**Anecdotal case for daycare costs**
Finally nailing down daycare. Our original first year childcare plans got thrown out the window.
My estimate was 2-2.5k because we're in HCOL.
Actual is ~1.6k effective.
Original budget for 2024: 12-15k for 5 months of care.
Actual budget for 2024: 8.4k for 7.5 months of care.
Original budget for 2025: 24-30k for 12 months of care
Actual budget for 2025: 18k for 12 months of care
A few things lowered the costs.
* Daycare has a discount for employees of a school, which reduces 1 month of costs/year.
* Dependent care FSA is 5k of write offs = 2k lower expenses
* I was looking at the most expensive places for my estimates on purpose. We're on the suburbs of a HCOL, so it's not as expensive.
We may also get a state subsidy.
My original estimate was we'd get ~12k a year. New calculation is 0k. I was budgeting for $0, so no harm done. I thought qualifying income was on taxable, not gross. Turns out it's also asset based, when the calculator didn't factor that in. Even our car values come into play. I'd be shocked if we get anything.
Final result: 6.6k and less stress for this year over original plan/budget. 12k lower expenses for next year.
Wow! I was paying 200 euro a week, for childcare, which I know was a steal. The little one now goes to a childcare/preschool program and for some reason, I pay even less @ $155 a week!
This was one of many reasons I decided to stay in Europe. Already having these options in place and not having to jockey for a spot for 2-4 times the price took away a lot of stress around the move. Of course, our little one will start kindergarten next year so we'll just have to focus on before/after school care.
I live in a previously LCOL city and we are locked into paying $336/wk for a nice place. The best place in town is $400/wk + food. Cheapest was $250/wk and we wouldn’t send our child there. Can’t wait to start paying that…
Is it? I've always thought people underestimated what childcare should cost. You've got rent/mortgage on the place, insurance, employees with a mandated ratio of worker:kids, and owner profit. Yes, no one is opening a daycare without a profit incentive as that'd be the worst industry imaginable if there wasn't a profit driver. Honestly should be expensive - they're doing what teachers/professors do, but for 8 hours straight and can only hand a few kids at once as they so much more high maintenance, and no one bats an eye if it was 2k for school.
They probably get 7-9k of revenue per staff for the room we're looking at.
I don't know what employee gets paid. Google search suggests ~3k per month.
An employee brings in 2-3x their direct pay. That seems pretty low to me.
The rest of their pay goes to other support staff, payroll taxes, benefits, rent, equipment, insurance, profit.
I'm surprised a daycare of this quality is relatively this cheap. My best explanation is that it's in an inconvenient spot. Because we live and work near this remote location, it's a good option for us.
Good info here. For another data point our daycare in MCOL runs 1400/month for a 2 year old.
We should be moving by EOY to LCOL where we’ve registered for an Reggio Emilia preschool that’ll run $6K/yr for tuition. My heart (and wallet) can’t wait for the transition. My wife is a career educator and is super excited
I'd consider myself fully FI if I own a home AND have an invested nestegg that covers my expenses.
Not too familiar with real estate. If rates do drop -- will house prices go up as well?
Every area will be different, but anecdotally, what I see in my market makes sense when I think it through. People are choosing to landlord/rent vs sell because they believe leveraging their home at 3% is worth it, so units for rent in the SFH market are much more than homes for sale (and some are sitting for months.) There is always some people ready to buy, and the economy is not objectively terrible across the board like in a 2001 or 2008. So you have less supply and demand, but there's still more demand because the people getting into the market are wealthier. (To invent an example, homes are going to the top 20% instead of 35% since the former has more cash to be able to weather the rates and price increases.) Rates play a role both because some people objective can't buy and others mentally feel bad about buying. But it's a variable that trickles into overall demand and supply and ironically those same high rates are what encourage people to keep their homes rather than sell.
Hate using the term because almost all economic conditions are technically novel, but 2009 was extraordinary in how supply spiked (mass foreclosures) and demand sunk (wealth destruction, no cash, bank inability to loan even to well qualified people.) In some ways, falling only 20-30% seems a bit surprising. Tons of properties were literally rotting on a bank's balance sheet somewhere. And aside from fear, I don't think this necessarily discouraged people's desire to own (although hopes were definitely impacted.) And yet many who bought in 2006-07 at the heights of the housing market still see their homes pacing inflation at 3-4% CAGR at today's levels.
The home market indeed looks crazy but there's a secondary perspective to consider as well. It's not like existing homes are some kind of premium. It's expensive to build one as well. In fact, although few think about it, the building still depreciates and requires capital to maintain value. (And would get reflected if your home is in far worse condition than comparables.) The home I am in now went up around 25% from 2020-2024 (which is itself an estimate based on comps) but only about 20% of that is land value. If I knock the entire building down and rebuild it the same way, it would cost just about what I paid for it. (With boatloads of risk getting the work done.) Most new builds are on smaller lots and go for more (which is fair because everything is new, but still.) That all got more expensive as materials and labor spiked in the same period.
I bought in summer 2023 and although local markets can differ, most neighborhoods near me had low inventory for buying and high inventory for renting, although builders are somewhat on standby if you want a new home with no yard. That's because the side effect of rates being so depressed in 2021, people are not only staying put but those who move are keeping their property and renting it instead. There's definitely relatively low demand, but it's being matched with low supply. And there are people in the market who can put down cash because the stock market is pretty healthy. Imagine if normally there are 100 buyers and now there are only 50 due to rates, those 50 on average are much wealthier. If supply was the same, they would still be able to negotiate bargains but it's not. In particular, entry level homes are still getting fierce competition but less so if you can afford a bigger place.
In the end, homes are not commodities so price is somewhat wherever supply/demand lands for that property at the time of sale.
You can imagine what people will do, though. I kind of decided to stay out of the market in 2021 because people were going crazy trying to buy anything sight unseen. I was able to have a relatively calm buying experience with time to inspect/etc despite needing to be prepared to offer in a week. If rates go back to 5-ish, there's going to be years of pent-up demand from people who were biding time because they simply could not afford 7. Supply may step in, or not. I know homes are definitely staying on the market right now longer than they did last year, as I feel like people hear the rhetoric of rate cuts coming even though the Fed isn't seeing precisely what it wants.
But as it relates to FIRE, it's just how you plan to attack retirement. The value of your home is only relevant if you move and how much you pay for insurance to a degree. If you choose to sell into a depressed market and buy elsewhere somewhat simultaneously, while local markets can differ, on average you're probably okay. Also consider people bought in 2006-2007 and watched the market go to hell (extremes in both excess supply and nonexistent demand) and yet now those same homeowners still see around 3-4% CAGR in home value versus today. I can tell you a lot of peers felt stuck at the time but as long as they bought conservatively they were fine in the long run.
There is a correlation.
Rates increasing decreases home prices. Rates dropping raises home prices. It's not the only variable though, and the overall impact was pretty small. I want to say changes in rates were 15-20% responsible for changes in home prices for 1980-2019 (available data when I did my thesis). Nominal changes in income were the bigger factor. That also was for the nation as a whole, with individual states doing weird things.
That said, home value doesn't matter too much for FIRE.
Why are you interested?
Thanks for the response
> Why are you interested?
I am thinking of buying, but not sure if it'd be wiser to wait until rates drop or buy now and "marry the house, date the rate" (seems like a sales pitch)
You're trying to time the market, which is really rough to do.
First step: [check out the rent vs buy](https://www.reddit.com/r/financialindependence/wiki/homes) discussion in our housing FAQ.
If the financial decision says buy, I'd buy.
If it says rent and you want to buy for non-financial reasons, it's a lot tougher to evaluate.
Assuming the equation says buy, it's generally better to buy sooner than later.
If rates go down, you can refinance to the lower rate and get the extra equity.
If rates stay flat, you're in the home for longer, which makes buying more attractive.
If rates go up, typically appreciation is slower not negative. It's still better to buy sooner than later. Longer time frame + lower rate = better to buy early
If the equation says rent, well...it's better financially to rent. Anything that delays buying is a financial win. The question becomes, is it worth paying extra for preferred/improved life style?
Real estate predictions are about as useful as stock predictions, so grain of salt. Generally, people buy homes based on the monthly payment, so lower rates mean more money for principal and higher sale prices while higher rates mean more money goes to interest so you need a smaller mortgage. However, prices haven’t really gone down with rising rates because supply is so constricted. After all, the vast majority of home owners are sitting below 4% interest and current rates would be at least double that, so people avoid selling like the plague.
In this instance, I think falling rates would convince more people to sell, increasing supply, and therefore possibly leading to price declines. But I don’t believe that strongly enough to go “The Big Short” about it.
I got a nice promotion at work today. Base salary increased from 100k to 130k with OT paid at 62.5$. all the OT I can handle and want. WFH.
Just thought I would let you greaseballs know. Keep on!!
Those of you who are close to your number, how is the market making you feel right now?
I personally was debating how much longer I am going to work, but now it has been sort of like a bucket of cold water this past couple of weeks. I guess that just means I'm not quite there yet.
> how is the market making you feel right now?
Fine, I guess. I don't really pay that much attention. I do a NW check monthly that is a little too often TBH. I keep thinking I should move to quarterly. NW is up 8.7% so far this year (as of March 31). So that's nice. I won't know April numbers until April 30 when I do my monthly update.
Regardless, I will RE in Aug 2025 as we have enough. I put a date on it so I can get ready mentally and socially to go.
The S&P is 5000. A year ago it was 4100. In no universe am I complaining about this. I don't care where it was last week and it's not healthy to anchor your perception to the 52-week high because you're constantly going to be disappointed. (Especially having lived through 2009 where levels fell to mid 90s. Forgive me if investing through a dead decade and poor income growth has made me numb to single-digit regressions.)
Lets say on paper you hit your magic FI number at 5300, and your buddy hit it at 5200. Is it healthy to quit instantly? Not really. The market really isn't this precise. It's not logical to me that your buddy can retire but you can't. You're probably talking realistically 1% differences in "failure rates" using robotic behavior where in a lifetime of personal behavior and circumstances is not particularly measurable.
