not nearly enough, but based on my retirement plans, it should be enough for the countries I'm looking at it.)

I have narrowed my investing options down to (2) choices, both of which present their pro's and con's (also based on my own personal situation):

Option 1:

Vanguard Index Funds (I'd like to put all my monthly paychecks into Vanguard Funds such as the Total Stock Market Index, but I'm being presented with (2) primary issues

- What happens if the market tanks? Does the 4% withdrawal rule, still apply? Let us say I am investing $70,000 a year into index funds, can I start withdrawing 4% immediately, starting the first year? Or do i have to wait for the market to appreciate, (such as waiting a few years before I can start withdrawing 4%) Can I still take 4% out each year, even if something like the Great Depression/Great Recession happens? Or do all of a sudden have to stop taking out 4% for living expenses if the market tanks?

- Do any Vanguard Total Market Index Funds allow for custom company allocation? I have religious views that prohibit the investment of funds into companies that use interest (banks), alcohol companies, weapons companies etc. Many of which are captured by the total market index. I would like to invest in something like VTSAX, but by "deselecting" certain companies, if you will, in order to meet my religious views. I know this is possible with mutual funds, but I am aiming solely for index funds because mutual fund fee's are too high and will eat into cash flow.

Option 2:

Real Estate Rental Property (Buying Single Family Homes in Cash)

Since I live in California, and can't use leverage/loans due to religious views, I am only able to buy homes in cash. My budget for a home is 80k, which you can't find in California, so I've been looking out of state, where a ton of scammers prey on California investors. Turnkey companies sell you homes that are very difficult to resell, due to these markets being only investor-purchase markets, so I could be stuck with a place I could never resell, if I need an exit strategy. I've looked at areas like Memphis, TN.


What should I do?


All I want, is to be consistently making $2,500 passive monthly income by the time I'm 35 (10 years from now) with $700,000 in capital invested.

MrThatsDifferent

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Just read MMMís blog, start with his most popular articles, then, weíll, read almost everything else. Sure itíll take a bit but you could use the education. About a billion people here will tell you to follow the investment order, so, do that. What you want is definitely achievable. Just you know, make sure you have a life and try to think about what your life will be like when youíve achieved your goal.

Also read JH Collins and Go Curry Cracker blogs.

Freedomin5

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Here is the Investment Order link referred to by a previous poster: https://forum.mrmoneymustache.com/investor-alley/investment-order/

My understanding is that you cannot deselect certain companies from VTSAX.

If you have to buy homes in cash, that is going to potentially limit you/slow down the growth of your money. Would you be able to invest in a REIT?

Also, the 4% rule should still work in market downturns. You would simply withdraw less money.

With regard to a downturn in the year you retire, most ER people would tell you to build up a 2-3 year cash buffer before retiring. That way you donít have to draw immediately from your funds.

Finally, I would strongly suggest that you save enough so that you could return to the US and live a modest life, rather than spend the rest of your days in a developing country. You never know if a country will break out in war, kick out all expats, choose not to renew your visa, etc. The last thing you want is to be stuck there with no way home. I have friends who are like that ó they have enough for a comfortable life in China, but not enough to survive in their home country.

ysette9

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First, kudos to you on your focus and goal and amazing savings rate. That is a super power that will go a long way to helping you reach your goals.

Next, read up on the references provided above in this thread. There is good stuff there.

Now the hard part. As you educate yourself more you will realize that your religious beliefs regarding money are going to cost you dearly, literally and figuratively, when it comes to achieving your financial goals. The stock market and low-cost, passive, broad index funds are the very best investment vehicle out there, period. You can research ethical index funds and all of that, but you’ll find that those funds will always have higher fees, which directly detracts from your ability to reach your long-term financial goals. You will also find that those funds are less diversified, which means you will be taking on more uncompensated risk. This also will impact your bottom line.

What is your goal in buying real estate? You can check out the threads on the debate over not paying your mortgage off early if you want the gory details, but the bottom line is that saving cash for a house instead of taking advantage of cheap interest rates for mortgages will also set you back, as the long-term performance of the stock market is a better return than low mortgage interest rates. Meaning, there is an opportunity cost of buying a house in cash, and that is the returns you could have earned on that money had it been invested instead.

