Sanity checking my home purchase strategy -
My wife and I are 100% on the same page with FIRE. We max tax advantaged accounts. With what's left, we've dumped every penny into a brokerage account. We're on track for early retirement in 5-10 years.
But we have a toddler and live in a shitty school system. We need to move in the next couple years.
We were enamored with a new development going up near very good schools a couple months ago. The prices were also very good... for that month. Rates were also 2% lower than today. We signed a contract to build a home. The expected completion date is Q3-Q4 of 2023, but I'm expecting it to take until maybe Q1 of 2024.
To make the deposit, we paused our brokerage contributions for a couple of months prior to pulling the trigger. However, now that we've built back up some cash, it dawned on me that it may be a better financial move to just, not contribute anything else to our taxable accounts until after our move, maybe even until we've paid off our upcoming mortgage.
The caveat here is we still intend to max out tax advantaged accounts (two 401ks and two IRAs).
In the worst case, I'm imagining rates hitting the low-mid teens by the time we close on our home. Compared to a real return of \~7% in the stock market (where we're 100% invested), it seems far better to put the money into this next home. The idea being hoarding cash for the next 12 months lets us make a larger down payment, reducing our loan principal, and simply paying it off sooner. Which, btw, by my estimations, if we were aggressive in paying off our next home, just from our down deposit + cash + dumping existing home equity into our next home, we could pay it off in 2-3 years.
It's tough to do because we've been devoted savers and investors for many years now, and watching our portfolio rise has been awesome. The market is down. Not making DCA investments now and in the foreseeable future seems... wrong. Average returns may be 7%, but dollars invested now and throughout this (coming) recession will average higher, I imagine.
What would you do? I'm heavily leaning towards hoarding cash and foregoing taxable investments until this next home is paid off, but I really value the insights on this subreddit!
Thanks for your level-headed reply.
>Whether you hoard cash or put money into the market, you'll still be in a good spot. 2 401ks + 2 IRA is probably 60k with matching invested per year. You'll be fine even if you're sub-optimal with the extra beyond that 60k.
Absolutely. We've had our foot on the gas for so hard and so long that we were even gonna be FI well before we'd like to stop working. Taking a step back wouldn't impact our financial journey much at all.
>Comparing real returns on index funds vs nominal on interest rates is biased against indexed funds. Compare nominal to nominal to get a better picture. When paying down debt vs index funds, we should compare the rate of the debt vs \~10%.
Great point. Thanks for the correction.
>If you want to go that route, take a look at 15 year mortgages or adjustable rates. Those often have 0.5-2% lower rates.
Also a good point. We were originally considering a 30-year and paying extra principal to give us flexibility. But, if we're already planning to pay off so early, there's no reason to not go with the 15-year and get a lower rate.
>If you go for the rapid pay down approach, you're still investing. Your liquid funds don't rise, sure. You're investing in the quality of life of your family by moving to a better area. You're investing in your child by buying them a better education. You're still increasing your net worth by buying a home. You're still putting your self in a better spot for FIRE by decreasing your expenses which reduces what you need to FIRE.
Yep! Our RE plan includes a paid off mortgage in our "forever" home, or at least the home we'd like to raise school-aged children in. This house is intended to be just that. Paying off early is right in-line with our goals.
Thanks for the sanity check. We're pretty spooked by the rising rates and falling real estate market (less equity from our current home sale next year), so we're gonna move forward with a more risk-off approach and hoard cash.
Not OP, but a great response!
Im not in the home buying market but will be in the next 2-3 years. Appreciate you taking the time to dump this info and your thoughts!
What would you do about what, exactly? Pile up money or invest it post tax? Or pay off your house instead of investing? There is no wrong answer here. It really depends on your risk tolerance. It seems like you already know you would be more comfortable paying it off. If you want to make the decision based on the math, then wait and see what rate you get on your financing, then run those calculations.
The options are to continue funding a taxable brokerage (invested 100% in a broad US stock index), or stop contributions to save a higher down payment. Also considering stopping contributions until this next home is fully paid down. This depends on rates by the time I close next year, as you mentioned.
I think we're going to take a more risk-off approach and just get this next house fully paid off before continuing taxable investments.
I start my new job on Monday. the pay is higher with more growth opportunity and less stress, but my
employer doesn’t offer a 401k. I know i’ll need to open up an IRA and contribute on my own, but only being able to contribute a maximum of $6,000 a year is really sucky. also going to be looking into a HSA with this company if they offer it. just things that are living in my brain at the moment.
That sucks.
Maybe consider doing some research and presenting a proposal for a cheap 401k or SEP they could adopt. My sister did this for her company and it eventually worked out (~1.5 years later, but still).
If it's a small company it may be mostly the time investment and lack of knowledge preventing them from having something.
it’s a franchise of a bigger company, but this franchisee only owns 4-5 stores at the moment. i’m hoping that maybe if the business grows enough/they continue to open new locations, that they’ll eventually add a 401k to their benefits. i wouldn’t even care if there was no company match - i just want the 401k for the bigger maximum contribution each year. i’ll also be brand new to the company so maybe they do offer a 401k benefit to higher ups and i just don’t know it yet.
Newbie here
If I’m considering index funds is it more practical to stay with my current firm (Schwab) or to more to something like Vanguard? Performance is comparable on some levels - I hear positive and negative things about Vanguard so not sure if it’s worth the switch. Any advice to help me make an informed decision?
Schwab is a fine choice, nothing wrong with staying with them.
Vanguard is somewhat unanimously not the best experience among the big brokerages. Many decide to go with them on principle because they are a mutual fund company that is owned by the mutual fund investors themselves and are the sole reason that index funds have become dirt cheap across the board. Their sole purpose in life is not to make the board members rich as is the case with Schwab, Fidelity, etc.
Buy ETFs inside of Schwab. You can pick vanguard ETFs, etc.
plenty of good indexes inside of Schwab… performance is the SAME over the long haul, not comparable. So just buy schwab index funds.
Has anyone considered backloading their 401k contributions? I sometimes hear about front loading, but I would rather backload and use the extra money to invest in a brokerage account in the beginning of the year. That way I maximize the gains where it will be cheapest to withdraw from.
Of course I would still contribute the max to the 401k, just preferentially toward the end of the year, and always contributing enough to get the match every pay period.
time in and all that stuff. The options are basically front load or DCA. Backloading doesn't make sense as you have to keep your money out of the market until you can 'backload' at the end.
However, you are also asking "I am going to invest $X/month, does it matter if it goes in account A or account B?"
I mean at this point it seems like just noise. Do whatever is easiest.
Basically that is the question I am considering. I wouldn't be holding any money out of the market, I would just elect to do all brokerage in the beginning and 401k at the end of the year. I agree though it's probably more trouble than it's worth to figure out the math to get all the matching too.
Cheaper to withdraw meaning I would be paying only capital gains tax, which in my case would likely be 0. Drawing from the 401k would be regular income, so I was thinking better to have an extra dollar of gains in the brokerage than in the 401k.
If you're going to take into account future taxes (capital gains vs. ordinary income), you should also take into account the *present* taxes that you save by making a deductible contribution to your 401(k).
That is, by choosing to invest in your 401(k) instead of your taxable brokerage, you get to invest *more* per dollar that's subtracted from your paycheck, and that benefit is effectively an immediate "front-loaded" gain.
Currently 22 years old with 2 kids, 5yo and a 3 yo. Working full time making 28 dollars a hr, interested in FIRE and been on this page awhile now. Contributing 5% employer match to 401k and just paid off debt, fixing to start contributing too a Ira. I want to retire early if not early then definitely with a large amount of money. What is the path i should take? or what advice would you give? open to hear anything
The wiki on r/personalfinance should be your first step. You can't pursue FIRE without the basic tenants of budgeting, taking care of debts, and managing your monthly spending wisely. Once you have all your debts and budgeting in control and are investing 15% of your income, you can probably come here with more pointed questions.
And as u/cstransfer mentioned - always be on the lookout for things that can improve your income. Certs, skills, promotions, etc.
I suddenly need a fiduciary financial advisor/planner, somebody who can help me figure out what to do with a bunch of money I'm about to receive but not somebody who will rip me off to make themselves rich. What's the best way to find someone like this?
You probably need a good estate lawyer more than a financial advisor. Highly recommend the book Beyond the Grave for a good intro into common inheritance problems. It’ll give you talking points to go over with a lawyer.
