Discussion
I don't necessarily mean in the strictest sense but does anyone else here follow things like Mr Money Mustache and Escape Artist?
https://theescapeartist.me/
https://www.mrmoneymustache.com/
https://theescapeartist.me/
https://www.mrmoneymustache.com/
Caterham.lover said:
Getting people to understand the benefits of compound interest - and the point about starting to save as early as possible - is key.
Making sure they have realistic expectations about the investment returns that are achievable (and the variability of those returns) is the second step.
People need to forgo some consumption to finance long term investment for their retirement, it really is that simple.
Kind of where I am on it and whilst I'd consider myself fortunate and still relatively young, my god do I wish I'd thought more about this a couple of decades back.Making sure they have realistic expectations about the investment returns that are achievable (and the variability of those returns) is the second step.
People need to forgo some consumption to finance long term investment for their retirement, it really is that simple.
It does make me wonder how this "movement" will go if we are in for turbulent markets going forwards - impression I get is that you'd have to have been doing something pretty badly wrong to have not made money if you'd invested regularly over the last decade.
Combine youth, healthy salaries with lots of disposable, and a decade of upwards markets and it feels like it was the perfect (good) storm for many of these folks.
Interesting article https://theescapeartist.me/2019/08/06/milestones-o...
mikeiow said:
Good article!
I especially like “Side note: It’s bizarre when people say: “yeah but the safe withdrawal rate in [the UK / insert country name here] is lower”. Errrr…you do know you’re allowed to just buy a global tracker fund, right?” - I see this mentioned a lot on FIRE discussions, like we are a closed investment island!
Of course, all this stuff is a bit of a gamble......in my case, a gamble I won’t get sucked into buying too much tech rubbish!
Yes I'm finding this kind of article fascinating reading as I seem to be spending increasing amounts of time glued to a compound interest calculator and trying to understand the least amount of risk required to get where I want to be I especially like “Side note: It’s bizarre when people say: “yeah but the safe withdrawal rate in [the UK / insert country name here] is lower”. Errrr…you do know you’re allowed to just buy a global tracker fund, right?” - I see this mentioned a lot on FIRE discussions, like we are a closed investment island!
Of course, all this stuff is a bit of a gamble......in my case, a gamble I won’t get sucked into buying too much tech rubbish!
mikeiow said:
Anyway, this has drifted a bit from FIRE (apologies OP!) - back on that topic - I am a great believer in at least firmly aiming for the ability to retire before one reaches State Pension Age, so FIRE=good!
Those who post here (& on the MSE retirement pages - a wealth of detail/dross in there!) at least are showing some semblance of planning, which I think is half the battle!
& in the back of my mind, after attending too many funerals in the past 18 months, I am always aware of the wedge of death
Cheerful stuff, eh!
No apologies needed I lap this stuff up Those who post here (& on the MSE retirement pages - a wealth of detail/dross in there!) at least are showing some semblance of planning, which I think is half the battle!
& in the back of my mind, after attending too many funerals in the past 18 months, I am always aware of the wedge of death
Cheerful stuff, eh!
I'm very late to this having totally missed the boat of the last 10 or so years where seemingly a blind chimp could have made good returns.
I think one of the most important milestones is “f
k You Money” and I'm there which is a nice feeling.A good article.
HOW TO BUILD A COMPOUNDING MACHINE
Though I always struggle with the 100% equities route these FIRE type articles always seem to suggest.
I doubt the next 10 years will be as easy to make money as the last ten were, with the beauty of hindsight.
HOW TO BUILD A COMPOUNDING MACHINE
Though I always struggle with the 100% equities route these FIRE type articles always seem to suggest.
I doubt the next 10 years will be as easy to make money as the last ten were, with the beauty of hindsight.
Derek Chevalier said:
I'm not sure how many people would be comfortable with the potential drawdowns of 100% equity portfolio.