I don’t mean to be a downer, but I just want you to look this straight in the face. Your religious beliefs are at odds with some of the core tenets of the FIRE community in his to achieve financial independence. I hope you will be able to find people with knowledge about how to invest in your particular situation, but I don’t expect there to be a ton of people on this forum. Perhaps there are religious-specific financial forums that would be a better resource? Just be aware of and plan for the fact that these limitations will cost you money, which means more months/years working than otherwise would be required if you followed the more traditional broad-market index fund approach.


ysette9

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Using a compound interest calculator assuming you add $70k a year and get average market returns of 7%, you can expect something like $1.19M at the end of ten years. Per the 4% rule-of-thumb that gives a retirement income of $3974 a month, well over your stated goal. So you could even go with a 3.5% withdrawal rate, which I believe has never failed in the history of the US stock market, and still have comfortable margin. This presumes no social security later in life, no salary increases that would increase your savings, etc.

However this is based on investing broadly in the stock market and having low investment fees. If those assumptions don’t hold true then I couldn’t say what you could expect.


blingwrx

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As a software engineer at 25, I think you're just starting your career and your salary has a lot of upside especially if you work hard and get into senior, lead or management roles in the next few years. I would say your income is most likely going to go up significantly from here if you work hard. From 25-30 my income doubled going from entry level to senior lead and from switching companies.

I think if you're already tired of office cubicle life after just starting out in the work force you may want to explore other jobs and that is perfectly normal for people to jump jobs every 1-3 years early in their careers. For software engineers there can be a lot of flexible options where you could find a job that allows you to work from home or work in an office that is less cubicle like and has a better culture. You'll also noticed this would be a great way to get a big jump in salary. It doesn't hurt to look around and see if you can fetch more money.

As previous poster mentioned you're on track to hit way more than 700k in 10 years. I think if you can keep up the savings rate and continue to do well at your job/career, you can easily have $2500 passive income in as little as 5-6 yrs just investing in vanguard index funds and withdrawing at a 4% rate you'd need 750k in investments.

Here's an estimated scenario, let's say you get about 3%-10% raise on average per year. Years you get a promotion or change jobs could net higher than 10% and on the low end 3% would just be adjusted for inflation raise with no merit increase or bonus. So I'd just use the average of 6.5% raise over 10 years for this scenario.

Year 0: you started with: 70k and invest that into VTSAX
Year 1: you saving 70k from salary making your total investment 140k and you gain 7% that year. now you have 150k
Year 2: 150k + 74.5k savings(assuming 6.5% average salary increase) * 7% gain = 240k
Year 3: 240k + 79.4 * 7% = $341.8k
Year 4: 341.8k+ 84.5k * 7% = $456k
Year 5: 456k + 90k * 7% = 584.3k
Year 6: 584.3k + 96k * 7% = 728k
Year 7: 728k + 102.3k * 7% = 888k
Year 8: 888k + 109k * 7% = 1067k
Year 9: 1067k + 116k * 7% = 1266k
Year 10: 1266k + 123.5k * 7% = 1487k

So you see with decent increases in salary and assuming a 7% average market rate return you can get to your number in about 6 years, less if market preforms better or longer if it performs worse.

Other things to think about is meeting a significant other and having kids in the future if that's in your plans. 25 years old is very young and I had no clue what I wanted in life at that age. Your life plans and financial plans/expenses may change significantly with a signifiant other and kids. You might not want to move to a developing country anymore if you meet someone here and have kids. Your expenses may be way higher than you think in the next 5-10 years. But in either case I think if you work the 10 years you mentioned the estimated 1.5 mil should be plenty to live a comfortable retirement in the USA based on your low expenses even if your expenses doubled.

faithless

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Hi, not much to add but a couple of thoughts:

Have you read JL Collins NH's Stock Series? If not it's worth a read:
https://jlcollinsnh.com/stock-series/

You have very defined goals (which is on one hand a good thing as it gives you something to aim for), but you can't control what Mr Market will return to you in any given year, might be great growth, or a 10% haircut or 40% crash.

Your concerns include exactly how the 4% SWR will operate in ten years time, yet you haven't invested anything yet...
It definitely won't work at all for you unless you invest it.

Similarly for Option 2, see house price crashes, rental markets changing, etc. Are Options 1 &2 mutually exclusive? You could do a mix.

