Race from $2M to $4M...and Beyond!

[TempusFugit]

I don’t 100% agree with everything my FA and I talk about.  But I actually am ok when we have differing opinions.  It makes me reexamine my why of it and either I make a change or I’m more of the belief.  I use to have different AAs in my accounts, now for simplicity they are all 70/30.  At the end of the day my dividends from my stocks are pretty equal to my bond earnings so I’m not putting them someplace special because of reason xyz.

I don’t get too precious about it either, but there is a good reason to use ROTH accounts for higher growth assets that you can leave in place for a long time.  If the stocks in a ROTH appreciate at 5-6-7 percent for the next twenty years, that’s going to be a big tax difference compared to the same growth in my 401K.  It could be tens of thousands of dollars that I don’t have to pay in capital gains taxes.  I think future me would be appreciative to past me when that happens. 

[Turtle]

I don’t 100% agree with everything my FA and I talk about.  But I actually am ok when we have differing opinions.  It makes me reexamine my why of it and either I make a change or I’m more of the belief.  I use to have different AAs in my accounts, now for simplicity they are all 70/30.  At the end of the day my dividends from my stocks are pretty equal to my bond earnings so I’m not putting them someplace special because of reason xyz.

I don’t get too precious about it either, but there is a good reason to use ROTH accounts for higher growth assets that you can leave in place for a long time.  If the stocks in a ROTH appreciate at 5-6-7 percent for the next twenty years, that’s going to be a big tax difference compared to the same growth in my 401K.  It could be tens of thousands of dollars that I don’t have to pay in capital gains taxes.  I think future me would be appreciative to past me when that happens.

Same here.

[couponvan]

Everyone here is racing, and I'm on a leisurely turtle pace.  Everything in its own time.  Money is coming in, and money is going out, but the tailwinds are pushing us forward despite ramping up college spending.  We are at $3.7 this month.  I think last month we were at $3.6.  Kids are back in college for the Fall now, so it will standstill for another few months.

Cash-flow wise though we are overspending our take-home pay by $10K per month and moving prior bonus money in our savings account to cash flow college expenses for that $10K.  At the same time, our 401(k)s are getting $10K.  It's a juggle.  Sometimes I stress about it, sometimes I don't.

Edit-Make that $3.6 again with a total gain of $20K….DH had a dog investment in his big account. Oops!

[ixtap]

I don’t 100% agree with everything my FA and I talk about.  But I actually am ok when we have differing opinions.  It makes me reexamine my why of it and either I make a change or I’m more of the belief.  I use to have different AAs in my accounts, now for simplicity they are all 70/30.  At the end of the day my dividends from my stocks are pretty equal to my bond earnings so I’m not putting them someplace special because of reason xyz.

I am still trying to understand this as simplicity. I rebalance in one transaction. *Maybe* two if a tax deferred account becomes 100% bonds and I need to use another. So many folks maintain that having your asset allocation mirrored in each account is easier, but none have been able to explain it a way that actually makes it sound more simple.

[MaybeBabyMustache]

I just checked our year on year net worth and we are up $1.3M, which is pretty nuts. As a disclaimer, I received a year's of severance, so that's certainly carrying some of the weight here & helping. Next year should be pretty illuminating, as I haven't worked since the layoff.

[EscapeVelocity2020]

Yeah, this is shaping up to be the second year in a row that net worth goes up by more than $1M.  And this is despite getting a new roof on the house thanks to Beryl ($18k), having two kids in college, and some nice vacations.  I'm beginning to feel rich!

[Turtle]

Yeah, this is shaping up to be the second year in a row that net worth goes up by more than $1M.  And this is despite getting a new roof on the house thanks to Beryl ($18k), having two kids in college, and some nice vacations.  I'm beginning to feel rich!

Meanwhile over in the poor corner of the thread, I’m feeling fortunate to have gone up around a third of that.  Not complaining though, because I only joined this thread earlier this year as far as the LNW is concerned. 

[dividendman]

Yeah, this is shaping up to be the second year in a row that net worth goes up by more than $1M.  And this is despite getting a new roof on the house thanks to Beryl ($18k), having two kids in college, and some nice vacations.  I'm beginning to feel rich!

Meanwhile over in the poor corner of the thread, I’m feeling fortunate to have gone up around a third of that.  Not complaining though, because I only joined this thread earlier this year as far as the LNW is concerned.

Yeah, these richies are have crazy growth. Especially the working ones... meanwhile my retired ass isn't even up half a mil :(

The plight of the not so rich is tough.

[Taran Wanderer]

Yeah, we’ve averaged $400k+ increases per year for the past several years. This includes added savings as we’re still working as well as investment gains. Helps move us toward the top end of this “race”. At some point it might actually make me feel rich!

[ixtap]

Yeah, we’ve averaged $400k+ increases per year for the past several years. This includes added savings as we’re still working as well as investment gains. Helps move us toward the top end of this “race”. At some point it might actually make me feel rich!

That's interesting. We are little less than halfway through this range and we do feel rich.

Not as rich as I felt two months ago when I had this net worth and expected to have an income that more than covered expenses for the foreseeable future, but still just pissed that my bike got stolen more than it being a financial hit, for example.

[Taran Wanderer]

That was intended to be tongue in cheek, but it’s funny how having what is arguably enough doesn’t make me feel fully secure financially. And yes, nothing is going to make anyone fully secure. Think of someone that might have been FIREd and living the debt-free life in downtown Asheville. Maybe they felt secure last week, and this week? Bad stuff can happen. Maybe security is like a mirage - you can see it out there, but you can’t actually reach it.

[ixtap]

That was intended to be tongue in cheek, but it’s funny how having what is arguably enough doesn’t make me feel fully secure financially. And yes, nothing is going to make anyone fully secure. Think of someone that might have been FIREd and living the debt-free life in downtown Asheville. Maybe they felt secure last week, and this week? Bad stuff can happen. Maybe security is like a mirage - you can see it out there, but you can’t actually reach it.

There are certainly ways we could fall out of our sense of security, but losing our home in and of itself is not sufficient to threaten our *financial* security. We would still have options.

 My in laws have a portfolio at least as large as ours in addition to their $1M house and they live off SS and a pension, yet they fret more about their financial future than we do ours. Security is more about attitude than facts.