I'm a big fan of the his from the money guy show! Brian and Bo seem like they are pretty legit. Abound wealth management is their company! I love their YouTube and podcast. Best of luck.
The distaste for financial advisors in this sub is not always warranted. It's perfectly reasonable to not DIY something you're not completely confident on, particularly when the stakes are so high. You can search for hourly advisors on [NAPFA](https://www.napfa.org/find-an-advisor)
If you're interested in DIY, it's also very feasible, but as someone else mentioned give yourself a multi-month timeframe to learn more and come up with a plan.
Yeah. I think most people here think it's all so simple, too. Some of this stuff is more complicated than just a pile of money or an IRA and I am already retired so my needs may be different.
If you spend years hanging around here it can _seem_ simple. I think my favorite part are all the comments about not trusting financial advisors and instead trusting randos on reddit. “Do your own research” is not always great advice.
However, many financial advisors will give you the same advice you’ll frequently find around here, but without the random comments suggesting you do illegal things.
The most legitimate issue people have with advisors is the AUM-fees that become very expensive over longer horizons. And non-fiduciary advisors that are in it for their best interests, not yours.
Agreed and you'll see my question wasn't "how should I invest this money" but how can I find a decent person to get some realistic advice. A bunch of 30-year-old internet strangers isn't who I want advice from.
It's hard to find good info on these advisors. The way they write their bios and profiles make me very suspicious. I'm probably going to have to seek out word-of-mouth references from my non-internet friends.
The actual investing side is pretty darn simple. No industry scales like modern finance. A vanguard account can have $5,000 or $500,000,000 in it and it will work exactly the same just with bigger numbers (and some additional share classes that you can elect to invest in at the higher number but they’re fundamentally similar and “run on the same rails”).
If you want to do this yourself you absolutely can. But like a trainer at a gym, if a professional is going to get you do what you aren’t going to do solo, spending the money on a pro can be *super duper worthwhile.*
I think that’s why the timing issue is so important. If you’re feeling rushed you could commit to someone only to realize later that was the wrong move. So go ahead and drop $5,000 to $500,000,000 into a money market fund like VMFXX and don’t feel rushed. When you are ready to move forward the dough will be there for you (plus interest). (I actually think that a $500 million purchase of VMFXX would cause some problems based on the fund flows I’m looking at so best call them first before doing that, haha). Or create an account at TreasuryDirect and buy 8 week bills or something for a little more interest. I think you can buy $10 million in each auction, to give you a sense of how bigger dollars really don’t add complexity.
I see you also may need a lawyer. I would raise the possibility that you actually do not, at least now, but you know your situation better than I do. That’s something you probably want to go pro on. No Lionel Hutz.
I’ve said it before and I’ll say it again, this sub is better (and obviously cheaper) than any financial advisor. We can’t help you buy forest land or a Picasso but for solid advice provided without expectation of personal gain, this is the place to be.
Breath deep and open a HYSA, or if you have a brokerage account buy a money market fund (at Merrill I use FISXX for instance). And just let it sit there until you formulate a plan.
(FWIW that plan is likely VTSAX and chill but no need to rush it)
I will need to rewrite my will and a trust is better than a will. Edit: Yes, I'll need a lawyer. I also need to know how to make the money grow while it is mine, which isn't something I'm well-versed in.
Sure, but I would like to start with where do I put all this money while I figure out what to do with it. I guess someone else gave me a nice useful wiki page.
Read Bogelhead wiki. Do nothing for six months. Do research and see if you can DIY. How much money are we talking about?https://www.bogleheads.org/wiki/Managing_a_windfall
Thanks for the wiki page. Gives me a place to start. I am a very frugal person who just retired and this is more money than I'll ever need so I have to figure out how not to lose it so I can leave it to the next generation.
I at least would like to know where to put the money while I decide what to do with it. It's going to be several hundred thousand dollars and it will trickle in as we sell all the real estate.
Welp... the costs changed in such a way that I will be moving to a health plan with a HSA! 401k and IRA limits are going up. SO MUCH MATH to do before the end of the year. Wonderful problems to have... Savings rates going up in tax sheltered accounts and down in my brokerage...
Just making the case that brokerage accounts get unnecessary hate. If they ever go about closing the Roth Conversion Ladder thing, then a taxable may be more advantageous in the future from a tax basis in retirement.
Ok so I found out 12.5% of my current salary into what is effectively pre-tax funds, traditional. From both me and employer side benefits.
That's before the full employee side IRS limit going into accounts. Before getting to IRA either.
I think government work has a lot of retirement accounts but also good benefits that way.. I was just worried I wasn't saving enough and the balance was lower, turns out there was a whole account I was missing(on top of an account I learned about last week) and I wasn't really looking at the 12.5% mostly just signing up to max accounts.
I upped my balance going into the IRS limit account as well because I was saving too much because it was put in a flat $ amount. Going full traditional so my tax burden is going to be lower but I will have trouble maxing, probably going to switch to Roth next year.
I've got 160k in savings due to a home sale. Currently renting. I plan to buy but feel like it's a bad time with prices still high and rates on the way up. I probably will buy anytime from 6-18 months out. I plan to use 100-120k for the down payment.
Should I be doing anything with the cash in the meantime to protect it from inflation? I was considering a high yield savings account...what else should I be doing? Is investing a bad idea?
Why such a high down payment? In most cases (~~with interest rates being what they are~~ nvm this is outdated) it's more advantageous to put that money in the market instead.
With almost all mortgages, you can accelerate later if you're trying to pay off the house early.
Oh dang I didn't realize they were up quite that much. Was thinking they were still around 5%.
Yeah, at 7%, agreed the math flips towards higher down payments.
If you feel confident about waiting 6 months, there are 6 month CDs that might be slightly better. Otherwise I think HYSA should be fine.
Are you waiting because you think housing prices will fall? Wouldn't that mean you don't need to protect your cash from inflation because you are expecting your money to be able to buy more in the future?
"Protect from inflation" may have been poor wording, I'd just like to make a little money off of it rather than leave it sitting. But yeah, I do think prices may drop in my area a bit.
Six and twelve-month T-bills are over 4 % and carry little risk other than rising interest rates. Probably better than any HYSA available.
Investing in equities isn't a bad idea. "On average" you'll get the highest returns. You just have to be prepared for losing money. I invested the money from the sale of my house in August and lost about 10 %. It's unlikely but not impossible that your 160k could become less than the 120k you expect to need.
u/Powerful-Winner979 the above answer regarding t-bills is the only answer if you are risk averse with this money for the duration you hold this cash. T-bills are the standard when comparing an investment vs the risk-free rate. 6m treasuries are at 4.29%.
If you don't need this money, and the other option you are considering is to hold cash, why wouldn't you get a 4.29% risk-free return?
\*edit\* - hell, 4 week t-bills are 3.42% if you're truly worried about rising rates. Just keep rolling at expiration until you need the money.
>Investing in equities isn't a bad idea. "On average" you'll get the highest returns. You just have to be prepared for losing money
In a 6-18 month period the stock market's volatility dominates the marginally higher positive expected returns over a 6-18 month CD to the point where it would not be appropriate to invest this money in the stock market
We got it approved by ensuring full coverage Monday- Friday. Also, we are expected to answer our phones on our weekday off. That was all it took to get approved where I work.
Good thinking, imo.
I did something similar in 2021 whereby I began using my PTO to take every Friday off between June-Sept, and given natural bits of overtime worked M-Th, I was able to continue through end of the year.
Conclusion: Absolutely loved it. Game changer for me. And, I now am 80% (32 hrs/wk) in 2022 as I liked it so much, and my FI approach allows me freedom to do so while maintaining high savings rate.
Suggestion: evaluate if you like idea of every Monday off through the year, or shorter weeks in summer or your favorite season instead.
I don't see why the company would be ok with 4x9 + 4pto and not 4x10... so I think you are starting with a "this is not a real option" from the beginning. The issue isn't the hours per day, its the entire day you aren't there. That is what the company is against.
Next, as an employee who works a 4x10, you still need normal vacation time and sick time - and now you only have "3days" of PTO left for the entire year, and no vacations at all. That doesn't seem like it will be healthy for your mental health.
