When do you see compounding take off?

[4tify]

I’ve been following the Way for about ten years now, diligently saving at least 50% of my income. But I’m not sure I’ve really seen the power of compounding at work. I do see annual gains but nothing like “the hockey stick” I hear about. Mostly my stash seems to be made up of just saving a lot.

I understand this from a one time lump sum, but is there a calculation for adding bit by bit over time? And at what point do you begin to see the hockey stick come into action?

Sorry I’m not much of a math person so thank you for helping me understand.

[boarder42]

I’ve been following the Way for about ten years now, diligently saving at least 50% of my income. But I’m not sure I’ve really seen the power of compounding at work. I do see annual gains but nothing like “the hockey stick” I hear about. Mostly my stash seems to be made up of just saving a lot.

I understand this from a one time lump sum, but is there a calculation for adding bit by bit over time? And at what point do you begin to see the hockey stick come into action?

Sorry I’m not much of a math person so thank you for helping me understand.

Depends on your asset allocation. If you've been saving 50% for 10 years in vti you should have already seen it take off.  So either you have a crappy asset allocation or you weren't pumping 50% the whole time or you just had a huge salary increase in the last year or 2.

[boarder42]

To be clear it's very linear. There is no hockey stick pop up. But your earning on investments should be far out weighing your contributions by now and you are Fi assuming inflationary raises and a 100% vti allocation over 10 years with the way the markets have been

[MudPuppy]

My very first mentor at work used to tell me that the first 100k was the hardest. She retired at 59.

[boarder42]

If you started at 0 in July of 2011 and you invested 2500 a month in the sp500 til July 2021. You have 668k. So if you made 60k and saved 30k a year you'd be at ~26.7k spending today based on the 4% rule or about 90% to Fi. This works for any 50% savings rate assuming your income didn't increase alot and in turn your spending along with it.

[4tify]

To be clear it's very linear. There is no hockey stick pop up. But your earning on investments should be far out weighing your contributions by now and you are Fi assuming inflationary raises and a 100% vti allocation over 10 years with the way the markets have been

Actually I’m FI now thanks to salary increases over the years. I was 80/20 but dropped to 60/40 last year when I hit my number and I’m over 50 and probably at the height of earning. I plan to stay at 60/40 forever.

Maybe this is the answer I’m looking for. It would appear 30 years invested is when the hockey stick takes off.

https://www.investopedia.com/terms/c/compoundinterest.asp

So it may be more that I’ve only been investing for a decade?

[boarder42]

To be clear it's very linear. There is no hockey stick pop up. But your earning on investments should be far out weighing your contributions by now and you are Fi assuming inflationary raises and a 100% vti allocation over 10 years with the way the markets have been

Actually I’m FI now thanks to salary increases over the years. I was 80/20 but dropped to 60/40 last year when I hit my number and I’m over 50 and probably at the height of earning. I plan to stay at 60/40 forever.

Maybe this is the answer I’m looking for. It would appear 30 years invested is when the hockey stick takes off.

https://www.investopedia.com/terms/c/compoundinterest.asp

So it may be more that I’ve only been investing for a decade?

You'll likely never see a hockey stick with a 60/40 allocation. That's almost too conservative to the point of being risky.

[boarder42]

60/40 is one of the worst allocations second only to all VTSAX.

[shuffler]

I understand this from a one time lump sum, but is there a calculation for adding bit by bit over time? And at what point do you begin to see the hockey stick come into action?

This is (of course) essentially the same question as asked in earlier threads.
Below is my response one one of those threads.  You can read the whole thread for other perspectives, if you like.

I think that "when our investments gains start outpacing our deposits" is a natural metric I would use, too.

Except most people's income and savings don't stay constant over the years, so I'd choose to state it in terms of present-day stash and present-day income.

If we assume:
  *  10% annual return on investments (note that this is intentionally not adjusted for inflation)
  *  50% savings rate (we're reasonably decent mustachians)
  *  Income of $x.
  *  Stash of $s.

... then every year we'll be depositing 0.5x.
... and every year our stash will grow by 0.1s.
... and "when our investments gains start outpacing our deposits" is when 0.1s = 0.5x ... or ... s = 5x

In other words:
    When our stash is 5 times our annual income.

