Author Topic: Train from $4M to $8M  (Read 4281 times)

StackOfCoins.com

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Train from $4M to $8M
« on: December 16, 2019, 10:13:28 AM »
Is anyone on this fat FIRE train? If yes, do you mind sharing a bit on where you've allocated your capital?

Happy holidays!


2sk22

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Re: Train from $4M to $8M
« Reply #1 on: December 16, 2019, 10:38:26 AM »
Ok I'll bite :-)

In my household we are very much in this bracket (invested assets are a hair over $4.6 million). We are 60% stock and 40% bonds/cash. The stocks are  mostly in total market index funds. Bonds are a mix - some municipal bonds as well as bond index funds.  Nothing exotic - no second home, no real estate investments, no fancy cars etc.

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Re: Train from $4M to $8M
« Reply #2 on: December 16, 2019, 12:47:45 PM »
Thanks 2sk22. Whatís your rationale for a 60/40 split?  Do you use a wealth manager?

OurTown

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Re: Train from $4M to $8M
« Reply #3 on: December 16, 2019, 01:49:57 PM »
"Race to $55 billion."

By Mike Bloomberg.

bigchrisb

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Re: Train from $4M to $8M
« Reply #4 on: December 16, 2019, 02:55:47 PM »
"Race to $55 billion."

By Mike Bloomberg.
I'll also bite.  We are in this band, mostly index stocks (australian bias) plus a bit of commercial property, and small amount of leverage. 6 months of cash but no bonds. Wife and I still choose to work, we can more than cover costs off either one income or the portfolio income.
 
However, tall poppy comments like this one mean that many who have made it to fat fire (technically fat fi for us) stop sharing how they got there. I don't post much on forums like this anymore for this reason.


2sk22

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Re: Train from $4M to $8M
« Reply #5 on: December 16, 2019, 03:30:21 PM »
Thanks 2sk22. Whatís your rationale for a 60/40 split?  Do you use a wealth manager?

This is a very conservative asset allocation but it works for us because our needs are quite modest. I have to admit that we are a bit of anomaly - we simply don't have the typically expensive tastes of a "FatFire" household.

Although I'm retiring in 2020, my wife plans to keep working as long as she can. So we have several more years of accumulation ahead of us. And even when my wife retires, I'm anticipating a fairly low withdrawal rate of about 2% (or perhaps even less!). I ran the various FIRE calculators and even with this conservative AA, there seems to be no problem ensuring this withdrawal rate.

We briefly had a financial advisor in the late 1990s but I was not impressed and came to the conclusion, I could do as well on my own. My strategy has been simply to save as much as we could on autopilot. As far as hiring a "wealth advisor": it does not seem necessary. We are far below the levels where complex tax avoidance strategies start to make sense.

Ockhamist

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Re: Train from $4M to $8M
« Reply #6 on: December 17, 2019, 07:01:43 AM »
"Race to $55 billion."

By Mike Bloomberg.
I'll also bite.  We are in this band, mostly index stocks (australian bias) plus a bit of commercial property, and small amount of leverage. 6 months of cash but no bonds. Wife and I still choose to work, we can more than cover costs off either one income or the portfolio income.
 
However, tall poppy comments like this one mean that many who have made it to fat fire (technically fat fi for us) stop sharing how they got there. I don't post much on forums like this anymore for this reason.

I hear you on that.  I have a good friend at work who occasionally asks me for financial advice.  I know enough not to try to help people without their explicitly asking, but he was asking, so I've answered his questions and pointed him toward good resources.  He does not know I'm FI (I keep that pretty close to the vest) but does know from things I've been involved with on the job that I'm good with money. 

Then one day out of the blue he just lays into me about how he's sick of me "lording it over everybody how rich I am."   

No idea what got into him, but that was the end of that.   

Much Fishing to Do

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Re: Train from $4M to $8M
« Reply #7 on: December 17, 2019, 08:33:27 AM »
I hit $4M NW with the market rise yesterday ($3M LNW).  I had been 90/10 until last year, gradually shifting toward 75/15/10 (cash) [maybe more like 70/20/10 or 70/15/15] now as contemplating RE 2020.  I don't really expect to hit much higher NW numbers except whatever natural inflation may occur or if investments do well during RE.
« Last Edit: December 17, 2019, 09:48:42 AM by Much Fishing to Do »

PaulMaxime

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Re: Train from $4M to $8M
« Reply #8 on: December 17, 2019, 02:26:20 PM »
Approximately $7MM NW not counting my private company stock which might double that if we go public or sell out.

95% equities. A small amount (3 years expenses) in tax and AMT free municipal ETF.

When will I retire? I don't know. I like the company and would like to see it through to IPO since I've been here since nearly the beginning.

FIREby35

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Re: Train from $4M to $8M
« Reply #9 on: December 17, 2019, 02:40:32 PM »
"Race to $55 billion."

