Author Topic: Cutting 4-5 Years Off Time to FI?  (Read 2364 times)


  • Pencil Stache
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Cutting 4-5 Years Off Time to FI?
« on: July 26, 2017, 12:15:37 PM »
The question is inspired by MMM's post back in August 2011. I've been re-reading the blog from the start and this one spiked my curiosity. I've taken no action, just curious to see what folks think based on my hypothetical example.

What is wrong with this idea?
Does it come down to risk tolerance?

As it stands, networthify says I can retire in 12.1 years with my current portfolio & savings rate.

In summary MMM mentions $350k in SNH would yield about $24k in dividends each year. My target/goal FI number is about $625k in VTSAX. Switching focus from SNH to VTSAX would cut my time down from 12.1 years to 7-8 years to FI.

Currently able to dump $5k in 401k annually. Next year will get employer match so $10K into a 401k each year plus ~$24k into a taxable account annually.

My thoughts are to keep my current holdings ($50k in VTSAX right now), but moving forward start purchasing 75% to 100% SNH (or similar REIT) and 0-25% VTSAX each month. Once I hit about $20k in dividends from SNH, or ~$250k in SNH shares I'd have a few options... (250,000/19.35)=12,920 shares... @ 1.56 dividend =$20,155.039. Obviously the share price will go up/down, but these are rough figures.

At that time I'd have a NW around $475k and could...
a. Throttle back to PT work & semi-retirement
b. Continue to work FT and go back to:
   $24k into VTSAX annually
   $20k dividends from SNH into VTSAX
   Plus 10k/year in 401k
Until I hit $625k in 2-3 more years anyway, although this 625k will generate more passive income than 100% in VTSAX...right?

My math says... (using today's share price of $19.35)
> It would take 7-8 years to get $250k in SNH starting at $0 (11k this year, then dividends plus 24k for subsequent years).
> Current holdings of VTSAX would grow via automatic dividend reinvestments to just under $70k by 2026. 50k*1.02 for rest of this year, then 1.04 for following years(too conservative?).
> I will have added $70-$80k into my 401k, plus appreciation.
Net worth would be around $450k-475k instead of $625k
Is the big issue here IF SNH continues to exist and pay dividends forever?

Many thanks. My face awaits punches.


  • Pencil Stache
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Re: Cutting 4-5 Years Off Time to FI?
« Reply #1 on: July 26, 2017, 02:38:55 PM »
I don't have an argument either way, I like Jlcollinsh thoughts on portfolio.  But I did find this

Last quarter had higher dividends than when MMM wrote that article, but there were some quarters in the 5 and 6% area instead of 7.8% of 2011.

Honestly those numbers are pretty cool to me, but I'm too junior of an investor to go deeper in this right now.