Feel free to adjust the assumption percentages for your own savings and investment-return rates.

[Tinker]

An early retirement stache is mostly made up from your contributions. Historical, broad investments double their input after 7+ years.
If you want to see the money run away, work for a handful of years beyond your FIRE date.

Or if you're after true wealth, try to become an entrepreneur based on free stuff (software) or none-free stuff (acquire external funding)
You're not going to get rich renting out your time - Naval Ravikant

[boarder42]

An early retirement stache is mostly made up from your contributions. Historical, broad investments double their input after 7+ years.
If you want to see the money run away, work for a handful of years beyond your FIRE date.

Or if you're after true wealth, try to become an entrepreneur based on free stuff (software) or none-free stuff (acquire external funding)
You're not going to get rich renting out your time - Naval Ravikant

What's true wealth bc historic projections have us retiring with 2MM at 35 and dying with over 100mm in today dollars could be half a billion if we live a bit longer.  All while withdrawing 5-6%.

[4tify]

60/40 is one of the worst allocations second only to all VTSAX.

Very interesting thank you.

[nereo]

To be clear it's very linear. There is no hockey stick pop up. But your earning on investments should be far out weighing your contributions by now and you are Fi assuming inflationary raises and a 100% vti allocation over 10 years with the way the markets have been

Actually I’m FI now thanks to salary increases over the years. I was 80/20 but dropped to 60/40 last year when I hit my number and I’m over 50 and probably at the height of earning. I plan to stay at 60/40 forever.

Maybe this is the answer I’m looking for. It would appear 30 years invested is when the hockey stick takes off.

https://www.investopedia.com/terms/c/compoundinterest.asp

So it may be more that I’ve only been investing for a decade?

If you Are retired, are you taking distributions from your investments? If so, that’s going to prevent or dampen most portfolio growth.

For us it was noticeable when the gains due to market increases were greater than what we could ever hope to save from our salaries. As we are limited by salary in saving around $25k/year, once our portfolio eclipsed $300k (which was fairly recently) things really took off.

Counterintuitive, if you are a high saver with a large income the inflection ping will be much later.

[4tify]

To be clear it's very linear. There is no hockey stick pop up. But your earning on investments should be far out weighing your contributions by now and you are Fi assuming inflationary raises and a 100% vti allocation over 10 years with the way the markets have been

Actually I’m FI now thanks to salary increases over the years. I was 80/20 but dropped to 60/40 last year when I hit my number and I’m over 50 and probably at the height of earning. I plan to stay at 60/40 forever.

Maybe this is the answer I’m looking for. It would appear 30 years invested is when the hockey stick takes off.

https://www.investopedia.com/terms/c/compoundinterest.asp

So it may be more that I’ve only been investing for a decade?

If you Are retired, are you taking distributions from your investments? If so, that’s going to prevent or dampen most portfolio growth.

For us it was noticeable when the gains due to market increases were greater than what we could ever hope to save from our salaries. As we are limited by salary in saving around $25k/year, once our portfolio eclipsed $300k (which was fairly recently) things really took off.

Counterintuitive, if you are a high saver with a large income the inflection ping will be much later.

Yes the high saver/large income is where I'm at. That and I apparently have a horrible portfolio lol.

[ysette9]

My very first mentor at work used to tell me that the first 100k was the hardest. She retired at 59.

That was my personal experience. It also so happened that I amassed my first $100k just before getting married, so the combined income made it much easier to build wealth once we combined households and finances. I also felt like the ball started rolling down the hill a lot faster after crossing the $1m mark.

[boarder42]

My very first mentor at work used to tell me that the first 100k was the hardest. She retired at 59.

That was my personal experience. It also so happened that I amassed my first $100k just before getting married, so the combined income made it much easier to build wealth once we combined households and finances. I also felt like the ball started rolling down the hill a lot faster after crossing the $1m mark.

I feel like it really depends on sequence of returns. Having a flat year then a big year after hitting 500k is a good feeling. Then a big snowball accelerating you to Fi 2 years early like we had personally is another big thing.

[Omy]

My very first mentor at work used to tell me that the first 100k was the hardest. She retired at 59.