By Mike Bloomberg.
I'll also bite.  We are in this band, mostly index stocks (australian bias) plus a bit of commercial property, and small amount of leverage. 6 months of cash but no bonds. Wife and I still choose to work, we can more than cover costs off either one income or the portfolio income.
 
However, tall poppy comments like this one mean that many who have made it to fat fire (technically fat fi for us) stop sharing how they got there. I don't post much on forums like this anymore for this reason.

I hear you on that.  I have a good friend at work who occasionally asks me for financial advice.  I know enough not to try to help people without their explicitly asking, but he was asking, so I've answered his questions and pointed him toward good resources.  He does not know I'm FI (I keep that pretty close to the vest) but does know from things I've been involved with on the job that I'm good with money. 

Then one day out of the blue he just lays into me about how he's sick of me "lording it over everybody how rich I am."   

No idea what got into him, but that was the end of that.

I'm learning the truth you both are describing. Thanks for sharing.

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Re: Train from $4M to $8M
« Reply #10 on: December 17, 2019, 02:50:44 PM »
"Race to $55 billion."

By Mike Bloomberg.
I'll also bite.  We are in this band, mostly index stocks (australian bias) plus a bit of commercial property, and small amount of leverage. 6 months of cash but no bonds. Wife and I still choose to work, we can more than cover costs off either one income or the portfolio income.
 
However, tall poppy comments like this one mean that many who have made it to fat fire (technically fat fi for us) stop sharing how they got there. I don't post much on forums like this anymore for this reason.

Thanks Chris. I hear you on comments that make your eyes roll.

Interesting, you are effectively 100% risk on (equities). Is the volatility not a concern? Preservation of capital principles?

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Re: Train from $4M to $8M
« Reply #11 on: December 17, 2019, 02:53:16 PM »
Thanks 2sk22. Whatís your rationale for a 60/40 split?  Do you use a wealth manager?

This is a very conservative asset allocation but it works for us because our needs are quite modest. I have to admit that we are a bit of anomaly - we simply don't have the typically expensive tastes of a "FatFire" household.

Although I'm retiring in 2020, my wife plans to keep working as long as she can. So we have several more years of accumulation ahead of us. And even when my wife retires, I'm anticipating a fairly low withdrawal rate of about 2% (or perhaps even less!). I ran the various FIRE calculators and even with this conservative AA, there seems to be no problem ensuring this withdrawal rate.

We briefly had a financial advisor in the late 1990s but I was not impressed and came to the conclusion, I could do as well on my own. My strategy has been simply to save as much as we could on autopilot. As far as hiring a "wealth advisor": it does not seem necessary. We are far below the levels where complex tax avoidance strategies start to make sense.

Your strategy has worked for you and thatís all that matters!  Congratulations on your success and results! 2% is low, do you live in a LCOL area?

StackOfCoins.com

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Re: Train from $4M to $8M
« Reply #12 on: December 17, 2019, 02:55:28 PM »
I hit $4M NW with the market rise yesterday ($3M LNW).  I had been 90/10 until last year, gradually shifting toward 75/15/10 (cash) [maybe more like 70/20/10 or 70/15/15] now as contemplating RE 2020.  I don't really expect to hit much higher NW numbers except whatever natural inflation may occur or if investments do well during RE.

Awesome. I find it interesting that youíre 90/10 up until last year with retirement possibly 1 year away. I must have a more conservative risk profile than most on here!

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Re: Train from $4M to $8M
« Reply #13 on: December 17, 2019, 02:57:58 PM »
Approximately $7MM NW not counting my private company stock which might double that if we go public or sell out.

95% equities. A small amount (3 years expenses) in tax and AMT free municipal ETF.

When will I retire? I don't know. I like the company and would like to see it through to IPO since I've been here since nearly the beginning.

Thanks Paul. Do you use a wealth advisor? With your mix, your portfolio must be quite volatile. Thatís doesnít bother you?

EscapedApe

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Re: Train from $4M to $8M
« Reply #14 on: December 17, 2019, 03:03:49 PM »
I hear you on that.  I have a good friend at work who occasionally asks me for financial advice.  I know enough not to try to help people without their explicitly asking, but he was asking, so I've answered his questions and pointed him toward good resources.  He does not know I'm FI (I keep that pretty close to the vest) but does know from things I've been involved with on the job that I'm good with money. 

Then one day out of the blue he just lays into me about how he's sick of me "lording it over everybody how rich I am."   

No idea what got into him, but that was the end of that.

That was pretty crass of him. Why not be proud of you, and happy for your accomplishments?

2sk22

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Re: Train from $4M to $8M
« Reply #15 on: December 17, 2019, 03:54:22 PM »
Your strategy has worked for you and thatís all that matters!  Congratulations on your success and results! 2% is low, do you live in a LCOL area?

I live in New Jersey in an inner suburb of New York City which is just a 20 minute bus ride away. We are close enough that I can see some of the new ultra-tall buildings in Manhattan from our house. We have no plans of moving after retirement - we really like it here.

bigchrisb

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Re: Train from $4M to $8M
« Reply #16 on: December 17, 2019, 10:52:37 PM »


Thanks Chris. I hear you on comments that make your eyes roll.