[tooqk4u22]

I see all these accounts here in this race to what seems only the beyond category and much of it occurring over a relative short period of a just a year or three.  It seems very surreal or unreal maybe.   I get the power of compounding but I fret about the fact that the gains of S&P 500 have been so outside the bounds historical averages in recent past whether looking at 1-, 5-, 10-year periods.  Most due to to multiple expansion overall and specifically within a few concentrated stocks seems like a setup.    Up 30% in last 12 months? 15% annualized for 5 years? Even 13% over 10 years?

But it does suggest that we should expect lower returns at some point - unless earnings (and buybacks) grow meaningfully, which expectation is 14% earnings growth for 2025 so we are at almost 21.5x forward PE - average over last 5 years was 18.  17% downside differential.  I would still be well below 4% WR even if if it happened - that is the great thing about overvalued markets - more cushion for the fall.  haha

Can't fight it! Won't fight it!


I feel for those people in NC and other areas impacted.  At least in Florida people have come to expect and be prepared to some extent for such weather events (although its still devastating) but when things happen in areas that truly are more like 100 year events its even harder when it happens. Financial security is so secondary to physical/family/community security. I live in an area that is fairly weather neutral so I would be caught off guard if suddenly got 30" of rain - I am sure there would be substantially flooding and damage even where I am, I don't think its ever happened thought.

[2sk22]

I see all these accounts here in this race to what seems only the beyond category and much of it occurring over a relative short period of a just a year or three.  It seems very surreal or unreal maybe.   I get the power of compounding but I fret about the fact that the gains of S&P 500 have been so outside the bounds historical averages in recent past whether looking at 1-, 5-, 10-year periods.  Most due to to multiple expansion overall and specifically within a few concentrated stocks seems like a setup.    Up 30% in last 12 months? 15% annualized for 5 years? Even 13% over 10 years?

The foundations of our "beyond" status goes much further back. I have not forgotten the period 2000-2011 when investments barely seemed to budge. Somehow we stayed employed and never stopped our investments. Being optimistic is what the MMM philosophy is all about :-)

Morgan Housel (https://collabfund.com/blog/the-seduction-of-pessimism/)

Six years ago I interviewed Jeremy Siegel, a Wharton finance professor with a reputation for investment optimism.

He was, in 2011, bullish on the stock market. He pointed to history. Over all long historic periods the stock market has produced positive returns after inflation.

A journalist in the room rebutted that stocks had actually shrunk over the previous decade.

Siegel wasn’t phased. Yes, 10-year returns were bad. But he doesn’t care about 10-year returns. It’s too short a period. Over the previous 20 years – 1991 to 2011 – the market had actually performed above average.

“The past decade has been frustrating,” he said. “But that’s only because we had unreasonably high returns in the 1990s. The last 10 years has just offset the previous decade.”

Siegel sidesteps pessimism not because he thinks bad stuff doesn’t happen, but because he has a longer time horizon than most. The difference is subtle but helps explain why pessimism sounds smart amid a backdrop of general improvement.

[Lake]

I see all these accounts here in this race to what seems only the beyond category and much of it occurring over a relative short period of a just a year or three.  It seems very surreal or unreal maybe.   I get the power of compounding but I fret about the fact that the gains of S&P 500 have been so outside the bounds historical averages in recent past whether looking at 1-, 5-, 10-year periods.  Most due to to multiple expansion overall and specifically within a few concentrated stocks seems like a setup.    Up 30% in last 12 months? 15% annualized for 5 years? Even 13% over 10 years?

But it does suggest that we should expect lower returns at some point - unless earnings (and buybacks) grow meaningfully, which expectation is 14% earnings growth for 2025 so we are at almost 21.5x forward PE - average over last 5 years was 18.  17% downside differential.  I would still be well below 4% WR even if if it happened - that is the great thing about overvalued markets - more cushion for the fall.  haha





@tooqk4u22 I am glad as a species we have people who are more sensitive to risks. There’s an evolutionary advantage for someone in the tribe to say hey guys maybe we should worry about all that roaring in those bushes over there. However the worries you noted probably aren’t best stated in this thread. Being on this thread means you are objectively rich and on this site the wealth here was self made and because of compound growth taking awhile we might skew towards the older age cohort. So consequently most of us here have been through many downturns in our lives. I would bet that everyone in this cohort has plans, backup plans and back plans for their backup plans. Also this thread is arguably mostly recession proof. While a huge market downturn would still be emotionally difficult I would bet for the vast majority of people in this thread their day to day living wouldn’t change much. In Fact I believe I recall you posting a lot in the Was 21/22 the worst year to retire. And if you believed that was the worst time in history to retire it doesn’t follow that your questioning the majority of the growth of people assets over the last 2-3 years is unreal. I personally retired in Aug of 21 and am worth more now then when I retired. And on this thread I’ve only got a measly 2.5M so if there’s a meeting I’m the one stuck cleaning up after and putting the chairs away but if there’s a downturn I’ll be fine. And I can tell you the rest of this thread is filled with people far smarter than me.  That being said if you have any actionable advice for de-risking I’m all ears😀

[markbike528CBX]

I see all these accounts here in this race to what seems only the beyond category and much of it occurring over a relative short period of a just a year or three.  It seems very surreal or unreal maybe.   I get the power of compounding but I fret about the fact that the gains of S&P 500 have been so outside the bounds historical averages in recent past whether looking at 1-, 5-, 10-year periods.  Most due to to multiple expansion overall and specifically within a few concentrated stocks seems like a setup.    Up 30% in last 12 months? 15% annualized for 5 years? Even 13% over 10 years?

