Yes, I want to work forever. I want to work at least part time forever. Really, I am having trouble figuring out when to start going part time. I know they say 25x your expenses in the stock market means you are FI. But my expenses are only 10k a year. So that means FI at $250k. But I want to work always so I'd say FI at 125k but that seems so low. I am not sure how to figure out how much I need before I pull back on working full time.
I'd look at it two ways.
You don't mind what you do for work - maybe you really like it.- save and invest $250K + inflation
- switch to part-time and work as much or as little as you like
- pull the plug fully anytime
You don't love working full-time and can't wait to be part-time.- save and invest $125K + inflation
- switch to part-time earning at least $10K
- let you money grow and maybe throw more in when you can
- after it reaches $250K + inflation pull the plug anytime you like
I put it in low cost index funds and the market tanks and then I decide I want to use a good chunk of it to buy a different place to live. I guess I think I need it in safer things and was thinking avoiding taxes was the way to go such as municipal bonds and CDs.
I'll be the minority opinion on this. I agree that if you have a short-term [0-5yrs] savings mission for a specific purpose than you need a less risky investment vehicle. However, what you are saying is - "I'm going to save money could be for 20yrs+....could be for 4yrs... who knows???" In that case I would say invest in the market.
Your money will grow more strongly there with capital growth and dividends. Yes a market crash soon after you start investing there would be painful if you suddenly decided you needed the money, but if that's only a problem early on. After a few years if you have invested $20K and it's worth $25K on paper....then just as you want to use it the market drops 20%...so you can only get $20K from it. You haven't lost anything, but the growth. And you can always decide not to pull the money out and wait a bit for the market to recover if your plans don't need to be executed ASAP.
If OTOH you invest in a safe investment with low returns you'll be in good shape if you suddenly decide to take the money out after 2yrs in the middle of a market crash, but 10yrs later if you never decided to use that money you are likely way behind where you would be had you invested in stocks.
To illustrate:
- $5K invested each year for 10yrs getting 7% = $72.5K
- $5K invested each year for 10yrs getting 3% = $58.4K
Keep in mind that if you start to want to move say 2yrs from now after investing in the market for 3yrs you can always change your investments at that time to something less risky once you have a solid goal and as long as you aren't making a snap decision to move next week there will be some time to deal with whatever is going on in the market.
I can't comment on the taxes vs. CD/Muni Bonds as I am not in the US.