Interesting, you are effectively 100% risk on (equities). Is the volatility not a concern? Preservation of capital principles?
Not really. We spend about $60k a year at the moment, plus another $40k on discretionary travel which we could pause if needed.  Total income between my wife, portfolio and myself is north of $500k. The excess income is the buffer - we would need to lose 2.5 out of the three incomes before needing to draw on capital. If things are dramatic enough to be in that situation, I'd be expecting lots of bond defaults.

Sure, the portfolio value bounces around. But we aren't spending capital, so who cares?

Car Jack

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Re: Train from $4M to $8M
« Reply #17 on: December 18, 2019, 06:54:28 AM »
Is anyone on this fat FIRE train? If yes, do you mind sharing a bit on where you've allocated your capital?

Happy holidays!

How do you define what can make up that $4M?

Net worth?
Liquid investable assets?
Value of beanie baby hoard or gold?

See my $2M to $4M thread, first post if you want to mimic it.  Of course, nobody follows the rules anyways, so maybe you just want to leave this open.

PaulMaxime

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Re: Train from $4M to $8M
« Reply #18 on: December 18, 2019, 09:57:44 AM »
Approximately $7MM NW not counting my private company stock which might double that if we go public or sell out.

95% equities. A small amount (3 years expenses) in tax and AMT free municipal ETF.

When will I retire? I don't know. I like the company and would like to see it through to IPO since I've been here since nearly the beginning.

Thanks Paul. Do you use a wealth advisor? With your mix, your portfolio must be quite volatile. Thatís doesnít bother you?

No wealth advisor though I do have a Motley Fool subscription for stock advice. It's a fixed fee not a percentage of assets and I do it all myself. I can't see paying someone a percentage of my assets to put me in mutual funds. I generally invest most of my money in individual stocks rather than index funds except my 401K and 529's for the grandkids.

I did dip my toe into venture capital recently, just a 250K commitment though. Just curious about early stage startup investing so I put some money in there.

I love volatility personally. My feeling is that I can afford more risk. I don't see that changing as I move to retirement except perhaps keeping a little more in cash.

trashtalk

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Re: Train from $4M to $8M
« Reply #19 on: December 18, 2019, 11:07:37 AM »
Posting to lurk. We have four young kids, live in a high-ish cost of living area to which we are emotionally and socially attached, and are relatively young so it would be great to get to numbers like this eventually.

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Re: Train from $4M to $8M
« Reply #20 on: December 18, 2019, 04:59:23 PM »
Approximately $7MM NW not counting my private company stock which might double that if we go public or sell out.

95% equities. A small amount (3 years expenses) in tax and AMT free municipal ETF.

When will I retire? I don't know. I like the company and would like to see it through to IPO since I've been here since nearly the beginning.

Thanks Paul. Do you use a wealth advisor? With your mix, your portfolio must be quite volatile. Thatís doesnít bother you?

No wealth advisor though I do have a Motley Fool subscription for stock advice. It's a fixed fee not a percentage of assets and I do it all myself. I can't see paying someone a percentage of my assets to put me in mutual funds. I generally invest most of my money in individual stocks rather than index funds except my 401K and 529's for the grandkids.

I did dip my toe into venture capital recently, just a 250K commitment though. Just curious about early stage startup investing so I put some money in there.

I love volatility personally. My feeling is that I can afford more risk. I don't see that changing as I move to retirement except perhaps keeping a little more in cash.

Interesting.  I'm about to commit to a private equity fund based on conversations with my banker.  How did you find out about your VC fund, was it based on your own research?  I've found out that doing my own due diligence on private funds can be very time consuming, and some funds that are more interesting I wouldn't have access to (min $5M commit for example).
« Last Edit: December 18, 2019, 05:11:13 PM by bluerunner »

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Re: Train from $4M to $8M
« Reply #21 on: December 18, 2019, 05:09:18 PM »


Thanks Chris. I hear you on comments that make your eyes roll.

Interesting, you are effectively 100% risk on (equities). Is the volatility not a concern? Preservation of capital principles?
Not really. We spend about $60k a year at the moment, plus another $40k on discretionary travel which we could pause if needed.  Total income between my wife, portfolio and myself is north of $500k. The excess income is the buffer - we would need to lose 2.5 out of the three incomes before needing to draw on capital. If things are dramatic enough to be in that situation, I'd be expecting lots of bond defaults.

Sure, the portfolio value bounces around. But we aren't spending capital, so who cares?

For something like a 2008 event, the drawdown was etched into my memory.  Granted that my NW situation was different then, but I had a better idea of my risk profile/appetite after that experience. 

StackOfCoins.com

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Re: Train from $4M to $8M
« Reply #22 on: December 18, 2019, 05:15:14 PM »
Your strategy has worked for you and thatís all that matters!  Congratulations on your success and results! 2% is low, do you live in a LCOL area?