A lot can happen in ten years, including increases and decreases in income, expenses, and major changes in lifestyle, e.g. a partner. Not all of which are in your control.

One thing that occurs to me is that it might be cheaper and do more good, rather than to pay $$ for specific ethical investments, to to invest in standard index funds and donate to charities/organisations that counter the ills produced by some of the sectors you dislike.


Another thing that occurs to me (and apologies if this is a little personal):

Your plan is to basically work your butt off at a FT job you hate for the next ten years, plus a second job, saving almost every penny to ensure you don't have to work in the future - you say you only spend the bare minimum to keep yourself alive.

Is this sustainable for the next decade? Your mental (and physical) health is much more important than accumulating money, and I've seen a lot of burn out reduce people to fractions of their former selves (including me at one point). It might be worth considering spending a little more on hobbies or things you value, to ensure you can stick the long haul. Apologies if I'm way off base here, everyone is guilty of their own experiences colouring their thoughts.

frugal_c

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You sound smart and hard working.  Just keep digging into the investing thing, one article at a time.  Compared to software engineering, the basis are quite .. basic.

You can find ethical index funds, but you are really specific.  Most of these funds will still invest in banks.   I don't have your religious views so haven't dug into it much but that is where I would start.

If you can't find an index fund that meets your needs, there is nothing wrong with buying individual stocks.  Just make sure you diversify, buy 40+ of them.   Just find an etf that you like, the etf provider will list all of their holdings.  Just go through the list and pick out the first 40 or so that meet your ethical criteria.

You should aim for $750k if you want $30k (2.5k per month) withdrawal.  At a minimum $750k.   With a bit of luck you can get there.

Yes, if we hit a great depression or 1970's stagflation environment, you might not hit your target in 10 years.  It really depends on when the crash happens though.  If it crashes next year, your first bit of investment will perform poorly but then you will be buying in at lower prices and should ultimately do well.   The stock market can return anything from double / triple your money in a decade or it can cut it in half.   Generally though you will at least match inflation over a decade.  On average more like 6% over inflation a year.  Again it varies wildly from decade to decade.  Worst case scenario, if the next decade is brutal in the market, prices are probably low and you can generally expect the subsequent decade to have better returns so it's not all bad.


Quote
One thing that occurs to me is that it might be cheaper and do more good, rather than to pay $$ for specific ethical investments, to to invest in standard index funds and donate to charities/organisations that counter the ills produced by some of the sectors you dislike.

This is a really good idea.

Keep in mind almost every company has some ethical issues if you dig deep enough.  With all due respect, it feels superficial to just say you can't buy interest earning companies, alcohol companies, etc..  I suspect if you look at why your religion is against those companies and applied the same standard, you wouldn't have very much to invest in.
« Last Edit: January 05, 2019, 12:35:22 PM by frugal_c »

a-scho

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http://www.moneychimp.com/calculator/compound_interest_calculator.htm

If you already have 80,000 and are able to save an additional 70,000 per year, doing so for 7 years at 7% interest will get you to roughly 777,000 in only seven years. If you go to 10 years, it is roughly 1.2 million dollars.
BUT, you need to start investing asap to get that 7% average. You can't take out 4% during the accumulation phase(7-10 years). Well, technically you can, but that's like seven steps forward four steps back.  Ideally, you want to be seven steps forward, no steps back.
I have no beef about living in LCOL countries. But, personally, I would work another year or so, so I have the option of living wherever I want, not being constricted to "under 30,000 a year" places.

Laura33

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First, I am going to assume your religious prohibitions are non-negotiable, that you understand that it will take you longer to FIRE as a result, and that you willingly accept those tradeoffs.  With that in mind:

1.  No, you cannot invest in VTSAX and "opt out" of certain selections; nor could you choose a balanced or target-date fund, because those have various bonds in them that pay interest.  You will need to do some serious research to find a socially-conscious fund that meets all of your criteria -- perhaps there are some Muslim-oriented funds, as those seem most likely to be consistent with the restrictions you have laid out?  If not, your best approach is likely to build your own portfolio at a company such as Schwab, where you buy individual stocks of companies that meet your criteria.  If you are not comfortable with this, it would be worthwhile to meet with a fee-only planner to help you set up that portfolio.