But it does suggest that we should expect lower returns at some point - unless earnings (and buybacks) grow meaningfully, which expectation is 14% earnings growth for 2025 so we are at almost 21.5x forward PE - average over last 5 years was 18.  17% downside differential.  I would still be well below 4% WR even if if it happened - that is the great thing about overvalued markets - more cushion for the fall.  haha

@tooqk4u22 I am glad as a species we have people who are more sensitive to risks. There’s an evolutionary advantage for someone in the tribe to say hey guys maybe we should worry about all that roaring in those bushes over there. However the worries you noted probably aren’t best stated in this thread. Being on this thread means you are objectively rich and on this site the wealth here was self made and because of compound growth taking awhile we might skew towards the older age cohort. So consequently most of us here have been through many downturns in our lives. I would bet that everyone in this cohort has plans, backup plans and back plans for their backup plans. Also this thread is arguably mostly recession proof. While a huge market downturn would still be emotionally difficult I would bet for the vast majority of people in this thread their day to day living wouldn’t change much. In Fact I believe I recall you posting a lot in the Was 21/22 the worst year to retire. And if you believed that was the worst time in history to retire it doesn’t follow that your questioning the majority of the growth of people assets over the last 2-3 years is unreal. I personally retired in Aug of 21 and am worth more now then when I retired. And on this thread I’ve only got a measly 2.5M so if there’s a meeting I’m the one stuck cleaning up after and putting the chairs away but if there’s a downturn I’ll be fine. And I can tell you the rest of this thread is filled with people far smarter than me.  That being said if you have any actionable advice for de-risking I’m all ears😀

My plan is to live as fear free as possible, spending generally less than 4% of current stache. This generally reflects a 4% inflation adjusted guidline.
My backup plan is to relax.   My backup to my backup plan is to prepare to live like everyone else.

I live near (two blocks) from the Columbia River.   I live about 20 feet, (363ft MSL) above river level. There is a 30 foot above river level elevation and dike between me and the river. 
My current plan for The Flood* is to get a 6pack, our inflatable "two-person" raft, that's it.   Is is a good plan? Nope, but at least I have a plan :-)

*The Flood.
https://www.nrc.gov/docs/ML1231/ML12319A477.pdf COLUMBIA GENERATING STATION RICHLAND, WASHINGTON Flood Protection Final Report

The probable maximum flood (PMF) event resulting from the breaching of the Columbia River's Grand Coulee Dam, which is approximately 245 river miles upstream of the CGS site, is at el. 422 feet msl. The limiting case flood (LCF) is at el. 424 feet msl, including 2 additional feet for wind wave action.
The Seattle District Army Corps of Engineers determined artificial flood levels at the CGS site assuming the following concurrent conditions: a sudden Grand Coulee Dam failure caused by massive explosives; the Columbia River is at flood stage; and reservoirs at all storage pools below the dam are full. A seismic failure or overtopping of the dam would not create flood level conditions as severe as the sudden catastrophic failure scenario.

If you live near a nuclear power plant, they have done analyses for a far more comprehensive set of threat scenarios then you can afford. Take advantage of it. 

Mostly responding to fix @Lake 's quoting issue.

[Lake]

@markbike528CBX thanks for fixing my quoting issue. I did say the other members of this thread were far smarter than me😀.

[ca-rn]

I see all these accounts here in this race to what seems only the beyond category and much of it occurring over a relative short period of a just a year or three.  It seems very surreal or unreal maybe.   I get the power of compounding but I fret about the fact that the gains of S&P 500 have been so outside the bounds historical averages in recent past whether looking at 1-, 5-, 10-year periods.  Most due to to multiple expansion overall and specifically within a few concentrated stocks seems like a setup.    Up 30% in last 12 months? 15% annualized for 5 years? Even 13% over 10 years?

The foundations of our "beyond" status goes much further back. I have not forgotten the period 2000-2011 when investments barely seemed to budge. Somehow we stayed employed and never stopped our investments. Being optimistic is what the MMM philosophy is all about :-)

Morgan Housel (https://collabfund.com/blog/the-seduction-of-pessimism/)

Six years ago I interviewed Jeremy Siegel, a Wharton finance professor with a reputation for investment optimism.

He was, in 2011, bullish on the stock market. He pointed to history. Over all long historic periods the stock market has produced positive returns after inflation.

A journalist in the room rebutted that stocks had actually shrunk over the previous decade.

Siegel wasn’t phased. Yes, 10-year returns were bad. But he doesn’t care about 10-year returns. It’s too short a period. Over the previous 20 years – 1991 to 2011 – the market had actually performed above average.

“The past decade has been frustrating,” he said. “But that’s only because we had unreasonably high returns in the 1990s. The last 10 years has just offset the previous decade.”

Siegel sidesteps pessimism not because he thinks bad stuff doesn’t happen, but because he has a longer time horizon than most. The difference is subtle but helps explain why pessimism sounds smart amid a backdrop of general improvement.

I started my 401k in 2001.  Didn't know a thing about retirement/investing but I tried to max it out every year.  In the beginning, it looked like the 401k account was eating my money- all red/upside down, no gain.  Every two weeks, pretax money went in but the balance stayed the same or went down...

My account was small and I "lost" a lot but unlike some coworkers, I didn't stop investing or panic sell to bonds/stable funds.

Those early years turned out to be the best b/c it was a pants on fire sale and set me up for success and FIRE.

The yes, the compounding/gains in recent years has been very good.

[FireLane]

I see all these accounts here in this race to what seems only the beyond category and much of it occurring over a relative short period of a just a year or three.  It seems very surreal or unreal maybe.   I get the power of compounding but I fret about the fact that the gains of S&P 500 have been so outside the bounds historical averages in recent past whether looking at 1-, 5-, 10-year periods.  Most due to to multiple expansion overall and specifically within a few concentrated stocks seems like a setup.    Up 30% in last 12 months? 15% annualized for 5 years? Even 13% over 10 years?

But it does suggest that we should expect lower returns at some point - unless earnings (and buybacks) grow meaningfully, which expectation is 14% earnings growth for 2025 so we are at almost 21.5x forward PE - average over last 5 years was 18.  17% downside differential.  I would still be well below 4% WR even if if it happened - that is the great thing about overvalued markets - more cushion for the fall.  haha

Can't fight it! Won't fight it!

I started investing in 2015, when I discovered MMM. As part of my FIRE plan, I modeled how big a stash I could expect to have under different rates of return. For the most optimistic scenario, which I treated as an unrealistic upper bound, I used a rate of return of 10%.

As of now, according to Vanguard, my ten-year rate of return is 12.2%.