I live in New Jersey in an inner suburb of New York City which is just a 20 minute bus ride away. We are close enough that I can see some of the new ultra-tall buildings in Manhattan from our house. We have no plans of moving after retirement - we really like it here.

Very nice.  Have never been to NJ but have been to Manhattan many times, which is such a cool town.

Much Fishing to Do

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Re: Train from $4M to $8M
« Reply #23 on: December 19, 2019, 05:12:31 AM »
I hit $4M NW with the market rise yesterday ($3M LNW).  I had been 90/10 until last year, gradually shifting toward 75/15/10 (cash) [maybe more like 70/20/10 or 70/15/15] now as contemplating RE 2020.  I don't really expect to hit much higher NW numbers except whatever natural inflation may occur or if investments do well during RE.

Awesome. I find it interesting that youíre 90/10 up until last year with retirement possibly 1 year away. I must have a more conservative risk profile than most on here!

Well, I guess my plans are very colored by my limited experience.  Given I'm 47 and wife is 45, and we have always been in pretty good health, there's a fairly decent chance the money needs to last 45 years or so.  Given that time frame equities seem the obvious winner.  Bonds don't seem that great right now (low return on them, and if returns rise then their values fall).  And in market downturns I've experienced from 2000 to now, having a few years of cash to spend could have solved most of the volatility issues.  My plan is basically to keep the porfolio balnaced with the 10%-15% in cash and except whenever my equities are more than 20% below their high price I'll forgo selling the equities and use the cash instead.  Of course if prices are still dropping after the cash is used up this will have been proven a bad strategy....  Given the dividends paid out annually in my taxable portfolio already represent a good percentage of what we spend and a very large percentage of what we 'need', that 10% cash could actually last a while. 

I'm sure there a re a lot of situations where I'd be more into bonds, If bonds seemed a lot more negatively correlated to stocks that they have appeared to be to me, if their returns were that much better than cash, etc, or even just little things like if I was just planning on one retirement instead of two the odds of it needing to last so long would be much less and maybe change my thinking.  So with all that said of course my 90/10 portfolio before FIRE was practically equivalent to the after FIRE portfolio as I didnt need the cash buffer at all as I was making the salary to spend from during market fluctuations.

In the end doing some backtesting I didn't see a whole lot of difference in overall success rates/portfolio balances changing bond/cash ratios around in the smallish window I'd consider, so decided to stick to my gut plan.  We'll see, in the end things I dont much think of always seem to be the things that make a difference (I've been about 65/35 US/international, if of course my equities were all US like VTI I would have done a whole lot better this decade, the decade I actually had significant money riding on it, but of course that could all change in the 20s...)

Ockhamist

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Re: Train from $4M to $8M
« Reply #24 on: December 19, 2019, 06:20:22 AM »
Interesting.  I agree about bonds ... don't see much upside and lots of potential downside.

I've been working on back-testing strategies where instead of just doing a steady x% draw, you employ a set rule which mandates withdrawing more when asset values are high, and don't withdraw as much or even at all when they are weak.   Hold withdrawals in a cash "buffer" and it's from the buffer that you pull your income.

The version I'm playing with initially seems to produce quite good returns overall, with the ability to hold nearly 100% of the invested portion in equities.  You do have to handle the gut check if there is a big drop, but no material affect on your income since that's coming from the buffer.  And the buffer is a drag on performance overall.

(edited for clarity)
« Last Edit: December 19, 2019, 11:40:54 AM by Ockhamist »

2sk22

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Re: Train from $4M to $8M
« Reply #25 on: December 19, 2019, 09:42:09 AM »
There has been a lot of academic discussion of the Equity Premium Puzzle: https://en.wikipedia.org/wiki/Equity_premium_puzzle

Quote
In simple terms, the investor returns on equities have been on average so much higher than returns on U.S. Treasury Bonds, that it is hard to explain why investors buy bonds, even after allowing for a reasonable amount of risk aversion.

I suspect that my own irrationality is driven more by prospect theory. Ok so I have to brag a little: I spent a wonderful day talking with Daniel Kahneman when he came to visit us at the megacorp I used to work for. :-)

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Re: Train from $4M to $8M
« Reply #26 on: December 19, 2019, 10:07:40 AM »

I did dip my toe into venture capital recently, just a 250K commitment though. Just curious about early stage startup investing so I put some money in there.

I love volatility personally. My feeling is that I can afford more risk. I don't see that changing as I move to retirement except perhaps keeping a little more in cash.

Interesting.  I'm about to commit to a private equity fund based on conversations with my banker.  How did you find out about your VC fund, was it based on your own research?  I've found out that doing my own due diligence on private funds can be very time consuming, and some funds that are more interesting I wouldn't have access to (min $5M commit for example).