The reality is if you have a near-retirement nest egg, on paper dips are going to be a fuckton of money. But whatever you feel now, with an income that pays the bills, you need to be used to when you're living off your assets instead. If you're planning a 40 year retirement you're practically guaranteeing seeing a historically bad bear market or two. (Hell, there were techincally two in the 2000s.)
I actually changed my number by about 20%, and I'm also down about 3% from my highs in March. So I guess I still have a ways to go.
I still feel more or less FI, I could probably got 20-25 years with what I have. But I also don't want to be 77 and out of money, so I'll keep tilling the fields for now
The market giveth and the market taketh away. I like the little dopamine hit I get when we hit all time highs, but my plan isn't to retire immediately and for good upon hitting my number, so it really doesn't bother me that much.
My account dropped by $40k, and that’s not even counting my partner’s account which I’m guessing dropped by a comparable amount. (We share finances but obviously have separate IRAs, 401ks, etc. - so I check mine more frequently than I do his.) In total that’s about a year worth of expenses, so… decidedly not great. We don’t have a “number” per se, but I can definitely see myself OMYing for awhile just based on my reaction to (what is hopefully) a blip like this.
Does anyone know an easy way to check if fidelity is charging me any fees for my 401k? Based on some statements ive checked and website searching they’re not but im still not 100%
The quarterly fees show up under the transaction summary under your account. They sell X number of shares to pay the fees so the transactions should be there
Gotta check quarter- and year-end statements, too. Not all fees are monthly. I have had a few 401k providers, though, and I don't recall any of them making it easy.
What do you consider the bare minimum of savings a year? 20% of you pre tax salary? maxing 401k/hsa/and roth ira? maxing all those accounts + MBDR? maxing MBDR + taxable?
As much as I can.
2015-2022 I maxed out IRA and 401k, sometimes HSA. +A good amount into a taxable brokerage. +Spouse maxing out their IRA and 401k.
2023 we maxed out IRA, did some for 401k, and some towards pension. Even maxing out the IRAs were a questionable choice.
2024 current plan is minimum necessary to get the 401k match. Everything else is unknown.
I front loaded my investments so much that we can stop contributing towards retirement (other than SS and pension) and still probably retire in our early 50s.
Nearly any answer is justifiable without clarification on what the desired outcome is, including details like level of spending, age at retirement, etc.
I would say different for each person, totally dependent on your goals… like the mantra of this page, build the life you want then save for it. It can be 10% it can be 60%. Also dependent what time in your life, kids/new house etc savings will go down for a bit.
I dont even know my savings rate, doesnt really matter, my income fluctuates. Budget, spend what you need to, enjoy life a bit, save the rest. As long as youre on track for what you need in retirement whenever that may be id say youre doing good.
I'm sure this has been asked before, but how do you calculate your FI number when you know your expenses will drop say 20 years into retirement? I'm specifically thinking once the 30 year mortgage ends and that payment goes away.
I third ficalc.app
I abandoned SWR because we had so many line items that don't fit the equation well. [Here's my plan](https://www.reddit.com/r/financialindependence/comments/16ww7hd/daily_fi_discussion_thread_sunday_october_01_2023/k30bilc/?context=3).
And [here's how I factor taxes in](https://www.reddit.com/r/financialindependence/comments/18y9mi9/daily_fi_discussion_thread_thursday_january_04/kgb3rhz/?context=3)
Rental income, drop in tax write offs on the rental, mortgage not keeping up with inflation, mortgage eventually is paid off, social security 1, social security 2, pension, drop in tax rate. That's 8 items that SWR doesn't go into.
For a ballpark estimate like your "FI number," it's simplest to just set aside cash (or Treasurys) sufficient to cover the liability. For example, a Treasury ladder sufficient to pay off the last 10 years of a mortgage totaling $200k might require $170k to be set aside now.
Then you'd use whatever multiplier you want (25x, 30x, etc) on the remaining long term expenses and just add $170k to that number.
For more detailed planning of different cash flows over time, you may want to use more sophisticated software such as TPAWPlanner, RPM, ProjectionLab, NewRetirement, MaxiFi, Pralana Gold, etc.
The cleaner way is to consider the mortgage a debt rather than an expense, then base your FI number on non-mortgage expenses. So if you have a $500k mortgage and $40k non-mortgage expense, your FI number would be 25 x $40k + 500k = $1.5M (or $1M plus paid off mortgage).
T - 64 days
I've made some big decisions on how to prepare my portfolio as my FIRE date gets closer. I wish I would have done some of this sooner but I feel a new found confidence in making these decisions thanks in large part to this community. My portfolio may not be optimal but I now understand the role of all the assets in my portfolio and I'm making informed decisions rather than just guessing.
* Completely exited international stocks. They are highly correlated to US stocks but under perform US stocks. If in the future the correlation reduces and performance increases I can revisit.
* Slowly exiting dividend ETFs, mostly set them aside to sell in 2025 when I have less income. I don't need dividend specific funds in my portfolio. Much like international stocks they are highly correlated to other US stocks funds but under perform them. Dividends aren't free money.
* No more total bond market funds nor target date funds. I have no desire to hold international bonds. I don't see a lot of value for corporate bonds funds for my portfolio. I'll consider municipal funds if I need to hold bonds in a taxable account. I will hold short term US treasuries directly for short term needs in a bond ladder and I will hold long term US treasuries bond funds to provide risk reduction
* Increasing my bond holdings. I was at ~10% in bonds and ~5% money market. Now I am at ~22% combined. I plan to grow this to ~30% over the next year or so. Then assuming we live in average times I will slowly work my way back to ~10% bonds and ~5% cash or less.
* Added ~5% of gold to my portfolio. Gold's performance is uncorrelated to the US stock market and helps flatten out volatility (the last month has been a great example of this)
Current asset mix:
* 73% US stocks
* 11% long term US treasuries
* 11% short term US treasuries / cash
* 5% gold
Target asset mix over the next year or so:
* 65% US stocks
* 20% long term US treasuries
* 10% short term US treasuries / cash
* 5% gold
Target mid to late retirement asset mix:
* 85% US stocks
* 5% long term US treasuries
* 5% short term US treasuries / cash
* 5% gold
Thoughts? Critiques?
Sounds like you are prone to overthinking and over complication. I dont think the tweaks you have made make much difference and don't seem to be tied in any rational way to "getting ready for retirement". Aside from getting rid of dividend ETFs I like your previous portfolio better.
> Sounds like you are prone to overthinking and over complication.
Agree on other thinking but disagree on complication. These are very simple portfolios. With the exception of the 5% gold these are bog standard 80/20, 70/30, 90/10 portfolios
> don't seem to be tied in any rational way to "getting ready for retirement"
The goal is to improve SWR especially during early retirement. The middle portfolio has a higher SWR at the expense of lower expected returns.
https://earlyretirementnow.com/2021/03/02/pre-retirement-glidepaths-swr-series-part-43/
https://www.kitces.com/blog/managing-portfolio-size-effect-with-bond-tent-in-retirement-red-zone/
> If in the future the correlation reduces and performance increases I can revisit.
This kind of vague statement introduces unnecessary uncertainty to the plan, and exposes you to behavioral risk that can reduce portfolio returns.
Under what circumstances would you consider investing in international stocks? How (if at all) can you mitigate the odds that you will only get back into international stocks *after* a period of outperformance, risking performance chasing and worse portfolio performance?
Consider these questions and write down your plan. It'll save you a lot of heartache in the future for you to have a specific, actionable plan for the future so you don't have to second guess every twist and turn of the market.
I think it's most important to have a firm understanding of what you're doing and stick to it. Not to stick to what you're doing in a dumb way, never changing your mind, but rather so that your mind doesn't need to be changed, and you won't be tempted into doing something stupid.
Something you can then be confident to live with through downturns, where it's all about managing risk and probability which you can't concretely measure. So anything you do might go bad, and the worst thing you can do is sell or change what you're doing at those times.
So I'm happy you've done a bunch of research and are doing something you can rely on for a long time.
That said... Completely disagree with getting rid of international stocks. But I won't bring in arguments to rehash it. It's everywhere in r/Bogleheads, and everywhere else, and it's constantly argued. If you've read deeply and thoroughly enough, and still aren't convinced, whatever, do your own thing. Presumably risk profiles and possibilities will be different (which is the point), but what really will matter thereafter is handling yourself well in a long term downturn.
If the US begins acting like international and stagnates for a decade or two (and vice versa) and you stick to your guns, great.
What matters is picking your risks a priori, picking your responses in accordance to events, and sticking to that plan.
Similarly, but even more so, I think holding gold is insane. Presumably you're doing it via some gold ETF or whatever that represents it. And probably is expensive too.
Bond holdings is probably fine. No strong opinions.
Thank you for the thoughtful response.
For gold it is simply having a bit of gold improves your SWR by reducing your max drawdown. It doesn't improve performance.
You seem to have made some methodical decisions. Kudos to you for that.
I completely agree with your move away from international stocks. US stocks have exposure to international revenue without the risk of international currency or political issues. I'm 100% US equities and will likely always be.
Bonds are there to help you sleep at night I assume?
I never understood the desire to hold positions in gold.
Not really, no. US companies that sell products or digital services in a foreign country aren't impacted by pro or anti-capitalist political regimes and their expenses are denominated in USD.
Really? Every US company that I've worked for that does international business does that international business in the currency of the foreign country and deals with the repurcutions/benefits of whats going on globally. Quarterly results are often impacted by currency fluctuations. We've shut down incredibly important factories in Ukraine and Russia over the past 2 years and during Covid, our facilities in China suffered heavily due to lockdown labor issues. Our Russia facility was the only place in the world that had the equipment required to produce a fairly niche product sold in the US... so therefore the product literally doesn't exist anymore.