I like your phrasing of "surreal". I'm certainly not complaining about having lots more money than I expected. But I also wonder how long this can go on. Maybe we're on the precipice of a crash, or at least, a long period of stagnation so that valuations can return to historical norms.

I already have a bigger stash than I ever expected to accumulate, so if returns are lower going forward, that shouldn't be a problem. I can live very well on a withdrawal rate that's incredibly low by all historical standards.

On the other hand, maybe the old assumptions are wrong. Maybe the fact that market returns have been this high for this long, despite a global pandemic and a Fed rate-hike cycle, isn't a fluke but a message that we should be heeding. Who knows - maybe the day is coming when robots and AI take over the world economy, whoever owns a share of them will be rich beyond their wildest dreams, and the market has already priced this in.

I have no idea if any of this is true (my crystal ball seems to be defective). All I'm saying is, we should leave room to be surprised to the upside. Maybe all the wise and prudent safety measures and fallbacks we planned out won't be necessary in the end. Maybe the future will be better than we expected, rather than worse.

Our biggest problem, when we're older, could be figuring out things to do with the giant piles of money we're all sitting on top of. I'm not necessarily against the idea of building a Scrooge McDuck-style money bin - just saying...

[Much Fishing to Do]

I see all these accounts here in this race to what seems only the beyond category and much of it occurring over a relative short period of a just a year or three.  It seems very surreal or unreal maybe.   I get the power of compounding but I fret about the fact that the gains of S&P 500 have been so outside the bounds historical averages in recent past whether looking at 1-, 5-, 10-year periods.  Most due to to multiple expansion overall and specifically within a few concentrated stocks seems like a setup.    Up 30% in last 12 months? 15% annualized for 5 years? Even 13% over 10 years?

But it does suggest that we should expect lower returns at some point - unless earnings (and buybacks) grow meaningfully, which expectation is 14% earnings growth for 2025 so we are at almost 21.5x forward PE - average over last 5 years was 18.  17% downside differential.  I would still be well below 4% WR even if if it happened - that is the great thing about overvalued markets - more cushion for the fall.  haha

Can't fight it! Won't fight it!

I started investing in 2015, when I discovered MMM. As part of my FIRE plan, I modeled how big a stash I could expect to have under different rates of return. For the most optimistic scenario, which I treated as an unrealistic upper bound, I used a rate of return of 10%.

As of now, according to Vanguard, my ten-year rate of return is 12.2%.

I like your phrasing of "surreal". I'm certainly not complaining about having lots more money than I expected. But I also wonder how long this can go on. Maybe we're on the precipice of a crash, or at least, a long period of stagnation so that valuations can return to historical norms.

I already have a bigger stash than I ever expected to accumulate, so if returns are lower going forward, that shouldn't be a problem. I can live very well on a withdrawal rate that's incredibly low by all historical standards.

On the other hand, maybe the old assumptions are wrong. Maybe the fact that market returns have been this high for this long, despite a global pandemic and a Fed rate-hike cycle, isn't a fluke but a message that we should be heeding. Who knows - maybe the day is coming when robots and AI take over the world economy, whoever owns a share of them will be rich beyond their wildest dreams, and the market has already priced this in.

I have no idea if any of this is true (my crystal ball seems to be defective). All I'm saying is, we should leave room to be surprised to the upside. Maybe all the wise and prudent safety measures and fallbacks we planned out won't be necessary in the end. Maybe the future will be better than we expected, rather than worse.

Our biggest problem, when we're older, could be figuring out things to do with the giant piles of money we're all sitting on top of. I'm not necessarily against the idea of building a Scrooge McDuck-style money bin - just saying...

I think this crew is already set up to be "surprised" to the upside no matter what.  There is so much planning focusing on the historically worst of returns, I think this, or maybe slightly better, unconsciously becomes the expectation. 

Someone who stuck to a 4% SWR over time with the type of allocations I see around here has, on AVERAGE, ended up doubling the stache (inflation adjusted) over 30 years. 

[Allie]

I just looked back through our old nw statements and my journal, then looked at current numbers and were up 1m since last year.  We’ve made it solidly into the beyond…I thought I’d feel different when we hit this level of asset accumulation.  Maybe it’ll hit me next year.

[tooqk4u22]

I see all these accounts here in this race to what seems only the beyond category and much of it occurring over a relative short period of a just a year or three.  It seems very surreal or unreal maybe.   I get the power of compounding but I fret about the fact that the gains of S&P 500 have been so outside the bounds historical averages in recent past whether looking at 1-, 5-, 10-year periods.  Most due to to multiple expansion overall and specifically within a few concentrated stocks seems like a setup.    Up 30% in last 12 months? 15% annualized for 5 years? Even 13% over 10 years?

But it does suggest that we should expect lower returns at some point - unless earnings (and buybacks) grow meaningfully, which expectation is 14% earnings growth for 2025 so we are at almost 21.5x forward PE - average over last 5 years was 18.  17% downside differential.  I would still be well below 4% WR even if if it happened - that is the great thing about overvalued markets - more cushion for the fall.  haha

@tooqk4u22 I am glad as a species we have people who are more sensitive to risks. There’s an evolutionary advantage for someone in the tribe to say hey guys maybe we should worry about all that roaring in those bushes over there. However the worries you noted probably aren’t best stated in this thread. Being on this thread means you are objectively rich and on this site the wealth here was self made and because of compound growth taking awhile we might skew towards the older age cohort. So consequently most of us here have been through many downturns in our lives. I would bet that everyone in this cohort has plans, backup plans and back plans for their backup plans. Also this thread is arguably mostly recession proof. While a huge market downturn would still be emotionally difficult I would bet for the vast majority of people in this thread their day to day living wouldn’t change much. In Fact I believe I recall you posting a lot in the Was 21/22 the worst year to retire. And if you believed that was the worst time in history to retire it doesn’t follow that your questioning the majority of the growth of people assets over the last 2-3 years is unreal. I personally retired in Aug of 21 and am worth more now then when I retired. And on this thread I’ve only got a measly 2.5M so if there’s a meeting I’m the one stuck cleaning up after and putting the chairs away but if there’s a downturn I’ll be fine. And I can tell you the rest of this thread is filled with people far smarter than me.  That being said if you have any actionable advice for de-risking I’m all ears😀

I do recall posting on that thread, which I didn't start, but I think the discussion wasn't that it absolutely was the worst time to FIRE but could it be.  At the time, and maybe still, it certainly is reasonable and logical to question whether or not someone FIREd or REd with a 4% WR at the peak of the market then experienced a massive decline in both equities AND bonds, which never happened before. IIRC I also said something about being a goldilocks time for FIRE at 4% after the fallout. 