Oh I know full well that I wouldn't.But it amazes me the number of FIRE type sites and other financial forums where there's a very common view or bias that 100% equities is the way to go.
Flooble said:
Hmm, he seems to think you can achieve 12% returns year-in year-out, without losses. I suppose you might have been lucky to pick the right fund but I wouldn't count on it.
And one of the "comments" in his blog talks about someone who paid off their four bedroom London house at the age of 39, on a teacher's salary and having bought new cars along the way (in that case, they appear to be now mid to late 40s so probably are telling the truth but ignoring that you could buy a London house in 1998 for £100K on a starting salary of 12K and average of 24K for a teacher).
I have a feeling that the writers of the blog (and comments) have had some very unusual circumstances which has led them to believe *everyone* can do the same.
Yes I agree entirely on that point, I'm treating it more as a reminder/encouragement that "simply" making every spare penny you can work for you harder than it would in a savings account in line with your risk tolerance is more important than many people think it is.And one of the "comments" in his blog talks about someone who paid off their four bedroom London house at the age of 39, on a teacher's salary and having bought new cars along the way (in that case, they appear to be now mid to late 40s so probably are telling the truth but ignoring that you could buy a London house in 1998 for £100K on a starting salary of 12K and average of 24K for a teacher).
I have a feeling that the writers of the blog (and comments) have had some very unusual circumstances which has led them to believe *everyone* can do the same.
mikeiow said:
Just to check my reading: are you suggesting that for anyone under 40, 100% equities in a DC scheme would be foolhardy?
My viewpoint is that if you have 20+ years to accessing/needing DC funds (which most under 40 would!), then 100% equities should be fine. 80% if you are particularly nervous.
Anything less runs a fair risk of missing out on decent long term gains that tend to occur.
Vanguard 80 or 100, or IM Index 80/100 is precisely what I would suggest for that.
Of course, the world is quite different today to even 5-10 years ago. No-one knows how far from the next "correction" we are - I've felt it has been overdue for a couple of years, BUT if I had removed funds to less 'risky' funds, I'd have missed out on a lot of growth, probably more than might be at risk when the correction occurs.
Being far closer to wanting to access funds, I naturally now dial things down a bit....if only we had a crystal ball, eh!
This is the dilemma I have.My viewpoint is that if you have 20+ years to accessing/needing DC funds (which most under 40 would!), then 100% equities should be fine. 80% if you are particularly nervous.
Anything less runs a fair risk of missing out on decent long term gains that tend to occur.
Vanguard 80 or 100, or IM Index 80/100 is precisely what I would suggest for that.
Of course, the world is quite different today to even 5-10 years ago. No-one knows how far from the next "correction" we are - I've felt it has been overdue for a couple of years, BUT if I had removed funds to less 'risky' funds, I'd have missed out on a lot of growth, probably more than might be at risk when the correction occurs.
Being far closer to wanting to access funds, I naturally now dial things down a bit....if only we had a crystal ball, eh!
I raised a thread about LifeStrategy last week and was looking at 60 as I figure in a bad situation 80 could still drop a lot?
red_slr said:
Depends how long you are willing to wait for it to recover I guess.
This is what I've never quite been able to work out.Feels a bit like the hare and the tortoise perhaps i.e. is it better not to risk big losses but settle for smaller steady gains?
Plus I guess it counts for s
t if something bad happens and you panic and sell because you misjudged your risk tolerance.Joey Deacon said:
Although I have not read much about FIRE, I guess this is what I have been inadvertently been doing over the last couple of years. I now have (to me) a decent 5 figure sum in a Marcus account and often wonder if there is something better I can do with it. I know very little about this sort of funds, but have a couple of questions.
1)What happens if the fund suddenly vanishes, is it literally a case of "sorry you lost all your money"
2)There have been cases recently of funds stopping people from withdrawing their money to stop the fund collapsing. Again, is it a case of "sorry you lost all your money"
Basically this is not a sum of money I can afford to lose, it is literally me saving every penny I can over the last two years.