That was my personal experience. It also so happened that I amassed my first $100k just before getting married, so the combined income made it much easier to build wealth once we combined households and finances. I also felt like the ball started rolling down the hill a lot faster after crossing the $1m mark.

Similar for us. $1M in 2009. 5 years later it doubled to $2M. 5 years after that it doubled again and we FIREd with $4M. It just passed $5M in June after 2 years of goofing off. The gains are slower now that we aren't working, but still going in the right direction.

Knowing what I know now, we would have been fine retiring in 2014...but I sleep better knowing that my money is making money faster than I can spend it.

[Wolfpack Mustachian]

60/40 is one of the worst allocations second only to all VTSAX.

Could you please explain your graphic? I'm curious what generated it, and, for example, where the 3.4 value for total stock market came from. Thanks!

[Edwards]

An early retirement stache is mostly made up from your contributions. Historical, broad investments double their input after 7+ years.
If you want to see the money run away, work for a handful of years beyond your FIRE date.

Or if you're after true wealth, try to become an entrepreneur based on free stuff (software) or none-free stuff (acquire external funding)
You're not going to get rich renting out your time - Naval Ravikant

This has been my experience as well.
I've been investing for approximately 7 years and my gains have doubled my total. My yearly earnings from investing are also very close to outpacing what I'm personally putting in.

[MissNancyPryor]

My very first mentor at work used to tell me that the first 100k was the hardest. She retired at 59.

That was my personal experience. It also so happened that I amassed my first $100k just before getting married, so the combined income made it much easier to build wealth once we combined households and finances. I also felt like the ball started rolling down the hill a lot faster after crossing the $1m mark.

Similar for us. $1M in 2009. 5 years later it doubled to $2M. 5 years after that it doubled again and we FIREd with $4M. It just passed $5M in June after 2 years of goofing off. The gains are slower now that we aren't working, but still going in the right direction.

Knowing what I know now, we would have been fine retiring in 2014...but I sleep better knowing that my money is making money faster than I can spend it.

This exactly.  It took us 22 years married to get to the first $1M.  Then 4 years later we had $2M.  Divorced in 2017, everything cut in half, but I have way more than doubled my money again since going solo.  The first million was the hardest by far.   

100% stocks, no bonds.  I bought a lot of AAPL a long time ago but have been selling 10% per year and slide it over to VWUAX and VTSAX so that it has not represented so much of my NW.  Those funds have enough AAPL in them already. 

That army of little green rectangles you are making is a bad ass hard working crew.  Feed it well and it will do what you need it to.   

[nereo]

[Michael in ABQ]

Getting to $100k was a long time. $100k to $200k felt like it only took a year or so. However, that was also with a deployment where I was making (and saving) a lot more money. It didn't hurt that the market has been growing nicely over the last few years.

I definitely think $100k is a major inflection point, not exactly hockey stock, but $100k is enough to start growing a decent amount on it's own.

[Tester]

For me it is 500k I think.
Hit 520k net worth (only invested money) last year.
Then bought a house, spent a lot of money on repairs, now at 550k net worth (now including house equity...).
I hope the expenses will finally go down to see the net worth take off for good.

[4tify]

My very first mentor at work used to tell me that the first 100k was the hardest. She retired at 59.

That was my personal experience. It also so happened that I amassed my first $100k just before getting married, so the combined income made it much easier to build wealth once we combined households and finances. I also felt like the ball started rolling down the hill a lot faster after crossing the $1m mark.

Similar for us. $1M in 2009. 5 years later it doubled to $2M. 5 years after that it doubled again and we FIREd with $4M. It just passed $5M in June after 2 years of goofing off. The gains are slower now that we aren't working, but still going in the right direction.

Knowing what I know now, we would have been fine retiring in 2014...but I sleep better knowing that my money is making money faster than I can spend it.

Mind sharing your portfolio allocation?

[wenchsenior]

For me it is 500k I think.
Hit 520k net worth (only invested money) last year.
Then bought a house, spent a lot of money on repairs, now at 550k net worth (now including house equity...).
I hope the expenses will finally go down to see the net worth take off for good.

I lost my graphs that tracked my 20 years of investing in a computer incident a few years ago, but this is what I remember too.