2.  If your religion prohibits interest, do not buy real estate.  The primary value of real estate is leverage:  you can buy a $100K home with say only $10K of your own money, whereas in the market you need to spend $100K to get $100K of stocks.  If you cannot borrow money, you lose this value.  At most, in your case, I would consider real estate only for when you transition to the income-generating phase* -- you will grow your wealth much more quickly if you put your money in the market.     

3.  Re:  the 4% rule:  do not take money out now -- why would you do that anyway, since you are clearly making more than you need already?  The 4% rule applies when you reach the withdrawal phase of your life; right now you are in the accumulation phase.  So accumulate and let it ride! 

4.  Yes, the 4% rule survives in basically any historical market environment.  But you also need to address psychology, i.e., just because your portfolio will be fine if the market drops 30% doesn't mean you won't panic and cash out at exactly the wrong time.  I am a big fan of the bond/CD ladder, though in your case it would just need to be cash to avoid interest:  in my case, I am going to put 3-5 years of anticipated living expenses in bonds/CDs, and then every year cash out one year's worth to live on, and then sell enough stocks to replenish that amount.  The reason I will do this is because if the stock market crashes, I will have plenty of cash to ride it out for several years; for as long as the market is down, I will simply live off my cash and not sell stocks, and then when the market turns around, I will sell enough stocks to replenish my 3-5 year cash 'stache.

Again, note that this involves tradeoffs:  I am locking in lower overall returns; mathematically, I'd do better if I kept all of my money in the market.  This also means working a little longer (my 4% is based off the amount I have invested, so I need to work long enough to have 25x expenses invested and another 3-5 years in cash).  But I know myself.  And I know that if the market crashes, I am going to freak and refuse to spend any money and worry about running out of money -- and that's how I grew up, and I am determined never to have to live that way again.  So for me, it's worth a little extra time in my cushy high-paid job for the mental security that extra cash provides.  You will need to make your own decision on whether the extra work is worth it.  Just don't delude yourself into thinking you'll be fine in a crash -- the worst possible scenario is that you think you are more risk-tolerant than you actually are and then sell off as soon as the market has a big drop.

5.  One final thought:  do you like your second job?  Is it something you'd do for fun even if you didn't need the money?  Does it provide a needed mental or physical break from your day job?  Because at your age and in your profession, you will likely do much better financially if you throw that extra time and effort into your day job.  Yes, it doesn't provide the immediate hit that you get from being paid by the hour -- but it will give you the knowledge and experience to qualify for a raise/promotion, and it will give you a reputation as a hard worker and dedicated employee (who, conveniently, also tend to be the ones offered raises promotions).  Now, obviously, if your second job provides some sort of value beyond the money, by all means go for it.  But if your goal is simply to maximize your total income in the fastest way possible, focusing all of your efforts on your day job is far and away the most effective way to do so for the vast majority of people.


*Although even here, I would avoid this if you want to move abroad.  Managing property long-distance is a PITA -- and it will cost you significant amounts in property management fees, too.

better late

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I have done zero research to see what the fees are or even if this addresses your constraints but you might look at sector funds - healthcare sector or energy sector fund for example - to get the benefits of a basket of stocks.

ysette9

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Just a quick clarifying note on Laura33’s advice on a fee-only financial planner. This does not mean AUM (assets under management) where someone charges you 1% of your portfolio forever for the pleasure of rebalancing your portfolio once a year. It means you forking over cash to pay for someone to set up a financial plan and walk you through sticking with it. Be prepared to pay something on the order of $1-2k for this. You can look for financial advisors on the XY planning network or Pinnacle Group Financial Services.

reeshau

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Just a quick clarifying note on Laura33ís advice on a fee-only financial planner. This does not mean AUM (assets under management) where someone charges you 1% of your portfolio forever for the pleasure of rebalancing your portfolio once a year. It means you forking over cash to pay for someone to set up a financial plan and walk you through sticking with it. Be prepared to pay something on the order of $1-2k for this. You can look for financial advisors on the XY planning network or Pinnacle Group Financial Services.

I would also recommend the Garrett Planning Network as a place to start.  They are all fee only, although some are percent of assets.  Others are fixed fee or hourly.

