Started my road to Financial Independence!

[OneforfreedomParticipant 930]

Just bought $3000 worth of mutual funds that have a pretty strong 10-year performance .

Current Age: 24

Target Retirement Age: 45. (Ideally 40).

I hope to own my own home and have $1.5M in assets by the target retirement age.

Please feel free to share any advice, your own goals, and suggestions!

[RoyDalParticipant]

I wish you every success. By the way, give income real estate a look. After all, stocks are not “real” like real estate is.

Society asks MGTOWs: Why are you not making more tax-slaves?

[OneforfreedomParticipant 930]

RoyDal wrote:

I wish you every success. By the way, give income real estate a look. After all, stocks are not “real” like real estate is.

Thank you sir! The good news is that with no kids, an 8% average annual rate of return, and the benefits of compound interest + time on my side, I am hopeful to attain this goal. The reason I chose 1.5M is that I plan to withdraw 4% of my assets for life, and that 4% number lets me withdraw indefinitely without ever running out of capital. 4% of 1.5M is $60K, which I think provides an excellent living standard when you own your own home. I could see myself using that money for travel, etc. The real benefit is not being reliant on my job for economic security.

I do intend to invest in income-producing real estate. I just don’t have enough capital for that yet. Also, I’m not too eager about managing the real estate on my own…so I’d probably enlist a property management company.

So I’m starting out with putting everything I earn in mutual funds. Once I start making more, I’ll buy a duplex, 4-plex and so on.

Have you had success with real estate?

[OneforfreedomParticipant 930]

Search this site for real estate. I wrote plenty. It amazes me how many men are pussies about a clogged sink when… A future million is in your path for handy responsible souls.

It’s not a matter of being a pussy about a clogged sink. I will be working 40-50 hours a week as a doctor. Real Estate investing will be just that for me: investing. I don’t want to manage it on my own because I’d rather spend the time on my hobbies and doing what I enjoy.

Paying 5-10% of rental income for a property management company to find the tenants, collect the rent for me, enforce the policies, etc. sounds like a bargain to me, and that’s what I will do.

Now if real estate were my DAY JOB, then yeah I’d read up on electrical, plumbing, etc. But it’s not.

[Antec80Participant 11]

Another great way is 401k with your work. A lot of companies will match up to a certain percent what you put in. It’s great because I told them what age I wanted to retire and with how much, they said you should put in this percent of your income.

[нσтησσвParticipant 830]

Age: 23
Goal: Leave society @ 30 and live in the middle of nowhere, financed income from $1 mill+ in assets & living off of the land

We have very similar goals 😉

My tip would be; take a look at your life, recognize what you need, what you don’t, and stop buying everything that you don’t need.
If possible, take up cooking / focus your hobbies towards things that will benefit yourself financially. Ie, doing your own car maintenance.

Oh, and for the most part; never buy a new car. Avg car depreciates in value at around $5000+/yr over a 10 year period. Buy a $50,000 car, 10 years later it’ll be $1000. Buy an $80,000 BMW, 10 years later it’ll be around $5000.

I started saving at 21; same year i bought my own apartment and despite dicking around for a year, i’m about 10% towards reaching my goals 🙂
So… i can certainly say that being a minimalist works!

And to show the bigger picture; The current average age for one moving out of their parents place is 27. By the time our generation reaches that point… it’ll definitely be 30+

So… being a minimalist and not wasting money on things like alcohol, tobacco, cars that we can’t afford, over priced services… really works well 🙂

My Goal: To Leave Society.

[OneforfreedomParticipant 930]

Antec80 wrote:

Another great way is 401k with your work. A lot of companies will match up to a certain percent what you put in. It’s great because I told them what age I wanted to retire and with how much, they said you should put in this percent of your income.

Nice! I’ll look into that. Do you mind sharing what percent of your income they let you put into your 401K? I understand that 401k plans have a limit since the contributions are tax-free.

So far, I have the following retirement accounts in mind:

1) 401k; tax-deductible contributions, tax-free growth. Taxed withdrawals.

2) IRA (5K allowed per year); tax-deductible contributions, tax-free growth. Taxed withdrawals.</span>

3) Health Savings Accounts coupled with high-deductible health insurance. Another 4K a year allowed.

Put together, I hope to cut future taxable income down by at least 20K/yr. That and moving to the great state of TX, TN or FL with no state income tax.

Thank you for sharing the point about 401k!

