The Intersection of FIRE and Disney

[RamblingMad]

Is anyone thinking of reducing their stock exposure as we approach the election and the longer term impacts of the virus start to show across several industries? I've never been a market timer and am normally on set it and forget it mode. Retirement is potentially 10 years out for us (more likely 10-15) but it just feels like a storm is coming. I know all signs point to long term steady growth when averaged across the years, just have this little voice on my shoulder saying play it safe. Probably should ignore it since we won't be touching that money even in 10 years, we'll draw from our pensions first and only use that to supplement. Just curious to hear what others are thinking. We're about 75/25 stocks/bonds last I checked.

Nope. Bonds pay nothing unless you buy high yield or emerging market. And it’s hard to find preferred stock at par or below for good companies right now. I’m just buying QQQ. I have a floor that I will sell at to minimize my loss. I can’t call the top of the market.

 

[BridgetBordeaux]

Wow....the S&P 500 closed at another record high.

It has been on a tear for the last 30 days.

 

[SouthFayetteFan]

Interesting little read on Reddit today:
(I’m definitely in the boring middle right now)

FIRE Is Boring

 

[Starport Seven-Five]

That's a really good post for the current times. It seems like everyday I see 5 people in the FI community asking about AAPL/TSLA and I think it's largely because they're bored. Sticking to the plan won't get you a "surprise, you're FI!" day but it will allow you to hit that target roughly when you expect to.

 

[SouthFayetteFan]

The Dow Jones is now up YTD... it’s been a wild year folks!

 

[RamblingMad]

The Dow Jones is now up YTD... it’s been a wild year folks!

Yep. Pretty crazy.

 

[SouthFayetteFan]

That's a really good post for the current times. It seems like everyday I see 5 people in the FI community asking about AAPL/TSLA and I think it's largely because they're bored. Sticking to the plan won't get you a "surprise, you're FI!" day but it will allow you to hit that target roughly when you expect to.

Yeah, boredom can lead to (potentially) bad decisions!

 

[SouthFayetteFan]

The sky is falling!!! SELL SELL SELL!!!!

 

[WVMomof3]

The sky is falling!!! SELL SELL SELL!!!!

Gahhh, don't make me look. lol I have been blissfully ignoring the ups and downs this year until DH showed me our updated numbers in his NW tables for the year. We had a 6 figure loss for the month of March. Ouch!! I would rather not know that because it just gives me anxiety. Though April was just a tad shy of a 6 figure gain, so all good, I guess. I am extremely thankful to have enough to have a 6 figure loss but it hurts to actually see it on paper.

 

[SouthFayetteFan]

Gahhh, don't make me look. lol I have been blissfully ignoring the ups and downs this year until DH showed me our updated numbers in his NW tables for the year. We had a 6 figure loss for the month of March. Ouch!! I would rather not know that because it just gives me anxiety. Though April was just a tad shy of a 6 figure gain, so all good, I guess. I am extremely thankful to have enough to have a 6 figure loss but it hurts to actually see it on paper.

You should go update it based on yesterday's numbers. All time highs...everywhere!

 

[Starport Seven-Five]

The sky is falling!!! SELL SELL SELL!!!!

Our account is back to where it was last Wednesday! Oh, the horror.

 

[QueenIsabella]

You should go update it based on yesterday's numbers. All time highs...everywhere!

I'll wait until we get our monthly statements, and DH updates the Spreadsheet of Phenomenal Cosmic Power. We have a meeting with our finance guy this month, anyway.

 

[SouthFayetteFan]

This post on Reddit was a good read. Sad that this guy couldn’t stomach what happened in March/April... but a good lesson for the rest of us to stay the course.

 

[disneyandme]

I am new to this and have a question: When you calculate for FI number, do you use your savings amount or your net work to calculate?

 

[SouthFayetteFan]

I am new to this and have a question: When you calculate for FI number, do you use your savings amount or your net work to calculate?

