Author Topic: My experience with FIRE  (Read 5025 times)

XTimer2020

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My experience with FIRE
« on: December 01, 2020, 08:19:42 AM »
I "retired" from an engineering career in 2015, at age 49, after starting a profitable small business in 2008. FIRE has been good. I was able to pursue creative projects and spend more time with my wife and kids. There have been pitfalls. I will share some of them here.
  • Without the structure of employment, it is easy for alcohol consumption to creep up over the years, particularly during periods of stress. I ended up giving up alcohol completely in 2017. Now, at 54, my health and mental health have never been better. Don't miss it a bit.
  • I do believe that divorce becomes a more attractive solution to marriage troubles, if there seem to be enough resources for both partners to live comfortably apart. I never considered that all those years of earning and saving actually make divorce easier and more likely. And, life post divorce has been good.
  • Being FIRE may also help with dating and remarriage. Plenty of time to socialize and get to know people. I did remarry in 2019. We went through all the pre-marital counseling including discussions of budgeting and financial planning. Yet, after marriage, we found that our sensibilities were different regarding sustainable levels of expense and how to handle occasional or unexpected expenses. That has been difficult. Slowly, we are getting on the same page. I am adapting as much as my new wife is.
  • After FIRE, the financial pieces must fit together over very log time horizons. I use a planning app called MaxiFi to calculate our sustainable level of discretionary spending. Knowing this releases a lot of financial anxiety. I then use YNAB to track our expenses against the sustainable target. Using these tools has been comforting and enjoyable. And, when something big happens, I can see very quickly what the effect will be. Sharing this information skillfully is something I'm working on.
  • I have always been a market timer. My intention was not to beat the market, it was to avoid the pain of the largest sell-offs. After FIRE, being a smart guy, it was easy to spend too much time strategizing about investments. Looking back, I would be so much further ahead if I had bought and held VTI. And ironically, the pain of down markets would have been far less than the cumulative stress of buying and selling over the years. For buy and hold investors, the pain of down markets is temporary. For market timers, locked in losses are permanent. Now I teach my kids, just buy and hold, apply your brain power to something more productive.
  • Stress is cumulative. Market stress, family stress, budget stress, health stress all sum together to affect decision making. Under stress, tunnel vision may occur, making it harder to see the skillful path in the moment. An investment strategy which depends on the decision maker being at the top of his game (forever) is fragile and unlikely to succeed over the long run.
  • Going forward, I intend to learn from others more than from making my own mistakes. Sometimes the skillful path is the easy path. See it, take it.
After slipping substantially in 2020, I am finally ready to commit to buy and hold for life. I am giving up market timing and accept that I have no idea if VTI will go up or down from here, in the short run. Locking in my losses at these prices is sickening, but waiting to get in would likely be more costly in both slippage and stress. Grateful for all the good in my life. I will take the Simple Path to investing forward from here.


John Galt incarnate!

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Re: My experience with FIRE
« Reply #1 on: December 01, 2020, 09:31:43 AM »


    • I have always been a market timer. My intention was not to beat the market, it was to avoid the pain of the largest sell-offs. After FIRE, being a smart guy, it was easy to spend too much time strategizing about investments. Looking back, I would be so much further ahead if I had bought and held VTI. And ironically, the pain of down markets would have been far less than the cumulative stress of buying and selling over the years. For buy and hold investors, the pain of down markets is temporary. For market timers, locked in losses are permanent. Now I teach my kids, just buy and hold, apply your brain power to something more productive.
    • Stress is cumulative. Market stress, family stress, budget stress, health stress all sum together to affect decision making. Under stress, tunnel vision may occur, making it harder to see the skillful path in the moment. An investment strategy which depends on the decision maker being at the top of his game (forever) is fragile and unlikely to succeed over the long run.
    • Going forward, I intend to learn from others more than from making my own mistakes. Sometimes the skillful path is the easy path. See it, take it.
    After slipping substantially in 2020, I am finally ready to commit to buy and hold for life. I am giving up market timing and accept that I have no idea if VTI will go up or down from here, in the short run. Locking in my losses at these prices is sickening, but waiting to get in would likely be more costly in both slippage and stress. Grateful for all the good in my life. I will take the Simple Path to investing forward from here.