As for the "Unreal" I hope it is understood that I meant that in the figurative sense as in "Wow, it is unreal!" not in the literal sense that I think people are lying....even if they are lying about their individual stashes it is just math.....had a $3Mil stash with 100% S&P 500 a year ago then gains would be $900K.......Wow, that's unreal!

[tooqk4u22]

I see all these accounts here in this race to what seems only the beyond category and much of it occurring over a relative short period of a just a year or three.  It seems very surreal or unreal maybe.   I get the power of compounding but I fret about the fact that the gains of S&P 500 have been so outside the bounds historical averages in recent past whether looking at 1-, 5-, 10-year periods.  Most due to to multiple expansion overall and specifically within a few concentrated stocks seems like a setup.    Up 30% in last 12 months? 15% annualized for 5 years? Even 13% over 10 years?

But it does suggest that we should expect lower returns at some point - unless earnings (and buybacks) grow meaningfully, which expectation is 14% earnings growth for 2025 so we are at almost 21.5x forward PE - average over last 5 years was 18.  17% downside differential.  I would still be well below 4% WR even if if it happened - that is the great thing about overvalued markets - more cushion for the fall.  haha

Can't fight it! Won't fight it!

I started investing in 2015, when I discovered MMM. As part of my FIRE plan, I modeled how big a stash I could expect to have under different rates of return. For the most optimistic scenario, which I treated as an unrealistic upper bound, I used a rate of return of 10%.

As of now, according to Vanguard, my ten-year rate of return is 12.2%.

I like your phrasing of "surreal". I'm certainly not complaining about having lots more money than I expected. But I also wonder how long this can go on. Maybe we're on the precipice of a crash, or at least, a long period of stagnation so that valuations can return to historical norms.

I already have a bigger stash than I ever expected to accumulate, so if returns are lower going forward, that shouldn't be a problem. I can live very well on a withdrawal rate that's incredibly low by all historical standards.

On the other hand, maybe the old assumptions are wrong. Maybe the fact that market returns have been this high for this long, despite a global pandemic and a Fed rate-hike cycle, isn't a fluke but a message that we should be heeding. Who knows - maybe the day is coming when robots and AI take over the world economy, whoever owns a share of them will be rich beyond their wildest dreams, and the market has already priced this in.

I have no idea if any of this is true (my crystal ball seems to be defective). All I'm saying is, we should leave room to be surprised to the upside. Maybe all the wise and prudent safety measures and fallbacks we planned out won't be necessary in the end. Maybe the future will be better than we expected, rather than worse.

Our biggest problem, when we're older, could be figuring out things to do with the giant piles of money we're all sitting on top of. I'm not necessarily against the idea of building a Scrooge McDuck-style money bin - just saying...

I think this crew is already set up to be "surprised" to the upside no matter what.  There is so much planning focusing on the historically worst of returns, I think this, or maybe slightly better, unconsciously becomes the expectation. 

Someone who stuck to a 4% SWR over time with the type of allocations I see around here has, on AVERAGE, ended up doubling the stache (inflation adjusted) over 30 years.

I agree with all this but also firmly believe in reversion to the mean.   I do think because of democratization of investing (low cost platforms, index funds, 401ks) combined with far fewer public companies and until recently continuously declining interest rates I do think markets warrant or will get higher premiums when compared to the overall historical averages. 

I am well along in this race and have also benefited from these outsized returns, although due to an AA that is likely more conservative than many here the returns haven't been , quite as surreal.  And that's ok especially with low WR %.   

As I said, Can't Fight It, Won't Fight It!  I have no crystal ball so I wouldn't be surprised if markets go up 20% next year or down 20% or whatever.

Onward and upward!

[EscapeVelocity2020]

One concerning thing about the equity market bubble is how it concentrates wealth.  The higher your NW gets, the more exposed you are to the assets that are going up the fastest.  That just can't be healthy long term, especially since the people most in need of gains are the ones least likely to own homes, stocks, and bonds...  I do my best to spread the wealth with generous tips and contributions, but that's hardly a solution.

[tooqk4u22]

One concerning thing about the equity market bubble is how it concentrates wealth.  The higher your NW gets, the more exposed you are to the assets that are going up the fastest.  That just can't be healthy long term, especially since the people most in need of gains are the ones least likely to own homes, stocks, and bonds...  I do my best to spread the wealth with generous tips and contributions, but that's hardly a solution.

I think there has always been an element of this - Rockefellers anyone?  At least the masses, or at least those that have a little extra to save each month and actually do so, can participate in it unlike prior generations. 

Wealth disparity is normal and fine but it certainly can go to far and maybe we are there, I don't know.   

Low interest rate policies favor asset holders and drive economic spending but also expand wealth disparity. 

Tax policy is really the only way to address it.......but you know how that goes....."We should increase taxes, as long as its the income/wealth rung higher than me!"

[MoneyTree]

Mid 2019 - First passed $1M
March 2020 - dropped to $840K (covid)
April 2020 - reclaimed $1M
June 2020 - passed $1.1M
August 2020 - passed $1.2M
January 2021 - passed $1.3M
April 2021 - passed $1.4M
August 2021 - passed $1.5M
November 2021 - passed $1.6M
June 2023 - passed $1.7M
December 2023 - passed $1.8M
January 2024 - passed $1.9M
March 2024 - passed $2M
June 2024 - passed $2.1M
July 2024 - passed $2.2M
October 2024 - passed $2.3M

This time it took a whole three months for the next 100K. Not as fast as the last 100K but it still feels like my wealth grows faster than I can get accustomed to it.

[JGS1980]

One concerning thing about the equity market bubble is how it concentrates wealth.  The higher your NW gets, the more exposed you are to the assets that are going up the fastest.  That just can't be healthy long term, especially since the people most in need of gains are the ones least likely to own homes, stocks, and bonds...  I do my best to spread the wealth with generous tips and contributions, but that's hardly a solution.