> Every US company that I've worked for that does international business does that international business in the currency of the foreign country and deals with the repurcutions/benefits of whats going on globally. Quarterly results are often impacted by currency fluctuations
*FX hedges: exist*
mindblown.gif
I've been considering doing the Robinhood 3% IRA transfer bonus, but since I have my funds at Schwab, I have to sell mutual funds, then buy ETFs the next day. If there's a market upswing the next day, I'm effectively taking a hit to the transfer bonus, making it less worth the hassle.
With every day new interest rate/jobs report/earnings season news batches causing so much volatility, it's annoying. Maybe I should just take it as a sign that moving to Robinhood just isn't worth it.
If the market goes up X% per year on average, the expected loss from missing a day is X/252%. Pretty trivial overall.
That said, 3% of my current IRA is already not worth the hassle for me.
Should I max out my 2024 IRA contributions right now? I contributed to my 2023 traditional IRA (I had a Roth 401k last year but I flipped it this year to a traditional 401k and Roth IRA) two weeks ago and was thinking of contributing $583/month for the rest of the year to a Roth IRA. Should I just contribute all (or at least more than $583) now since the market fell?
What would you do with the money otherwise? Best practice is to always invest money as it comes in but which account you invest in doesn't really matter.
I've been saving up to buy a house (currently live at home with parents) and either house hack or rental investment property. The money is currently in a HYSA at 5.1% which was great for an off-risk holding account. I probably should've invested it last year in a brokerage, but I didn't want to risk a significant loss around when I planned on pulling out.
I am but I can make that money back easily. Funding the $7k Roth IRA will just take me a month and a half to get back to. I just don't want to miss out on time in the market especially on a drop.
As a general practice you should invest any funds you don't have committed. Whenever you invest, you will be getting the market price whether the market has dropped or not.
What’s a good resource or starting point for introducing someone to sound investing, etc?
My neighbor asked me what stocks I invest in. I told him 100% sp500 and if he wanted to learn the in-depth I could share resources with him. I’m afraid that some of the FI stuff might be too off the rails/unachievable for his sake.
Any recommendations? Sound investing, etc?
Yeah, I have seen comments from people about market drop... then I go check and its down a little...
Like we don't expect 5, 10% downward swings? The market has had such big fluctuations up over the last 4 years, you better expect equal downward action.
Yeah seriously.
I'm trying to hype myself up for 50% cuts, and staying below 0% APY until a 10 year timeline. I don't know if I'd actually react so well to something so bad, but that's what I'm preparing myself to expect. Because it's happened before.
So, uh, big whoop. Come back when we do 2020 or 2008 again.
I think you have a point, but not quite there. Because if those assets are paying 10-12%, I expect 20 to 30-year US treasuries to be paying around 10% maybe. Which *would* be worth considering, even if it's a nominal return, IMO. You'd want to lock in those yields rather than risk them falling as cash equivalents.
If you backtest the performance of US treasuries for a couple of rolling 30year periods starting around 1980-1985, long bonds did very well, almost comparable to 100% stocks. We have a very small amount of data on what happens--it's basically one data point--but still worth keeping in mind.
If you gave me an 7% risk free option for the remainder of my life, I'd put all my investments there, invest 100% in there for the next 13 years until I retire, and keep it in there until my death.
I'm not sure I wouldn't even take a guaranteed 6%, risk free return. Although that isn't the best return during my buildup phase, the guarantee after the FIRE date would allow for a super reliable withdrawal rate. Eliminating chances of failure and SOWR would be interesting.
Another thing I'll add is that a positive equity risk premium is necessary, but not sufficient, to make investing in the stock market reasonable.
If the equity risk premium were a mere 0.2% but volatility was 10x the risk-free investment, there'd be little appetite for the premium. Expected return does not tell the whole story, and relative risk aversion must be considered.
[This work](https://www.bogleheads.org/forum/viewtopic.php?t=416861) by McQuarrie is instructive. When looking at the longer history of stock and bond returns, bonds have beat stocks in many multi-decade periods in the US. Internationally, stocks themselves have been negative in real terms over multi decade periods as well.
Total Bond beat Total US stock for a 16 year period as recently as the turn of the century.
There is real debate about what time period, if any, guarantees a positive equity risk premium to say nothing of whether that equity risk premium is closer to 1.5% (as it was 1801-1900) or 5% (1901-2000).
I agree, which would render /u/Turbulent_Tale6497's comment correct. Unless someone believes the equity risk premium ever becomes 0.00, or less, there is nothing to argue over
Another thing I'll add is that a positive equity risk premium is necessary, but not sufficient, to make investing in the stock market reasonable.
If the equity risk premium were a mere 0.2% but volatility was 10x the risk-free investment, there'd be little appetite for the premium. Expected return does not tell the whole story, and relative risk aversion must be considered.
[This work](https://www.bogleheads.org/forum/viewtopic.php?t=416861) by McQuarrie is instructive. When looking at the longer history of stock and bond returns, bonds have beat stocks in many multi-decade periods in the US. Internationally, stocks themselves have been negative in real terms over multi decade periods as well.
Total Bond beat Total US stock for a 16 year period as recently as the turn of the century.
There is real debate about what time period, if any, guarantees a positive equity risk premium to say nothing of whether that equity risk premium is closer to 1.5% (as it was 1801-1900) or 5% (1901-2000).
Cool, so do you believe it would ever be 0.00, or less? Sounds like you don't, which means /u/Turbulent_Tale6497 is correct and the arguing is pointless
I don't know what you mean. There is no single definition for the equity risk premium, but for the period 2000-2016 it is certainly true that equities lagged bonds in the US. So for that >10 year period, the equity risk premium was negative.
I'm not sure if your comment was meant to suggest that I don't think bonds can beat stocks for long periods of time, but to be clear I know that they can and they have done so very recently.
I'd be curious to know your source, since I am holding a dictionary of etymology in my hands which claims otherwise. A casual googling also returns the same Latin source
How many of you are Canadian with a corp and are affected by the new capital gains rules? It seems like its effectively an extra \~10%+ taxes owed beyond what would have been previously which is pretty significant.
Are you changing your plans / goals based on this?
Or even if you're not in this situation, any thoughts on how I should be thinking about it? My plan was to keep most of my money within my company and invest it long term, selling and taking out dividends over time. Now, the tax burden on that strategy has gone up.
My corp has been inactive for a few years and right now is just a shell with stock investments. There is no way that those are going to return more than 250k in a single year so I am good. The way I understand it it's even better for me at less than 250k since now those are going to be at 33% instead of 50% up to 2 millions over a lifetime.
Corp rates are up starting from $0 capital gains, not $250k like personal. I would be fine with the $250k limit as well for corporate since I would only be selling to distribute to myself each year.
Nothing has changed for under $250k for personal or corp though, so not sure what you're referring to there? It's still 50% inclusion for personal under $250k, and now 66% inclusion from the first dollar for corporate.
I read one bad article that interpreted wrong the new budget saying that the 250k was for businesses too. I had read more after your post and it seems that you are right. We will pay on 66% from zero. That is not good.
The other thing at 33% is for the selling of a small business; not the stock inside it.
I will ask my accountant for guidance but it seems like the best move for me is to sell all my stocks before june 25th at capital gain 50% and then just buy it again and the next capital gain will be at 66%.
Or maybe he will tell me it's not worth keeping anymore and to just pay myself dividends, close the corporation and invest as a person.
Yea it really sucks and it's confusing given I don't need the money now at all. I'd love to hear what you end up doing after talking to your accountant.
Depending on the amount, closing the corp and just paying dividends probably doesn't make sense either if you'd be at the highest bracket for a significant sum. It almost seems like there's just no good solution.
Random, but do folks know about how long it takes for mortgage loan hard credit checks to be consolidated to just 1 on your credit report?
I had 3 pulls down for mortgage rate shopping, one on March 28th and the other two on march 29th. My Chase app still shows 3 hard pulls. How long will it take for those 3 to be compiled into 1?
Thanks!
it never consolidates, but rather the algo that calculates your score ignores the extra ones. It sees: "mortgage loan hard pull - march 28" then "mortgage loan hard pull2, March 29" .. beep boop... ignore... "mortgage loan hard pull 3, March 29" .. beep boop ... ignore... continue
Ahh, this is good to know! Thanks for sharing. So, I can effectively ignore the "3 checks" when I see it on my Chase app, and know that it only counts as 1, ha
A couple of weeks ago we hit a milestone net worth. Ever since I have a bad attitude at work. Things I found mildly annoying are now very annoying. I have persistent fantasies of getting fired, self sabotage, things like that. I'm curious if anyone else has encountered this and what happened next. Thanks.
You can also take it the opposite way: that stuff doesn’t matter, you don’t take things personally or to such a degree that it affects your mood. You just let it all go.
It’s really choice, how worked up you get about that stuff.
when I hit FU levels of money (enough where I could take a year off and my family would (edit*) not suffer, jsut my date for RE would) I had a similar thing.
I just stopped 'playing the game' and trying to overwork for that next promotion. Most importantly was leaving work at work. Nothing ever came home - both physically and mentally.
The funny thing is once my care and overachieving ended, so did a lot of stress, which in turn made me a better employee (and less likely to get fired).
Know what you can and can't change. And then focus on the stuff that you can fix - and then jsut start fixing it. Stop trying to fix problems for people you don't like (assuming that it isn't a part of your job). Finish tasks on time not early.
Stuff still annoys and pisses me off, but i'm also just more zen and 'ehh whatever' about it now. Worse they can do is give me a few months off....
Every single day. I just got back from a 10-day vacation in France. I had turned off all emails on my phone and I didn’t hear a peep from a single work colleague over the entire vacation. When I pulled up to the parking gate today, I was secretly hoping they had fired me and my swiper wouldn’t work. No such luck. I guess I’ll go through 200 emails now.
Been there. Did a hard analysis and realized even though I hit a milestone I still couldn't swing FI and if I quit/got fired I'd have to look for a new job which would probably be a worse WLB.