It seemed to take forever to get that first 500K, which was roughly 16 years into our investing career (but that included the 2008 crash, which set us back a couple years). We also had a slightly more conservative portfolio during that first period (maybe 70/30) b/c of a lot of outstanding debt and cash flow obligations and the need for a big emergency fund.

We reallocated to a more aggressive portfolio at that point (about 85/15).  It took only ~4 more years to get to a million, despite the huge 2020 stock market crash that blasted our portfolio.  Now the growth is just...silly.  I expect we'll reach 2 million within 3-5 years.

ETA: We anticipate staying at 85/15 allocation forever, barring some shocking unforeseen issue occurring (where we are forced to live with no wiggle room in withdrawal rate). Honestly, if it were just up to me, I would likely keep us in 90/10 for the rest of our lives, but my husband doesn't quite have my nerves of steel LOL.

[ender]

It really depends on what your savings are.

If you are saving $200k/year then the inflection point of compounding will be different than someone saving $20k/year.

[lhamo]

It really depends on what your savings are.

If you are saving $200k/year then the inflection point of compounding will be different than someone saving $20k/year.

This.  Also the inverse -- depends on what your expenses are.   Someone who makes 100k but only spends 10k is going to see a much steeper growth curve than someone who makes 100k but spends 90k.  And the steeper the curve the faster you get to the point where your investment earnings are adding to the balance more than what you are saving.

[Omy]

My very first mentor at work used to tell me that the first 100k was the hardest. She retired at 59.

That was my personal experience. It also so happened that I amassed my first $100k just before getting married, so the combined income made it much easier to build wealth once we combined households and finances. I also felt like the ball started rolling down the hill a lot faster after crossing the $1m mark.

Similar for us. $1M in 2009. 5 years later it doubled to $2M. 5 years after that it doubled again and we FIREd with $4M. It just passed $5M in June after 2 years of goofing off. The gains are slower now that we aren't working, but still going in the right direction.

Knowing what I know now, we would have been fine retiring in 2014...but I sleep better knowing that my money is making money faster than I can spend it.

Mind sharing your portfolio allocation?

Not sure about the actual percentages but here are my buckets:
$1.4M equity real estate (primary and 2 rental properties - no mortgages)
$0.6M shares from former company
$0.6M taxable stock accounts
$1.9M retirement accounts (mostly stock)
$0.6M annuity, CDs, bonds, cash

We've always hung on to too much cash....but it keeps me from worrying and allows us to jump on a deal. Rentals cover our basic expenses.

[JLee]

60/40 is one of the worst allocations second only to all VTSAX.

Could you please explain your graphic? I'm curious what generated it, and, for example, where the 3.4 value for total stock market came from. Thanks!

I'm curious about that too.

[HPstache]

60/40 is one of the worst allocations second only to all VTSAX.

I am curious, are these rankings built on FIRE allocations or wealth building allocations??

[simonsez]

Pretty subjective question, I'm nowhere near FIRE but when I see an account* that I've personally put $X into and the account balance is nearly 3x that amount, I'd say the compounding has been doing some heavy lifting.

* Invested in boring broad market coverage index funds

[JJ-]

60/40 is one of the worst allocations second only to all VTSAX.

Could you please explain your graphic? I'm curious what generated it, and, for example, where the 3.4 value for total stock market came from. Thanks!

I'm curious about that too.

It is from Portfolio Visualizer's Portfolio Matrix. It basically scores each portfolio in number of categories (at the top) and then assigns it an overall rank. Then it gives it an overall rank based on performance in the categories. The higher the score in the categories, the higher the overall score at the end. The tool is pretty handy to see how well some asset allocations back test and compare to common portfolios.

From the site:

How To Interpret The Chart
Rather than calculating the returns of an individual portfolio, the Portfolio Matrix collects the stats for every portfolio on the site in one image. It consists of two parts — Rankings and Performance. Selecting a portfolio metric will always sort the results from best to worst.

Rankings

The rankings matrix on the left displays the relative performance of every portfolio across ten different metrics. The horizontal rows correlate to an individual portfolio, and the vertical columns track a performance metric across portfolios. The rankings are also color-coded with blue representing the best portfolios and red representing the worst portfolios. A red color does not mean that a portfolio is an objectively poor choice, but simply that it is less desirable for that metric relative to other good options.

