RetireJapan

Good points, and I too have wondered about setting more cash aside. Or spending it. I am Mr Frugal, but often need to remind myself that I can't take it with me...

See a $20,000 gain overnight has become common, but drops of the same also occur readily.

Memory can be short, as in the 20-30% hit COVID caused before the quick rebound. I worry about all the housing bubble talk in the US-we've seen that one before, though I suspect the banks are dolling out the money for second and third homes now.

RetireJapan wrote: ↑Mon Nov 01, 2021 7:51 am 1. Not sure. Going to finish working at the end of March, then will help wife with her business and (hopefully) put some more time into RJ. Future cash flows are less certain than my job salary, but I imagine we won't be trying to live off investments for at least another 3-5 years.

2. Our basic living expenses are pretty low (everyday annual spending is probably around 3m). Optional expenses for us would be international travel and gifts to family (up to another 3m or so maybe?).

3. Most likely.

I just reread the thread and realized that you said you have 25x what you need in annual spending. By this do you mean that, at this time, your investment returns would provide 25x more than what she would need annually (3m?) Or that your total investments equal 25x times 3m?

Gulliver wrote: ↑Mon Nov 01, 2021 9:22 am I just reread the thread and realized that you said you have 25x what you need in annual spending. By this do you mean that, at this time, your investment returns would provide 25x more than what she would need annually (3m?) Or that your total investments equal 25x times 3m?

Ha, ha, if I had 75m a year in investment income I should have retired a long time ago!

Our savings/investments are 25x a comfortable annual spending rate

RetireJapan wrote: ↑Mon Nov 01, 2021 9:31 am

Gulliver wrote: ↑Mon Nov 01, 2021 9:22 am I just reread the thread and realized that you said you have 25x what you need in annual spending. By this do you mean that, at this time, your investment returns would provide 25x more than what she would need annually (3m?) Or that your total investments equal 25x times 3m?

Ha, ha, if I had 75m a year in investment income I should have retired a long time ago!

Our savings/investments are 25x a comfortable annual spending rate

OK. If the former were true I would have been a bit confused as to your concern about taking profit…

On the one hand, it sounds like you’ve reached your investment goals with a comfortable buffer to boot. On the other, you have a short time horizon of 3 to 5 years and your answer to question number three was a bit uncertain (and the fact that you asked the question in the first place indicates risk adversity).

Due to your short time horizon IMO you need to preserve your investment worth best you can. So in order to help you sleep better at night, I would recommend more balanced portfolio. There is some data indicating that if you want a 90% confidence level that your nest egg will not run out of money, a balance portfolio (60/40)-(50/50) actually out performs a growth portfolio (70/30)-(80/20) during your withdrawal period.

https://www.fidelity.com/viewpoints/ret ... vings-last

I am guessing you know this, but for the benefit of those who don’t: Once you reach your withdrawal time horizon use the 4 to 5% withdrawal limit rule to preserve your balance, adjusting occasionally for inflation.

“OK this is all fine and good”, you might say, “but how do you create a balance portfolio when bonds are just as risky (expensive) as stocks these days?”

Like I think others have said in the thread, low risk short term tax exempt government bonds are still fairly stable. Even though you’ll likely only get a 1 to 2% return, it’s better than nothing. Additionally, you can hold a 20/20% or 30/10% bond/cash mix in order to have funds available to use at your discretion (remember to re-balance periodically).

From what you’ve said it sounds like in a bull market you will have additional returns over the 4-5% level which can be used for disposable income. (Not to mention any pension and Social Security etc.(not sure if you included those in the calculations of the investments we’ve been talking about).

As I will soon you’re facing the same circumstances I’d be interested in hearing any alternative interpretations.

Thanks for the discussion, everyone!

Done a lot of thinking, and also tried to notice how I reacted to your ideas (to figure out how I felt about things).

I have decided to do... nothing. We'll keep our investments pretty much as they are and continue saving/investing each month. If there is a correction, that is probably a good thing as it will allow us to buy some more things cheaply.

I will try to increase our cash reserves a bit, maybe try to get to 2-3 years' spending in cash.

