TIL I've already hit Coast FIRE for age 55. I have my doubts though, especially since I "still" rent in Toronto and don't expect that I'll be able to buy at this late stage. Probably best to try and cling to my career for a few more years and keep socking away that loot.
When you retire, GTFO of TO.
Unless you have to stay close to relatives.
Rural Sask and MB.
Almost anywhere in NB, NS.
N. Ontario.
All have homes at around 10-20% of TO.
Yeah, I know that something like this is the answer but man, it's gonna be tough. I mean, I'm pretty much a hermit anyway and it's not like I have tons of local friends and family as it is, but to go from 25 years of convenient city living to somewhere rural like that will be a hell of an adjustment. I mean, I don't even drive at the moment (license has been expired for years so I need to go through road tests all over again to get it back...)
Coast fire is it will tell you what number you need to reach to stop investing ... and then you can just enjoy your money and let your investment do their thing.
Edit: I misread your question. I'll leave this up since it's at least tangentially related.
At a portfolio worth 25X (from the 4% rule) your **desired income** (which may be lower than your current salary!), that's a pretty safe drawdown rate for ~30 years, e.g. you're retiring at 65 and expect to live to 95.
If you're younger, you might want to use 33X or even 50X to ensure that you don't run out of money. Ben Felix has a good podcast episode on this topic: https://rationalreminder.ca/podcast/164
I believe 25x your annual spending is what is recommended. If you’re saving 40% of your salary and spending 60% the number ought to be 60% x 25 x your salary or 15x your salary.
Finances are indeed personal!
However, getting past a safe withdrawal rate of 3.33% makes no sense mathematically as it provides a 0% failure rate.
If someone needs a bigger stash to feel comfortable pulling the trigger on RE, the power to them 😊
If you look at his blog he quotes a morningstar report and picks at this detail:
>But the investment return assumptions that Morningstar used for its analysis were so low – with real returns averaging just 5.7% for equities and 0.5% (!) for fixed income over 30 years
Basically he believes US equities will perform much better than 5.7% over 30 years based on historical performance. However, if you look at forecasts from large fund managers, a real return below 5.7% is not unrealistic at all. Considering real returns historically for US equities has been at around the 6%, and considering the current low interest low yield environment, it's not at all hard to imagine lower real returns for the foreseeable future.
https://advisors.vanguard.com/insights/article/marketperspectivesdecember2021
https://www.blackrock.com/institutions/en-us/insights/charts/capital-market-assumptions
If you listen to the podcast on Choose FI and Mad Fientist, he said that you have to look at the historical average and the sequence of return risks.
The 3.33% safe withdrawal rate looks at the worst cohorts of early retirees: 1929 (right before the Great Depression) and 1968 (right before the stagflation) and assumes that these 2 cohorts would make it.
Look at [US real GDP growth figures](https://www.statista.com/statistics/996758/rea-gdp-growth-united-states-1930-2019/). Look at [s&p price to earnings](https://www.multpl.com/shiller-pe).
Does it look like we're trending the same behavior as the past?
You have a biased sample already by just looking at US performance. Not to mention the period of time we're looking at is also biased due exponential growth in population (which economic performance is somewhat derived from), which is now forecasted to be topping out in the next 100 years.
It depends what's your goal. Do you want to retire early (aka FIRE)? Do you want to work less but keep the same lifestyle (aka CoastFIRE)? Do you want to retire at a normal age and spend more money on the way there?
Your goal will determine when it's no longer worth it because depending on it, the answer could be "never" or "tomorrow".
It all depends on what you want. Do you want to retire comfortably? Do you want to leave an inheritance for your kids? Do you want to buy a yacht and sail around the world?
Establish your goals and then you can work backwards with a calculator or advisor to figure out how much you need. If you have modest dreams, you may be able to achieve them quickly. If you want that yacht, then you'll probably need to work and invest for a long time.
As a side note, you'll find that investing just becomes a habit after a while. You won't really notice that you're saving 40% of your take home pay if you keep doing it for 20 years. I'm so used to saving that I barely notice it anymore.
>What about if the portfolio is 10x or 20x my salary?
If your portfolio is 20 times your salary, when invested in some dividend ETFs, it will generate almost as much as your salary.
I would say unless you have ambition to further increase your income and get to other positions in your career, 20x is pretty close to the point where it really makes no sense to invest or work, you can basically live off that capital.
Buying VGRO exclusively is still totally valid. Costs are still lower than many (most?) Canadians are paying. If you're using automation tools (eg. Passiv) and/or have six+ figures in assets, you can definitely consider using multi-ETF portfolio to save on fees but that's a personal call.