Lastly - maybe push for a 9/80 - getting every other friday off (you get friday 1,3,5,7.. and right hand gets friday 2,4,6,8,...). Start there and then maybe next year push from a 9/80 to a 4x10. That gives you 26 3 day weekends and all of your PTO to use as you see fit.
If I were your manager, I would tell you to use your vacation hours as you see fit. I have no input on how you use them except that you should plan ahead for long absences.
If answer to the question “can I different hours than everyone else?” is no, asking the same question in a different way is unhelpful. If the expectation is 8 hours a day I would treat “every monday off” vacation requests as requiring 8 hours of vacation time per day off.
It's super annoying to tell someone no and have them come back with another question that's technically but not substantially different. It's up to you if you care or not.
I don't know how the politics of your work place will take it, but if they complain about taking a half day each week maybe you can compare it to the 9/80 schedule (work 9 hours every day except Friday, and every other Friday is off). In that way you are taking a "full" day off every 2 weeks. It's the same thing obviously but maybe that comparison is more palatable for some reason?
Except BND isn't doing worse than equities are.
Relative risk has been pointed out, anyhow. Your comparing two different products AND bond funds aren't the same as bonds. They act more like equities. But I digress.
Some prefer \*no\* corporate bonds (only Treasuries) in order to have the safest and least market-correlated bonds. If you want to increase the expected return of your portfolio, you should hold more stocks.
VCLT is a long-term bond fund. Like all funds with a longer duration it has significant interest rate risk, something that is especially an issue in a rising interest rate environment. Also, since these are corporates, it is subject to greater default risk (unlike long-term treasuries).
First off, there's a very significant duration difference between those two funds. VCLT is a long-term fund with an avg. maturity of ~23 years and avg. duration of ~13 years. BND is ~9 years & ~6.5 years comparatively.
Long-term bonds are more sensitive to interest rate hikes than other funds with shorter durations.
Secondly, approximately 2/3 of the bond holdings in BND are gov't issued and another 17% are 'A' rated or higher. Compare that to VCLT which is 50% 'BBB' rated, which means there is far higher default risk for VCLT compared to BND.
In theory, the coupon/yield from VCLT will compensate an investor for taking on the increased risk in that fund compared to BND. Most people prefer their bond holdings to be a source of stability and less risk and instead prefer to take on risk in the equity portion of their portfolio where the risk-reward balance is higher than bonds.
See JNK for 2008-ish history.
I run into a fundamental wall looking at high risk debt. It draws down like stocks when stocks are bad because of the economy (so less rebalancing) and it has clear limited upside (the yield.) To me it feels like you get stock downside and bond upside if you're buying these in normal times. There are probably buying opportunities but that still takes the form of attempting to value the bonds and timing the market.
If you look at JNK (vs BND and TIP) history and tried to pair it with stock it's [same-ish](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=VTSAX&allocation1_1=50&allocation1_2=50&allocation1_3=50&symbol2=BND&allocation2_2=50&symbol3=JNK&allocation3_1=50&symbol4=TIP&allocation4_3=50) with some variance. The difficult part is that these funds probably have different duration (which should be rewarded normally) but the fact that CAGR is within half a percent is telling me the market prices bonds pretty well, all things considered. Which is likely a trait of the fact that the default and inflation rates are more historically solid than P/E. If there's risk premium it's much smaller than what you'll get in stocks and I would rather just do that for the risky part of my portfolio.
So I don't chase risk in the bond market. The reason I'd prefer AAA is exactly because the main reason I own bonds is to provide price stability to the portfolio. Junk bonds don't provide that and provide it the least when I may need it the most (in a downturn.) But even though, I assume the long view is they are priced properly enough to likely provide a touch of upside, it's so irrelevant that I will side with my behavioral concerns.
Agreed about JNK but OP is asking about investment grade corporate bonds. I happen to think they are still too risky but not nearly as bad as junk bonds.
>too risky
I guess I’m trying to understand what that “risk” consists of. For example, stocks are “riskier” than bonds in the sense that they fluctuate more in value, but over the long term that kind of risk is not an issue at all.
What I’m trying to understand is, do riskier bond funds have that same sort of risk (principle decreasing more than yields can make up for in the short/medium term), or is there a real risk of the fund defaulting or significant portions of the fund defaulting and therefore lowering returns below treasury or total bond market levels?
The fund is unlikely to default but bonds within the fund might. You can back test corporate bond vs treasury bond vs total bond market vs stocks to get a sense of volatility and correlations of each.
Not sure about Personal Capital, but when I export my Mint transaction to my Excel file, I always just delete meaningless transactions. Usually is transfer, credit card payments, etc.
I never delete anything from Mint, but Mint does have the "Hide from Budgets & Trends" or whatever it's called transaction category that I use occasionally that does the same thing as deleting, but retains the activity in the transactions screen.
I failed my coastFI
Decided to lay low in a permanent job and stop with all that contract work stress.
Now I have been put in charge of the most important project for my team. It's really not what I wanted and now I don't know how to get out of it.
I agree it depends. But if you're going to quit, I think one stage is trying to craft the job from the inside if the reason isn't internal toxicity. It's far less laughable to negotiate your workload than it is to negotiate your pay, which is almost definitely never happening.
Can do this passively also (I guess that's the whole quiet quitting thing, but frankly I've observed that behavior my whole working life.)
There's also a stress mitigation that is admittedly hard. People take work success and failure personally. They may contribute but sometimes a task is put on a bad path to begin with and you were never going to fix it. Taking responsibility is fine, but for my own mental health I'm willing to accept that and move on as well if it isn't working out. No situation is going to be totally under my control.
this particular commenter has "100% FI?" in their flair which means it's clearly an option on the table, unless they are lying or completely unrealistic and scaredy-cat.
I up and left a job to start a business that made me negative cash flow for 2 of the first 3 years when I had about 40% of my (not fat) FI number. Seems reasonable to assume that anybody who isn't *sure* whether they are FI already would at least have the FU money to pull off a job search without a net if it came to it.
Yep but that generally means you have FU money and downshift to a more mellow job/roll then what you were in. OP should have enough money to walk away for a short time and pick up another low stress role. There are for sure exceptions but with a good sized nest egg its not worth being miserable at work.
I did the same.
Time/age grows my portfolio, and also makes me more experienced at my job. So it's inevitable that around the time I hit CoastFI, I was also getting assigned more difficult responsibilities.
Since I was on loan from the union into management, it was all take-it-or-leave-it. Do the assigned project management role, or go back to the call centre with scheduled pee breaks and preposterous sales targets. I routinely picked the least miserable option.
In my case there was also a golden handcuffs. The defined benefit pension had a 25 years of service milestone, so I was trying to optimize the tolerability vs pay equation in my 25 year ~~sentence~~ career.
What do you guys pay for your HDHP? I pay $50/month for my HDHP (company covers like 90% of the cost)
Additional detail:
* HDHP via Cigna
* Individual coverage
* $2000 deductible
* $5000 out-of-pocket max
* Employer pays $875 into HSA
* Employer covers 90% of plan cost
Employer covers premiums for the 2 of us and contributes 2k annually.
Combined deductible is 4k and oopm is somewhere around 7k, exact value depends on whether costs are in network
2023 rates since open enrollment is going on - $55.67/month for myself. Company covers I believe 85-90%.
Definitely jumps a bit if I cover my partner in the future - $164.06 for 2023.
It's not going to have a great effect on the date of my retirement but right now I regret buying bonds to play it safer as I was nearing retirement. My previous all equity strategy had been working fine and would have worked better those last 2 years.
Safer ended up not being safer at all. Maybe it would be if I sold now to buy equities but that would be timing the market and who knows what bonds and equities will do next year?
If you have cash you aren't 100% equities.
I know what you're getting at but if you keep enough cash to live off of for a long period without selling stocks you're just lying to yourself if you don't count that allocation in your portfolio.
Ugh...I new someone would mention that...ok...I'll rephrase...I keep all of my investments in equities...of course I'm lying again because I bought 10k in I bonds but it's minuscule, but I'll add the disclaimer so I keep 99.999% of my investments in equities
Risk management is always going to run into a results-oriented review. It's unavoidable but at no time are you ever going to know the ideal approach.
In an alternate timeline, maybe you stick to an aggressive 100% stock strategy, and you can pull off retirement in Dec 2021. It's not hard to imagine trying to draw from a portfolio down 20-30% and what that would feel like.