It seems likely we'll have at least an income for a few more years (or likely indefinitely, as I enjoy writing and teaching, and it is pretty much always possible to do those as side gigs). We'll also maybe have a windfall from selling my wife's business at some point/minor inheritance from her parents/profit from selling our manshon.

I feel more comfortable now, although let's see how I react during the next big stock market fall

RetireJapan wrote: ↑Mon Nov 01, 2021 9:31 am

Gulliver wrote: ↑Mon Nov 01, 2021 9:22 am I just reread the thread and realized that you said you have 25x what you need in annual spending. By this do you mean that, at this time, your investment returns would provide 25x more than what she would need annually (3m?) Or that your total investments equal 25x times 3m?

Ha, ha, if I had 75m a year in investment income I should have retired a long time ago!

Our savings/investments are 25x a comfortable annual spending rate

You lost me here....

Let's use 3 million as annual expense. Isn't 25x annual spending rate the same as 75 mill?

If 75 mill is your end goal then what is your current goal if let's say you want to retire in 20 years?

OkiBum wrote: ↑Tue Nov 02, 2021 3:00 am

RetireJapan wrote: ↑Mon Nov 01, 2021 9:31 am

Gulliver wrote: ↑Mon Nov 01, 2021 9:22 am I just reread the thread and realized that you said you have 25x what you need in annual spending. By this do you mean that, at this time, your investment returns would provide 25x more than what she would need annually (3m?) Or that your total investments equal 25x times 3m?

Ha, ha, if I had 75m a year in investment income I should have retired a long time ago!

Our savings/investments are 25x a comfortable annual spending rate

You lost me here....

Let's use 3 million as annual expense. Isn't 25x annual spending rate the same as 75 mill?

If 75 mill is your end goal then what is your current goal if let's say you want to retire in 20 years?

3 million is pretty low for a couple who is still working/running a business and are homeowners, have dependants etc. I would say 4-5 million.

I would assume based on other posts that we are looking at *Revised down* ->100-150 million in assets here.

I think Ben had met most people's learn fire and "dad-bod fire" goals. He seems to be focused more on FATfire.

OkiBum wrote: ↑Tue Nov 02, 2021 3:00 am

RetireJapan wrote: ↑Mon Nov 01, 2021 9:31 am

Gulliver wrote: ↑Mon Nov 01, 2021 9:22 am I just reread the thread and realized that you said you have 25x what you need in annual spending. By this do you mean that, at this time, your investment returns would provide 25x more than what she would need annually (3m?) Or that your total investments equal 25x times 3m?

Ha, ha, if I had 75m a year in investment income I should have retired a long time ago!

Our savings/investments are 25x a comfortable annual spending rate

You lost me here....

Let's use 3 million as annual expense. Isn't 25x annual spending rate the same as 75 mill?

If 75 mill is your end goal then what is your current goal if let's say you want to retire in 20 years?

Sorry for the confusion! My end goal is to have more money than we need. At this point, it's not so much a goal as 'let's see what happens'. We probably have enough assets to stop working now, but will continue running my wife's school (she wants to keep it going, not really for the money but for the staff and students) and let the portfolio keep growing.

EmaxisSlim Cultist wrote: ↑Tue Nov 02, 2021 3:07 am I would assume based on other posts that we are looking at 150-200 million in assets here.

Ha, ha, we're not quite at that level yet, but I expect we'll end up there at some point (as long as the global stock markets co-operate). Which is pretty much overkill for us.

As other people on the forum and on the internet have mentioned, then the challenge becomes building a fulfilling lifestyle. I fear that will be harder than I am anticipating. A bit like the end of one of my favourite FIRE blogs: https://livingafi.com/2021/03/17/the-20 ... nt-update/

RetireJapan wrote: ↑Tue Nov 02, 2021 12:52 am.
I have decided to do... nothing.

Yeah, I am also currently 100% in equities but my time horizon is 10+ years. Around the five year mark I plan to move towards 50-50. Hopefully bond yields will be higher by then!

That said, I am keeping one eye on the mood of the U.S. Fed, the success of the infrastructure and stimulus bills, midterm elections and my 50 day moving averages. If any of those start to go wonky I am definitely prepared to jump ship early.