|
I think I came up with a decent beginning goal, with numbers behind it. This is more as a thought exercise as I'm working through the book. What would it take to live on only the monthly returns from money that I've invested in some particular fund? Let's pick some arbitrary amount like $2500 per month in order to live at a bare minimum or something. Therefore, the question is, what X amount of money would I have to invest in a stock with Y annual return in order to get at least that much to live on per month? Let's take VFIAX as an example. If I'm reading its profile right, in the past 10 years, it's had an annual return of somewhere between 20% and 13%, 16.5% on average. In order to make all your expenses for the year, you'd need to get at least $2500 * 12 = $28,800 from an annual return of 16.5%. The equation then looks like this: code:Does that make sense? Maybe that'd be a decent goal, saving up to invest enough that you can live off the returns. shut up pollyanna
|
#
?
Feb 28, 2020 00:20
|
|
|
|
| # ? May 27, 2024 10:02 |
|
|
Pollyanna posted:Does that make sense? No. Go finish reading the book. Pollyanna posted:Maybe that'd be a decent goal, saving up to invest enough that you can live off the returns. Ya think? That's the whole point.
|
|
#
?
Feb 28, 2020 00:22
|
|
|
 ok
|
|
#
?
Feb 28, 2020 00:23
|
|
|
For everyone else reading along, Pollyanna's idea runs into sequence-of-returns and volatility problems, and also relies on the longest boom period without a bust in modern history as the representative example of expected returns. Pollyanna, you're starting to think about things in a useful way but you're still missing a bunch of important stuff.
|
|
#
?
Feb 28, 2020 00:24
|
|
|
Last year I consolidated my financial accounts, rolled my old 401k and 403b into an IRA (then converted into a Roth IRA). Felt pretty good about having everything under control. Turns out I missed some  . A 457b and another 401k. From what I've been able to find on the IRS website (1 2), I should be able to rollover the 457b into a trad IRA just like a 401k - is that correct? Plan is to roll both the accounts into an IRA, then move the funds into the Roth IRA like before.
|
|
#
?
Feb 28, 2020 00:49
|
|
|
Hey look, at least you got there. There's a lot of people who don't even get to step 1. But yes, go to https://www.firecalc.com/ and use actual numbers. And don't use some ridiculous expected returns number like 20%. Try 5% if you want to be on the safe side of realistic.
|
|
#
?
Feb 28, 2020 01:00
|
|
|
Pollyanna posted:The market will be back up by the time it’s worth it to withdraw from your funds, don’t worry. Thank you, Pollyanna. You truly got that one right.
|
|
#
?
Feb 28, 2020 01:02
|
|
|
My 'timing the market' stories: just before grad school I had some 'fun money' that I invested in alt coins (mostly etherium). Bought at a dip, and as soon as I went back to its more 'nirmal' price, I withdrew what I invested so I was playing with house money. Then if it would go up 10% or so in a week, I'd sell. If it dipped a bit, I'd buy back. Did that for a while and eventually had to sell since I was in grad school and had negative income. That was right before it like tripled in price in oct/Nov 2017. So I missed the big gain by selling 'high', but it was house money so no big deal. While in grad school I also rolled over my old 401ks into my roth Ira, since my income was low and I had just stocked up a bunch of cash from my summer internship so I could cover the taxes. Between pulling out of the market and reinvesting the market tanked so that was good! Timing the market is all luck (I say as somebody who just rolled 10k from my checking account into a brokerage).
|
|
#
?
Feb 28, 2020 01:12
|
|
|
You've got the concept right, at least, but your numbers are wildly, wildly overoptimistic. There was some discussion about safe sustained withdrawal rates a few days ago and there's what sounds like a very plausible argument that even a 4% withdrawal rate is unsafely high, and possibly even a 3% withdrawal rate is unsafely high (which is pretty depressing to be honest).
|
|
#
?
Feb 28, 2020 01:20
|
|
|
Pollyanna posted:Let's take VFIAX as an example. If I'm reading its profile right, in the past 10 years, it's had an annual return of somewhere between 20% and 13%, 16.5% on average. In 1980, Japan was 45% of the global stock market and the US was 29%. People like Michael Creighton got rich handwringing about Japan's unstoppable business culture taking over America. Japan got the fetishistic "the future" feeling of neon anime and cyberpunk that continues to haunt American popular culture to this day (especially on a forum like this). Not long after, Japan's market spiked and crashed in value. In 1992 the Japanese Nikkei 225 index fell past a value that it did not return to until 2017 which is about where is it now. It was more or less flat for 25+ years. Today, Japan's stock market is about 8% of the global total and America's is about 55%. No one is worried that Japan will take over the US. Who can know what the future will hold.  The past 10 years of the S&P 500's growth have been unprecedented. We've never seen anything like it. Relying on those values as a typical average for your expected future returns is foolish.
|
|
#
?