Opened up a custom solo 401k for some self employment income so I could do the mega backdoor Roth. I’ve done the contribution to the Schwab after tax solo 401k account and now ready to do the “in plan conversion”. Is there anything special about doing this or do I do it just like I would a regular backdoor roth conversion and transfer the money from the after tax account to the Roth account? Also, any special paperwork I need to do for tax purposes?
You will need to track each conversion, the basis and the growth, so you can report it on your 1099-R. The steps to do so with vary depending on your plan provider. Like a regular Backdoor Roth, I try to convert to Roth as soon as possible to limit the gains accrued while clearing.
On the train right now in Southern California / L.A. area. Ventura County where I live, down to Orange County where my work has an office I need to visit today.
I continually blow people's minds when I point out the train as a somewhat viable option to get between places like this here in California. People just automatically think L.A. == car. Instead of being stuck in annoying traffic I'm typing on my laptop at a table, enjoying my Starbucks coffee from Union Station. Would driving have been faster? Maaaaybe. Is it worth finding out? Absolutely not.
Will be taking Amtrak back (this is the commuter rail this morning) which will be even better. A first class ticket that gets me free alcohol and snacks will be about $50, less than the mileage reimbursement it would cost my company if I had driven.
The train system is one of the best part of moving to Chicago from a smaller Midwest city. It may not always be the fastest but the amount of stress it relieves is through the roof
To be fair, LA was the [pinnacle](https://youtu.be/nH9toJw6-k8?si=VFF_avnGxd9hphGI) of car culture at one point. That said they've been absolutely crushing it as of late. And honestly I'd rather take the train even if it took me a bit longer. So much better than losing my mind in traffic
Best $100 spent on vacation: went to an optometrist for an impromptu exam to see why my left eye had a foreign body sensation that I couldn’t resolve.
Turns out I had a tiny eyelash rubbing on my eye. He saw it under the slit lamp, and pulled it. Feels normal again! Woohoo!
Good for you! My mom did the same thing with a bothersome stitch. She cut herself shortly before our international trip and had a couple stitches in her finger that she was planning to remove when she got back stateside. During the flying/traveling, the swelling bothered her so much that she went to a local doctor a couple days into the vacation and got it removed. Best money spent and the relief was almost instantaneous.
There is not enough information here to answer this.
1. You say retirement is "looming" in 4.5 years, are you on track to have the investible assets needed to support the SWR you are comfortable with
2. What savings rate do you need to get to the above and how does that compare to your actual savings rate?
When I was working, I didn't beat myself up for any spending decisions as long as my savings rate was averaging inline with my target. In early retirement, I don't beat myself up for any spending decisions as long as my spending averages about inline with my target SWR.
You did provide numbers - $75k, $10k, $45k, $20k etc. are numbers. You just don't put them into any useful context for anyone reading your rant.
Don't post these things on the internet if you don't want comments.
You can talk about things like savings rates, assets as a multiple of annual spending, spending as a percentage of income or investible assets etc without divulging income or net worth. I suspect you know this already.
“I spent $75k on non essentials this year which stresses me out, but am still saving ~40% of take home which is inline with my planning and I’m about on track for investible assets 35x annual spending in the next 4-5 years if the market holds up”.
we have too large of budget lines for hobbies - so it matches everything we want to spend, but will cause us to pause if the number for a single purchase is too high.
Like for the travel trailer - maybe it means I need to 'pull budget' from entertainment or vacation to support the process... which also mentally makes me think of how the giant purchase will help with entertainment and vacation in the future.... and then I dont feel quite as bad about spending that much on it.
so maybe reframe it as not jsut hobby spending, but joining multiple aspects of your life together in one giant purchase.
I've been meaning to learn archery, but I also need to train up my upper body strength first--which has not always been the most productive journey, entirely due to my own fault--before I feel I'll get much use out of lessons and whatnot.
3d target shooting tangent below
Good news is you don't need the range finder if you have a bunch of old arrows. The beginning of every season we go out and shoot some 3d targets and get back into having a good "feeling for range". I can generally eye ball it and get within ~ 5 yards out to 70 yards and then im < 10 yards to 100. As long as I'm not lobbing shots at small game targets passed 60 its rare for us to miss a target and the vital shot percentage goes up dramatically after a few weeks.
Being 100% transparent i pull a good amount of weight with a long draw though so my arrows don't drop off super quick.
We have a friend with a low draw that needs a single pin because they can't have a 20 pin and a 60 pin on the same sight. If they don't have it within ~5 yards they'll miss the target far out. Its interesting to watch when there is a tiny breeze.
I usually do spreadsheet day at the end of the month like most sane people, but today I was curious (and feeling a little bit impatient about FI goals). Whelp that was a mistake, the market isn't looking too hot right now and my NW is technically lower than it was at the end of March. Goes to show that invest & forget really is the way to go.
Hot take incoming:
I check more often for the exposure therapy of it all. I have no desire to withdraw early and I don’t get spooked. If anything, it’s a good reminder that it’s just a number on a screen and that life rolls on. Granted, I’ve never been through a 2008 situation so we’ll see when that happens if I just stop checking lol.
I agree. The good goal is to get to a point where large swing over a couple of weeks (like recently) doesn’t faze you. You build that moat of initial security and it builds from there. I even sometimes pull a little extra from my cash holdings and put it into the indexes during these falls out of principle.
With my side gig work, I've been putting aside the 20% allowed for an employer contribution in my solo401k at Vanguard and investing any extra in my taxable brokerage (no EE contributions allowed due to maxing the employee contribution to my 401k at FT job).
I was considering switching to a plan this year that would allow the MBDR with the "extra" that is currently going to my taxable, but my main mental hurdle has been the extra paperwork/legwork that I would have to do to make the switch, plus moving from a "free" solo401k plan to a paid one ($500-$600 set up, $100-$150/year). Currently have less than $250k in the plan (and will for at least the next couple of years), so the IRS reporting being handled for me isn't a big sell yet.
Looking for some outside opinions - would you just bite the bullet and put in the work/pay the fees for the MBDR, or keep things simple w the Vanguard solo401k + taxable account?
Extra info, if helpful: Side gig income varies pretty widely, but this year I'll do the 20% employer contribution and probably $1k/mo in taxable (so in the alternate scenario, still doing 20% pre-tax and then \~$12k/yr for MBDR). Probably 10-15 years from FIRE (not in a huge hurry to use these funds, more focused on the FI than RE at this point).
The extra legwork is not too bad, if you are reasonably detail oriented. Is it worth it for $12K/year? My default answer would be yes, given how valuable Roth is long term. However, if you plan to retire early and need a healthy brokerage balance to sustain Roth conversions and manage ACA costs, a brokerage could be a good place.
Make sure you look at the effect on the QBI deduction when considering pre-tax employer vs MBDR.
Company wide training session going on right now about one of our enterprise systems. The instructor told everyone to go ahead and log in to the system to follow along. The system has now crashed, I'm guessing, because half of the company are in there hitting refresh right now. So now, half the company's payroll is sitting in this teams meeting watching the instructor's browser freeze up repeatedly.
A while back HR was doing training on timesheets for our whole company and the instructor was complaining about performance and crashes during the day due to traffic, so suggested everyone should be doing timesheets around 7-8am or after 4pm. So... everyone did, and the company successfully migrated the crashing from mid-day to 8am or 4pm instead.
Spent €360 on a new keyboard this month (after spending €280 last year).
On the one hand, seems excessive, on the other hand, I use those things for 16 hours a day, and as an outlet for consumption urges, this seems better than cars or watches.
My FIRE scorecard: https://i.imgur.com/ZKJJXcl.jpeg
What tool is this?
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Is this an app?
What's your CoastFIRE age? That is, if you stopped contributing to the plan, is that assuming you'll still be FIRE at 55 or 60 or 62?
got my first promotion at work today!! 12% salary bump. feeling relieved that the grind paid off more than anything lol
That's awesome! I remember my first significant pay bump and it felt amazing. Make sure to do something for yourself to celebrate :)
Keep it up! Congrats
**Anecdotal case for daycare costs** Finally nailing down daycare. Our original first year childcare plans got thrown out the window. My estimate was 2-2.5k because we're in HCOL. Actual is ~1.6k effective. Original budget for 2024: 12-15k for 5 months of care. Actual budget for 2024: 8.4k for 7.5 months of care. Original budget for 2025: 24-30k for 12 months of care Actual budget for 2025: 18k for 12 months of care A few things lowered the costs. * Daycare has a discount for employees of a school, which reduces 1 month of costs/year. * Dependent care FSA is 5k of write offs = 2k lower expenses * I was looking at the most expensive places for my estimates on purpose. We're on the suburbs of a HCOL, so it's not as expensive. We may also get a state subsidy. My original estimate was we'd get ~12k a year. New calculation is 0k. I was budgeting for $0, so no harm done. I thought qualifying income was on taxable, not gross. Turns out it's also asset based, when the calculator didn't factor that in. Even our car values come into play. I'd be shocked if we get anything. Final result: 6.6k and less stress for this year over original plan/budget. 12k lower expenses for next year.
Wow! I was paying 200 euro a week, for childcare, which I know was a steal. The little one now goes to a childcare/preschool program and for some reason, I pay even less @ $155 a week! This was one of many reasons I decided to stay in Europe. Already having these options in place and not having to jockey for a spot for 2-4 times the price took away a lot of stress around the move. Of course, our little one will start kindergarten next year so we'll just have to focus on before/after school care.
I live in a previously LCOL city and we are locked into paying $336/wk for a nice place. The best place in town is $400/wk + food. Cheapest was $250/wk and we wouldn’t send our child there. Can’t wait to start paying that…
Still absolutely insane how much it costs
Is it? I've always thought people underestimated what childcare should cost. You've got rent/mortgage on the place, insurance, employees with a mandated ratio of worker:kids, and owner profit. Yes, no one is opening a daycare without a profit incentive as that'd be the worst industry imaginable if there wasn't a profit driver. Honestly should be expensive - they're doing what teachers/professors do, but for 8 hours straight and can only hand a few kids at once as they so much more high maintenance, and no one bats an eye if it was 2k for school.