With regard to option #1, there is an S&P Shariah index, which I think does what you want.  There are some funds following this index, but you would have to research their costs.  Performance history will also be limited, since the index was only created in 2006.

https://www.investopedia.com/terms/s/shariah-compliant-funds.asp
« Last Edit: January 07, 2019, 11:34:43 AM by reeshau »

Rob_bob

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To the OP, you said "I have religious views that prohibit the investment of funds into companies that use interest (banks)..."

Since you said you would not borrow money to buy a house I would assume that you will also not want to invest in any company that borrows money as well?

If so then you are going to have to search long and hard to find any company that doesn't ever borrow money.  I think you would have to invest outside of the U.S. in countries where the culture prohibits lending/borrowing.  I can't even think of a company that doesn't at some point borrow from banks or issue bonds that pay interest?

ysette9

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Does anyone who has studied this stuff understand how capital markets and economies can function without lending and borrowing? It seems so utterly fundamental to a functioning and efficient economy is really curious how you get around it.

Radagast

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I have religious views that prohibit the investment of funds into companies that use interest (banks), alcohol companies, weapons companies etc. Many of which are captured by the total market index. I would like to invest in something like VTSAX, but by "deselecting" certain companies, if you will, in order to meet my religious views. I know this is possible with mutual funds, but I am aiming solely for index funds because mutual fund fee's are too high and will eat into cash flow.

Option 2:

Real Estate Rental Property (Buying Single Family Homes in Cash)

Since I live in California, and can't use leverage/loans due to religious views, I am only able to buy homes in cash. My budget for a home is 80k, which you can't find in California, so I've been looking out of state, where a ton of scammers prey on California investors. Turnkey companies sell you homes that are very difficult to resell, due to these markets being only investor-purchase markets, so I could be stuck with a place I could never resell, if I need an exit strategy. I've looked at areas like Memphis, TN.
Option 1 could be pretty difficult. It would be very easy to purchase 100 shares of 100 companies for an average $70 per share. But you would certainly run an increased risk of failure, have greater complexity, and it would be expensive to diversify lets say 30 of those 100 internationally. You could also use Robinhood and get 10 shares of 1000 companies for $70 average, but that is even greater complexity and still more expensive if you want international holdings. Another choice is to use sector ETFs to eliminate the things you object to. That would be more effective, but I don't know how many sectors you will have left as most "socially conscious" and sector ETFs are not oriented towards your particular belief system. You will also need eliminate Berkshire, GE, and any company that opens a banking-like product which could be quite a few.

Option 2) is probably difficult in California, especially now. Forum Moderator ARebelSpy has done something like this by investing in real estate around the country. He used leverage, but you might be able to learn a lot from him and follow a longer road with no loans and less favorable economic fundamentals now vs when ARS was in the buying business. There are towns not too far from California where you could meet the 1% rule though, even today. Or even IN California https://www.realtor.com/realestateandhomes-search/Susanville_CA/type-multi-family-home (but ask yourself, is there a reason why these places have such high returns?)

frugaldrummer

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Some thoughts for you on the big picture:

You've done an incredible job so far and it's a real accomplishment to be where you are at your age and have saved what you have. Congratulations.

Grinding for 10 years (or possibly less) in order to have financial freedom at 35 is great!

HOWEVER - what are you retiring TO? Sounds like your goal is just to get away from a job you don't like, without a clear idea of what you'd like to be doing with your life otherwise. The next 10 years might be much more pleasant if you find a more congenial workplace. Or you might decide to do a different kind of work altogether after 5 years and use your accumulated savings to fund a more distant retirement while working in a more rewarding field.
My observation with older retirees is that those who are retiring TO something - to pursue a dream or favorite hobby or who have an active social life in place - do very well. Those who are just retiring FROM something - i.e. a bad workplace - often have real difficulty in their retired life finding their place.

If you do nothing but grind for the next ten years without establishing a social life and interests of your own, you may have trouble knowing what to do with yourself once you are FIREd.   Perhaps you should consider spending any money you get in raises on pursuing those things (new interests, social life), while still putting away your $70k a year.
« Last Edit: January 08, 2019, 01:58:12 PM by frugaldrummer »

BicycleB

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With all due respect, you're going to need to decompress so you don't blow a fuse.