So your "FI" number or the number at which you reach Financial Independence is a Net Worth figure that you believe is necessary to attain financial independence. It also is often a net worth figure comprised solely of your cash and investments (and not things like real estate or other fixed assets). This of course would take into account your annual spending too. It should have nothing to do with your income or your savings rate - as those numbers shouldn't affect how much you spend.

It also needs to account for your SWD (Safe Withdrawal Rate) - this is the rate at which you're willing to pull money out of your cash and investments such that you never spend down the principal or run out of money. 4% is the widely accepted number here but you'll probably encounter see people at anywhere from 2%-7% on the SWD spectrum.

Here's an example - if you feel that you can spend $50k per year for the rest of your life and you feel that a 4% SWD is acceptable then your FI number is $1,250,000 ($50k divided by 4%). Once you reach $1,250,000 in cash and investments, you're now Financially Independent...work optional...

 

[hlhlaw07]

So your "FI" number or the number at which you reach Financial Independence is a Net Worth figure that you believe is necessary to attain financial independence. It also is often a net worth figure comprised solely of your cash and investments (and not things like real estate or other fixed assets). This of course would take into account your annual spending too. It should have nothing to do with your income or your savings rate - as those numbers shouldn't affect how much you spend.

It also needs to account for your SWD (Safe Withdrawal Rate) - this is the rate at which you're willing to pull money out of your cash and investments such that you never spend down the principal or run out of money. 4% is the widely accepted number here but you'll probably encounter see people at anywhere from 2%-7% on the SWD spectrum.

Here's an example - if you feel that you can spend $50k per year for the rest of your life and you feel that a 4% SWD is acceptable then your FI number is $1,250,000 ($50k divided by 4%). Once you reach $1,250,000 in cash and investments, you're now Financially Independent...work optional...

Question. If you have a guaranteed pension for the rest of your life, how does they play into the equation? Do you just lower the spend part of the equation or do you lower the withdrawal? I’m trying to figure it out but it’s not quite adding up or making sense.

 

[SouthFayetteFan]

Question. If you have a guaranteed pension for the rest of your life, how does they play into the equation? Do you just lower the spend part of the equation or do you lower the withdrawal? I’m trying to figure it out but it’s not quite adding up or making sense.

I'm not an expert on that topic by any stretch of the imagination, but I'd reduce the spend side. So if you have $50k in annual expenses but know that your annual pension will cover $30k of that, then you're just looking to cover $20k in spend via your investments. Make sense?

 

[hlhlaw07]

I'm not an expert on that topic by any stretch of the imagination, but I'd reduce the spend side. So if you have $50k in annual expenses but know that your annual pension will cover $30k of that, then you're just looking to cover $20k in spend via your investments. Make sense?

That’s what made the most sense to me, but I wasn’t sure if by doing that I was overlooking something and throwing off the whole equation. Thanks!

 

[QueenIsabella]

Keep in mind, a pension might not start until age 65 or so, or be greatly reduced if you start earlier.

Similarly, people are of many minds on Social Security--when to start it, what will actually be there for you, personally, how much might it be taxed.

What's another BIG part of the equation is health care costs. If you retire early, you're generally on the hook for these. If early retirement is your goal, it makes sense to at least look to see what the cost might look like--employer-provided health care doesn't usually give an accurate picture of the costs (even if your plan contribution seems high).

Right now, we're FI, but have no plans to RE. Our reasons (YMMV):

(1) 2 minor children (who also need health care coverage), youngest is 14
(2) Health care costs
(3) DH loves his job
(4) We like travel. Nice travel. And we're a family of 6, so this is an expensive hobby.

We're 57/56, so we can see the end, and we're just coasting to get there. We're interested in FAT FIRE (living high in retirement). And actually, we're in a position now that we can afford to travel as a family, except not this year (we had plans...).

 

[Starport Seven-Five]

Similarly, people are of many minds on Social Security--when to start it, what will actually be there for you, personally, how much might it be taxed.

People really need to be careful with their assumptions as well. SS is calculated on average monthly earnings over your highest earning 35 years... and many in the FIRE community will work less than 35. 0's drag down the average quickly.