I hate to disagree, but I just don't think there's an equity bubble right now. The fact is that corporations are making record profits right now, and that's reflected in the market.

I do agree that investing in equities (eventually) leads to concentration of wealth. I also agree that the people who most need it are the least willing or able to invest. I'm not sure I can be responsible for them outside of promoting and encouraging and voting for a robust social safety net.

JGS

[SwordGuy]

One concerning thing about the equity market bubble is how it concentrates wealth.  The higher your NW gets, the more exposed you are to the assets that are going up the fastest.  That just can't be healthy long term, especially since the people most in need of gains are the ones least likely to own homes, stocks, and bonds...  I do my best to spread the wealth with generous tips and contributions, but that's hardly a solution.

I hate to disagree, but I just don't think there's an equity bubble right now. The fact is that corporations are making record profits right now, and that's reflected in the market.

I do agree that investing in equities (eventually) leads to concentration of wealth. I also agree that the people who most need it are the least willing or able to invest. I'm not sure I can be responsible for them outside of promoting and encouraging and voting for a robust social safety net.

JGS

... and voting for a robust social safety net and the wages of a decent living for EVERY full time.   
Every.  Single.  One.

If the job needs doing, the worker doing it in order to receive a decent living should receive that decent living, not a pauper's wage.   The fact that the USA has millions of "working poor" is a damning indictment of our society.

[Taran Wanderer]

... and voting for a robust social safety net and the wages of a decent living for EVERY full time.   
Every.  Single.  One.

If the job needs doing, the worker doing it in order to receive a decent living should receive that decent living, not a pauper's wage.   The fact that the USA has millions of "working poor" is a damning indictment of our society.

I’ve been thinking about this as we proceed through a significant home improvement project that is costing way[\u] more than I originally expected.  I mean, we’re talking 2x.  Part of that is inflation, part of it is that I have expensive tastes, and part of that is that these guys are getting a living wage.  I can’t control inflation.  I could scale back my tastes or go with a lower quality contractor, but I’m going to do this once, and I want it to be done right.  As for the living wage issue, would I really feel better saving 10% or 20% off the backs of the workers?

No.

[arcturus]

I understand completely where you are @Taran Wanderer  on the home project.  Been a while since I posted, but we have been very busy taking lots of steps in prep for RE.  Sold the oversized house, moved into a smaller place but spent way more than anticipated in renovating it.  Not sure about 2x more, as I usually budget high, but its been a lot.  But the dust has finally started to settle (literally and figuratively) and we're still just a nose under $3M invested (frustratingly close), but are now mortgage free! 

Like you, as we've been doing our project, we've been trying to treat our contractors / craftspeople well along the way and do things the right way with higher quality materials, since we are hopeful that we will be here for a long time.   I'm not going to wade too deep into the political waters, but to whomever said the disparity is becoming too great, I agree, but it depends on where you draw that line.  Even with most of us being in the 90-95th percentile, I think many of us can't even comprehend the wealth of the 99th percentile. 

PS - @Taran Wanderer -- I hope your project is a success!

[Bateaux]

One concerning thing about the equity market bubble is how it concentrates wealth.  The higher your NW gets, the more exposed you are to the assets that are going up the fastest.  That just can't be healthy long term, especially since the people most in need of gains are the ones least likely to own homes, stocks, and bonds...  I do my best to spread the wealth with generous tips and contributions, but that's hardly a solution.

I just woke to a leg cramp and something in my eye, it's 2 am.
I spent the last two days back in the muck of a flooded home here in Florida with Team Rubicon. The house had not been touched since hurricane Hulene passed through. Hauling out the refrigerator made me throw up. I've carried out the bodies of home fire victims. Their cooked flesh ripping apart in my gloves and I didn't throw up. It was that bad. The homeowner, a retired police officer and disabled veteran could not enter the house, because he is currently immune compromised. He's undergoing cancer treatment and highly susceptible to infection. Mold and fungus are some of the worst things for cancer patients to encounter.
Anyway, moving on to finance, according to Mint our accounts are up 125K in the last 30 days. We've never had Internet at the Florida house and the mobile phone service went from poor to non-existent after Hurricane Milton. We went to Spectrum Saturday morning and had high speed Internet by afternoon. I also bought a new TV to connect to it. My wife picked up the new iPhone 16
pro while there since her 4 year old phone was acting up. All is good at our home.
15 minutes away families are out of their homes, can't find gasoline for their vehicles and can't find ice to keep their limited food cold. It's first world and 3rd world in the same county. These situations exist from the tip of Florida to the Appalachian Mountains. They need the help of the able.

[Lake]

@Bateaux after hurricane Katrina I organized a trailer full of needed items and went down from Minnesota for a week to help out in the Biloxi area doing what you are doing now. The refrigerators were the worst part! It’s absolutely impossible to explain how bad something can smell. Some of them ended up doors down so when we lifted them the contents ended up all over the floors. After a few days of working in the heat without power a local gas station was able to make ice and someone brought us some ice cold drinks. I think that’s still one of the most pleasurable/refreshing experiences I’ve ever had. A simple cold drink amidst devastation.

[Bateaux]

@Bateaux after hurricane Katrina I organized a trailer full of needed items and went down from Minnesota for a week to help out in the Biloxi area doing what you are doing now. The refrigerators were the worst part! It’s absolutely impossible to explain how bad something can smell. Some of them ended up doors down so when we lifted them the contents ended up all over the floors. After a few days of working in the heat without power a local gas station was able to make ice and someone brought us some ice cold drinks. I think that’s still one of the most pleasurable/refreshing experiences I’ve ever had. A simple cold drink amidst devastation.

The power of nature to destroy our feeble construction is amazing. We're temporarily occupying the surface of the planet. Once we're gone it will rapidly replace most of the evidence of our existence. Hopefully we mature to a state of being where we spread more love and less hate. Thank you for what you've done to bring that forward.