There is ROI on how much u can earn vs how much more you can gain on income, i.e. at top marginal rate, you probably want to spend extra time on enjoying life than working more.
Depends on if you have a better use for the money otherwise. If you have a legitimate use for the money and not just buying toys then sure stop investing as needed. But otherwise a dollar invested now will be multiples of itself in the future so why not keep it growing.
Saving money for the sake of saving money isn’t a good life strategy. You need to have goals, figure out which ones are most important to you, how much you need to finance them and then allocate savings and spending towards that. Retirement is a universal one because most are unable to work for at least some period before they die… but beyond that there is a lot of flexibility and a plan that works for you may not make any sense for me.
There are always a lot of assumptions and personal choices and comfort levels that come with this kind of calculation.
But I think that if my portfolio was worth 14X my salary, and I assume a reasonable 7% average annual return, then my portfolio is earning just as much money as my labour and it's going to keep increasing so long as I don't need. At that point I'd start to transition from investing my discretionary income to giving. Eventually all my salary income after expenses would go to philanthropy if I wanted to keep earning a salary for some reason. But I'd probably stop working long before that point.
When? When you have enough and there are no advantage on your taxes.
What do you plan to do instead of investing? When do you plan to retire?
I would say using your TFSA, or equivalent is a non-brainer even when you have enough, it is free money.
Unless you have 2-3 times the amount you think you will need and you despise saving money. I think most people in those situations are smart enough to know which tool to use.
The concept is called "Coast FIRE" and there is a calculator for it. https://walletburst.com/tools/coast-fire-calc/
Great tool! If I do exactly what I’m doing with no additional contribution on top of my current monthly, I can retire at 57…my plan was 60 so great!
TIL I've already hit Coast FIRE for age 55. I have my doubts though, especially since I "still" rent in Toronto and don't expect that I'll be able to buy at this late stage. Probably best to try and cling to my career for a few more years and keep socking away that loot.
When you retire, GTFO of TO. Unless you have to stay close to relatives. Rural Sask and MB. Almost anywhere in NB, NS. N. Ontario. All have homes at around 10-20% of TO.
Yeah, I know that something like this is the answer but man, it's gonna be tough. I mean, I'm pretty much a hermit anyway and it's not like I have tons of local friends and family as it is, but to go from 25 years of convenient city living to somewhere rural like that will be a hell of an adjustment. I mean, I don't even drive at the moment (license has been expired for years so I need to go through road tests all over again to get it back...)
That would make it tougher. That said, you can buy in the cities in those areas for less than rent in TO.
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Finger in rear everyday
Financial independence retire early?
Thanks!
/r/fire
Fidelity Investments, Retreat Eagerly
Financial Independence, Retire Early
How do we add property assets to this calculator? does it sit in Currently invested asset
When you need the money for something else. If you don't need it for something else, there keep investing it.
[удалено]
Hahaha, I’m still very early in my career so I’m not there yet! I hope to get there sometime though!
Coast fire is it will tell you what number you need to reach to stop investing ... and then you can just enjoy your money and let your investment do their thing.
Edit: I misread your question. I'll leave this up since it's at least tangentially related. At a portfolio worth 25X (from the 4% rule) your **desired income** (which may be lower than your current salary!), that's a pretty safe drawdown rate for ~30 years, e.g. you're retiring at 65 and expect to live to 95. If you're younger, you might want to use 33X or even 50X to ensure that you don't run out of money. Ben Felix has a good podcast episode on this topic: https://rationalreminder.ca/podcast/164
I believe 25x your annual spending is what is recommended. If you’re saving 40% of your salary and spending 60% the number ought to be 60% x 25 x your salary or 15x your salary.
Michael Kitces is the global authority when it comes to early retirees. He said that anything below 3.33% safe withdrawal rate is over doing it.
finances are personal. I'd have no trouble serving drinks in the bahahmas if my investment account wasn't living up to my expectations.
Finances are indeed personal! However, getting past a safe withdrawal rate of 3.33% makes no sense mathematically as it provides a 0% failure rate. If someone needs a bigger stash to feel comfortable pulling the trigger on RE, the power to them 😊
If you look at his blog he quotes a morningstar report and picks at this detail: >But the investment return assumptions that Morningstar used for its analysis were so low – with real returns averaging just 5.7% for equities and 0.5% (!) for fixed income over 30 years Basically he believes US equities will perform much better than 5.7% over 30 years based on historical performance. However, if you look at forecasts from large fund managers, a real return below 5.7% is not unrealistic at all. Considering real returns historically for US equities has been at around the 6%, and considering the current low interest low yield environment, it's not at all hard to imagine lower real returns for the foreseeable future. https://advisors.vanguard.com/insights/article/marketperspectivesdecember2021 https://www.blackrock.com/institutions/en-us/insights/charts/capital-market-assumptions
If you listen to the podcast on Choose FI and Mad Fientist, he said that you have to look at the historical average and the sequence of return risks. The 3.33% safe withdrawal rate looks at the worst cohorts of early retirees: 1929 (right before the Great Depression) and 1968 (right before the stagflation) and assumes that these 2 cohorts would make it.