     Buy-and-hold, long-term investing results in impressive, persuasive arithmetic,  but there is no assurance of its continuance.


    CNBC

    Why long-term investors should never sell stocks in a panic

    PUBLISHED SUN, MAR 22 202011:15 AM EDTUPDATED MON, MAR 23 20208:01 AM EDT
    Pippa Stevens
    @PIPPASTEVENS13


    KEY POINTS
    While it might seem counterintuitive to sit back and relax while stocks post swift and steep losses, for investors with longer-term time frames it typically pays to wait it out.


    Looking at data going back to 1930, Bank of America found that if an investor missed the S&P 500′s 10 best days in each decade, total returns would be just 91%, strikingly below the 14,962% return for investors who held steady throughout the ups and downs.[/list]
    « Last Edit: December 01, 2020, 09:37:04 AM by John Galt incarnate! »

    Ricochet

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    Re: My experience with FIRE
    « Reply #2 on: December 05, 2020, 08:42:49 AM »
    Thanks for the advice. Iím still working and, um, timing the market at least for this pandemic. So far my energy stocks are going well, but when things return to normal, Iím sticking with a safe index tracker or two. Who needs that stress when you are not working?

    DocToDisco

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    Re: My experience with FIRE
    « Reply #3 on: December 29, 2020, 10:59:45 AM »
    @XTimer2020

     Check this out the next time you feel the urge to sell.  This is great.

    https://youtu.be/OOGU94eL07E

    It's JL Collins giving a guided meditation on drastic changes in the stock market.

    marty998

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    Re: My experience with FIRE
    « Reply #4 on: December 29, 2020, 09:08:43 PM »
    Looking at data going back to 1930, Bank of America found that if an investor missed the S&P 500′s 10 best days in each decade, total returns would be just 91%, strikingly below the 14,962% return for investors who held steady throughout the ups and downs.

    I subscribe to the buy and hold theory as much as anyone, but I hate this piece of research. Lets pose the question of what would be the returns of a portfolio that misses the 10 worst days of each decade...?

    Substantially north of 14,962% I'd presume. Imagine missing black Friday in Oct 1987, the worst days of the tech bust, the GFC, and Corona... You'd be the proverbial billionaire.

    Statistically if you hold stocks on any given day you are likely to encounter an up day (because the market has more up days than down days), but given we are talking about the 10 best and 10 worst days, the chances of encountering one of the 10 best or one of the 10 worst days in a decade are, I'd suggest, equally likely (10 in ~2600 trading days)


    marty998

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    Re: My experience with FIRE
    « Reply #5 on: December 29, 2020, 09:14:06 PM »

    • Stress is cumulative. Market stress, family stress, budget stress, health stress all sum together to affect decision making. Under stress, tunnel vision may occur, making it harder to see the skillful path in the moment. An investment strategy which depends on the decision maker being at the top of his game (forever) is fragile and unlikely to succeed over the long run.

    Yep - anything from the choice of what to eat to choice of romantic partner becomes much more clouded when stressed.

    I hear that some stress is good - if only to engage the instinctual "fight or flight" part of the caveman brain that does make a good decision (if I don't steer the car away from that runaway truck my babies in the backseat might die), but constant ongoing stress leads to fatigue and yes, shit decision making (need calories now, must eat another donut).


    cool7hand

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    Re: My experience with FIRE
    « Reply #6 on: December 30, 2020, 04:23:48 AM »
    Deep post. Thanks for sharing. You might consider Ray Dalio's All Seasons (aka All Weather) Portfolio. We've had great success with it. Give it a Google.

    John Galt incarnate!

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    Re: My experience with FIRE
    « Reply #7 on: December 30, 2020, 08:50:36 AM »

    I do believe that divorce becomes a more attractive solution to marriage troubles, if there seem to be enough resources for both partners to live comfortably apart.



    I agree.

    Another  advantage of each partner having enough of their own resources to live the life they choose is the absence of  financial pressure to get married to jointly avail themselves of the financial advantages of the legal incidents of marriage.

    Unfortunately, too many married  couples stay together in an unhappy, unfulfilling, rancorous marriage.