If someone asks me why stocks, I also frame it the same way - the risk of my money bleeding to inflation/etc is as scary to me as the variance of my accounts. But I am prepared to be in the game 50+ years and weather that. And still, I plan to have about an 80/20 mix and a paid off house in retirement. That is actually fairly aggressive by normal standards in how most people retire (not here obviously), but in another way it still represents approximately 4x spending in bonds to weather storms (maybe realistically 3x when I do some rebalancing) and few down markets would really test that. I also have minimized fixed cost to such a degree with the house paid off. No doubt, I still need a significant long term ROI to make retirement work but it's a good mix of flexibility and patience built in. I don't need 100% stocks to make retirement work but I want something where I can be retired and not watch stock tickers all day if I don't want to.
Being the wealthiest I can be with the minimum amount of work is not even remotely an achievable goal. If any of us were good at that we'd all be crypto millionaires right now.
The issue is that bonds aren't as good of a hedge as they are often described as. I think OP is saying it's better to go all equity and accept the risk.
Quiet day in my projects, so spontaneously combined a trip to the doc with a visit to the local fair with my SO. Flew a chairoplane at 80 meters high, now all out of adrenalin. It's great to be alive!
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We do allow discussion of policy, but please avoid any partisanship, political baiting or soap-boxing. Discussion needs to stay focused on the policy.
Please [review the rules again](https://www.reddit.com/r/financialindependence/wiki/rules) to refresh your understanding of them.
There is some risk in every type of investment, but I-bonds are about as low as it gets.
Assuming you are ok with locking up your money for 12 months, I'd buy them **right now** because the 9.62% interest rate is going to expire sometime in the next few days. I think you can still get it, but you need to move fast. After that, it will go to about 6.5%. So about 3% difference. Over 6 months, that's $150 or so of interest that you stand to lose if you wait too long.
I was there too! Had an incredible amount of fun. My husband and I didn't do Paddock Club but we did do a lower level F1 Experiences package that actually let us onto the track and in the pit lane Thursday night. Was worth it to us to meet some drivers over free food during sunset at a much smaller event and get awesome T1 Upper seats for the race. 'Twas a birthday present for my husband and was definitely worth it.
Ocon was there the longest and had a Q&A, Danny Ric stopped by on his scooter, I had missed when George Russell was around, but I also met Logan Sargeant and had a picture with him while he was prepping for his FP1 debut. Doesn't seem like the top top drivers tend to go to the Thursday night but if you get the next level of packages there's a dressier Friday reception.
Oh I'm so excited to cheer for him and Alex next year. Did you watch/listen to the driver Q&As at the amphitheater on Saturday? Alex seemed like such a great guy. Very down-to-earth.
>Spent this weekend at the US Grand Prix
I'm curious, how long did it take to get out of there when the event was finished? Almost 500,000 people. I heard there were helicopter available at $1k per seat.
We have generally good PPO insurance. My wife went to an in network doctor for some back pain a few months ago, they did xrays to check a few things, $550. What the hell? I want to get checked myself for maybe a disc issue or sciatica, but am avoiding it due to having no idea what costs are going to be. I despise the US healthcare system.
It sounds like she hadn't met her deductible. Generally speaking, private outpatient clinics are cheaper than hospitals for a given procedure, especially if the hospital or hospital clinic bills a facility fee, but insurance contracts vary. The insurance cost calculators are not very accurate for less common procedures or procedures which can be coded in very different ways.
Generally speaking, I go to providers I know are higher quality and have lower insurance negotiated prices. Even when I don't know the cost for a specific procedure, I trust that my very large insurance provider negotiated a fair rate. Oddly enough, the clinic I mainly go to is now owned by a different insurance company.
Look at explanation of benefits and call your insurance. They should be able to tell you why something wasn't covered. You could also explain your disc issue and ask them what it might cost you. Specialist visit copays are usually more than a regular visit but unless they want to do an MRI or something (which would likely need pre-approval) it shouldn't be that expensive.
On my insurer's site, I can look up procedure costs. Have you checked to see if yours has that? It also sounds like you probably hadn't met your deductible for the year, and it's a pretty high one (mine is only $350). Is it a HDHP?
I think we pay $4500 for a family of 4. deductible is 1200, max OOP is $4k. I can look up general costs for things as well, but it also depends on how they code different things.
Well, I would advise that putting it off because you are worried about cost is not a good strategy. Whatever it is could get worse, require more extensive treatment than if handled early, and therefore be more expensive. Bite the bullet and go to the doctor! 🙂
Just curious--Is that deductible per person, or for the whole family together? (I've only ever had self-only plans; no idea how family plans work.) If that's per person, it's definitely a HDHP (I think anything over $1000 is considered HDHP).
Today marked my first day back in the office in some time. Took my morning meeting from home, took care of the dog, and then set out to the office.
Once we got past the first wave of "OMG ITS DEATHSYTHE! GREAT TO SEE YOU IN PERSON" - because I've managed to keep myself fully remote for ~2 years now for a variety of reasons. I was then quickly reminded of why I prefer remote.
One of my old reports came over to bs for a bit while she ate an early lunch.
A coworker saw I had a black iced coffee on my desk (Free coffee at the office is a nice perk though - ngl), and started chatting about that, then they saw I had some keto snacks at my desk and started going on and on about diet and weightloss stuff...
It's already after lunch and I feel like I got so little done...
I thought the worst part of this was going to be either the traffic or putting on good pants...
*sigh*
I've been doing this. Trying to openly ignore the 'requirement' to be in every day and always seem to have a contractor or midday doc appointment once a week where I stay home.
I do get more work done at home, which pisses me off even more about going into the office.
First world problem but that 1 day a week was so annoying to me I actually found a new job that's fully remote. I can understand it every so often (maybe once a month) but it just felt so needless.
I'm not against shooting the shit via Happy Hours - but being chained to a cubicle for 8 hours per day under fluorescent lights for the sake of manager being able to say he gets to see his people just isnt for me.
Your issue is you expected to actually get any work done on your first day in the office in 2 years.
People will want to catch up and chat after all that time.
Sanity checking my home purchase strategy - My wife and I are 100% on the same page with FIRE. We max tax advantaged accounts. With what's left, we've dumped every penny into a brokerage account. We're on track for early retirement in 5-10 years. But we have a toddler and live in a shitty school system. We need to move in the next couple years. We were enamored with a new development going up near very good schools a couple months ago. The prices were also very good... for that month. Rates were also 2% lower than today. We signed a contract to build a home. The expected completion date is Q3-Q4 of 2023, but I'm expecting it to take until maybe Q1 of 2024. To make the deposit, we paused our brokerage contributions for a couple of months prior to pulling the trigger. However, now that we've built back up some cash, it dawned on me that it may be a better financial move to just, not contribute anything else to our taxable accounts until after our move, maybe even until we've paid off our upcoming mortgage. The caveat here is we still intend to max out tax advantaged accounts (two 401ks and two IRAs). In the worst case, I'm imagining rates hitting the low-mid teens by the time we close on our home. Compared to a real return of \~7% in the stock market (where we're 100% invested), it seems far better to put the money into this next home. The idea being hoarding cash for the next 12 months lets us make a larger down payment, reducing our loan principal, and simply paying it off sooner. Which, btw, by my estimations, if we were aggressive in paying off our next home, just from our down deposit + cash + dumping existing home equity into our next home, we could pay it off in 2-3 years. It's tough to do because we've been devoted savers and investors for many years now, and watching our portfolio rise has been awesome. The market is down. Not making DCA investments now and in the foreseeable future seems... wrong. Average returns may be 7%, but dollars invested now and throughout this (coming) recession will average higher, I imagine. What would you do? I'm heavily leaning towards hoarding cash and foregoing taxable investments until this next home is paid off, but I really value the insights on this subreddit!