It's that Motley Fool subscription. They started a venture fund: https://foolventures.com. It's a bit different from most in that they have a lot more limited partners and they want the partners to be involved in the process of suggesting investments and even talking to the companies themselves. So it's a good learning experience. We had a meetup where several of the CEOs spoke and I had a good conversation with one, the CEO of Upskill who's in the Augmented Reality space which is totally up my alley being that where I work is the leading AR company.

Anyway it's been a bit of a learning experience as well as the possibility to make some $$

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Re: Train from $4M to $8M
« Reply #27 on: December 23, 2019, 07:41:00 PM »
I'm interested in Angel Investing as opposed to VC.  Nords (sometimes posts here, most times at www.Early-Retirement.org, and has a blog - https://the-military-guide.com) got me excited about this prospect, but I don't have the time for any private equity stuff, yet.  Financial Samurai also does some interesting structured equity stuff.

As for having a position in bonds, I like having an AA that allows me to re-balance.  Even if it is 90/10, it forces me to sell the winners and buy something 'undervalued'.  But this year seems to have wrung all of the remaining value out of both equities and bonds... 
« Last Edit: December 23, 2019, 08:10:14 PM by EscapeVelocity2020 »

JoJoP

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Re: Train from $4M to $8M
« Reply #28 on: December 25, 2019, 08:17:56 AM »
Is anyone on this fat FIRE train? If yes, do you mind sharing a bit on where you've allocated your capital?

Happy holidays!

Real Estate 85%,
Domestic Stocks about 10%, working on getting this up to 20%
Other 5% -- foreign stocks, bullion, misc. 

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Re: Train from $4M to $8M
« Reply #29 on: December 27, 2019, 10:40:22 PM »
I'm interested in Angel Investing as opposed to VC.  Nords (sometimes posts here, most times at www.Early-Retirement.org, and has a blog - https://the-military-guide.com) got me excited about this prospect, but I don't have the time for any private equity stuff, yet.
Thanks for the tag!

Re: Train from $4M to $8M

Is anyone on this fat FIRE train? If yes, do you mind sharing a bit on where you've allocated your capital?
Yep-- due to reaching FI in late 1999 on a high savings rate and an aggressive asset allocation, and then not spending it fast enough over the last 17 years of retirement.

During the last 30+ years we've kept an asset allocation of >90% equities, at first due to having a steady military salary and then an active-duty military pension.  ">90%" is a tripwire to make sure we buy into bear markets and economic recessions, and today Personal Capital says that we're actually 98.7% equities. 

Most of that AA is in the Vanguard total stock market ETF (VTI).  We're shedding the last of our dividend ETF (DVY) through annual sales (0% capital-gains income-tax bracket) for spending cash or by donating the appreciated shares to charity.  About 25% of our AA is in the "B" shares of Berkshire Hathaway, and 10% is in angel investments.  We'll probably hold on to the "B" shares until we pass them on via probate (or at least until Buffett & Munger step down) and we're drawing down the angel investments as they flame out or exit. 

We've chatted with advisors and wealth managers over the years but we haven't found any who we felt were worth the fees.  Today I'm happy to pay a fee-only CFP when we have a research project, and I know several firms that I'd hire, but otherwise we're heading toward simplicity and autopilot.

Interesting.  I'm about to commit to a private equity fund based on conversations with my banker.  How did you find out about your VC fund, was it based on your own research?  I've found out that doing my own due diligence on private funds can be very time consuming, and some funds that are more interesting I wouldn't have access to (min $5M commit for example).
The best way to learn angel investing is by joining a group that's affiliated with a national organization like the Angel Capital Association.  Educate yourself by reading, working alongside the more experienced members of the group, and asking questions.  I've been with Hawaii Angels since late 2007 (thanks to ClifP), and this year I'm bowing out of the monthly meetings to become a "fallen angel".

I've invested in 10 startups and in one of the Blue Startups funds, and I'm hoping to close out this chapter of my investing life during the next decade.  (And this time I really mean it!)  Five of those investments are still in business and on track for exits (including Blue Startups), although one is struggling.  Of the remaining six, one has suspended operations, another has crammed down its early investors to 3 cents on the dollar, and the other four have shut down.

The due diligence on startups is the education part of angel investing, and it's hard work (as well as time-consuming) when it's done right.  However it's done more to make me a skilled investor (with incredible mentors) than any other part of my investor education.

A few years ago I wrote a guest post on angel investing for Jim Collins:
https://jlcollinsnh.com/2016/12/13/angel-investing-or-angel-philanthropy/
I'd suggest that you do not commit to any private equity fund (let alone a "banker") until after you've read that post.  If you think it's a better use of your time to give that sales team your money rather than learning angel investing through your own work with an angel group, then you might as well avoid the PE fees and revert to buying passively-managed equity index funds with low expense ratios. 

At an absolute minimum for angel investing you should commit to 10 startups of $25K each with another $250K in reserve for follow-on rounds in the survivors.  Your track record would be more sustainable if you could ramp up to 20 startups of $25K each with at least $300K-$500K for follow-on investments.