[OneforfreedomParticipant 930]

нσтησσв wrote:

Age: 23 Goal: Leave society @ 30 and live in the middle of nowhere, financed income from $1 mill+ in assets & living off of the land We have very similar goals ? My tip would be; take a look at your life, recognize what you need, what you don’t, and stop buying everything that you don’t need. If possible, take up cooking / focus your hobbies towards things that will benefit yourself financially. Ie, doing your own car maintenance. Oh, and for the most part; never buy a new car. Avg car depreciates in value at around $5000+/yr over a 10 year period. Buy a $50,000 car, 10 years later it’ll be $1000. Buy an $80,000 BMW, 10 years later it’ll be around $5000. I started saving at 21; same year i bought my own apartment and despite dicking around for a year, i’m about 10% towards reaching my goals So… i can certainly say that being a minimalist works! And to show the bigger picture; The current average age for one moving out of their parents place is 27. By the time our generation reaches that point… it’ll definitely be 30+ So… being a minimalist and not wasting money on things like alcohol, tobacco, cars that we can’t afford, over priced services… really works well

Hey! Thank you for responding, and hooray for similar goals.

When you say live in the middle of nowhere, what do you mean? and why leave society? I mean I get it, situation is pretty toxic in the US, but I’m planning some awesome sex and travel escapades to Asia for when I retire :D.

I completely agree with your philosophy on spending. And CONGRATULATIONS on the 10% milestone! Only gotta do it nine more times and you’re there!

I’m learning to cook. I will always buy cars with cash and used. Not going to spend more than 5-10K on a car. I don’t know if you know Mr. Money Mustache, but he has an excellent blog on living an amazing life, early retirement, and not worrying about money. He’s a multimillionaire right now, but his family lives on about $30K a year because that’s all they need to be happy. And they have a blast! They bike all over, enjoy everything life has to offer, spend months upon months vacationing in Hawaii. They own their home, have a rental property, have millions in assets like I said. He’s been retired since age 30 I think. Anyways, check it out at http://www.mrmoneymustache.com if you want.

 

[BeerParticipant 11832]

I’m 31 now…early retirement has been one of my goals since my first job at 16 lol.  Currently have a net worth of around 100k split between real estate equity, retirement accounts, and post tax accounts, a 30k a year pension waiting for me when I’m 64…obviously inflation will eat it up but any money in my pocket is good, and most importantly my only debt is a small mortgage at less than a 3% rate so I’m in no hurry to pay it off.  Bought my first property at 22 so I didn’t have to pay rent to someone else and it worked out well as I’m currently paying about 200 bucks a month less to own than a renter in the same building, and I paid for college as I went so I avoided student loans but it hurt my savings rate for a while…its all good now though as I have no student debt hanging over my head.  The goal is financial independence by 35 and to be in a position where by 40 I can at least semi retire and just work part time sometimes if I feel like it…it depends how burned out I am from my job at that point.

Just some pointers I’d give…

1.  Limit your expenses, as HotNoob has already suggested.  If you can live on a 20k a year budget, going by the 4% rule just as a guide, you’d need 500k to get to your goal.  If you need 40k a year to survive you need 1 million.  That extra 500k you’d need might mean another decade of working.  If you are one of those people making 6 figures living paycheck to paycheck, you’ll never hit your goal.  Obviously living frugally is your friend.  My goal is to keep my budget down to around 20k a year, so I can hit financial independence as soon as possible.  Once I am at that point however much longer I decide to work is just fluff…extra money for toys, traveling, and investing just for additional peace of mind…but soon as I hit my minimum at least I have the peace of mind that I can say f~~~ it and walk away from the full time work world whenever I want.

2.  Careful with the retirement accounts.  Obviously there are benefits to various retirement accounts, but they have a lot of rules and penalties involved with early withdrawals.  If you want to retire in the 40-45 range you aren’t going to be doing yourself any favors by having all your funds in retirement accounts.  Plus when you withdraw money from a tax deferred account you have to pay income tax rates on it.  This country is totally f~~~ed up financially…income tax rates will probably be higher 20 years down the road than they are now.  Don’t be afraid to start a post tax brokerage account and put some of your savings into that if you are serious about retiring in your 40s…at least you’ll have penalty free access to it if you retire early or hit a rough patch in employment in the future.

3.  Real estate – do the math!  I know some guys on here have done well with it but it doesn’t work for everyone…it really depends on your income(as you pay income tax rates on rental income) and your area, as some states have income taxes and/or higher property taxes.  I know for my income and my area if I had any rental income coming in it would be getting taxed at a 39% rate, plus if hire a property manager there goes another 5-10%, plus property taxes.  If I had rental property right now and planned on using a property manager in my crappy high cost of living area 50-70% of my rental income would be gone before I even factored in maintenance, vacancies, eviction costs, mortgage interest(considering most real estate investors aren’t going around paying 100% in today’s low rate environment), or insurance.  Of course if your in a state with no/lower property/income taxes, and you aren’t already in a high income tax bracket to begin with, rental properties make a lot more sense…just something to think about if you are going to be a doctor as you’ll probably be in a high income tax bracket.  Even if you end up in retirement with a lot of money in pre-tax accounts…you’ll end up putting yourself in a high tax bracket with rental income being added to your 401k/IRA withdrawals + SS…but again…if you don’t have much in those type of accounts and your primary income is rental income it will be at a much lower rate…real estate is something you definitely want to research and think about how it fits into your overall plan before you jump into it.