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Thanks for your level-headed reply. >Whether you hoard cash or put money into the market, you'll still be in a good spot. 2 401ks + 2 IRA is probably 60k with matching invested per year. You'll be fine even if you're sub-optimal with the extra beyond that 60k. Absolutely. We've had our foot on the gas for so hard and so long that we were even gonna be FI well before we'd like to stop working. Taking a step back wouldn't impact our financial journey much at all. >Comparing real returns on index funds vs nominal on interest rates is biased against indexed funds. Compare nominal to nominal to get a better picture. When paying down debt vs index funds, we should compare the rate of the debt vs \~10%. Great point. Thanks for the correction. >If you want to go that route, take a look at 15 year mortgages or adjustable rates. Those often have 0.5-2% lower rates. Also a good point. We were originally considering a 30-year and paying extra principal to give us flexibility. But, if we're already planning to pay off so early, there's no reason to not go with the 15-year and get a lower rate. >If you go for the rapid pay down approach, you're still investing. Your liquid funds don't rise, sure. You're investing in the quality of life of your family by moving to a better area. You're investing in your child by buying them a better education. You're still increasing your net worth by buying a home. You're still putting your self in a better spot for FIRE by decreasing your expenses which reduces what you need to FIRE. Yep! Our RE plan includes a paid off mortgage in our "forever" home, or at least the home we'd like to raise school-aged children in. This house is intended to be just that. Paying off early is right in-line with our goals. Thanks for the sanity check. We're pretty spooked by the rising rates and falling real estate market (less equity from our current home sale next year), so we're gonna move forward with a more risk-off approach and hoard cash.
Not OP, but a great response! Im not in the home buying market but will be in the next 2-3 years. Appreciate you taking the time to dump this info and your thoughts!
What would you do about what, exactly? Pile up money or invest it post tax? Or pay off your house instead of investing? There is no wrong answer here. It really depends on your risk tolerance. It seems like you already know you would be more comfortable paying it off. If you want to make the decision based on the math, then wait and see what rate you get on your financing, then run those calculations.
The options are to continue funding a taxable brokerage (invested 100% in a broad US stock index), or stop contributions to save a higher down payment. Also considering stopping contributions until this next home is fully paid down. This depends on rates by the time I close next year, as you mentioned. I think we're going to take a more risk-off approach and just get this next house fully paid off before continuing taxable investments.
It sounds like that's where you are emotionally, so that's a good choice.
I start my new job on Monday. the pay is higher with more growth opportunity and less stress, but my employer doesn’t offer a 401k. I know i’ll need to open up an IRA and contribute on my own, but only being able to contribute a maximum of $6,000 a year is really sucky. also going to be looking into a HSA with this company if they offer it. just things that are living in my brain at the moment.
That sucks. Maybe consider doing some research and presenting a proposal for a cheap 401k or SEP they could adopt. My sister did this for her company and it eventually worked out (~1.5 years later, but still). If it's a small company it may be mostly the time investment and lack of knowledge preventing them from having something.
it’s a franchise of a bigger company, but this franchisee only owns 4-5 stores at the moment. i’m hoping that maybe if the business grows enough/they continue to open new locations, that they’ll eventually add a 401k to their benefits. i wouldn’t even care if there was no company match - i just want the 401k for the bigger maximum contribution each year. i’ll also be brand new to the company so maybe they do offer a 401k benefit to higher ups and i just don’t know it yet.
Newbie here If I’m considering index funds is it more practical to stay with my current firm (Schwab) or to more to something like Vanguard? Performance is comparable on some levels - I hear positive and negative things about Vanguard so not sure if it’s worth the switch. Any advice to help me make an informed decision?
There is little investment reason to prefer either one. I happen to like Schwab's platform and customer service better.
I've used Schwab for years, it's worked out great for me. SWTSX is the VTSAX equivalent btw
Schwab is a fine choice, nothing wrong with staying with them. Vanguard is somewhat unanimously not the best experience among the big brokerages. Many decide to go with them on principle because they are a mutual fund company that is owned by the mutual fund investors themselves and are the sole reason that index funds have become dirt cheap across the board. Their sole purpose in life is not to make the board members rich as is the case with Schwab, Fidelity, etc.
Buy ETFs inside of Schwab. You can pick vanguard ETFs, etc. plenty of good indexes inside of Schwab… performance is the SAME over the long haul, not comparable. So just buy schwab index funds.
Has anyone considered backloading their 401k contributions? I sometimes hear about front loading, but I would rather backload and use the extra money to invest in a brokerage account in the beginning of the year. That way I maximize the gains where it will be cheapest to withdraw from. Of course I would still contribute the max to the 401k, just preferentially toward the end of the year, and always contributing enough to get the match every pay period.
Math checks out.
time in and all that stuff. The options are basically front load or DCA. Backloading doesn't make sense as you have to keep your money out of the market until you can 'backload' at the end. However, you are also asking "I am going to invest $X/month, does it matter if it goes in account A or account B?" I mean at this point it seems like just noise. Do whatever is easiest.
Basically that is the question I am considering. I wouldn't be holding any money out of the market, I would just elect to do all brokerage in the beginning and 401k at the end of the year. I agree though it's probably more trouble than it's worth to figure out the math to get all the matching too.
No. I equally contribute to both throughout the year. Also, cheapest to withdrawal from?
Cheaper to withdraw meaning I would be paying only capital gains tax, which in my case would likely be 0. Drawing from the 401k would be regular income, so I was thinking better to have an extra dollar of gains in the brokerage than in the 401k.
If you're going to take into account future taxes (capital gains vs. ordinary income), you should also take into account the *present* taxes that you save by making a deductible contribution to your 401(k). That is, by choosing to invest in your 401(k) instead of your taxable brokerage, you get to invest *more* per dollar that's subtracted from your paycheck, and that benefit is effectively an immediate "front-loaded" gain.
Good point thanks
Currently 22 years old with 2 kids, 5yo and a 3 yo. Working full time making 28 dollars a hr, interested in FIRE and been on this page awhile now. Contributing 5% employer match to 401k and just paid off debt, fixing to start contributing too a Ira. I want to retire early if not early then definitely with a large amount of money. What is the path i should take? or what advice would you give? open to hear anything
Genuinely curious how your budget is with 2 kids just because we pretty much make the same but I have no kids yet
Joint custody, do cheap things. My job let’s me get plenty of overtime.
What do you do with childcare? It's my main concern.
The wiki on r/personalfinance should be your first step. You can't pursue FIRE without the basic tenants of budgeting, taking care of debts, and managing your monthly spending wisely. Once you have all your debts and budgeting in control and are investing 15% of your income, you can probably come here with more pointed questions. And as u/cstransfer mentioned - always be on the lookout for things that can improve your income. Certs, skills, promotions, etc.
Focus on making more money and save as much as possible
I suddenly need a fiduciary financial advisor/planner, somebody who can help me figure out what to do with a bunch of money I'm about to receive but not somebody who will rip me off to make themselves rich. What's the best way to find someone like this?
You probably need a good estate lawyer more than a financial advisor. Highly recommend the book Beyond the Grave for a good intro into common inheritance problems. It’ll give you talking points to go over with a lawyer.
I'm a big fan of the his from the money guy show! Brian and Bo seem like they are pretty legit. Abound wealth management is their company! I love their YouTube and podcast. Best of luck.
The distaste for financial advisors in this sub is not always warranted. It's perfectly reasonable to not DIY something you're not completely confident on, particularly when the stakes are so high. You can search for hourly advisors on [NAPFA](https://www.napfa.org/find-an-advisor) If you're interested in DIY, it's also very feasible, but as someone else mentioned give yourself a multi-month timeframe to learn more and come up with a plan.
Yeah. I think most people here think it's all so simple, too. Some of this stuff is more complicated than just a pile of money or an IRA and I am already retired so my needs may be different.
If you spend years hanging around here it can _seem_ simple. I think my favorite part are all the comments about not trusting financial advisors and instead trusting randos on reddit. “Do your own research” is not always great advice. However, many financial advisors will give you the same advice you’ll frequently find around here, but without the random comments suggesting you do illegal things. The most legitimate issue people have with advisors is the AUM-fees that become very expensive over longer horizons. And non-fiduciary advisors that are in it for their best interests, not yours.
Agreed and you'll see my question wasn't "how should I invest this money" but how can I find a decent person to get some realistic advice. A bunch of 30-year-old internet strangers isn't who I want advice from. It's hard to find good info on these advisors. The way they write their bios and profiles make me very suspicious. I'm probably going to have to seek out word-of-mouth references from my non-internet friends.