Until you reach that level then you could try to improve your skills through syndicates on AngelList or other crowdfunding groups.  However I find the personal interactions of pitches, due-diligence sessions, and shareholder meetings to be far more valuable than anything done online... and far cheaper than any fund's general partner.

Freedomin5

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Re: Train from $4M to $8M
« Reply #30 on: December 28, 2019, 04:06:36 AM »
"Race to $55 billion."

By Mike Bloomberg.
I'll also bite.  We are in this band, mostly index stocks (australian bias) plus a bit of commercial property, and small amount of leverage. 6 months of cash but no bonds. Wife and I still choose to work, we can more than cover costs off either one income or the portfolio income.
 
However, tall poppy comments like this one mean that many who have made it to fat fire (technically fat fi for us) stop sharing how they got there. I don't post much on forums like this anymore for this reason.

Well, itís their loss then. How else are you going to learn if you shoot down people who are more successful than you are and dismiss their success and advice? Thatís kind of like a teacher giving you information and you calling them a know-it-all. Itís juvenile, and to me, thatís the definition of stupid. Thanks for sharing. I, for one, am picking up quite a bit from this discussion (including the definition of ďtall poppy syndromeĒ as I had never heard the phrase before).

EscapeVelocity2020

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Re: Train from $4M to $8M
« Reply #31 on: December 28, 2019, 08:22:42 AM »
@Nords Thanks for the long post and sharing your experience!

kittykat

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Re: Train from $4M to $8M
« Reply #32 on: January 01, 2020, 02:04:26 PM »
I'd also like to add that I really really appreciate hearing how you each achieved the Fat FIRE level, and your savings/investing/spending strategies. I admire your achievement and I am all ears for learning.

PaulMaxime

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Re: Train from $4M to $8M
« Reply #33 on: January 01, 2020, 09:05:53 PM »
I'd also like to add that I really really appreciate hearing how you each achieved the Fat FIRE level, and your savings/investing/spending strategies. I admire your achievement and I am all ears for learning.

Well, mostly I just feel lucky. I guess the biggest part of all this for me is that I recognized and took advantages of opportunities that presented themselves to me.

I happened to have a steady job and capital to invest during the last recession because I took a job at Google and saved saved saved.

On a bit of a whim I decided to respond to the recruiter that sent me a message on LinkedIn back in 2007 just because I wanted to see the Googleplex. My surprise that they actually offered me a job!

One of the product managers I worked with on Google Books happened to move to this interesting "startup" inside of the company and when we spun out from Google in 2015 I decided to take the chance and go. Never expected that we'd  be so successful.

In my favor I was in the mode to be open to new things and willing to take risks (not afraid to invest during a recession, not afraid to take a chance on a risky startup vs my comfortable corporate job) and a lot of lucky timing like moving to SF from Baltimore in Sept 2007 and selling my house there right before the housing market collapsed and then not buying a new place until 2012 here at nearly the bottom of the market.

Not sure what lessons I'd give someone. Let's see.

Have a bit of a financial cushion so that you can take calculated risks. One reason I was able to go to my startup was that I was financially well off enough that if it didn't work out I wouldn't starve.

Be open to opportunities and say yes to things even if it makes you a little uncomfortable.

Be content with what you have and put most of your gains into building more gains.

But being at the right place at the right time is a lot of it. If I hadn't been as lucky I'd probably still be fine but not where I am today. It's actually pretty humbling to think about it.

kittykat

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Re: Train from $4M to $8M
« Reply #34 on: January 02, 2020, 03:04:59 PM »
I'd also like to add that I really really appreciate hearing how you each achieved the Fat FIRE level, and your savings/investing/spending strategies. I admire your achievement and I am all ears for learning.

Well, mostly I just feel lucky. I guess the biggest part of all this for me is that I recognized and took advantages of opportunities that presented themselves to me.

I happened to have a steady job and capital to invest during the last recession because I took a job at Google and saved saved saved.

On a bit of a whim I decided to respond to the recruiter that sent me a message on LinkedIn back in 2007 just because I wanted to see the Googleplex. My surprise that they actually offered me a job!

One of the product managers I worked with on Google Books happened to move to this interesting "startup" inside of the company and when we spun out from Google in 2015 I decided to take the chance and go. Never expected that we'd  be so successful.
...


Thanks for that additional context. It's helpful to understand. I'm probably closer to where you were about 10 years ago and thankful for a similar job opportunity I've been at for 5 years now. I did the whole startup thing in the past and not sure I would ever take that kind of risk again no matter what. I just hope to pay my gCorp dues for another 10 years but get wiser about saving and investing asap. I don't own any real estate at this time but hoping to line myself up for the the ongoing dip in the NYC market.