     Lacking  sufficient resources they are wedded to a relationship of mutual antipathy which is antithetical to their happiness and contentment.




    MetalCap

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    Re: My experience with FIRE
    « Reply #8 on: January 05, 2021, 01:04:40 PM »
    Going in a completely opposite direction:

    Quote
    I use a planning app called MaxiFi to calculate our sustainable level of discretionary spending. Knowing this releases a lot of financial anxiety.

    How do you like MaxFi?  It looks like it can only be used once you're at FI or OMY.

    Jack0Life

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    Re: My experience with FIRE
    « Reply #9 on: January 13, 2021, 09:12:55 AM »
    I "retired" from an engineering career in 2015, at age 49, after starting a profitable small business in 2008. FIRE has been good. I was able to pursue creative projects and spend more time with my wife and kids. There have been pitfalls. I will share some of them here.
    • Without the structure of employment, it is easy for alcohol consumption to creep up over the years, particularly during periods of stress. I ended up giving up alcohol completely in 2017. Now, at 54, my health and mental health have never been better. Don't miss it a bit.

    • I do believe that divorce becomes a more attractive solution to marriage troubles, if there seem to be enough resources for both partners to live comfortably apart. I never considered that all those years of earning and saving actually make divorce easier and more likely. And, life post divorce has been good.
    [/b]

    • Being FIRE may also help with dating and remarriage. Plenty of time to socialize and get to know people. I did remarry in 2019. We went through all the pre-marital counseling including discussions of budgeting and financial planning. Yet, after marriage, we found that our sensibilities were different regarding sustainable levels of expense and how to handle occasional or unexpected expenses. That has been difficult. Slowly, we are getting on the same page. I am adapting as much as my new wife is.
    • After FIRE, the financial pieces must fit together over very log time horizons. I use a planning app called MaxiFi to calculate our sustainable level of discretionary spending. Knowing this releases a lot of financial anxiety. I then use YNAB to track our expenses against the sustainable target. Using these tools has been comforting and enjoyable. And, when something big happens, I can see very quickly what the effect will be. Sharing this information skillfully is something I'm working on.

    • I have always been a market timer. My intention was not to beat the market, it was to avoid the pain of the largest sell-offs. After FIRE, being a smart guy, it was easy to spend too much time strategizing about investments. Looking back, I would be so much further ahead if I had bought and held VTI. And ironically, the pain of down markets would have been far less than the cumulative stress of buying and selling over the years. For buy and hold investors, the pain of down markets is temporary. For market timers, locked in losses are permanent. Now I teach my kids, just buy and hold, apply your brain power to something more productive.
    [/b]

    • Stress is cumulative. Market stress, family stress, budget stress, health stress all sum together to affect decision making. Under stress, tunnel vision may occur, making it harder to see the skillful path in the moment. An investment strategy which depends on the decision maker being at the top of his game (forever) is fragile and unlikely to succeed over the long run.
    • Going forward, I intend to learn from others more than from making my own mistakes. Sometimes the skillful path is the easy path. See it, take it.
    After slipping substantially in 2020, I am finally ready to commit to buy and hold for life. I am giving up market timing and accept that I have no idea if VTI will go up or down from here, in the short run. Locking in my losses at these prices is sickening, but waiting to get in would likely be more costly in both slippage and stress. Grateful for all the good in my life. I will take the Simple Path to investing forward from here.

    These 2 points really applies to me.
    -Still loves my wife and I see us growing old together but now that she has a career now and we are FI, whenever we have problems, I tend to think I would be just fine and happy if we go our seperate ways and divide our assets. I think we had 1 serious discussion about divorce and many not so serious pissed off and wanting to get away from each others.
    -I am too a market timer much more so since I've been furloughed, then laid-off. I have too much time on my hand. I re-allocate my mutual funds way too much. I have Vanguard and they only let you move the particular funds once per 30 days. You would figure that would stop me but nope. Between me and my wife, we have 5 different accounts so I'm able to reallocate funds from one account to another. Part of my problem is that I hit it big once(I moved all my funds out during March sell-off) and part of my madness is trying to safe guard my funds from the next sell-off.

    BTW, are your assets more than what it was when you FIREd or less ??