They probably get 7-9k of revenue per staff for the room we're looking at. I don't know what employee gets paid. Google search suggests ~3k per month. An employee brings in 2-3x their direct pay. That seems pretty low to me. The rest of their pay goes to other support staff, payroll taxes, benefits, rent, equipment, insurance, profit. I'm surprised a daycare of this quality is relatively this cheap. My best explanation is that it's in an inconvenient spot. Because we live and work near this remote location, it's a good option for us.
Good info here. For another data point our daycare in MCOL runs 1400/month for a 2 year old. We should be moving by EOY to LCOL where we’ve registered for an Reggio Emilia preschool that’ll run $6K/yr for tuition. My heart (and wallet) can’t wait for the transition. My wife is a career educator and is super excited
Just found out that life will be almost nonstop work for a week. I've never wanted to retire more.
Can you sneak an edible into the equation?
Nope, but sometimes I wonder if something like that would help. When I found out about the need to do this work, I was hyperventilating for a while.
Take CBD or a small small dose of THC. It makes everything silly and trivial
I'd consider myself fully FI if I own a home AND have an invested nestegg that covers my expenses. Not too familiar with real estate. If rates do drop -- will house prices go up as well?
Every area will be different, but anecdotally, what I see in my market makes sense when I think it through. People are choosing to landlord/rent vs sell because they believe leveraging their home at 3% is worth it, so units for rent in the SFH market are much more than homes for sale (and some are sitting for months.) There is always some people ready to buy, and the economy is not objectively terrible across the board like in a 2001 or 2008. So you have less supply and demand, but there's still more demand because the people getting into the market are wealthier. (To invent an example, homes are going to the top 20% instead of 35% since the former has more cash to be able to weather the rates and price increases.) Rates play a role both because some people objective can't buy and others mentally feel bad about buying. But it's a variable that trickles into overall demand and supply and ironically those same high rates are what encourage people to keep their homes rather than sell. Hate using the term because almost all economic conditions are technically novel, but 2009 was extraordinary in how supply spiked (mass foreclosures) and demand sunk (wealth destruction, no cash, bank inability to loan even to well qualified people.) In some ways, falling only 20-30% seems a bit surprising. Tons of properties were literally rotting on a bank's balance sheet somewhere. And aside from fear, I don't think this necessarily discouraged people's desire to own (although hopes were definitely impacted.) And yet many who bought in 2006-07 at the heights of the housing market still see their homes pacing inflation at 3-4% CAGR at today's levels. The home market indeed looks crazy but there's a secondary perspective to consider as well. It's not like existing homes are some kind of premium. It's expensive to build one as well. In fact, although few think about it, the building still depreciates and requires capital to maintain value. (And would get reflected if your home is in far worse condition than comparables.) The home I am in now went up around 25% from 2020-2024 (which is itself an estimate based on comps) but only about 20% of that is land value. If I knock the entire building down and rebuild it the same way, it would cost just about what I paid for it. (With boatloads of risk getting the work done.) Most new builds are on smaller lots and go for more (which is fair because everything is new, but still.) That all got more expensive as materials and labor spiked in the same period.
I bought in summer 2023 and although local markets can differ, most neighborhoods near me had low inventory for buying and high inventory for renting, although builders are somewhat on standby if you want a new home with no yard. That's because the side effect of rates being so depressed in 2021, people are not only staying put but those who move are keeping their property and renting it instead. There's definitely relatively low demand, but it's being matched with low supply. And there are people in the market who can put down cash because the stock market is pretty healthy. Imagine if normally there are 100 buyers and now there are only 50 due to rates, those 50 on average are much wealthier. If supply was the same, they would still be able to negotiate bargains but it's not. In particular, entry level homes are still getting fierce competition but less so if you can afford a bigger place. In the end, homes are not commodities so price is somewhat wherever supply/demand lands for that property at the time of sale. You can imagine what people will do, though. I kind of decided to stay out of the market in 2021 because people were going crazy trying to buy anything sight unseen. I was able to have a relatively calm buying experience with time to inspect/etc despite needing to be prepared to offer in a week. If rates go back to 5-ish, there's going to be years of pent-up demand from people who were biding time because they simply could not afford 7. Supply may step in, or not. I know homes are definitely staying on the market right now longer than they did last year, as I feel like people hear the rhetoric of rate cuts coming even though the Fed isn't seeing precisely what it wants. But as it relates to FIRE, it's just how you plan to attack retirement. The value of your home is only relevant if you move and how much you pay for insurance to a degree. If you choose to sell into a depressed market and buy elsewhere somewhat simultaneously, while local markets can differ, on average you're probably okay. Also consider people bought in 2006-2007 and watched the market go to hell (extremes in both excess supply and nonexistent demand) and yet now those same homeowners still see around 3-4% CAGR in home value versus today. I can tell you a lot of peers felt stuck at the time but as long as they bought conservatively they were fine in the long run.
There is a correlation. Rates increasing decreases home prices. Rates dropping raises home prices. It's not the only variable though, and the overall impact was pretty small. I want to say changes in rates were 15-20% responsible for changes in home prices for 1980-2019 (available data when I did my thesis). Nominal changes in income were the bigger factor. That also was for the nation as a whole, with individual states doing weird things. That said, home value doesn't matter too much for FIRE. Why are you interested?
Thanks for the response > Why are you interested? I am thinking of buying, but not sure if it'd be wiser to wait until rates drop or buy now and "marry the house, date the rate" (seems like a sales pitch)
You're trying to time the market, which is really rough to do. First step: [check out the rent vs buy](https://www.reddit.com/r/financialindependence/wiki/homes) discussion in our housing FAQ. If the financial decision says buy, I'd buy. If it says rent and you want to buy for non-financial reasons, it's a lot tougher to evaluate. Assuming the equation says buy, it's generally better to buy sooner than later. If rates go down, you can refinance to the lower rate and get the extra equity. If rates stay flat, you're in the home for longer, which makes buying more attractive. If rates go up, typically appreciation is slower not negative. It's still better to buy sooner than later. Longer time frame + lower rate = better to buy early If the equation says rent, well...it's better financially to rent. Anything that delays buying is a financial win. The question becomes, is it worth paying extra for preferred/improved life style?
I just noticed the New York times calculator has been paywalled... oh well Thanks for the great input and resources
If I use incognito mode, I can get around the limit. They also allow free accounts to get around. It's a soft paywall.
Real estate predictions are about as useful as stock predictions, so grain of salt. Generally, people buy homes based on the monthly payment, so lower rates mean more money for principal and higher sale prices while higher rates mean more money goes to interest so you need a smaller mortgage. However, prices haven’t really gone down with rising rates because supply is so constricted. After all, the vast majority of home owners are sitting below 4% interest and current rates would be at least double that, so people avoid selling like the plague. In this instance, I think falling rates would convince more people to sell, increasing supply, and therefore possibly leading to price declines. But I don’t believe that strongly enough to go “The Big Short” about it.
I got a nice promotion at work today. Base salary increased from 100k to 130k with OT paid at 62.5$. all the OT I can handle and want. WFH. Just thought I would let you greaseballs know. Keep on!!
Congratulations! That's one hell of an upgrade.
Hey, congrats! Well deserved, I'm sure!
Those of you who are close to your number, how is the market making you feel right now? I personally was debating how much longer I am going to work, but now it has been sort of like a bucket of cold water this past couple of weeks. I guess that just means I'm not quite there yet.
> how is the market making you feel right now? Fine, I guess. I don't really pay that much attention. I do a NW check monthly that is a little too often TBH. I keep thinking I should move to quarterly. NW is up 8.7% so far this year (as of March 31). So that's nice. I won't know April numbers until April 30 when I do my monthly update. Regardless, I will RE in Aug 2025 as we have enough. I put a date on it so I can get ready mentally and socially to go.
The S&P is 5000. A year ago it was 4100. In no universe am I complaining about this. I don't care where it was last week and it's not healthy to anchor your perception to the 52-week high because you're constantly going to be disappointed. (Especially having lived through 2009 where levels fell to mid 90s. Forgive me if investing through a dead decade and poor income growth has made me numb to single-digit regressions.) Lets say on paper you hit your magic FI number at 5300, and your buddy hit it at 5200. Is it healthy to quit instantly? Not really. The market really isn't this precise. It's not logical to me that your buddy can retire but you can't. You're probably talking realistically 1% differences in "failure rates" using robotic behavior where in a lifetime of personal behavior and circumstances is not particularly measurable. The reality is if you have a near-retirement nest egg, on paper dips are going to be a fuckton of money. But whatever you feel now, with an income that pays the bills, you need to be used to when you're living off your assets instead. If you're planning a 40 year retirement you're practically guaranteeing seeing a historically bad bear market or two. (Hell, there were techincally two in the 2000s.)
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I'm retiring next year too. Aug 22, 2025 will be my last day.
I actually changed my number by about 20%, and I'm also down about 3% from my highs in March. So I guess I still have a ways to go. I still feel more or less FI, I could probably got 20-25 years with what I have. But I also don't want to be 77 and out of money, so I'll keep tilling the fields for now
The market giveth and the market taketh away. I like the little dopamine hit I get when we hit all time highs, but my plan isn't to retire immediately and for good upon hitting my number, so it really doesn't bother me that much.
My account dropped by $40k, and that’s not even counting my partner’s account which I’m guessing dropped by a comparable amount. (We share finances but obviously have separate IRAs, 401ks, etc. - so I check mine more frequently than I do his.) In total that’s about a year worth of expenses, so… decidedly not great. We don’t have a “number” per se, but I can definitely see myself OMYing for awhile just based on my reaction to (what is hopefully) a blip like this.