EscapeVelocity2020

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Re: Train from $4M to $8M
« Reply #35 on: January 02, 2020, 03:19:34 PM »
Up until 2005, wife and I both worked and stashed significantly for about a decade, while moving around the US a bit , living cheaply and simply, and making ~100k total by that time.  Then our second child had arrived and my industry was really hot, so my wife quit her job and I joined a company that sent us on an expat assignment in 2007.  I made $140k/yr with only my salary, we sold our house so we had almost no expenses, and we stashed even more during that period.  By 2008 we were on track to hit $1M NW by the time my assignment wrapped up in 2009, so I got more defensive with my 100% equities portfolio and 401k.  Then the great recession hit and I put the money back in.  We also bought our house at a discount in 2009, 15 yr mortgage, which we've since refinanced to 2.75%.  Experienced turbocharged rebound gains in 2009 onward.  The rest is simple compounding, enjoying my work, and having another expat assignment in Dubai (but kept the house in the US and have had higher expenses since hitting fat-FI).  It's a bit surreal at times, especially with the market still shooting upwards, just how big the numbers are these days.

Bogleheads had a refrain that has served me well in managing my investments - "determine your willingness, need, and ability to take risk".  Early on, I had ability and need to take on risk (long investment horizon, free cash flow, stable job).  In 2007, I had the ability buy not as much willingness or need to take on risk (since I'd hit my lean-FI number).  After the big drop in 2008/9, I was a bit more willing to take on greater risk exposure since stocks like GE were at fire-sale prices and had fat dividend yields.

I still use that Boglehead phrase today when I assess my target asset allocation.

kittykat

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Re: Train from $4M to $8M
« Reply #36 on: January 02, 2020, 07:58:23 PM »
Up until 2005, wife and I both worked and stashed significantly for about a decade, while moving around the US a bit , living cheaply and simply, and making ~100k total by that time.  Then our second child had arrived and my industry was really hot, so my wife quit her job and I joined a company that sent us on an expat assignment in 2007.  I made $140k/yr with only my salary, we sold our house so we had almost no expenses, and we stashed even more during that period.  By 2008 we were on track to hit $1M NW by the time my assignment wrapped up in 2009, so I got more defensive with my 100% equities portfolio and 401k.  Then the great recession hit and I put the money back in.  We also bought our house at a discount in 2009, 15 yr mortgage, which we've since refinanced to 2.75%.  Experienced turbocharged rebound gains in 2009 onward.  The rest is simple compounding, enjoying my work, and having another expat assignment in Dubai (but kept the house in the US and have had higher expenses since hitting fat-FI).  It's a bit surreal at times, especially with the market still shooting upwards, just how big the numbers are these days.

Bogleheads had a refrain that has served me well in managing my investments - "determine your willingness, need, and ability to take risk".  Early on, I had ability and need to take on risk (long investment horizon, free cash flow, stable job).  In 2007, I had the ability buy not as much willingness or need to take on risk (since I'd hit my lean-FI number).  After the big drop in 2008/9, I was a bit more willing to take on greater risk exposure since stocks like GE were at fire-sale prices and had fat dividend yields.

I still use that Boglehead phrase today when I assess my target asset allocation.

Thanks for sharing! So sounds like it wasnt a simple bet on Index Funds as I've been reading in some of the basic FI literature. When you say taking on Risk, is that more stock bets? Or are you using other investment vehicles as well?

EscapeVelocity2020

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Re: Train from $4M to $8M
« Reply #37 on: January 03, 2020, 11:32:10 AM »
The bulk of my equity holdings are US Index funds - large cap and some small caps.  Have some emerging markets since they seem undervalued.  Through work, my ESPP has grown to a sizable single stock holding.  My trading accounts and IRAís are individual stocks.  Also have a foreign bank account which pays good interest and diversifies my USD concentration for when I travel internationally, although USD has been incredibly strong.

Also have about 400k in TIPS and Munis, but inflation and tax rates have been falling or staying low. 

Edited - I mistakenly said my 401k's were individual stocks, I meant IRA's...  401k's are are in index funds that the plans offer. 
« Last Edit: January 05, 2020, 12:30:01 PM by EscapeVelocity2020 »

2sk22

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Re: Train from $4M to $8M
« Reply #38 on: January 03, 2020, 11:51:08 AM »
I'd also like to add that I really really appreciate hearing how you each achieved the Fat FIRE level, and your savings/investing/spending strategies. I admire your achievement and I am all ears for learning.

We achieved FATFire (I hate the term) in the most boring possible Boglehead-like manner :-) Both my wife and have I worked at very well paying jobs for over twenty five years and saved a big portion of our income by investing in index funds. Very little risk taken either in career or investment. We never had a specific goal in mind - the goal was simply to accumulate as much as possible without too much sacrifice.

Until a couple of years ago, I had no thought of retirement. I had expected to keep working until forced to leave because I genuinely liked my work. But the nature of my job progressively became more boring. Early last year, however, I discovered MMM and realized that I did not have to work any longer - quite simple.

EscapeVelocity2020

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Re: Train from $4M to $8M
« Reply #39 on: January 03, 2020, 12:25:48 PM »
Irgendwann reicht es - have to ask, warum deutsche sprache?