Feb 28, 2020 01:22
|
|
|
doingitwrong posted:In 1980, Japan was 45% of the global stock market and the US was 29%. People like Michael Creighton got rich handwringing about Japan's unstoppable business culture taking over America. Japan got the fetishistic "the future" feeling of neon anime and cyberpunk that continues to haunt American popular culture to this day (especially on a forum like this). Not long after, Japan's market spiked and crashed in value. In 1992 the Japanese Nikkei 225 index fell past a value that it did not return to until 2017 which is about where is it now. It was more or less flat for 25+ years. Today, Japan's stock market is about 8% of the global total and America's is about 55%. No one is worried that Japan will take over the US. Who can know what the future will hold. Nothing is always the same but Japan's economy since the early 90s is really something to behold. On the other hand, Japan is still plodding along so it's not the end of the world. On the other other hand, nothing is always the same so who knows what would happen if the US economy just stopped doing anything for 30 years.
|
|
#
?
Feb 28, 2020 01:39
|
|
|
Pollyanna posted:I think I came up with a decent beginning goal, with numbers behind it. This is more as a thought exercise as I'm working through the book. Instead of "oh let's guess $2500 per month" you can actually figure out a good number based on your actual historical and planned future expenses. Then yeah, multiply (the yearly number) by 25 to 33 depending on how optimistic you want to be. And that's basically it.
|
|
#
?
Feb 28, 2020 02:16
|
|
|
totalnewbie posted:Hey look, at least you got there. There's a lot of people who don't even get to step 1. bro i love firecalc but why are you sending that to pollyanna, they are not ready for that poo poo man
|
|
#
?
Feb 28, 2020 02:46
|
|
|
Pollyanna posted:$174,546 in VFIAX, Just slap another zero on that bad boy and you might actually be right.
|
|
#
?
Feb 28, 2020 03:08
|
|
|
H110Hawk posted:Just slap another zero on that bad boy and you might actually be right. 100% theoretical, yo. Also I even admitted in the post that it was wildly optimistic, which makes FIRE sound a lot harder to achieve now.
|
|
#
?
Feb 28, 2020 04:14
|
|
|
Pollyanna posted:100% theoretical, yo. Also I even admitted in the post that it was wildly optimistic, which makes FIRE sound a lot harder to achieve now. I know. I wasn't kidding though.
|
|
#
?
Feb 28, 2020 04:16
|
|
|
Pollyanna posted:100% theoretical, yo. Also I even admitted in the post that it was wildly optimistic, which makes FIRE sound a lot harder to achieve now. Even that $2500/mo would have to grow to $4100/mo in 20 years to keep up.
|
|
#
?
Feb 28, 2020 04:33
|
|
|
WithoutTheFezOn posted:And you haven’t even said hello yet to the retiree's best bud, inflation. That's already taken into account with the withdrawal rate of 3-4 percent.
|
|
#
?
Feb 28, 2020 04:34
|
|
|
But not in the 28800/.165 equation.
|
|
#
?
Feb 28, 2020 04:40
|
|
|
My favorite stock market thread posts are the ones where it’s painfully obvious the poster is actively trading away his/her retirement portfolio.
|
|
#
?
Feb 28, 2020 11:35
|
|
|
number go down
|
|
#
?
Feb 28, 2020 12:34
|
|
|
please knock Mom! posted:number go down Edit: not to be confused with sell
|
|
#
?
Feb 28, 2020 14:26
|
|
|
The phrase you’re thinking of is “on sale”. loving  at these markets, the more I understand this poo poo the less I care about them going down. Hell, I’ll even add more once I build up some more money, cause it’ll be cheaper than it was before.
|
|
#
?
Feb 28, 2020 15:35
|
|
|
KS posted:Linking this again. Actual process at Vanguard, step by step: https://www.physicianonfire.com/backdoor/ I'll check out the form. Thanks. My active 401k is a Roth (trad for company match and ESOP contributions though), so I don't know if that would work. Maybe if it is offered they could roll it into the trad part? Ancillary Character posted:Since your original contribution were tax-deductible, you owe income tax on the entire amount of the conversion. It's likely more than $29k since a part of that $130k will likely cross into another tax bracket. This relatively straightforward calculation of the tax owed also only applies if you pay the tax with money you have on hand. If you have to pay tax with money inside the IRA, then that amount is an early distribution and also is assessed a penalty. Ugh.. I think I'll just end up with tax diversified retirement accounts. I'm not income limited on Roth contributions nor do I expect to be. If I ever get to that point I'll deal with it then.
|
|
#
?
