How do I prepare myself within a couple of years to FIRE?

[TPLFIRE]

Sorry in advance if these questions have been discussed elsewhere. 

I've started 100% VTSAX buying since 5-6 years ago and I have been as frugal as possible.  As I'm approaching FIRE within a couple of years from now. I have a few questions:

1. I read from MMM, JLCollins, GCC, WA, and others to not care about daily stocks, just buy and hold.  But I can't help myself because if it drops a lot it means possibly a few more years until I reach my target, and vise versa. Is this true for everyone that's within a few years of FIRE?
2. I don't plan on having any income within the first couple of years (I'm burnt out from my current job) of FIRE.  With the upcoming stock drop, should I keep my 100% stocks portfolio, or move to a 75/25 ratio?  I can probably live on the dividends alone so I'm leaning towards 100% stocks. But also would like to have non-stocks to sell them during a crash period.  Does this sound like a good strategy?
3. If buying bonds means less risk, which is what I'm leaning towards due to that we're within 1-4 years before a good drop, would it be before or after I quit my job to sell 25% of my VTSAX and buy VBTLX? 
4. What are the tax implications of selling and buying in #2?  I'm assuming lots of capital gain taxes if I did it the same year I quit. Does this mean I should sell in the subsequent year when I don't have a salary, to minimize the capital gains?



 

[Playing with Fire UK]

If you are worried about the next recession, you probably have too much in stocks, are reading too much news, or checking too frequently.

For 2, I don't know about your jurisdiction, but the people who do will want to know how much is in taxable and non-taxable accounts, and how much is the gain?

[sokoloff]

1. I read from MMM, JLCollins, GCC, WA, and others to not care about daily stocks, just buy and hold.  But I can't help myself because if it drops a lot it means possibly a few more years until I reach my target, and vise versa. Is this true for everyone that's within a few years of FIRE?

This is true for most everyone who wants to retire as early as possible.

Don't worry more about what happens if the next crash hits before your retirement more than you'd worry about what happens if it hits the day after you retire, IMO.

[TartanTallulah]

If you haven't already got a cash fund, and assuming you're planning to stop work before you're old enough to draw on tax-advantaged savings, this might be a good time to put the password to your Vanguard account in the back of the drawer and start saving a cash cushion that will allow you to sit tight and weather a drop in the value of your investment.

There are as many opinions as there are gurus about the ideal balance between bonds and stocks as retirement approaches. I've no doubt someone cleverer than I am will be able to advise you based on historical data.

[talltexan]

Suppose you just switch your new money going into the stache to 50% VTSAX and 50% Bonds?

[ricgnzlzcr]

This might not be the most efficient method, but I would divide your nest egg into two buckets:

• Bucket 1: Enough cash to live on for 2-3 years assuming their is a recession. This gives your stocks enough time to recover from any declines and more importantly gives you the psychological boost needed to not panic/sell
• Bucket 2: The rest of your money in stocks so that it keeps growing

Your overall return might be a little lower, but if you've 22x your living expenses is in stocks and 3x is in cash your overall return difference is minimal: https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=2&startYear=1972&endYear=2017&initialAmount=100000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&portfolio1=Custom&portfolio2=Custom&portfolio3=Custom&TotalStockMarket1=92&TotalStockMarket2=100&TreasuryBills1=8

[CanuckExpat]

https://forum.mrmoneymustache.com/post-fire/pre-fire-checklist/


None of them include worrying about the stock market :)