4.  Don’t ever get married.  Divorce laws are stupid.  The higher your income, and the higher your net worth, the more a divorce is going to cost you.  If one of your major life goals is early retirement divorce is the easiest way to f~~~ it up, so why risk it?

[OneforfreedomParticipant 930]

Beer wrote:

I’m 31 now…early retirement has been one of my goals since my first job at 16 lol.  Currently have a net worth of around 100k split between real estate equity, retirement accounts, and post tax accounts, a 30k a year pension waiting for me when I’m 64…obviously inflation will eat it up but any money in my pocket is good, and most importantly my only debt is a small mortgage at less than a 3% rate so I’m in no hurry to pay it off.  Bought my first property at 22 so I didn’t have to pay rent to someone else and it worked out well as I’m currently paying about 200 bucks a month less to own than a renter in the same building, and I paid for college as I went so I avoided student loans but it hurt my savings rate for a while…its all good now though as I have no student debt hanging over my head.  The goal is financial independence by 35 and to be in a position where by 40 I can at least semi retire and just work part time sometimes if I feel like it…it depends how burned out I am from my job at that point. Just some pointers I’d give… 1.  Limit your expenses, as HotNoob has already suggested.  If you can live on a 20k a year budget, going by the 4% rule just as a guide, you’d need 500k to get to your goal.  If you need 40k a year to survive you need 1 million.  That extra 500k you’d need might mean another decade of working.  If you are one of those people making 6 figures living paycheck to paycheck, you’ll never hit your goal.  Obviously living frugally is your friend.  My goal is to keep my budget down to around 20k a year, so I can hit financial independence as soon as possible.  Once I am at that point however much longer I decide to work is just fluff…extra money for toys, traveling, and investing just for additional peace of mind…but soon as I hit my minimum at least I have the peace of mind that I can say f~~~ it and walk away from the full time work world whenever I want. 2.  Careful with the retirement accounts.  Obviously there are benefits to various retirement accounts, but they have a lot of rules and penalties involved with early withdrawals.  If you want to retire in the 40-45 range you aren’t going to be doing yourself any favors by having all your funds in retirement accounts.  Plus when you withdraw money from a tax deferred account you have to pay income tax rates on it.  This country is totally f~~~ed up financially…income tax rates will probably be higher 20 years down the road than they are now.  Don’t be afraid to start a post tax brokerage account and put some of your savings into that if you are serious about retiring in your 40s…at least you’ll have penalty free access to it if you retire early or hit a rough patch in employment in the future. 3.  Real estate – do the math!  I know some guys on here have done well with it but it doesn’t work for everyone…it really depends on your income(as you pay income tax rates on rental income) and your area, as some states have income taxes and/or higher property taxes.  I know for my income and my area if I had any rental income coming in it would be getting taxed at a 39% rate, plus if hire a property manager there goes another 5-10%, plus property taxes.  If I had rental property right now and planned on using a property manager in my crappy high cost of living area 50-70% of my rental income would be gone before I even factored in maintenance, vacancies, eviction costs, mortgage interest(considering most real estate investors aren’t going around paying 100% in today’s low rate environment), or insurance.  Of course if your in a state with no/lower property/income taxes, and you aren’t already in a high income tax bracket to begin with, rental properties make a lot more sense…just something to think about if you are going to be a doctor as you’ll probably be in a high income tax bracket.  Even if you end up in retirement with a lot of money in pre-tax accounts…you’ll end up putting yourself in a high tax bracket with rental income being added to your 401k/IRA withdrawals + SS…but again…if you don’t have much in those type of accounts and your primary income is rental income it will be at a much lower rate…real estate is something you definitely want to research and think about how it fits into your overall plan before you jump into it. 4.  Don’t ever get married.  Divorce laws are stupid.  The higher your income, and the higher your net worth, the more a divorce is going to cost you.  If one of your major life goals is early retirement divorce is the easiest way to f~~~ it up, so why risk it?

Wow. Just…wow- thank you SO much for this. I love it. Congrats on reaching the 100K mark!

Do you know if your pension is indexed for inflation?