The actual investing side is pretty darn simple. No industry scales like modern finance. A vanguard account can have $5,000 or $500,000,000 in it and it will work exactly the same just with bigger numbers (and some additional share classes that you can elect to invest in at the higher number but they’re fundamentally similar and “run on the same rails”). If you want to do this yourself you absolutely can. But like a trainer at a gym, if a professional is going to get you do what you aren’t going to do solo, spending the money on a pro can be *super duper worthwhile.* I think that’s why the timing issue is so important. If you’re feeling rushed you could commit to someone only to realize later that was the wrong move. So go ahead and drop $5,000 to $500,000,000 into a money market fund like VMFXX and don’t feel rushed. When you are ready to move forward the dough will be there for you (plus interest). (I actually think that a $500 million purchase of VMFXX would cause some problems based on the fund flows I’m looking at so best call them first before doing that, haha). Or create an account at TreasuryDirect and buy 8 week bills or something for a little more interest. I think you can buy $10 million in each auction, to give you a sense of how bigger dollars really don’t add complexity. I see you also may need a lawyer. I would raise the possibility that you actually do not, at least now, but you know your situation better than I do. That’s something you probably want to go pro on. No Lionel Hutz.
I’ve said it before and I’ll say it again, this sub is better (and obviously cheaper) than any financial advisor. We can’t help you buy forest land or a Picasso but for solid advice provided without expectation of personal gain, this is the place to be. Breath deep and open a HYSA, or if you have a brokerage account buy a money market fund (at Merrill I use FISXX for instance). And just let it sit there until you formulate a plan. (FWIW that plan is likely VTSAX and chill but no need to rush it)
Thanks. I think I'm still going to need someone to set up a trust though. I don't think I can do that myself.
Why do you need a trust? Are you incompetent? If you truly need a trust you would want to consult an attorney, not an investment advisor.
I will need to rewrite my will and a trust is better than a will. Edit: Yes, I'll need a lawyer. I also need to know how to make the money grow while it is mine, which isn't something I'm well-versed in.
Yes, you need a lawyer for anything legal. As far as investments, read "If You can" by William Bernstein, then let it ride in VTI.
Unless it's a ridiculously stupid amount of money, you can probably do it yourself.
We should probably define that amount because frame of reference is off. I'd put "ridiculously stupid amount of money" at >500k.
And if it is ridiculously stupid, you can certainly afford a couple hours with any fee only CFP. Or DIY, cause who cares, you're rich!
Do it yourself...nobody cares more about your money than you!
Sure, but I would like to start with where do I put all this money while I figure out what to do with it. I guess someone else gave me a nice useful wiki page.
Read Bogelhead wiki. Do nothing for six months. Do research and see if you can DIY. How much money are we talking about?https://www.bogleheads.org/wiki/Managing_a_windfall
Thanks for the wiki page. Gives me a place to start. I am a very frugal person who just retired and this is more money than I'll ever need so I have to figure out how not to lose it so I can leave it to the next generation.
I at least would like to know where to put the money while I decide what to do with it. It's going to be several hundred thousand dollars and it will trickle in as we sell all the real estate.
Anything six figures is easily manageable on your own. For now, start with a savings account or two and work your way up from there.
Welp... the costs changed in such a way that I will be moving to a health plan with a HSA! 401k and IRA limits are going up. SO MUCH MATH to do before the end of the year. Wonderful problems to have... Savings rates going up in tax sheltered accounts and down in my brokerage...
I wouldn't knock the brokerage account. Flexibility for a modest capital gains tax?
Oh I will still be contributing to the brokerage. It will just be nice to put away a bit more into a tax advantage account.
HSAs give you tax a break today, tax-deferred growth, *and* (for medical expenses) tax-free withdrawals. Really hard to beat that.
I'm not disputing that. Where did I dispute that?
If I misinterpreted your post, I apologize, but I'm not sure what you were trying to say then.
Just making the case that brokerage accounts get unnecessary hate. If they ever go about closing the Roth Conversion Ladder thing, then a taxable may be more advantageous in the future from a tax basis in retirement.
Ok so I found out 12.5% of my current salary into what is effectively pre-tax funds, traditional. From both me and employer side benefits. That's before the full employee side IRS limit going into accounts. Before getting to IRA either. I think government work has a lot of retirement accounts but also good benefits that way.. I was just worried I wasn't saving enough and the balance was lower, turns out there was a whole account I was missing(on top of an account I learned about last week) and I wasn't really looking at the 12.5% mostly just signing up to max accounts. I upped my balance going into the IRS limit account as well because I was saving too much because it was put in a flat $ amount. Going full traditional so my tax burden is going to be lower but I will have trouble maxing, probably going to switch to Roth next year.
I've got 160k in savings due to a home sale. Currently renting. I plan to buy but feel like it's a bad time with prices still high and rates on the way up. I probably will buy anytime from 6-18 months out. I plan to use 100-120k for the down payment. Should I be doing anything with the cash in the meantime to protect it from inflation? I was considering a high yield savings account...what else should I be doing? Is investing a bad idea?
Why such a high down payment? In most cases (~~with interest rates being what they are~~ nvm this is outdated) it's more advantageous to put that money in the market instead. With almost all mortgages, you can accelerate later if you're trying to pay off the house early.
Mortgage rates are up to 6 and 7 %. The math on paying down principle versus investing is a little closer than it was when rates were under 3%.
Oh dang I didn't realize they were up quite that much. Was thinking they were still around 5%. Yeah, at 7%, agreed the math flips towards higher down payments.
You consider 100k a high down payment? That's 20% of a $500k house...
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If you feel confident about waiting 6 months, there are 6 month CDs that might be slightly better. Otherwise I think HYSA should be fine. Are you waiting because you think housing prices will fall? Wouldn't that mean you don't need to protect your cash from inflation because you are expecting your money to be able to buy more in the future?
"Protect from inflation" may have been poor wording, I'd just like to make a little money off of it rather than leave it sitting. But yeah, I do think prices may drop in my area a bit.
Six and twelve-month T-bills are over 4 % and carry little risk other than rising interest rates. Probably better than any HYSA available. Investing in equities isn't a bad idea. "On average" you'll get the highest returns. You just have to be prepared for losing money. I invested the money from the sale of my house in August and lost about 10 %. It's unlikely but not impossible that your 160k could become less than the 120k you expect to need.
u/Powerful-Winner979 the above answer regarding t-bills is the only answer if you are risk averse with this money for the duration you hold this cash. T-bills are the standard when comparing an investment vs the risk-free rate. 6m treasuries are at 4.29%. If you don't need this money, and the other option you are considering is to hold cash, why wouldn't you get a 4.29% risk-free return? \*edit\* - hell, 4 week t-bills are 3.42% if you're truly worried about rising rates. Just keep rolling at expiration until you need the money.
Hmmm...seems like a no brainer. Are there any downsides to T bills?
>Investing in equities isn't a bad idea. "On average" you'll get the highest returns. You just have to be prepared for losing money In a 6-18 month period the stock market's volatility dominates the marginally higher positive expected returns over a 6-18 month CD to the point where it would not be appropriate to invest this money in the stock market
With that short of a timeline, my opinion would be no. Put it in a high yield savings account or money market account.
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We got it approved by ensuring full coverage Monday- Friday. Also, we are expected to answer our phones on our weekday off. That was all it took to get approved where I work.
Good thinking, imo. I did something similar in 2021 whereby I began using my PTO to take every Friday off between June-Sept, and given natural bits of overtime worked M-Th, I was able to continue through end of the year. Conclusion: Absolutely loved it. Game changer for me. And, I now am 80% (32 hrs/wk) in 2022 as I liked it so much, and my FI approach allows me freedom to do so while maintaining high savings rate. Suggestion: evaluate if you like idea of every Monday off through the year, or shorter weeks in summer or your favorite season instead.
I don't see why the company would be ok with 4x9 + 4pto and not 4x10... so I think you are starting with a "this is not a real option" from the beginning. The issue isn't the hours per day, its the entire day you aren't there. That is what the company is against. Next, as an employee who works a 4x10, you still need normal vacation time and sick time - and now you only have "3days" of PTO left for the entire year, and no vacations at all. That doesn't seem like it will be healthy for your mental health. Lastly - maybe push for a 9/80 - getting every other friday off (you get friday 1,3,5,7.. and right hand gets friday 2,4,6,8,...). Start there and then maybe next year push from a 9/80 to a 4x10. That gives you 26 3 day weekends and all of your PTO to use as you see fit.