Already have a BTL, that is what I bought with the previous three years of saving every penny I can.
A good starting point would be look at the DIY thread on here.1)What happens if the fund suddenly vanishes, is it literally a case of "sorry you lost all your money"
2)There have been cases recently of funds stopping people from withdrawing their money to stop the fund collapsing. Again, is it a case of "sorry you lost all your money"
Basically this is not a sum of money I can afford to lose, it is literally me saving every penny I can over the last two years.
Already have a BTL, that is what I bought with the previous three years of saving every penny I can.
There some really good resources out there like Monevator that have some good DIY info on them.
Lots of people recommend Vanguard for a pretty simple option.
The main thing to get your head around IMO is saving v investing and your risk tolerance.
You have a sum in your Marcus account, let's say you suddenly need it at some point, with Marcus you can guarantee that your original sum is available whilst with investing you can't though usually given enough time investments will rise.
Joey Deacon said:
I think this may be the main stumbling block for me. In the past I have dabbled with Gold and Bitcoin and watched the prices religiously, panicking and selling up as soon as the price fell. In the case of Gold I sold at the lowest point possible, if I had just kept it I would have been 30% up now.
I am literally the worst type of investor possible, buying the right things but bailing out at the first sign of losing money instead of riding it out.
I certainly don't need the money right now, but seeing it there and knowing it is safe is a major plus to me.
Respectfully I wouldn't see either of those as an investment I am literally the worst type of investor possible, buying the right things but bailing out at the first sign of losing money instead of riding it out.
I certainly don't need the money right now, but seeing it there and knowing it is safe is a major plus to me.
I did a lot of reading before doing anything but it's still hard work seeing anything lose money but what I have learned so far is that it usually bounces back.
I once read that an analogy is to imagine watching someone walk up a hill whilst playing with a yo yo so long term you're heading uphill but depending where the yo yo is at any given moment in time you might be up or down.
If you want a simple to digest starting point maybe start with the Lars Kroijer videos
https://www.kroijer.com/
Kent Border Kenny said:
Do these blogs / sites pay much attention to the other side of the equation; income?
I’ve not put as much thought as I could into my investment portfolio, but have been working away on maximizing my income for about twenty five years, which has now made it far easier to be able to invest at a rate that will leave me secure when older.
I get the impression that the income side is a bit glossed over.
I was reading this site on and off yesterday and the chap has a "take" on income in that he thinks of investing today as buying a future income stream.I’ve not put as much thought as I could into my investment portfolio, but have been working away on maximizing my income for about twenty five years, which has now made it far easier to be able to invest at a rate that will leave me secure when older.
I get the impression that the income side is a bit glossed over.
http://earlyretirementextreme.com/
I know others like Terry Smith will say forget focussing on income and invest for total return and draw what you need when you need it.
rockin said:
^^^ This. You're either "doing alright" or you're not. And these things must always be considered in the context of the immediate tax environment.
It's getting a bit off FIRE but I've never understood investing for income.I can't get my head around buying dogs where their share price can tank but you'll get a "safe" dividend
Kent Border Kenny said:
But this is still looking only at the investment side. I get the impression that a lot of people work on this side in great detail but don’t also work on increasing earnings.
It’s all well and good managing to get an extra percent out of a portfolio but it’s not going to make enough of a difference if your household income is £30k.
Do you mean during the "fiRE" piece? Or as in during your younger working lifetime focus on earning more so you're saving more?It’s all well and good managing to get an extra percent out of a portfolio but it’s not going to make enough of a difference if your household income is £30k.
A 5 pieces series of articles on Monevator (a good blog for all sorts of things money related).
https://monevator.com/debating-fire-the-believer-v...
The rest of the articles are linked from the homepage or down the right hand side
https://monevator.com/debating-fire-the-believer-v...
The rest of the articles are linked from the homepage or down the right hand side
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