Performance

The bar chart on the right displays the actual values for the specified performance metric. Use this to understand the true values behind the rankings. Blue bars mean that high numbers are good, while red bars mean that high numbers are bad.

The brief descriptions take you to a longer article at the same site here.

You can see a few brief thoughts on the SCV allocation in the thread on the vanguard paper.

[HPstache]

60/40 is one of the worst allocations second only to all VTSAX.

I am curious, are these rankings built on FIRE allocations or wealth building allocations??

I'm quoting myself, but I can see now that the far left column is average return and for some reason I missed that.  VTSAX is indeed the highest performer in terms of returns as I expected.

[Wolfpack Mustachian]

--snip--

Thanks for the explanation. It's a little odd that VTSAX could be top performing in terms of return but do so poorly on all of the other things that it makes it the worst overall. Interesting stuff.

[JJ-]

60/40 is one of the worst allocations second only to all VTSAX.

I am curious, are these rankings built on FIRE allocations or wealth building allocations??

I'm quoting myself, but I can see now that the far left column is average return and for some reason I missed that.  VTSAX is indeed the highest performer in terms of returns as I expected.

VTSAX (Total Stock Market) is #2 of the 19 common portfolios in the average return. "My portfolio", consisting of 80% SCV allocation and 20% LTT in the screenshot, is #1 in average returns and several other categories and is the first row. You can change "my portfolio" for any AA and compare to the other 19.

[Wolfpack Mustachian]

60/40 is one of the worst allocations second only to all VTSAX.

I am curious, are these rankings built on FIRE allocations or wealth building allocations??

I'm quoting myself, but I can see now that the far left column is average return and for some reason I missed that.  VTSAX is indeed the highest performer in terms of returns as I expected.

VTSAX (Total Stock Market) is #2 of the 19 common portfolios in the average return. "My portfolio", consisting of 80% SCV allocation and 20% LTT in the screenshot, is #1 in average returns and several other categories and is the first row. You can change "my portfolio" for any AA and compare to the other 19.

Ah. I misunderstood that. Thanks for the clarification!

[JJ-]

--snip--

Thanks for the explanation. It's a little odd that VTSAX could be top performing in terms of return but do so poorly on all of the other things that it makes it the worst overall. Interesting stuff.

For wealth building (set and forget) for a majority during the majority of working years, it's a simple recommendation for those not wanting to complicate the FIRE process and let compound interest work. However, when you want to start looking at transitioning from saving to spending that's when you need to come up with a bit more of a sound plan, and why you see discussion about things like the GB or other portfolios around here and other sites. For various reasons, even during accumulation you see adoption of these other portfolios. I have been saving for 10+ years into VTI and only recently started diving into the various sectors. Portfoliocharts.com and portfoliovisualizer.com have been incredibly helpful. Also, radagasts thread on idiots vs gurus here has been... eye opening.

[HPstache]

60/40 is one of the worst allocations second only to all VTSAX.

I am curious, are these rankings built on FIRE allocations or wealth building allocations??

I'm quoting myself, but I can see now that the far left column is average return and for some reason I missed that.  VTSAX is indeed the highest performer in terms of returns as I expected.

VTSAX (Total Stock Market) is #2 of the 19 common portfolios in the average return. "My portfolio", consisting of 80% SCV allocation and 20% LTT in the screenshot, is #1 in average returns and several other categories and is the first row. You can change "my portfolio" for any AA and compare to the other 19.

 Sorry to be dull, but SCV and LTT are?  Scotch Creek Ventures & Lattice Semiconductors Corp?

[lhamo]

My guess?

SCV= small cap value

LTT= long term treasuries

[JJ-]

My guess?

SCV= small cap value

LTT= long term treasuries

That is correct.

60/40 is one of the worst allocations second only to all VTSAX.

I am curious, are these rankings built on FIRE allocations or wealth building allocations??

I'm quoting myself, but I can see now that the far left column is average return and for some reason I missed that.  VTSAX is indeed the highest performer in terms of returns as I expected.