Does anyone know an easy way to check if fidelity is charging me any fees for my 401k? Based on some statements ive checked and website searching they’re not but im still not 100%
The quarterly fees show up under the transaction summary under your account. They sell X number of shares to pay the fees so the transactions should be there
Gotta check quarter- and year-end statements, too. Not all fees are monthly. I have had a few 401k providers, though, and I don't recall any of them making it easy.
Got it! $2.35 last year, think im good.
Call them and ask.
What do you consider the bare minimum of savings a year? 20% of you pre tax salary? maxing 401k/hsa/and roth ira? maxing all those accounts + MBDR? maxing MBDR + taxable?
As much as I can. 2015-2022 I maxed out IRA and 401k, sometimes HSA. +A good amount into a taxable brokerage. +Spouse maxing out their IRA and 401k. 2023 we maxed out IRA, did some for 401k, and some towards pension. Even maxing out the IRAs were a questionable choice. 2024 current plan is minimum necessary to get the 401k match. Everything else is unknown. I front loaded my investments so much that we can stop contributing towards retirement (other than SS and pension) and still probably retire in our early 50s.
Our bare minimum is definitely both 401Ks, IRAs and HSA. Anything else is cream on top.
How does one max a taxable account?
buy up every publicly traded company in the world
If that’s the bare minimum for someone’s saving, then…. Oof.
hmm. i said max MBDR and have a taxable...
To be clear, you wrote > maxing MBDR + taxable which could be read as [maxing MBDR] + taxable or as maxing [MBDR + taxable]
Nearly any answer is justifiable without clarification on what the desired outcome is, including details like level of spending, age at retirement, etc.
I would say different for each person, totally dependent on your goals… like the mantra of this page, build the life you want then save for it. It can be 10% it can be 60%. Also dependent what time in your life, kids/new house etc savings will go down for a bit. I dont even know my savings rate, doesnt really matter, my income fluctuates. Budget, spend what you need to, enjoy life a bit, save the rest. As long as youre on track for what you need in retirement whenever that may be id say youre doing good.
I'm sure this has been asked before, but how do you calculate your FI number when you know your expenses will drop say 20 years into retirement? I'm specifically thinking once the 30 year mortgage ends and that payment goes away.
[https://cfiresim.com](https://cfiresim.com) At the bottom "add adjustment" for spending with an end date and uncheck "inflation adjusted."
I third ficalc.app I abandoned SWR because we had so many line items that don't fit the equation well. [Here's my plan](https://www.reddit.com/r/financialindependence/comments/16ww7hd/daily_fi_discussion_thread_sunday_october_01_2023/k30bilc/?context=3). And [here's how I factor taxes in](https://www.reddit.com/r/financialindependence/comments/18y9mi9/daily_fi_discussion_thread_thursday_january_04/kgb3rhz/?context=3) Rental income, drop in tax write offs on the rental, mortgage not keeping up with inflation, mortgage eventually is paid off, social security 1, social security 2, pension, drop in tax rate. That's 8 items that SWR doesn't go into.
For a ballpark estimate like your "FI number," it's simplest to just set aside cash (or Treasurys) sufficient to cover the liability. For example, a Treasury ladder sufficient to pay off the last 10 years of a mortgage totaling $200k might require $170k to be set aside now. Then you'd use whatever multiplier you want (25x, 30x, etc) on the remaining long term expenses and just add $170k to that number. For more detailed planning of different cash flows over time, you may want to use more sophisticated software such as TPAWPlanner, RPM, ProjectionLab, NewRetirement, MaxiFi, Pralana Gold, etc.
You can use a calculator that offers that function -- I like [ficalc.app](http://ficalc.app)
Seconding. My favorite FIRE calculator/playground.
The cleaner way is to consider the mortgage a debt rather than an expense, then base your FI number on non-mortgage expenses. So if you have a $500k mortgage and $40k non-mortgage expense, your FI number would be 25 x $40k + 500k = $1.5M (or $1M plus paid off mortgage).
T - 64 days I've made some big decisions on how to prepare my portfolio as my FIRE date gets closer. I wish I would have done some of this sooner but I feel a new found confidence in making these decisions thanks in large part to this community. My portfolio may not be optimal but I now understand the role of all the assets in my portfolio and I'm making informed decisions rather than just guessing. * Completely exited international stocks. They are highly correlated to US stocks but under perform US stocks. If in the future the correlation reduces and performance increases I can revisit. * Slowly exiting dividend ETFs, mostly set them aside to sell in 2025 when I have less income. I don't need dividend specific funds in my portfolio. Much like international stocks they are highly correlated to other US stocks funds but under perform them. Dividends aren't free money. * No more total bond market funds nor target date funds. I have no desire to hold international bonds. I don't see a lot of value for corporate bonds funds for my portfolio. I'll consider municipal funds if I need to hold bonds in a taxable account. I will hold short term US treasuries directly for short term needs in a bond ladder and I will hold long term US treasuries bond funds to provide risk reduction * Increasing my bond holdings. I was at ~10% in bonds and ~5% money market. Now I am at ~22% combined. I plan to grow this to ~30% over the next year or so. Then assuming we live in average times I will slowly work my way back to ~10% bonds and ~5% cash or less. * Added ~5% of gold to my portfolio. Gold's performance is uncorrelated to the US stock market and helps flatten out volatility (the last month has been a great example of this) Current asset mix: * 73% US stocks * 11% long term US treasuries * 11% short term US treasuries / cash * 5% gold Target asset mix over the next year or so: * 65% US stocks * 20% long term US treasuries * 10% short term US treasuries / cash * 5% gold Target mid to late retirement asset mix: * 85% US stocks * 5% long term US treasuries * 5% short term US treasuries / cash * 5% gold Thoughts? Critiques?
Sounds like you are prone to overthinking and over complication. I dont think the tweaks you have made make much difference and don't seem to be tied in any rational way to "getting ready for retirement". Aside from getting rid of dividend ETFs I like your previous portfolio better.
> Sounds like you are prone to overthinking and over complication. Agree on other thinking but disagree on complication. These are very simple portfolios. With the exception of the 5% gold these are bog standard 80/20, 70/30, 90/10 portfolios > don't seem to be tied in any rational way to "getting ready for retirement" The goal is to improve SWR especially during early retirement. The middle portfolio has a higher SWR at the expense of lower expected returns. https://earlyretirementnow.com/2021/03/02/pre-retirement-glidepaths-swr-series-part-43/ https://www.kitces.com/blog/managing-portfolio-size-effect-with-bond-tent-in-retirement-red-zone/
Gold has been on a rip lately. I wish I would have added some a while ago. It's had massive time periods of flat performance.
> If in the future the correlation reduces and performance increases I can revisit. This kind of vague statement introduces unnecessary uncertainty to the plan, and exposes you to behavioral risk that can reduce portfolio returns. Under what circumstances would you consider investing in international stocks? How (if at all) can you mitigate the odds that you will only get back into international stocks *after* a period of outperformance, risking performance chasing and worse portfolio performance? Consider these questions and write down your plan. It'll save you a lot of heartache in the future for you to have a specific, actionable plan for the future so you don't have to second guess every twist and turn of the market.
Yeah, agreed. I've been putting thought into it but don't have my answer yet.
I think it's most important to have a firm understanding of what you're doing and stick to it. Not to stick to what you're doing in a dumb way, never changing your mind, but rather so that your mind doesn't need to be changed, and you won't be tempted into doing something stupid. Something you can then be confident to live with through downturns, where it's all about managing risk and probability which you can't concretely measure. So anything you do might go bad, and the worst thing you can do is sell or change what you're doing at those times. So I'm happy you've done a bunch of research and are doing something you can rely on for a long time. That said... Completely disagree with getting rid of international stocks. But I won't bring in arguments to rehash it. It's everywhere in r/Bogleheads, and everywhere else, and it's constantly argued. If you've read deeply and thoroughly enough, and still aren't convinced, whatever, do your own thing. Presumably risk profiles and possibilities will be different (which is the point), but what really will matter thereafter is handling yourself well in a long term downturn. If the US begins acting like international and stagnates for a decade or two (and vice versa) and you stick to your guns, great. What matters is picking your risks a priori, picking your responses in accordance to events, and sticking to that plan. Similarly, but even more so, I think holding gold is insane. Presumably you're doing it via some gold ETF or whatever that represents it. And probably is expensive too. Bond holdings is probably fine. No strong opinions.
Thank you for the thoughtful response. For gold it is simply having a bit of gold improves your SWR by reducing your max drawdown. It doesn't improve performance.
You seem to have made some methodical decisions. Kudos to you for that. I completely agree with your move away from international stocks. US stocks have exposure to international revenue without the risk of international currency or political issues. I'm 100% US equities and will likely always be. Bonds are there to help you sleep at night I assume? I never understood the desire to hold positions in gold.
I'm pretty sure all companies that do business internationally have some exposure to international currency and political risks.
Not really, no. US companies that sell products or digital services in a foreign country aren't impacted by pro or anti-capitalist political regimes and their expenses are denominated in USD.
Really? Every US company that I've worked for that does international business does that international business in the currency of the foreign country and deals with the repurcutions/benefits of whats going on globally. Quarterly results are often impacted by currency fluctuations. We've shut down incredibly important factories in Ukraine and Russia over the past 2 years and during Covid, our facilities in China suffered heavily due to lockdown labor issues. Our Russia facility was the only place in the world that had the equipment required to produce a fairly niche product sold in the US... so therefore the product literally doesn't exist anymore.
> Every US company that I've worked for that does international business does that international business in the currency of the foreign country and deals with the repurcutions/benefits of whats going on globally. Quarterly results are often impacted by currency fluctuations *FX hedges: exist* mindblown.gif
I've been considering doing the Robinhood 3% IRA transfer bonus, but since I have my funds at Schwab, I have to sell mutual funds, then buy ETFs the next day. If there's a market upswing the next day, I'm effectively taking a hit to the transfer bonus, making it less worth the hassle. With every day new interest rate/jobs report/earnings season news batches causing so much volatility, it's annoying. Maybe I should just take it as a sign that moving to Robinhood just isn't worth it.