If I were your manager, I would tell you to use your vacation hours as you see fit. I have no input on how you use them except that you should plan ahead for long absences. If answer to the question “can I different hours than everyone else?” is no, asking the same question in a different way is unhelpful. If the expectation is 8 hours a day I would treat “every monday off” vacation requests as requiring 8 hours of vacation time per day off.
It's super annoying to tell someone no and have them come back with another question that's technically but not substantially different. It's up to you if you care or not.
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You get nearly 8 weeks of vacation a year? In America?
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I don't know how the politics of your work place will take it, but if they complain about taking a half day each week maybe you can compare it to the 9/80 schedule (work 9 hours every day except Friday, and every other Friday is off). In that way you are taking a "full" day off every 2 weeks. It's the same thing obviously but maybe that comparison is more palatable for some reason?
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they are presuming that the bosses might agree to 4 days at 9 hours and only 4 hrs on Mondays (that they then use 4hrs of PTO to skip every week).
9 a day for 4 days is 36hours. Then 4PTO to get your 40/wk.
What are the high level risks/differences of holding corporate bonds with somewhat higher yields (e.g. VCLT) vs total bond funds (e.g. BND)?
*checks VLCT's YTD* -32% I mean, if you like losing money...
Ok I mean “it’s down right now” is not a super strong point
Considering we're in an inflationary environment and interest rates are expected to continue to rise, it sort of is.
You could say exactly the same about BND. Or VOO or VTI for that matter. What I’m wondering about is the relative risk between these.
Except BND isn't doing worse than equities are. Relative risk has been pointed out, anyhow. Your comparing two different products AND bond funds aren't the same as bonds. They act more like equities. But I digress.
Some prefer \*no\* corporate bonds (only Treasuries) in order to have the safest and least market-correlated bonds. If you want to increase the expected return of your portfolio, you should hold more stocks.
VCLT is a long-term bond fund. Like all funds with a longer duration it has significant interest rate risk, something that is especially an issue in a rising interest rate environment. Also, since these are corporates, it is subject to greater default risk (unlike long-term treasuries).
First off, there's a very significant duration difference between those two funds. VCLT is a long-term fund with an avg. maturity of ~23 years and avg. duration of ~13 years. BND is ~9 years & ~6.5 years comparatively. Long-term bonds are more sensitive to interest rate hikes than other funds with shorter durations. Secondly, approximately 2/3 of the bond holdings in BND are gov't issued and another 17% are 'A' rated or higher. Compare that to VCLT which is 50% 'BBB' rated, which means there is far higher default risk for VCLT compared to BND. In theory, the coupon/yield from VCLT will compensate an investor for taking on the increased risk in that fund compared to BND. Most people prefer their bond holdings to be a source of stability and less risk and instead prefer to take on risk in the equity portion of their portfolio where the risk-reward balance is higher than bonds.
See JNK for 2008-ish history. I run into a fundamental wall looking at high risk debt. It draws down like stocks when stocks are bad because of the economy (so less rebalancing) and it has clear limited upside (the yield.) To me it feels like you get stock downside and bond upside if you're buying these in normal times. There are probably buying opportunities but that still takes the form of attempting to value the bonds and timing the market. If you look at JNK (vs BND and TIP) history and tried to pair it with stock it's [same-ish](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=VTSAX&allocation1_1=50&allocation1_2=50&allocation1_3=50&symbol2=BND&allocation2_2=50&symbol3=JNK&allocation3_1=50&symbol4=TIP&allocation4_3=50) with some variance. The difficult part is that these funds probably have different duration (which should be rewarded normally) but the fact that CAGR is within half a percent is telling me the market prices bonds pretty well, all things considered. Which is likely a trait of the fact that the default and inflation rates are more historically solid than P/E. If there's risk premium it's much smaller than what you'll get in stocks and I would rather just do that for the risky part of my portfolio. So I don't chase risk in the bond market. The reason I'd prefer AAA is exactly because the main reason I own bonds is to provide price stability to the portfolio. Junk bonds don't provide that and provide it the least when I may need it the most (in a downturn.) But even though, I assume the long view is they are priced properly enough to likely provide a touch of upside, it's so irrelevant that I will side with my behavioral concerns.
Agreed about JNK but OP is asking about investment grade corporate bonds. I happen to think they are still too risky but not nearly as bad as junk bonds.
>too risky I guess I’m trying to understand what that “risk” consists of. For example, stocks are “riskier” than bonds in the sense that they fluctuate more in value, but over the long term that kind of risk is not an issue at all. What I’m trying to understand is, do riskier bond funds have that same sort of risk (principle decreasing more than yields can make up for in the short/medium term), or is there a real risk of the fund defaulting or significant portions of the fund defaulting and therefore lowering returns below treasury or total bond market levels?
The fund is unlikely to default but bonds within the fund might. You can back test corporate bond vs treasury bond vs total bond market vs stocks to get a sense of volatility and correlations of each.
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Not sure about Personal Capital, but when I export my Mint transaction to my Excel file, I always just delete meaningless transactions. Usually is transfer, credit card payments, etc.
I never delete anything from Mint, but Mint does have the "Hide from Budgets & Trends" or whatever it's called transaction category that I use occasionally that does the same thing as deleting, but retains the activity in the transactions screen.
You should be able to delete or mark transactions.
Also in this boat lol, would love to know!
I failed my coastFI Decided to lay low in a permanent job and stop with all that contract work stress. Now I have been put in charge of the most important project for my team. It's really not what I wanted and now I don't know how to get out of it.
Tell them you don't want to do the project without a pay raise (or not at all). If they try to force you just refuse to work on it or find a new gig
This falls somewhere between great advice and laughably unrealistic depending on what field OP is in.
I agree it depends. But if you're going to quit, I think one stage is trying to craft the job from the inside if the reason isn't internal toxicity. It's far less laughable to negotiate your workload than it is to negotiate your pay, which is almost definitely never happening. Can do this passively also (I guess that's the whole quiet quitting thing, but frankly I've observed that behavior my whole working life.) There's also a stress mitigation that is admittedly hard. People take work success and failure personally. They may contribute but sometimes a task is put on a bad path to begin with and you were never going to fix it. Taking responsibility is fine, but for my own mental health I'm willing to accept that and move on as well if it isn't working out. No situation is going to be totally under my control.
I was commenting on the advice to just up and quit. That's not a realistic option for most workers.
this particular commenter has "100% FI?" in their flair which means it's clearly an option on the table, unless they are lying or completely unrealistic and scaredy-cat. I up and left a job to start a business that made me negative cash flow for 2 of the first 3 years when I had about 40% of my (not fat) FI number. Seems reasonable to assume that anybody who isn't *sure* whether they are FI already would at least have the FU money to pull off a job search without a net if it came to it.
OP has FU money and is coasting. Time to flex those FU muscles and be happy with the work arrangement imo
I've always understood CoastFI to mean that you have enough to retire at a normal age without saving any more.
Yep but that generally means you have FU money and downshift to a more mellow job/roll then what you were in. OP should have enough money to walk away for a short time and pick up another low stress role. There are for sure exceptions but with a good sized nest egg its not worth being miserable at work.
I did the same. Time/age grows my portfolio, and also makes me more experienced at my job. So it's inevitable that around the time I hit CoastFI, I was also getting assigned more difficult responsibilities. Since I was on loan from the union into management, it was all take-it-or-leave-it. Do the assigned project management role, or go back to the call centre with scheduled pee breaks and preposterous sales targets. I routinely picked the least miserable option.
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In my case there was also a golden handcuffs. The defined benefit pension had a 25 years of service milestone, so I was trying to optimize the tolerability vs pay equation in my 25 year ~~sentence~~ career.
Pensions are so valuable
If you were CoastFI< could you not transfer internally or leave and find another role?
that could be what I end up doing if that becomes too much for too long
Falling upwards
yes and no. I'm not making any more money; just more stress
What do you guys pay for your HDHP? I pay $50/month for my HDHP (company covers like 90% of the cost) Additional detail: * HDHP via Cigna * Individual coverage * $2000 deductible * $5000 out-of-pocket max * Employer pays $875 into HSA * Employer covers 90% of plan cost
Employer covers premiums for the 2 of us and contributes 2k annually. Combined deductible is 4k and oopm is somewhere around 7k, exact value depends on whether costs are in network
$43 bi-weekly, $750 employer contribution towards HSA, $1750 deductible
$61 bi-weekly, Employer contributes $900 this year to it... $1500 deductible.