2sk22

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Re: Train from $4M to $8M
« Reply #40 on: January 03, 2020, 03:25:41 PM »
Irgendwann reicht es - have to ask, warum deutsche sprache?

I started learning German using Duolingo for a vacation in Switzerland a few years ago but the project took on a life of its own and I'm still at it  today. I have supplemented Duolingo with some other materials and I am now able to read a fair bit of German. Enough at least to read my favorite German language model railroad websites without the help of Google translate.

This particular phrase popped up in a Duolingo lesson a few days ago and roughly means "at some point it is enough". Which seems very apt for my situation. I take this as a good omen :-)

kittykat

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Re: Train from $4M to $8M
« Reply #41 on: January 04, 2020, 11:23:06 AM »
Awesome info. Thank you both for sharing. That definitely paints a clearer picture for me and what I need to do.

GreenEggs

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Re: Train from $4M to $8M
« Reply #42 on: January 04, 2020, 07:38:54 PM »
I'm here with about $3.1M in equities & 4.6M in real estate.  $3.2M of the of the RE is for sale.  When it sells I'll buy more index funds. 

VTSAX seems to be the popular fund around here, but VIGAX gained over 37% for 2019, and averaged almost 15% for the 10 year time frame.  So, I'll be going with VIGAX as the properties sell.

 







dragoncar

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Re: Train from $4M to $8M
« Reply #43 on: January 04, 2020, 09:17:54 PM »
Choo choo! (not on the train, but prefer the phrase to "Race" in other threads)

nancyfrank232

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Train from $4M to $8M
« Reply #44 on: January 05, 2020, 06:31:44 AM »
I'm here with about $3.1M in equities & 4.6M in real estate.  $3.2M of the of the RE is for sale.  When it sells I'll buy more index funds. 

VTSAX seems to be the popular fund around here, but VIGAX gained over 37% for 2019, and averaged almost 15% for the 10 year time frame.  So, I'll be going with VIGAX as the properties sell.

 

What type of real estate do you own?

What made you decide to sell your real estate and buy equities instead of doing a 1031 and saving the capital gains?

Omy

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Re: Train from $4M to $8M
« Reply #45 on: January 05, 2020, 07:26:16 AM »
I'm on the train - and I don't expect it to be a particularly fast train.

GreenEggs

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Re: Train from $4M to $8M
« Reply #46 on: January 05, 2020, 09:01:40 AM »
I'm here with about $3.1M in equities & 4.6M in real estate.  $3.2M of the of the RE is for sale.  When it sells I'll buy more index funds. 

VTSAX seems to be the popular fund around here, but VIGAX gained over 37% for 2019, and averaged almost 15% for the 10 year time frame.  So, I'll be going with VIGAX as the properties sell.

 

What type of real estate do you own?

What made you decide to sell your real estate and buy equities instead of doing a 1031 and saving the capital gains?




It isn't income producing, so not eligible for a 1031.   Some was inherited and some gifted.  It's waterfront lake lots that have become quite valuable over the years.  The gifted lots have capital gains, but we were able to do a recombination to create 3 lots from 2, so it's almost like getting a free lot.  One of the inherited lots is worth 2-3 times the appraised value, because there were no comps & it can be subdivided into 3 or 4 lots.  So there will be a lot of capital gains to share with Uncle Sam on it too.  Half of it is my brother's, so we can cry/complain about it together. 
We could probably have requested a higher appraisal value, but I didn't think about it at the time and nobody suggested it.  It can't be changed now, but something to ponder...

nancyfrank232

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Train from $4M to $8M
« Reply #47 on: January 05, 2020, 02:36:19 PM »
I'm here with about $3.1M in equities & 4.6M in real estate.  $3.2M of the of the RE is for sale.  When it sells I'll buy more index funds. 

VTSAX seems to be the popular fund around here, but VIGAX gained over 37% for 2019, and averaged almost 15% for the 10 year time frame.  So, I'll be going with VIGAX as the properties sell.

 

What type of real estate do you own?

What made you decide to sell your real estate and buy equities instead of doing a 1031 and saving the capital gains?




It isn't income producing, so not eligible for a 1031.   Some was inherited and some gifted.  It's waterfront lake lots that have become quite valuable over the years.  The gifted lots have capital gains, but we were able to do a recombination to create 3 lots from 2, so it's almost like getting a free lot.  One of the inherited lots is worth 2-3 times the appraised value, because there were no comps & it can be subdivided into 3 or 4 lots.  So there will be a lot of capital gains to share with Uncle Sam on it too.  Half of it is my brother's, so we can cry/complain about it together. 
We could probably have requested a higher appraisal value, but I didn't think about it at the time and nobody suggested it.  It can't be changed now, but something to ponder...

The $3.7m in real estate is your half?

Can you and your brother approach a developer to get a number of units for selling them the lots?

I have neighbours who are brothers and they got a 300 unit rental building for selling to a large developer (who then proceeded to build 6 buildings and 2200 units)
« Last Edit: January 05, 2020, 02:37:56 PM by nancyfrank232 »