Seriously, you are issuing multiple non-standard restrictions and requirements because you hate your job but also have several other mental/emotional fears/needs/issues. You are creating what you propose as a financial case, but most of the parameters are arbitrary emotional ones. I don't mean to disrespect your feelings, which are real, or your religion, which sounds like one of the world's most hallowed and popular faiths (Islam). Nonetheless the non-physical parameters are important and in this forum are unusual, thus I feel comment is needed. Please do not be offended. I am simply observing that the bulk of the case is about managing your own mind, emotions, and ethics. Any financial specifics are subservient to these, therefore you should focus largely on the these non-physical issues first, which I will call mental in post even though they are broader than that.

Investing without interest - as others pointed out, none of the standard methods on this website are compliant. You will have to research this independently, though some commenters may have useful suggestions. Investing within your religion's rules must be a solved problem. Where have you looked for answers? Here are links from a one second Google search "how do Muslims invest". If that's not your faith, at least these address some of the concerns you stated. Do your research. You can do this.

(basic intro in entry level reference source)
https://www.investopedia.com/ask/answers/07/islamic_investments.asp
(article below mentions several organizations dedicated to halal investing)
https://www.nytimes.com/2017/06/30/your-money/retirement-savings-the-muslim-way.html
(website discusses several issues)
http://www.islamic-finance.com/item164_f.htm
(general article in Western media)
http://time.com/money/3699119/investing-options-muslims/

Re your 10 year timeline, 10 years is reasonable if you learn to get ordinary investment returns in halal (?) ways and continue to save at anything near your current high rate. Read the savings rate tables in the article linked below. Bear in mind they assume your retirement spending will be similar to today. If your current spend is lower than desired retirement, adjust accordingly. I am cozy living on half your planned accumulation, already FIRE (at least FIR), so I think you can succeed.

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Life is about reasonable enjoyment. Perhaps if you develop a calmer mindset, your job won't be hell. I don't recommend a side job in your case unless it's something you like. Good luck!!!!!





« Last Edit: January 08, 2019, 02:33:28 PM by BicycleB »

kelvin

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I don't have any answers, friend.

Someone with a very different outlook on life - not at all Mustachian - once told me the following: "Invest your time and your money into your personal business. If you're doing it right, your business should be your best ROI." I do not have a business, have no idea how to start one that would actually bring in money, and if I tried to throw money at the problem it would be money down the drain. Maybe you can do better than me.

Another option would be to ask the very wealthy folk with similar religious restrictions how they invest. 

Best of luck!

bacchi

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OP can always buy VTI and then short the companies that are prohibited.

For example, buy $10k VTI and short 10 shares of Chase. The exact number of shares to short could be easily calculated with the prospectus.

This would really eat into the returns, I expect, and it might be better to find a specific social fund or stock-pick 50-100 suitable companies with a low-cost brokerage (M1 Finance allows investing in a lot of companies at once).

bacchi

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Does anyone who has studied this stuff understand how capital markets and economies can function without lending and borrowing? It seems so utterly fundamental to a functioning and efficient economy is really curious how you get around it.

Apparently one can become a sort of general partner through bonds.

https://www.saturna.com/halal#sukuk-bonds

By sharing the risk of the venture, one can receive some of the profits (without actually controlling the direction of the company). It makes a halal bank more of a VC company.
« Last Edit: March 27, 2019, 03:07:28 PM by bacchi »

jpompo

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Does anyone who has studied this stuff understand how capital markets and economies can function without lending and borrowing? It seems so utterly fundamental to a functioning and efficient economy is really curious how you get around it.

They call interest by a different name. For example a bank will buy the property with the title in their name, and then lease you the property until you've made all the payments. The lease rate is equal to P&I payment.

SimpleCycle

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There are halal mutual funds and halal ETFs, although I believe the latter are traded on the London stock exchange and therefore are harder to access as an American.  I think you can apply all the rules of MMM while using Shariah-compliant financial products instead of the more traditional ETFs mentioned here more frequently.

That said, 10 years is a long time to sacrifice your current happiness for your future happiness.  I think you need to find a way to make life meaningful and fulfilling now, in addition to saving for the future.  Also bear in mind that life will change a lot in the next 10 years, and you have no idea what joys and disasters will change your course in life.  Building flexibility into a financial plan is always a smart move.