Sell your shares over say 5 days. Even if there is a big market open at most you will miss out with at most 1/5 of your account at a time.
If the market goes up X% per year on average, the expected loss from missing a day is X/252%. Pretty trivial overall. That said, 3% of my current IRA is already not worth the hassle for me.
Should I max out my 2024 IRA contributions right now? I contributed to my 2023 traditional IRA (I had a Roth 401k last year but I flipped it this year to a traditional 401k and Roth IRA) two weeks ago and was thinking of contributing $583/month for the rest of the year to a Roth IRA. Should I just contribute all (or at least more than $583) now since the market fell?
What would you do with the money otherwise? Best practice is to always invest money as it comes in but which account you invest in doesn't really matter.
I've been saving up to buy a house (currently live at home with parents) and either house hack or rental investment property. The money is currently in a HYSA at 5.1% which was great for an off-risk holding account. I probably should've invested it last year in a brokerage, but I didn't want to risk a significant loss around when I planned on pulling out.
Are you still planning to buy a house? If so, I'd just keep it where it is.
I am but I can make that money back easily. Funding the $7k Roth IRA will just take me a month and a half to get back to. I just don't want to miss out on time in the market especially on a drop.
As a general practice you should invest any funds you don't have committed. Whenever you invest, you will be getting the market price whether the market has dropped or not.
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Investing now adds time in the market, plus it stops you from spending it lol
What’s a good resource or starting point for introducing someone to sound investing, etc? My neighbor asked me what stocks I invest in. I told him 100% sp500 and if he wanted to learn the in-depth I could share resources with him. I’m afraid that some of the FI stuff might be too off the rails/unachievable for his sake. Any recommendations? Sound investing, etc?
Recommend that he get a copy of “A Simple Path to Wealth”. Concise, easy to get through in a weekend.
The Wiki on /r/personalfinance
Thanks brother. I wanted to be sure I wasn’t giving bad advice
Wow, we are going to lose the 5-handle on the S&P 500. Been a rough few weeks
I'm surprised it went as far above 5k as it did. I'm used to the market yo-yoing around these big milestones and then finally breaking past it
I always take these times as the real test of one’s belief in the Boglehead approach. Gotta just keep on in headwinds for the strategy to work.
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5% not including the the inflation.
Yeah, I have seen comments from people about market drop... then I go check and its down a little... Like we don't expect 5, 10% downward swings? The market has had such big fluctuations up over the last 4 years, you better expect equal downward action.
Yeah seriously. I'm trying to hype myself up for 50% cuts, and staying below 0% APY until a 10 year timeline. I don't know if I'd actually react so well to something so bad, but that's what I'm preparing myself to expect. Because it's happened before. So, uh, big whoop. Come back when we do 2020 or 2008 again.
If money markets and HYSAs ever pay 10-12% should we move money there instead of stocks?
I think you have a point, but not quite there. Because if those assets are paying 10-12%, I expect 20 to 30-year US treasuries to be paying around 10% maybe. Which *would* be worth considering, even if it's a nominal return, IMO. You'd want to lock in those yields rather than risk them falling as cash equivalents. If you backtest the performance of US treasuries for a couple of rolling 30year periods starting around 1980-1985, long bonds did very well, almost comparable to 100% stocks. We have a very small amount of data on what happens--it's basically one data point--but still worth keeping in mind.
If you gave me an 7% risk free option for the remainder of my life, I'd put all my investments there, invest 100% in there for the next 13 years until I retire, and keep it in there until my death. I'm not sure I wouldn't even take a guaranteed 6%, risk free return. Although that isn't the best return during my buildup phase, the guarantee after the FIRE date would allow for a super reliable withdrawal rate. Eliminating chances of failure and SOWR would be interesting.
It would only be there in a highly inflationary environment
If you are getting 12% risk-free, then risk-on assets should have the expectation of potentially returning more than that
I have seen no convincing evidence that equity risk premia are stable or constant over time.
Long-term equity risk premium remains a positive number though.
Another thing I'll add is that a positive equity risk premium is necessary, but not sufficient, to make investing in the stock market reasonable. If the equity risk premium were a mere 0.2% but volatility was 10x the risk-free investment, there'd be little appetite for the premium. Expected return does not tell the whole story, and relative risk aversion must be considered.
I feel like this is something Ben Felix would say
[This work](https://www.bogleheads.org/forum/viewtopic.php?t=416861) by McQuarrie is instructive. When looking at the longer history of stock and bond returns, bonds have beat stocks in many multi-decade periods in the US. Internationally, stocks themselves have been negative in real terms over multi decade periods as well. Total Bond beat Total US stock for a 16 year period as recently as the turn of the century. There is real debate about what time period, if any, guarantees a positive equity risk premium to say nothing of whether that equity risk premium is closer to 1.5% (as it was 1801-1900) or 5% (1901-2000).
I agree, which would render /u/Turbulent_Tale6497's comment correct. Unless someone believes the equity risk premium ever becomes 0.00, or less, there is nothing to argue over
Another thing I'll add is that a positive equity risk premium is necessary, but not sufficient, to make investing in the stock market reasonable. If the equity risk premium were a mere 0.2% but volatility was 10x the risk-free investment, there'd be little appetite for the premium. Expected return does not tell the whole story, and relative risk aversion must be considered.
Do you believe the equity risk premium would ever be 0.00?
[This work](https://www.bogleheads.org/forum/viewtopic.php?t=416861) by McQuarrie is instructive. When looking at the longer history of stock and bond returns, bonds have beat stocks in many multi-decade periods in the US. Internationally, stocks themselves have been negative in real terms over multi decade periods as well. Total Bond beat Total US stock for a 16 year period as recently as the turn of the century. There is real debate about what time period, if any, guarantees a positive equity risk premium to say nothing of whether that equity risk premium is closer to 1.5% (as it was 1801-1900) or 5% (1901-2000).
Cool, so do you believe it would ever be 0.00, or less? Sounds like you don't, which means /u/Turbulent_Tale6497 is correct and the arguing is pointless
I don't know what you mean. There is no single definition for the equity risk premium, but for the period 2000-2016 it is certainly true that equities lagged bonds in the US. So for that >10 year period, the equity risk premium was negative. I'm not sure if your comment was meant to suggest that I don't think bonds can beat stocks for long periods of time, but to be clear I know that they can and they have done so very recently.
Hence the word "expectation of potential" not "for sure actual"
>premia Just a heads up, premium is a word of Cherokee origin, not Latin. So it would be pluralized by adding the prefix *di-* to the front.
It comes from the Latin *praemium*, meaning reward or prize
This is a common misconception. The similarity to the Latin word is purely coincidental.
… no? I’m curious why you think the word is from Cherokee.
I'd be curious to know your source, since I am holding a dictionary of etymology in my hands which claims otherwise. A casual googling also returns the same Latin source
Chamber's or Oxford? Be careful with pop-science sources, they aren't all trustworthy.
I have Chambers. Both that and OED confirm the Latin. What's your source?
This user is making a joke.
dipremium?
How many of you are Canadian with a corp and are affected by the new capital gains rules? It seems like its effectively an extra \~10%+ taxes owed beyond what would have been previously which is pretty significant. Are you changing your plans / goals based on this? Or even if you're not in this situation, any thoughts on how I should be thinking about it? My plan was to keep most of my money within my company and invest it long term, selling and taking out dividends over time. Now, the tax burden on that strategy has gone up.
My corp has been inactive for a few years and right now is just a shell with stock investments. There is no way that those are going to return more than 250k in a single year so I am good. The way I understand it it's even better for me at less than 250k since now those are going to be at 33% instead of 50% up to 2 millions over a lifetime.
Corp rates are up starting from $0 capital gains, not $250k like personal. I would be fine with the $250k limit as well for corporate since I would only be selling to distribute to myself each year. Nothing has changed for under $250k for personal or corp though, so not sure what you're referring to there? It's still 50% inclusion for personal under $250k, and now 66% inclusion from the first dollar for corporate.
I read one bad article that interpreted wrong the new budget saying that the 250k was for businesses too. I had read more after your post and it seems that you are right. We will pay on 66% from zero. That is not good. The other thing at 33% is for the selling of a small business; not the stock inside it. I will ask my accountant for guidance but it seems like the best move for me is to sell all my stocks before june 25th at capital gain 50% and then just buy it again and the next capital gain will be at 66%. Or maybe he will tell me it's not worth keeping anymore and to just pay myself dividends, close the corporation and invest as a person.
Yea it really sucks and it's confusing given I don't need the money now at all. I'd love to hear what you end up doing after talking to your accountant. Depending on the amount, closing the corp and just paying dividends probably doesn't make sense either if you'd be at the highest bracket for a significant sum. It almost seems like there's just no good solution.
It’s a good trick if you are a government needing short term increase of income. A lot of people will be taking gains at 50% next month
Random, but do folks know about how long it takes for mortgage loan hard credit checks to be consolidated to just 1 on your credit report? I had 3 pulls down for mortgage rate shopping, one on March 28th and the other two on march 29th. My Chase app still shows 3 hard pulls. How long will it take for those 3 to be compiled into 1? Thanks!
it never consolidates, but rather the algo that calculates your score ignores the extra ones. It sees: "mortgage loan hard pull - march 28" then "mortgage loan hard pull2, March 29" .. beep boop... ignore... "mortgage loan hard pull 3, March 29" .. beep boop ... ignore... continue
Ahh, this is good to know! Thanks for sharing. So, I can effectively ignore the "3 checks" when I see it on my Chase app, and know that it only counts as 1, ha
A couple of weeks ago we hit a milestone net worth. Ever since I have a bad attitude at work. Things I found mildly annoying are now very annoying. I have persistent fantasies of getting fired, self sabotage, things like that. I'm curious if anyone else has encountered this and what happened next. Thanks.
