Author Topic: Growing some stubble, others still shaving  (Read 1403 times)

NorthernDreamer

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Growing some stubble, others still shaving
« on: September 05, 2016, 11:45:39 AM »
I had posted a case study a few weeks ago about wanting to move our registered accounts away from our mutual fund advisor. So far, so good. My husband and I have been doing our research, reading The Millionaire Teacher (from the public library, of course). Wow that should be required reading in high school! We are making it a goal to make the move to setting up our accounts with Questrade this month.

I guess you usually never know the state of your friends' finances. The other week we mentioned to friends (who I'd pegged as financially responsible) that we want to retire in under 18 years (at 52 and 55, max). They were dumbfounded. Said they wanted to see our spreadsheet. Said they were hoping to do it by 60, and thought that was way better than most. But they had no reasoning. They are with a financial advisor and saving 10% of their salary. And buy lots of expensive outdoor/camping gear. And pay people to reno their home. So, I guess I shouldn't be so surprised.

I feel like I'm learning an investing superpower. My husband and I have always been pretty thrifty by nature (or cheap as my family thinks...) now we can put all those savings to work!

AlmstRtrd

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Re: Growing some stubble, others still shaving
« Reply #1 on: September 05, 2016, 01:24:09 PM »
I think "saving 10% of salary" is just such standard advice for those who are saving for retirement. Most people don't save at all, and by comparison those who sock away 10% feel as if they are doing great. Well, it is better than nothing. Maybe suggest, if it seems that advice is welcome, that they try upping their savings rate to 15%. That's not so much in nominal dollar terms but an extra 50% is a huge increase in their savings rate. Sometimes incremental changes are easier than huge ones, and they would surely see their expected time to retirement shrink. Just my two cents worth.

talltexan

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Re: Growing some stubble, others still shaving
« Reply #2 on: September 06, 2016, 02:52:03 PM »
If they're making home payments, that principal should also be counted towards their savings rate. The 10% may be subject to a company match. Twenty percent is possible without even realizing it.

TheAnonOne

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Re: Growing some stubble, others still shaving
« Reply #3 on: September 09, 2016, 11:49:57 AM »
If they're making home payments, that principal should also be counted towards their savings rate. The 10% may be subject to a company match. Twenty percent is possible without even realizing it.

You can count debt repayment in your savings rate if you also count the balance against your invested networth.

If you have 500k in the market and own a 500k house, you get to count the principal repayments if you say you have $0 invested.

Otherwise if you count your home repayment without the other side, you have a savings rate of say 50% but yet, somehow your portfolio is staying the same.

This is of-course for the FIRE crowd, and not people looking at total networth (which already counts principal borrowed)


-TLDR: you can count home payments in savings rate for FIRE time only if you count the balance of the debt against your invested balance.