Frankies Girl

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Quote
- Do any Vanguard Total Market Index Funds allow for custom company allocation? I have religious views that prohibit the investment of funds into companies that use interest (banks), alcohol companies, weapons companies etc. Many of which are captured by the total market index. I would like to invest in something like VTSAX, but by "deselecting" certain companies, if you will, in order to meet my religious views. I know this is possible with mutual funds, but I am aiming solely for index funds because mutual fund fee's are too high and will eat into cash flow.


To make this real simple to understand...

VTSAX is like a big ol' pot of soup. Someone made it using chicken stock, tomatoes, potatoes, carrots, some noodles and bits of chicken and threw in some celery and garlic and salt and pepper.

What you're asking is as you come up to get a bowl is if they could please serve you a bowl of soup, but take out all the tomatoes as you can't eat them. The tomatoes are a part of that soup. There is no way to filter it now to remove every bit of tomato. Same thing with index funds for the most part. They are a blend of whatever type of investment soup they are targeting, so no, you can't remove certain ingredients that you don't want.

You'll have to create your own soup, rather than pay for someone else's version. And by doing so, you are going to have to spend more time and effort to source the "ingredients" and your soup will likely take much longer to simmer and be edible because you have specific foods you can't/won't consume.




And I agree with the other that you are pushing yourself way too hard to try to meet a very dangerous deadline. Burnout is a real thing. Saving and working should not be so all-consuming; that it is very unhealthy. Stepping away from the high pay but terrible workplace and finding something that is a bit nicer in terms of work/coworker/using your brain and skills for challenge/fun but for a bit less $ and FIREing in 15 years may be better than working like a slave for the next 10 years and being too mentally and physically broken to enjoy your freedom.

This is especially something you want to consider as your religious restrictions on investing is going to slow (possibly by quite a large margin) the ability to FIRE and still guarantee a set income according tot he 4% rule's parameters.

Mother Fussbudget

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Congratulations on your Path To FIRE.  As with everyone, your path will be UNIQUE to YOU, so you'll no doubt find ways to do exactly what you want - like invest in ethically based stock market funds (after reading the Morningstar research and analysis of them, of course...).  My suggestions:

  • Read the Investment Order (referenced earlier).
  • Have a full mental grasp on how and why the power of saving pre-tax dollars can increase your $$ in FIRE
         MadFientist's website[/b]  is very good at explaining some of these concepts.  Examples:  401K, Roth-401K, Roth-IRA, Traditional IRA, solo-401K (for those who have a side business).
  • Read JLCollinsNH's "The Simple Path to Wealth" (library) and the webpages that cover some of the info contained there.
  • Search "islam friendly mutual funds" or something similar.  There is more than 1 Halal friendly fund out there. (no, I'm not into that, but I've read alot about investing, and am aware such funds exist)
  • Get on BiggerPockets.com and read / learn / network about REI (real estate investing) at a high level.
  • Read the BiggerPocket forums and FaceBook groups for investing in your targeted real estate city(ies).
         examples:  "Memphis Investors Group...", "Memphis Real Estate Investors", etc.
  • Nothing beats BOOKS for depth research on any topic.  My recommended 3 books in REI:
   1) The Millionaire Real Estate Investor - good summary found HERE.
   2) The Out Of State Real Estate Investor - a Bigger Pockets book discussing how to do REI if you live in a HCOL market - you invest in a city where the cost of real estate is more reasonable. Most important concept is to build a team in the area you're interested in (REI friendly realtor, Property Management company, handyman, accountant, lawyer, etc).
   3) Landlording On AutoPilot - discusses the hows and whys of being a landlord as a side-gig. As an out-of-state investor, you'd build a team to handle these tasks.

If you're really interested in REI, do your research, BUT avoid the 'paralysis of analysis' and Just-Buy-A-Good-Deal somewhere, and get started.  Make your property management company find renters, collect the rent, and deposit the proceeds into your pass-through LLC's bank account. (Tax laws now favor pass-through LLC real estate companies. Take advantage of these tax advantages).

And above all... Welcome to the world of FIRE.  All the best! MFB
« Last Edit: March 27, 2019, 06:12:33 PM by Mother Fussbudget »