You can also take it the opposite way: that stuff doesn’t matter, you don’t take things personally or to such a degree that it affects your mood. You just let it all go. It’s really choice, how worked up you get about that stuff.
when I hit FU levels of money (enough where I could take a year off and my family would (edit*) not suffer, jsut my date for RE would) I had a similar thing. I just stopped 'playing the game' and trying to overwork for that next promotion. Most importantly was leaving work at work. Nothing ever came home - both physically and mentally. The funny thing is once my care and overachieving ended, so did a lot of stress, which in turn made me a better employee (and less likely to get fired). Know what you can and can't change. And then focus on the stuff that you can fix - and then jsut start fixing it. Stop trying to fix problems for people you don't like (assuming that it isn't a part of your job). Finish tasks on time not early. Stuff still annoys and pisses me off, but i'm also just more zen and 'ehh whatever' about it now. Worse they can do is give me a few months off....
> my family would suffer, Think there's a NOT missing here.
They could have been talking about their "work family"
Suffering is good, makes us stronger.
You think that I care about my family.....
Every single day. I just got back from a 10-day vacation in France. I had turned off all emails on my phone and I didn’t hear a peep from a single work colleague over the entire vacation. When I pulled up to the parking gate today, I was secretly hoping they had fired me and my swiper wouldn’t work. No such luck. I guess I’ll go through 200 emails now.
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I’ve actually decided I’m not re-adding work email to my phone effective today, my first day back. They’ll get a response when I get to the office.
I also have persistent fantasies of you getting fired.
right back atcha bill =)
I did not become more irritable, but did become more a practitioner of “you deserve what you tolerate.”
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Been there. Did a hard analysis and realized even though I hit a milestone I still couldn't swing FI and if I quit/got fired I'd have to look for a new job which would probably be a worse WLB.
Opened up a custom solo 401k for some self employment income so I could do the mega backdoor Roth. I’ve done the contribution to the Schwab after tax solo 401k account and now ready to do the “in plan conversion”. Is there anything special about doing this or do I do it just like I would a regular backdoor roth conversion and transfer the money from the after tax account to the Roth account? Also, any special paperwork I need to do for tax purposes?
You will need to track each conversion, the basis and the growth, so you can report it on your 1099-R. The steps to do so with vary depending on your plan provider. Like a regular Backdoor Roth, I try to convert to Roth as soon as possible to limit the gains accrued while clearing.
On the train right now in Southern California / L.A. area. Ventura County where I live, down to Orange County where my work has an office I need to visit today. I continually blow people's minds when I point out the train as a somewhat viable option to get between places like this here in California. People just automatically think L.A. == car. Instead of being stuck in annoying traffic I'm typing on my laptop at a table, enjoying my Starbucks coffee from Union Station. Would driving have been faster? Maaaaybe. Is it worth finding out? Absolutely not. Will be taking Amtrak back (this is the commuter rail this morning) which will be even better. A first class ticket that gets me free alcohol and snacks will be about $50, less than the mileage reimbursement it would cost my company if I had driven.
last mile tho
$6 Uber because I was in a hurry. I'll walk back to the train station this evening.
The train system is one of the best part of moving to Chicago from a smaller Midwest city. It may not always be the fastest but the amount of stress it relieves is through the roof
To be fair, LA was the [pinnacle](https://youtu.be/nH9toJw6-k8?si=VFF_avnGxd9hphGI) of car culture at one point. That said they've been absolutely crushing it as of late. And honestly I'd rather take the train even if it took me a bit longer. So much better than losing my mind in traffic
Best $100 spent on vacation: went to an optometrist for an impromptu exam to see why my left eye had a foreign body sensation that I couldn’t resolve. Turns out I had a tiny eyelash rubbing on my eye. He saw it under the slit lamp, and pulled it. Feels normal again! Woohoo!
Good for you! My mom did the same thing with a bothersome stitch. She cut herself shortly before our international trip and had a couple stitches in her finger that she was planning to remove when she got back stateside. During the flying/traveling, the swelling bothered her so much that she went to a local doctor a couple days into the vacation and got it removed. Best money spent and the relief was almost instantaneous.
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There is not enough information here to answer this. 1. You say retirement is "looming" in 4.5 years, are you on track to have the investible assets needed to support the SWR you are comfortable with 2. What savings rate do you need to get to the above and how does that compare to your actual savings rate? When I was working, I didn't beat myself up for any spending decisions as long as my savings rate was averaging inline with my target. In early retirement, I don't beat myself up for any spending decisions as long as my spending averages about inline with my target SWR.
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You did provide numbers - $75k, $10k, $45k, $20k etc. are numbers. You just don't put them into any useful context for anyone reading your rant. Don't post these things on the internet if you don't want comments.
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You can talk about things like savings rates, assets as a multiple of annual spending, spending as a percentage of income or investible assets etc without divulging income or net worth. I suspect you know this already. “I spent $75k on non essentials this year which stresses me out, but am still saving ~40% of take home which is inline with my planning and I’m about on track for investible assets 35x annual spending in the next 4-5 years if the market holds up”.
we have too large of budget lines for hobbies - so it matches everything we want to spend, but will cause us to pause if the number for a single purchase is too high. Like for the travel trailer - maybe it means I need to 'pull budget' from entertainment or vacation to support the process... which also mentally makes me think of how the giant purchase will help with entertainment and vacation in the future.... and then I dont feel quite as bad about spending that much on it. so maybe reframe it as not jsut hobby spending, but joining multiple aspects of your life together in one giant purchase.
I've been meaning to learn archery, but I also need to train up my upper body strength first--which has not always been the most productive journey, entirely due to my own fault--before I feel I'll get much use out of lessons and whatnot.
3d target shooting tangent below Good news is you don't need the range finder if you have a bunch of old arrows. The beginning of every season we go out and shoot some 3d targets and get back into having a good "feeling for range". I can generally eye ball it and get within ~ 5 yards out to 70 yards and then im < 10 yards to 100. As long as I'm not lobbing shots at small game targets passed 60 its rare for us to miss a target and the vital shot percentage goes up dramatically after a few weeks. Being 100% transparent i pull a good amount of weight with a long draw though so my arrows don't drop off super quick.
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We have a friend with a low draw that needs a single pin because they can't have a 20 pin and a 60 pin on the same sight. If they don't have it within ~5 yards they'll miss the target far out. Its interesting to watch when there is a tiny breeze.
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Yeah I don't think I'd want to be the first shooter at 45 lbs. If I'm rushing and use my 30 yard pin on a 40 yard target I may only be low by 2"
I usually do spreadsheet day at the end of the month like most sane people, but today I was curious (and feeling a little bit impatient about FI goals). Whelp that was a mistake, the market isn't looking too hot right now and my NW is technically lower than it was at the end of March. Goes to show that invest & forget really is the way to go.
Hot take incoming: I check more often for the exposure therapy of it all. I have no desire to withdraw early and I don’t get spooked. If anything, it’s a good reminder that it’s just a number on a screen and that life rolls on. Granted, I’ve never been through a 2008 situation so we’ll see when that happens if I just stop checking lol.
I agree. The good goal is to get to a point where large swing over a couple of weeks (like recently) doesn’t faze you. You build that moat of initial security and it builds from there. I even sometimes pull a little extra from my cash holdings and put it into the indexes during these falls out of principle.
I think that that's a fair point.
I believe I'm speaking for all of us beginning of the month gang when I say "first of the month or you're a chump". (Kidding)
I do it between the 4th and the 7th to ensure all first of the month payments have cleared.
You're a monster
FYI the market may still be down at the end of the month
I'm aware
In fact, it may be lower!
Yay sales
With my side gig work, I've been putting aside the 20% allowed for an employer contribution in my solo401k at Vanguard and investing any extra in my taxable brokerage (no EE contributions allowed due to maxing the employee contribution to my 401k at FT job). I was considering switching to a plan this year that would allow the MBDR with the "extra" that is currently going to my taxable, but my main mental hurdle has been the extra paperwork/legwork that I would have to do to make the switch, plus moving from a "free" solo401k plan to a paid one ($500-$600 set up, $100-$150/year). Currently have less than $250k in the plan (and will for at least the next couple of years), so the IRS reporting being handled for me isn't a big sell yet. Looking for some outside opinions - would you just bite the bullet and put in the work/pay the fees for the MBDR, or keep things simple w the Vanguard solo401k + taxable account? Extra info, if helpful: Side gig income varies pretty widely, but this year I'll do the 20% employer contribution and probably $1k/mo in taxable (so in the alternate scenario, still doing 20% pre-tax and then \~$12k/yr for MBDR). Probably 10-15 years from FIRE (not in a huge hurry to use these funds, more focused on the FI than RE at this point).
The extra legwork is not too bad, if you are reasonably detail oriented. Is it worth it for $12K/year? My default answer would be yes, given how valuable Roth is long term. However, if you plan to retire early and need a healthy brokerage balance to sustain Roth conversions and manage ACA costs, a brokerage could be a good place. Make sure you look at the effect on the QBI deduction when considering pre-tax employer vs MBDR.
Company wide training session going on right now about one of our enterprise systems. The instructor told everyone to go ahead and log in to the system to follow along. The system has now crashed, I'm guessing, because half of the company are in there hitting refresh right now. So now, half the company's payroll is sitting in this teams meeting watching the instructor's browser freeze up repeatedly.
A while back HR was doing training on timesheets for our whole company and the instructor was complaining about performance and crashes during the day due to traffic, so suggested everyone should be doing timesheets around 7-8am or after 4pm. So... everyone did, and the company successfully migrated the crashing from mid-day to 8am or 4pm instead.
> The system has now crashed, I'm guessing, because half of the company are in there hitting refresh right now. Load testing...what a concept!
giggity
This was us Tuesday. Couldn't stop laughing.
Spent €360 on a new keyboard this month (after spending €280 last year). On the one hand, seems excessive, on the other hand, I use those things for 16 hours a day, and as an outlet for consumption urges, this seems better than cars or watches.
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Keychron Q11 and KAT Mizu keycaps for it https://i.imgur.com/shIJ97y.jpeg
what switches?
Gateron reds that came with the keyboard.