VTSAX (Total Stock Market) is #2 of the 19 common portfolios in the average return. "My portfolio", consisting of 80% SCV allocation and 20% LTT in the screenshot, is #1 in average returns and several other categories and is the first row. You can change "my portfolio" for any AA and compare to the other 19.

 Sorry to be dull, but SCV and LTT are?  Scotch Creek Ventures & Lattice Semiconductors Corp?

You are not dull thank you for asking the question as I had no idea what they were like 6 months ago either.

[brandon1827]

--snip--

Thanks for the explanation. It's a little odd that VTSAX could be top performing in terms of return but do so poorly on all of the other things that it makes it the worst overall. Interesting stuff.

For wealth building (set and forget) for a majority during the majority of working years, it's a simple recommendation for those not wanting to complicate the FIRE process and let compound interest work. However, when you want to start looking at transitioning from saving to spending that's when you need to come up with a bit more of a sound plan, and why you see discussion about things like the GB or other portfolios around here and other sites. For various reasons, even during accumulation you see adoption of these other portfolios. I have been saving for 10+ years into VTI and only recently started diving into the various sectors. Portfoliocharts.com and portfoliovisualizer.com have been incredibly helpful. Also, radagasts thread on idiots vs gurus here has been... eye opening.

Thanks for posting the link, I'd never seen this thread before. It's a lot to unpack and I think it's going to take someone as dense as I am quite some time to figure out exactly what the chart is telling me and how I can use that information to my advantage, lol.

[JJ-]

--snip--

Thanks for the explanation. It's a little odd that VTSAX could be top performing in terms of return but do so poorly on all of the other things that it makes it the worst overall. Interesting stuff.

For wealth building (set and forget) for a majority during the majority of working years, it's a simple recommendation for those not wanting to complicate the FIRE process and let compound interest work. However, when you want to start looking at transitioning from saving to spending that's when you need to come up with a bit more of a sound plan, and why you see discussion about things like the GB or other portfolios around here and other sites. For various reasons, even during accumulation you see adoption of these other portfolios. I have been saving for 10+ years into VTI and only recently started diving into the various sectors. Portfoliocharts.com and portfoliovisualizer.com have been incredibly helpful. Also, @Radagast 's thread on idiots vs gurus here has been... eye opening.

Thanks for posting the link, I'd never seen this thread before. It's a lot to unpack and I think it's going to take someone as dense as I am quite some time to figure out exactly what the chart is telling me and how I can use that information to my advantage, lol.

You will see me admit to ignorance / density in that thread as well, so don't feel alone. It took me 2-3 weeks to start to digest it after seeing it for the first time and still my head is spinning in circles when I try to dive in any deeper. That was after coming back to it every few days as well as reading about each of those asset classes/portfolios.

When you figure it out let me know :)

[mistymoney]

--snip--

Thanks for the explanation. It's a little odd that VTSAX could be top performing in terms of return but do so poorly on all of the other things that it makes it the worst overall. Interesting stuff.

For wealth building (set and forget) for a majority during the majority of working years, it's a simple recommendation for those not wanting to complicate the FIRE process and let compound interest work. However, when you want to start looking at transitioning from saving to spending that's when you need to come up with a bit more of a sound plan, and why you see discussion about things like the GB or other portfolios around here and other sites. For various reasons, even during accumulation you see adoption of these other portfolios. I have been saving for 10+ years into VTI and only recently started diving into the various sectors. Portfoliocharts.com and portfoliovisualizer.com have been incredibly helpful. Also, @Radagast 's thread on idiots vs gurus here has been... eye opening.

Thanks for posting the link, I'd never seen this thread before. It's a lot to unpack and I think it's going to take someone as dense as I am quite some time to figure out exactly what the chart is telling me and how I can use that information to my advantage, lol.

You will see me admit to ignorance / density in that thread as well, so don't feel alone. It took me 2-3 weeks to start to digest it after seeing it for the first time and still my head is spinning in circles when I try to dive in any deeper. That was after coming back to it every few days as well as reading about each of those asset classes/portfolios.

When you figure it out let me know :)

  where did you find the info on what all those portfolios were?

