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Ask HN: Decade-long plan to FIRE starting just under age 40?

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Re: Ask HN: Decade-long plan to FIRE starting just under age 40?

#11

Post by tehsuk »

pdevr wrote: post #3

Your constraints: 1) You cannot run a business. 2) You have practically no net worth. 3) You do not have a network of good contacts. 4) You are 38. 5) You are jobless now. Considering all your constraints, here is a path to consider: 1) Have an open mindset. This is the MOST important tip. Do not let your past determine your future. 2) Be consistent. Have an accountability partner to make sure you are working towards…

> Put your money in low risk investments. Google "best low-risk investments" - there are many sites with lists. Invest in near-zero risk investments and park your money there. Do not touch it.

"Near-zero risk" means near zero profits. For a ten year horizon, stock index funds are fine but generally considered "high risk". As the ten year point approaches, slowly re-balance towards low-risk assets. Totally agree on staying away from options, anything leveraged or other gambles.

> Look at the general trend of stock market. Invest only when it is going up. Never bet against market. If you invest, buy only stocks or indices you plan to hold for ten years. Never sell. Make sure to have stop losses added to do that for you. When those stop losses get executed frequently, get out of the market. Do not try to do value plays. You may not live enough to see the market reversal.

This would be trying to time the market, which is a bad idea. Don't. You don't know which way the stock market is going until after the fact. The advice above is a quick path to buying high and selling low. Instead, invest the same amount every month and just don't touch it! Time in the market is what matters.

Re: Ask HN: Decade-long plan to FIRE starting just under age 40?

#13

Post by luddite99 »

luddite99 wrote: post #8

The others have given you some good advice on techniques (Live Cheaply + Earn Well + Boring Stock Index Investments) but I'll throw some maths at you that you might find helpful. There's a handy little formula that you can play around with in order to work out a suitable target and savings timeline. Although it ignores the stochastic nature of stock markets by assuming a constant return, it's a good ballpark figure,…

Oh, and if anyone would like a version of the formulas that work when you already have an amount invested, I'll put them here too:

C = Your current amount of savings invested or available to invest

X = (T - C * (1 + R)^N) * R / ((1 + R)^N - 1)

N = log(base 1 + R) ((T * R + X) / (C * R + X)) = ln((T * R + X) / (C * R + X)) / ln(1 + R)

Re: Ask HN: Decade-long plan to FIRE starting just under age 40?

#14

Post by napolux »

koolba wrote: post #2

Only if you learn to permanently live as a miser. You might have acquired the skill by necessity, but it takes a strong will to keep it up once you have income flowing. The basic math of it would be to earn X, and live off of X/5 (both after taxes). After 10 years you’ll have 40+ years of income accumulated. There’s some additional complexities with health care, but the core plan is to earn, not spend a dime, and get…

This comment should be on top. Most of the FIRE people I know have most of their basic necessities paid by the company they work for (house, car, phone, etc...)

That's the easy way to do it.

Re: Ask HN: Decade-long plan to FIRE starting just under age 40?

#15

Post by BartekG »

Start by considering why you want to retire - is there something you want to do that you can't do while working? If not then you condemn yourself to 10 years of hard work and living in poverty in order to be bored and live in poverty for the next 50 years. A good job can be a source of joy, achievements, self worth, contacts with people and money. I'm a programmer with a relatively low paying but stress-free job and I plan not to retire for as long as my health permits.

Re: Ask HN: Decade-long plan to FIRE starting just under age 40?

#16

Post by blackrock »

Don’t get a girlfriend. Don’t get a wife. Don’t have a child.

Minimize social contact with friends and relatives. That’ll end up costing you money.

Save everything.

Try to aim for $30,000 in savings a year. In 10 years, you will have $300,000. You can do this.

Life will suck. You may feel like an empty shell, going through life, as you get older. And you may question what it is you’re doing, and why. But keep your eye on the prize.

Open a stock trading account. Put your money into SPY. Keep buying it. This is the S&P 500 market. Your goal is to get that 2-3% dividend. Reinvest that back into more shares of SPY.

After a while, it will start to compound.

In 5 years, learn how to write cash secured puts. This will allow you to make a little more money than just investing in SPY. There are more risks involved here, so keep your strategy conservative. Or if this is too complicated, then skip it, and just stick to investing in SPY.

Re: Ask HN: Decade-long plan to FIRE starting just under age 40?

#17

Post by blackrock »

stouset wrote: post #9
Gunax wrote: post #6

The rule of thumb is that you can safely withdraw about 3% of you saving annually (same say 4%, some say 2.5%, depends on how risky you want to be). So estimate what you can save over 10 years and determine if you're willing (or capable) of living on 3% of that.

This is pretty much it. Let’s say at 50 you’re comfortable living off of 4% of your assets, which should have a reasonably high chance of providing income throughout your retirement without depleting your principal. This 4% is assuming 7% market returns before 3% inflation. How much are you willing to live off as income? If you need $40,000/yr (before taxes) you’ll require $1m in savings. $60,000 requires $1.5m. Tax-…

This is easy. Just find a job that pays you $350,000 a year.

Re: Ask HN: Decade-long plan to FIRE starting just under age 40?

#18

Post by divtiwari »

blackrock wrote: post #17
stouset wrote: post #9

Earlier quoted context omitted.

This is pretty much it. Let’s say at 50 you’re comfortable living off of 4% of your assets, which should have a reasonably high chance of providing income throughout your retirement without depleting your principal. This 4% is assuming 7% market returns before 3% inflation. How much are you willing to live off as income? If you need $40,000/yr (before taxes) you’ll require $1m in savings. $60,000 requires $1.5m. Tax-…

This is easy. Just find a job that pays you $350,000 a year.

Just get a job as a SDE in Netflix or Renaissance Technologies. /s

Re: Ask HN: Decade-long plan to FIRE starting just under age 40?

#19

Post by blackrock »

divtiwari wrote: post #18
blackrock wrote: post #17

Earlier quoted context omitted.

This is easy. Just find a job that pays you $350,000 a year.

Just get a job as a SDE in Netflix or Renaissance Technologies. /s

LOL. Not a problem. If only you could’ve predicted the future, 20 years ago, that Netflix would’ve paid their software engineers $350,000 a year.

Back then, Netflix was just some silly DVD rental business.

Then, you could’ve studied and did whatever you could to land such a job with them.

Re: Ask HN: Decade-long plan to FIRE starting just under age 40?

#20

Post by superbcarrot »

I wouldn't do it if I were you. I would rather live the rest of my life comfortably doing a job that I enjoy than go through relative deprivation and poverty for a while just so I can live the rest of my life in the same state of deprivation and poverty but without a job.
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