Feb 28, 2020 15:40
|
|
|
Pollyanna posted:
You've come a long way in a short span of time 
|
|
#
?
Feb 28, 2020 15:50
|
|
|
totalnewbie posted:Nothing is always the same but Japan's economy since the early 90s is really something to behold. Part of Japan's problem is that their immigration policy has long been a Trumpian dream. Their country is literally dying because of it. If we want a preview of what this country could become if we close off our borders, look at Japan.
|
|
#
?
Feb 28, 2020 16:10
|
|
|
They only thing that bums me out about this is that my parents just retired and are absolute morons when it comes to their portfolios. They'll be fine because they have sweet pensions, and my mom long ago moved her 401k over to Vanguard, but I'm terrified of whatever the gently caress my dad is doing with his. I had to talk my mom out of moving her money to someone else because "your father's 401k has done so much better, I don't know what Vanguard is doing" jfc, he's gambling mom, that's why
|
|
#
?
Feb 28, 2020 16:17
|
|
|
Uh, poo poo, I should send some texts then. Just to double check...Kylaer posted:You've come a long way in a short span of time 17% of the way through fpillars 
|
|
#
?
Feb 28, 2020 16:22
|
|
|
If I have the ability to, should I just drop the max $6k as a lump sum into my Roth IRA and then just focus on my traditional employer 401k with my regular direct deposits? I could do a % of my paycheck but I feel like I’d screw up and accidentally go over.
|
|
#
?
Feb 28, 2020 16:23
|
|
|
My kid's 529 account now has less in it than what we put in, so that's going just great... at least I have 12 more years to recover
|
|
#
?
Feb 28, 2020 16:24
|
|
|
seiferguy posted:If I have the ability to, should I just drop the max $6k as a lump sum into my Roth IRA and then just focus on my traditional employer 401k with my regular direct deposits? I could do a % of my paycheck but I feel like I’d screw up and accidentally go over. What happens if you accidentally go over? 
|
|
#
?
Feb 28, 2020 16:26
|
|
|
i prefer hit it once and forget it, if you have the ability time in market beats DCA in general
|
|
#
?
Feb 28, 2020 16:28
|
|
|
seiferguy posted:If I have the ability to, should I just drop the max $6k as a lump sum into my Roth IRA and then just focus on my traditional employer 401k with my regular direct deposits? I could do a % of my paycheck but I feel like I’d screw up and accidentally go over.
|
|
#
?
Feb 28, 2020 16:29
|
|
|
KYOON GRIFFEY JR posted:i prefer hit it once and forget it, if you have the ability time in market beats DCA in general That was my line of thinking. I can probably get it in before tax day no problem. I figure $6k of return now is going to be better than slowly getting up to $6k over time. Pollyanna posted:What happens if you accidentally go over? Tax penalty, but if you catch it beforehand you can adjust prior to penalty. Until you’re making over $124k a year, you can do $6k max per year.
|
|
#
?
Feb 28, 2020 16:34
|
|
|
Astro7x posted:My kid's 529 account now has less in it than what we put in, so that's going just great... at least I have 12 more years to recover it's called Long Term Investing for a reason, just keep putting the same amount in every month
|
|
#
?
Feb 28, 2020 17:02
|
|
|
Doccykins posted:it's called Long Term Investing for a reason, just keep putting the same amount in every month Month? I dumped the 20K max in on January 1st.
|
|
#
?
Feb 28, 2020 17:09
|
|
|
Astro7x posted:
|
|
#
?
Feb 28, 2020 17:12
|
|
|
Bhodi posted:I got warned against doing this because our 401k match is done quarterly so if I had put the max in all of their matching contributions would be denied. Companies with competent accounting departments that don't hate their employees have a true up at the end of the year which fixes this, but obviously not all companies have that.
|
|
#
?
Feb 28, 2020 17:17
|
|
|
Bhodi posted:I got warned against doing this because our 401k match is done quarterly so if I had put the max in all of their matching contributions would be denied. We have two Roths and a 529. No employer matching. For the 529 in IL, I basically reduce my state income taxes by about $1,000 for putting in $20,000. I guess I'm still technically ahead on that...
|
|
#
?
Feb 28, 2020 17:20
|
|
|
|
| # ? May 27, 2024 10:02 |
|
|
silvergoose posted:Companies with competent accounting departments that don't hate their employees have a true up at the end of the year which fixes this, but obviously not all companies have that. Also, even for companies that do, you usually have to be an employee at the time of true-up to receive it. That creates a small but meaningful extra cost to changing jobs if you should decide it's time to leave.
|
|
#
?
Feb 28, 2020 17:33
|
|