[JJ-]

--snip--

Thanks for the explanation. It's a little odd that VTSAX could be top performing in terms of return but do so poorly on all of the other things that it makes it the worst overall. Interesting stuff.

For wealth building (set and forget) for a majority during the majority of working years, it's a simple recommendation for those not wanting to complicate the FIRE process and let compound interest work. However, when you want to start looking at transitioning from saving to spending that's when you need to come up with a bit more of a sound plan, and why you see discussion about things like the GB or other portfolios around here and other sites. For various reasons, even during accumulation you see adoption of these other portfolios. I have been saving for 10+ years into VTI and only recently started diving into the various sectors. Portfoliocharts.com and portfoliovisualizer.com have been incredibly helpful. Also, @Radagast 's thread on idiots vs gurus here has been... eye opening.

Thanks for posting the link, I'd never seen this thread before. It's a lot to unpack and I think it's going to take someone as dense as I am quite some time to figure out exactly what the chart is telling me and how I can use that information to my advantage, lol.

You will see me admit to ignorance / density in that thread as well, so don't feel alone. It took me 2-3 weeks to start to digest it after seeing it for the first time and still my head is spinning in circles when I try to dive in any deeper. That was after coming back to it every few days as well as reading about each of those asset classes/portfolios.

When you figure it out let me know :)

  where did you find the info on what all those portfolios were?

If you run a test on portfoliocharts you can see several other portfolios listed on the right. I'd start there and start researching them individually or portfoliovisualizer.

Also try here

[getmoneyeatpizza]

@boarder42 if 60 and 40 VSTAX are no good what allocation do you use? That golden one?

[joe189man]

PTF

I think Boarder likes SCV, he discusses it in his new journal

[Steeze]

Last year my portfolio grew by a little more than I spent. That happened at about 10x spending. It was noticeable, I was surprised at year end. That is in addition to us adding another 3x in contributions.

This year we are at around 12.5x mid-year and I am starting to see the light! If things hold up we are looking at another 3x contributions and 1.5x in growth, finishing the year around 14-14.5x.

Things are starting to snowball, I can feel it.

[boarder42]

@boarder42 if 60 and 40 VSTAX are no good what allocation do you use? That golden one?

I use 80/20 small cap value to long term Treasury for retirement.

Right now with my 401k still in play for a few months and esop I'm as 100% small value as I can be and will move my esop to LTTs when they clear 16 months after retirement

[NorCal]

You can look at the compound interest effect as a mathematical thing or a psychological thing.

The mathematical part is pretty straight forward and a bit boring after you understand it (IMO).

I can tell you how the psychological impact hit me.  It happened a few different ways and in a few different places.

1. One day I was looking at my brokerage account, and I realized just my taxable brokerage account had nearly $200K of unrealized capital gains sitting there.  That's $200K that's been earning me even more money, and I never even realized the scale of it in the day-to-day market movements. 
2.  I re-did my time-to-FI spreadsheet with a different look and feel.  I was playing with numbers and realized that changes to my savings rate no longer had any material impact, and the date was almost entirely a function of my portfolio growth rate assumptions.  The difference between saving 50% and 0% is the difference between full FI in 2025 vs. 2026 (Assuming a portfolio growth rate of 4%).

[boarder42]

You can look at the compound interest effect as a mathematical thing or a psychological thing.

The mathematical part is pretty straight forward and a bit boring after you understand it (IMO).

I can tell you how the psychological impact hit me.  It happened a few different ways and in a few different places.

1. One day I was looking at my brokerage account, and I realized just my taxable brokerage account had nearly $200K of unrealized capital gains sitting there.  That's $200K that's been earning me even more money, and I never even realized the scale of it in the day-to-day market movements. 
2.  I re-did my time-to-FI spreadsheet with a different look and feel.  I was playing with numbers and realized that changes to my savings rate no longer had any material impact, and the date was almost entirely a function of my portfolio growth rate assumptions.  The difference between saving 50% and 0% is the difference between full FI in 2025 vs. 2026 (Assuming a portfolio growth rate of 4%).

Yeah that second point is really the tipping point to me. I started tweaking my tracker like what if we spent everything we made what would our fi date be. Only 3 years. Longer wow.