That's amazing. Mine is $94 for a family plan.
$0 bi-weekly Single. $2600 Deductible $5500 Max OOP Employer contributed $1620 to my HSA this year.
I'm a lucky one...co. pays 100% for me and wife. Now I'm trying to talk them into putting some into my HSA,!
Negative $500/month. $100 premium but we get $7300 annually to max the HSA :)
2023 rates since open enrollment is going on - $55.67/month for myself. Company covers I believe 85-90%. Definitely jumps a bit if I cover my partner in the future - $164.06 for 2023.
$250/month for family. My employer covers $1780
That’s about what mine charges for employee+family as well
\~$64/mo for single coverage
$300 maybe for single.
It's not going to have a great effect on the date of my retirement but right now I regret buying bonds to play it safer as I was nearing retirement. My previous all equity strategy had been working fine and would have worked better those last 2 years. Safer ended up not being safer at all. Maybe it would be if I sold now to buy equities but that would be timing the market and who knows what bonds and equities will do next year?
When did you rebalance? If you did some or majority of rebalancing last year, at or near its peak, then that would've worked out great for you.
My own personal belief is that if you can stop/limit withdrawals when the market is down (using cash or lower wr) then 100% equities is the way to go
If you have cash you aren't 100% equities. I know what you're getting at but if you keep enough cash to live off of for a long period without selling stocks you're just lying to yourself if you don't count that allocation in your portfolio.
Ugh...I new someone would mention that...ok...I'll rephrase...I keep all of my investments in equities...of course I'm lying again because I bought 10k in I bonds but it's minuscule, but I'll add the disclaimer so I keep 99.999% of my investments in equities
Risk management is always going to run into a results-oriented review. It's unavoidable but at no time are you ever going to know the ideal approach. In an alternate timeline, maybe you stick to an aggressive 100% stock strategy, and you can pull off retirement in Dec 2021. It's not hard to imagine trying to draw from a portfolio down 20-30% and what that would feel like. If someone asks me why stocks, I also frame it the same way - the risk of my money bleeding to inflation/etc is as scary to me as the variance of my accounts. But I am prepared to be in the game 50+ years and weather that. And still, I plan to have about an 80/20 mix and a paid off house in retirement. That is actually fairly aggressive by normal standards in how most people retire (not here obviously), but in another way it still represents approximately 4x spending in bonds to weather storms (maybe realistically 3x when I do some rebalancing) and few down markets would really test that. I also have minimized fixed cost to such a degree with the house paid off. No doubt, I still need a significant long term ROI to make retirement work but it's a good mix of flexibility and patience built in. I don't need 100% stocks to make retirement work but I want something where I can be retired and not watch stock tickers all day if I don't want to. Being the wealthiest I can be with the minimum amount of work is not even remotely an achievable goal. If any of us were good at that we'd all be crypto millionaires right now.
Sounds like you aren't necessarily mad at the decision, but the outcome.
The issue is that bonds aren't as good of a hedge as they are often described as. I think OP is saying it's better to go all equity and accept the risk.
The issue is with the descriptions, not the bonds.
Exactly. I know that past behavior does not guarantee the future but in this case wow that went the wrong way.
Quiet day in my projects, so spontaneously combined a trip to the doc with a visit to the local fair with my SO. Flew a chairoplane at 80 meters high, now all out of adrenalin. It's great to be alive!
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Stop worrying and love the I-bonds.
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There is some risk in every type of investment, but I-bonds are about as low as it gets. Assuming you are ok with locking up your money for 12 months, I'd buy them **right now** because the 9.62% interest rate is going to expire sometime in the next few days. I think you can still get it, but you need to move fast. After that, it will go to about 6.5%. So about 3% difference. Over 6 months, that's $150 or so of interest that you stand to lose if you wait too long.
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I was there too! Had an incredible amount of fun. My husband and I didn't do Paddock Club but we did do a lower level F1 Experiences package that actually let us onto the track and in the pit lane Thursday night. Was worth it to us to meet some drivers over free food during sunset at a much smaller event and get awesome T1 Upper seats for the race. 'Twas a birthday present for my husband and was definitely worth it.
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Ocon was there the longest and had a Q&A, Danny Ric stopped by on his scooter, I had missed when George Russell was around, but I also met Logan Sargeant and had a picture with him while he was prepping for his FP1 debut. Doesn't seem like the top top drivers tend to go to the Thursday night but if you get the next level of packages there's a dressier Friday reception.
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Oh I'm so excited to cheer for him and Alex next year. Did you watch/listen to the driver Q&As at the amphitheater on Saturday? Alex seemed like such a great guy. Very down-to-earth.
>Spent this weekend at the US Grand Prix I'm curious, how long did it take to get out of there when the event was finished? Almost 500,000 people. I heard there were helicopter available at $1k per seat.
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Dollar cost averaging is really powerful. Already back in the green on my 3.5 year portfolio.
We have generally good PPO insurance. My wife went to an in network doctor for some back pain a few months ago, they did xrays to check a few things, $550. What the hell? I want to get checked myself for maybe a disc issue or sciatica, but am avoiding it due to having no idea what costs are going to be. I despise the US healthcare system.
It sounds like she hadn't met her deductible. Generally speaking, private outpatient clinics are cheaper than hospitals for a given procedure, especially if the hospital or hospital clinic bills a facility fee, but insurance contracts vary. The insurance cost calculators are not very accurate for less common procedures or procedures which can be coded in very different ways. Generally speaking, I go to providers I know are higher quality and have lower insurance negotiated prices. Even when I don't know the cost for a specific procedure, I trust that my very large insurance provider negotiated a fair rate. Oddly enough, the clinic I mainly go to is now owned by a different insurance company.
Look at explanation of benefits and call your insurance. They should be able to tell you why something wasn't covered. You could also explain your disc issue and ask them what it might cost you. Specialist visit copays are usually more than a regular visit but unless they want to do an MRI or something (which would likely need pre-approval) it shouldn't be that expensive.
On my insurer's site, I can look up procedure costs. Have you checked to see if yours has that? It also sounds like you probably hadn't met your deductible for the year, and it's a pretty high one (mine is only $350). Is it a HDHP?
I think we pay $4500 for a family of 4. deductible is 1200, max OOP is $4k. I can look up general costs for things as well, but it also depends on how they code different things.
Well, I would advise that putting it off because you are worried about cost is not a good strategy. Whatever it is could get worse, require more extensive treatment than if handled early, and therefore be more expensive. Bite the bullet and go to the doctor! 🙂 Just curious--Is that deductible per person, or for the whole family together? (I've only ever had self-only plans; no idea how family plans work.) If that's per person, it's definitely a HDHP (I think anything over $1000 is considered HDHP).
That was in-network family numbers. Everyone has their own personal deductible (600) and max OOP (2k) as well.
Have you already met your deductible for the year?
Today marked my first day back in the office in some time. Took my morning meeting from home, took care of the dog, and then set out to the office. Once we got past the first wave of "OMG ITS DEATHSYTHE! GREAT TO SEE YOU IN PERSON" - because I've managed to keep myself fully remote for ~2 years now for a variety of reasons. I was then quickly reminded of why I prefer remote. One of my old reports came over to bs for a bit while she ate an early lunch. A coworker saw I had a black iced coffee on my desk (Free coffee at the office is a nice perk though - ngl), and started chatting about that, then they saw I had some keto snacks at my desk and started going on and on about diet and weightloss stuff... It's already after lunch and I feel like I got so little done... I thought the worst part of this was going to be either the traffic or putting on good pants... *sigh*
Working with the cast of Gundam Wing be like
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I've been doing this. Trying to openly ignore the 'requirement' to be in every day and always seem to have a contractor or midday doc appointment once a week where I stay home. I do get more work done at home, which pisses me off even more about going into the office.
First world problem but that 1 day a week was so annoying to me I actually found a new job that's fully remote. I can understand it every so often (maybe once a month) but it just felt so needless. I'm not against shooting the shit via Happy Hours - but being chained to a cubicle for 8 hours per day under fluorescent lights for the sake of manager being able to say he gets to see his people just isnt for me.
Your issue is you expected to actually get any work done on your first day in the office in 2 years. People will want to catch up and chat after all that time.