[Fomerly known as something]

One concerning thing about the equity market bubble is how it concentrates wealth.  The higher your NW gets, the more exposed you are to the assets that are going up the fastest.  That just can't be healthy long term, especially since the people most in need of gains are the ones least likely to own homes, stocks, and bonds...  I do my best to spread the wealth with generous tips and contributions, but that's hardly a solution.

I just woke to a leg cramp and something in my eye, it's 2 am.
I spent the last two days back in the muck of a flooded home here in Florida with Team Rubicon. The house had not been touched since hurricane Hulene passed through. Hauling out the refrigerator made me throw up. I've carried out the bodies of home fire victims. Their cooked flesh ripping apart in my gloves and I didn't throw up. It was that bad. The homeowner, a retired police officer and disabled veteran could not enter the house, because he is currently immune compromised. He's undergoing cancer treatment and highly susceptible to infection. Mold and fungus are some of the worst things for cancer patients to encounter.
Anyway, moving on to finance, according to Mint our accounts are up 125K in the last 30 days. We've never had Internet at the Florida house and the mobile phone service went from poor to non-existent after Hurricane Milton. We went to Spectrum Saturday morning and had high speed Internet by afternoon. I also bought a new TV to connect to it. My wife picked up the new iPhone 16
pro while there since her 4 year old phone was acting up. All is good at our home.
15 minutes away families are out of their homes, can't find gasoline for their vehicles and can't find ice to keep their limited food cold. It's first world and 3rd world in the same county. These situations exist from the tip of Florida to the Appalachian Mountains. They need the help of the able.

My sister is up in the Panhandle seeing the devastation of Hurricane Michael and how areas around Panama City that still has not necessarily been fixed is why they will be moving most likely to Fort Collins during their retirement.  Their FL home is in a good area as far as hurricane but they just don’t want to deal with even the possibility after witnessing that.

[Lake]

@Bateaux after hurricane Katrina I organized a trailer full of needed items and went down from Minnesota for a week to help out in the Biloxi area doing what you are doing now. The refrigerators were the worst part! It’s absolutely impossible to explain how bad something can smell. Some of them ended up doors down so when we lifted them the contents ended up all over the floors. After a few days of working in the heat without power a local gas station was able to make ice and someone brought us some ice cold drinks. I think that’s still one of the most pleasurable/refreshing experiences I’ve ever had. A simple cold drink amidst devastation.

The power of nature to destroy our feeble construction is amazing. We're temporarily occupying the surface of the planet. Once we're gone it will rapidly replace most of the evidence of our existence. Hopefully we mature to a state of being where we spread more love and less hate. Thank you for what you've done to bring that forward.

@Bateaux my message was rushed so I didn’t get to finish it. Good luck and stay safe. You are making a big difference. I know when you look up at the end of the day it might not seem like it but it’s a huge help and it’s people like you who get everything back to normal again. On a lighter note I think you may be working harder in retirement than when you had an actual job😁

[arcturus]

@Bateaux after hurricane Katrina I organized a trailer full of needed items and went down from Minnesota for a week to help out in the Biloxi area doing what you are doing now. The refrigerators were the worst part! It’s absolutely impossible to explain how bad something can smell. Some of them ended up doors down so when we lifted them the contents ended up all over the floors. After a few days of working in the heat without power a local gas station was able to make ice and someone brought us some ice cold drinks. I think that’s still one of the most pleasurable/refreshing experiences I’ve ever had. A simple cold drink amidst devastation.

The power of nature to destroy our feeble construction is amazing. We're temporarily occupying the surface of the planet. Once we're gone it will rapidly replace most of the evidence of our existence. Hopefully we mature to a state of being where we spread more love and less hate. Thank you for what you've done to bring that forward.

Well said!  Hope you are taking care of yourself!

[ATtiny85]

We've gone a little quiet here. Hard to post anything after Bateaux shares what actions he (and others) have been taking to directly help people. Tough act to follow. Great work, glad we have folks like you out and about.

As noted elsewhere, we have executed our glidepath to get to 70/30 over the last year+ from something like 90/10. Already seems to feel like the volatility is down a bit. I have a simple spreadsheet that compiles the portfolio. I was used to seeing larger swings than I feel like I see these days. That feeling will get reset the next time we have something more than these little 1% moves of course. With so much in US Bond Funds, I definitely get why people complain about them. They don't zig or zag with anything that seems logical. About a third of the bonds are in my IRA in a normal mutual fund (VBTLX) and it has been neat to see the monthly dividend increase. The rest are in 401k CITs, which bury the dividend, and I just have to assume there is enough oversight behind the scenes that all is on the up and up with those things.

[tooqk4u22]

We've gone a little quiet here. Hard to post anything after Bateaux shares what actions he (and others) have been taking to directly help people. Tough act to follow. Great work, glad we have folks like you out and about.

As noted elsewhere, we have executed our glidepath to get to 70/30 over the last year+ from something like 90/10. Already seems to feel like the volatility is down a bit. I have a simple spreadsheet that compiles the portfolio. I was used to seeing larger swings than I feel like I see these days. That feeling will get reset the next time we have something more than these little 1% moves of course. With so much in US Bond Funds, I definitely get why people complain about them. They don't zig or zag with anything that seems logical. About a third of the bonds are in my IRA in a normal mutual fund (VBTLX) and it has been neat to see the monthly dividend increase. The rest are in 401k CITs, which bury the dividend, and I just have to assume there is enough oversight behind the scenes that all is on the up and up with those things.

I posted on another thread but bonds/cash are interesting more now than they have been in very long time.  VBIAX (Vanguard Balanced fund 60/40) has a 30day SEC yield of 2.36%, so if one is living under a 4% WR then 60% of your nut is covered from dividends and interest (assuming that actual distributions will match SEC over time).    That's not to bad and even better if one is managing to an even lower WR. 

[couponvan]

It’s quiet because meh, October stinks.

[Bateaux]

We've gone a little quiet here. Hard to post anything after Bateaux shares what actions he (and others) have been taking to directly help people. Tough act to follow. Great work, glad we have folks like you out and about.