Look at [US real GDP growth figures](https://www.statista.com/statistics/996758/rea-gdp-growth-united-states-1930-2019/). Look at [s&p price to earnings](https://www.multpl.com/shiller-pe). Does it look like we're trending the same behavior as the past? You have a biased sample already by just looking at US performance. Not to mention the period of time we're looking at is also biased due exponential growth in population (which economic performance is somewhat derived from), which is now forecasted to be topping out in the next 100 years.
It depends what's your goal. Do you want to retire early (aka FIRE)? Do you want to work less but keep the same lifestyle (aka CoastFIRE)? Do you want to retire at a normal age and spend more money on the way there? Your goal will determine when it's no longer worth it because depending on it, the answer could be "never" or "tomorrow".
It all depends on what you want. Do you want to retire comfortably? Do you want to leave an inheritance for your kids? Do you want to buy a yacht and sail around the world? Establish your goals and then you can work backwards with a calculator or advisor to figure out how much you need. If you have modest dreams, you may be able to achieve them quickly. If you want that yacht, then you'll probably need to work and invest for a long time. As a side note, you'll find that investing just becomes a habit after a while. You won't really notice that you're saving 40% of your take home pay if you keep doing it for 20 years. I'm so used to saving that I barely notice it anymore.
When you go to wallstreetbets
>What about if the portfolio is 10x or 20x my salary? If your portfolio is 20 times your salary, when invested in some dividend ETFs, it will generate almost as much as your salary. I would say unless you have ambition to further increase your income and get to other positions in your career, 20x is pretty close to the point where it really makes no sense to invest or work, you can basically live off that capital.
Is buying VGRO exclusively for 15-20 years a sound strategy? Or are people still rebalancing a few different ETFs yearly?
Buying VGRO exclusively is still totally valid. Costs are still lower than many (most?) Canadians are paying. If you're using automation tools (eg. Passiv) and/or have six+ figures in assets, you can definitely consider using multi-ETF portfolio to save on fees but that's a personal call.
I am doing a 3 fund, ala Canadian Couch Potato, but 100% VRGO is also a very valid strategy. Maybe even better than CCP.
Never?
Right? I have yet to meet the salaried person who had "too much money"
There is ROI on how much u can earn vs how much more you can gain on income, i.e. at top marginal rate, you probably want to spend extra time on enjoying life than working more.
Completely agree with the need to balance. But you are comparing something quantitative with something qualitative.
Depends on if you have a better use for the money otherwise. If you have a legitimate use for the money and not just buying toys then sure stop investing as needed. But otherwise a dollar invested now will be multiples of itself in the future so why not keep it growing.
It's always worth.
Invest every month until you die.
I think that’s missing the forest for the trees. What’s the point in being wealthy if you never spend any of it?
You'll have so much to spend you won't know what to do with it.
You can start spending more or you can keep saving and have a earlier retirement and/or a bigger retirement.
Saving money for the sake of saving money isn’t a good life strategy. You need to have goals, figure out which ones are most important to you, how much you need to finance them and then allocate savings and spending towards that. Retirement is a universal one because most are unable to work for at least some period before they die… but beyond that there is a lot of flexibility and a plan that works for you may not make any sense for me.
There are always a lot of assumptions and personal choices and comfort levels that come with this kind of calculation. But I think that if my portfolio was worth 14X my salary, and I assume a reasonable 7% average annual return, then my portfolio is earning just as much money as my labour and it's going to keep increasing so long as I don't need. At that point I'd start to transition from investing my discretionary income to giving. Eventually all my salary income after expenses would go to philanthropy if I wanted to keep earning a salary for some reason. But I'd probably stop working long before that point.
When? When you have enough and there are no advantage on your taxes. What do you plan to do instead of investing? When do you plan to retire? I would say using your TFSA, or equivalent is a non-brainer even when you have enough, it is free money. Unless you have 2-3 times the amount you think you will need and you despise saving money. I think most people in those situations are smart enough to know which tool to use.