As noted elsewhere, we have executed our glidepath to get to 70/30 over the last year+ from something like 90/10. Already seems to feel like the volatility is down a bit. I have a simple spreadsheet that compiles the portfolio. I was used to seeing larger swings than I feel like I see these days. That feeling will get reset the next time we have something more than these little 1% moves of course. With so much in US Bond Funds, I definitely get why people complain about them. They don't zig or zag with anything that seems logical. About a third of the bonds are in my IRA in a normal mutual fund (VBTLX) and it has been neat to see the monthly dividend increase. The rest are in 401k CITs, which bury the dividend, and I just have to assume there is enough oversight behind the scenes that all is on the up and up with those things.

Thanks for that. I have taken a good rest and some vacations since then.
I'm still invested at about 90/10 and looking at the market today that's made an immediate payoff. I don't want to mention anything election related, other than the fact that I think 2025 will be positive for us. I don't feel a lot of danger of a recession or other things that could immediately trip up the markets. Changes in Europe or Middle East could do that, but even then I see that as temporary to US markets. I just feel safer in stocks than anywhere else right now. I just watched people kayak past our home. The sun is shining and it's summer time in November here in Louisiana. I'm scheduled to ride  200 miles in a bicycle group in Florida Friday. I guess if better pack if I'm going.

[Fomerly known as something]

I will say.  Thank God my last campaign as employee in an election adjacent occupation is over.  8 more months until I retire, but in 2028 I will not have to check a weather App to see if I’m in Michigan, Pennsylvania, Arizona, Wisconsin, Georgia, North Carolina or Nevada.  In fact I think I might aim to walk long distance on the Camino late summer into Fall of 2028 because I will be able to do so.  I’m thinking of going Geneva to Santiago. 

[Much Fishing to Do]

We've gone a little quiet here. Hard to post anything after Bateaux shares what actions he (and others) have been taking to directly help people. Tough act to follow. Great work, glad we have folks like you out and about.

As noted elsewhere, we have executed our glidepath to get to 70/30 over the last year+ from something like 90/10. Already seems to feel like the volatility is down a bit. I have a simple spreadsheet that compiles the portfolio. I was used to seeing larger swings than I feel like I see these days. That feeling will get reset the next time we have something more than these little 1% moves of course. With so much in US Bond Funds, I definitely get why people complain about them. They don't zig or zag with anything that seems logical. About a third of the bonds are in my IRA in a normal mutual fund (VBTLX) and it has been neat to see the monthly dividend increase. The rest are in 401k CITs, which bury the dividend, and I just have to assume there is enough oversight behind the scenes that all is on the up and up with those things.

I've really noticed this as well.  I was always about 90/10 until the last couple years.  Now I'm more like 60/18/5/5/12 which is stocks, bonds, cash, rental property, and a lake home I bought for my dad to live in as long as he is able, hopefully a long time (he pays the utilities).  The last was something I wanted to do given I could...but frankly I also just liked putting some money somewhere other than the market (stocks and bonds seem to move in the same direction so often now just changing that allocation made me feel like I was lowering my returns without getting much more safety...).

Now the daily percentage moves of the whole seem significantly muted, almost boring, which is nice...

[SwordGuy]

(stocks and bonds seem to move in the same direction so often now just changing that allocation made me feel like I was lowering my returns without getting much more safety...).

Bonds you own don't move with the market, they are stationary and provide a fixed return (unless the bond-holder goes broke and can't pay their debts to you).

Bond FUNDS move with the market because when the other bond FUND holders need immediate cash and sell for a bad price, you're affected, too.

[tooqk4u22]

(stocks and bonds seem to move in the same direction so often now just changing that allocation made me feel like I was lowering my returns without getting much more safety...).

Bonds you own don't move with the market, they are stationary and provide a fixed return (unless the bond-holder goes broke and can't pay their debts to you).

Bond FUNDS move with the market because when the other bond FUND holders need immediate cash and sell for a bad price, you're affected, too.

Only if you hold the bond to maturity, if you need to sell before maturity you will get a high or lower price depending on where current interest rates are. 

For Bond funds it is all about Yield-to-maturity. 

[bigote2032]

10/31/2023   1.55
11/30/2023   1.69
12/31/2023   1.77
1/31/2024   1.78
2/29/2024   1.87
3/31/2024   1.94
4/30/2024   1.89
5/31/2024   1.94
6/30/2024   2.01
7/31/2024   2.02
8/31/2024   2.08
9/30/2024   2.18
10/31/2024   2.17


Down 10K this month.  I actually took more than 20K for some unexpected expenses, so the market helped me.

Not too many people reporting this month, seems flat to last month so not too exciting.

[Exflyboy]

OK I'll play.

Last week (i.e before the election) I had $3705k.

Tonight its $3774k

I.e a gain of $69k. in basically 2 days. Not bad.

I have been lamenting the potential loss of the ACA (and/or Medicaid) for those of us with assets. Then $69k for two people in good health would pay for quite a bit of health insurance if we had to..

It feels like a hollow victory though and I still feel sick the vote went the way it did.

[Bateaux]

OK I'll play.

Last week (i.e before the election) I had $3705k.

Tonight its $3774k

I.e a gain of $69k. in basically 2 days. Not bad.

I have been lamenting the potential loss of the ACA (and/or Medicaid) for those of us with assets. Then $69k for two people in good health would pay for quite a bit of health insurance if we had to..

It feels like a hollow victory though and I still feel sick the vote went the way it did.

Same: 3495K last week
             3570K this week

I don't like what happened in the country, but I've been paid 75K in hush money the last few days.

[rmorris50]

$3.74m last week
$3.84m this week

Crazy to have the portfolio increase that much over the week. That "and Beyond" category is approaching much faster than I ever anticipated.

Bummed about the election, but assuming the TJCA gets extended will be a good opportunity to get money out of our pre-tax accounts, which makes up 80% of our net worth.

[Captain FIRE]

I don't like what happened in the country, but I've been paid 75K in hush money the last few days.

Hush money. I like that framing. Unfortunately, no amount of hush money can make up for me losing rights to my own body. The whole point of FIRE is to avoid trading life energy for money, so no, a trade of possibly my life for money isn’t a good trade at all.

I’m also expecting that hush money to be clawed back once tariffs hit the cost of goods, massive amounts of federal employees (and associated contractors/grant recipients) are fired and job hunting, and we tailspin into a recession.

[LoanShark]

No need for the political commentary.