I will respond to your points in the order of presentation:

1. Limit Expenses- Agreed; I think that this is where investing and compound interest really shines. Reaching 1M is not easy, but if you invest consistently and over a long time horizon, it should be do-able. I’m aiming for a 4% withdrawal rate each year because that is the maximum safe withdrawal rate that studies have demonstrated that one can have while maintaining an infinite source of cash flow. This is based on a Trinity study that I found on…you guessed it, Mr. Money Mustache’s website! (http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/).

 

The nice thing about the 4% rule is that it adjusts for inflation so you never lose purchasing power. So for example, let’s say my fund grows by 7% in year one (very reasonable). 3% of the growth is actually just inflation. 4% is the interest on my capital. I withdraw that 4%. I’d like to start with $60K, so I need capital pool of 1.5M. The next year, it grows by 7% and reaches just above 1.6M, and I get 4% of that or $64.2K. This way, I maintain purchasing power.

I know it sounds hard to reach 1.5M, but I genuinely believe that with the support of compound interest as well as continuous investing, the goal can be reached.

2. Thank you for sharing this point about retirement accounts. I had not considered this, and you just brought up a very important thought that will ultimately change my strategy. THANK YOU. So what would you recommend I do? My current fund (since I’m just a student and not employed) is in a taxable individual account. Should I skip out on IRAs/401ks or still contribute? The tax advantage right now is nice, but yeah I do want to “retire” at age 40 and the penalties could easily reverse the gains I made.

Hmm…I need to think about this…Maybe I should still sock away the max IRA and 401K allowed each year, and just let it compound from age 40 to 59.5?

I’ll be averaging about 100K from age 27 to 31, and then 150K-200K from age 32-40 or 45. So what I’m thinking is…put the 22K in these retirement accounts each year. Let them grow. Sock the rest away in taxable accounts for age 40 which I can withdraw whenever. So essentially, the age-40 accounts will be the taxable accounts and will have the bulk of my money. I will open up the income stream at age 40. The age 59.5 accounts will be the tax-deferred. They will not have the bulk of my money, and they will supplement my income stream at age 59.5. Would you agree with this approach?

3. Yeah now that you describe the math, real estate does seem like a tough choice for high income producers. Correct me if I’m wrong though, but I think you can set up a corporation to own the real estate. The Corporation collects the rental income. The benefit here is that the corporation pays taxes after spending as much money it can on appropriate business expenses. So I think I would make myself an employee of the corporation (which I’d own). The corporation would collect income, spend it on more real estate (business expenses) or on the property mortgage, and then would pay taxes on what was left.

4. Never getting married. Never having kids. My family thinks I’m going to change my mind…how wrong.  100% agree with you.

Thank you for your insight. It’s really helping me form a plan.

I want to sit down with a financial planner and go over this with them…
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[felixParticipant 406]

Oneforfreedom wrote:

Just bought $3000 worth of mutual funds that have a pretty strong 10-year performance .

Here is my advice.  Get Your Spreadsheet Out and track your funds (MONTHLY) against an index like SPX (S&P 500), unfortunately most funds do not beat a basic index.  Kiplinger: How to Pick the Best Index Fund

But Don’t Just Take My Advice

Here is the advice of a brilliant investor that lives in the part of the country the Washington Insider Beltway’s call the  ‘SLOW DANCING FLY OVER COUNTRY”   Warren Buffet Retirement Advice

Also: It is fun to pull of an investment Grand Slam.  If you want to do this set aside a little ‘Mad Money’ and play with options.  The trick is to view it as a Las Vegas Weekend gamble.  Only bet what you are willing to loose.

Finally. Use the internet and Learn Learn Learn.  But avoid the ‘can’t lose investment advice’.  Crammer over at ‘The Street’ is usually wrong, some people joke the trick to succeeding in the market is to do the opposite of what Crammer tells his listeners.  The guy was telling people that Lehman’s was a buy the week before it failed.

Hope this helps

Enjoy.

 

 

 

more throttle ..... less brakes.....

[MadmanParticipant 772]

Excellent! Once you make the decision, its really not that hard to become financially independent (FI).

I think I plugged this website enough already, but Mr. Money Mustache really has all the info you need.

Be frugal, spend less than you make, invest the remainder.

I am 35 and sort of had a Money Mustache strategy going on before I heard about it, I was doing more of dividend investing in my taxable account, which I think is ok. That account generates ~$800/month in dividends, used to be over~$1k but I sold some stock recently.. transitioning some money over to Vanguard Index funds.

All my married/divorced friends are struggling, and here I am with 800 dollars EXTRA every month that I dont even know what to do with (I’m investing it).

Front loading your 401K or IRA is a good idea too as it reduces your income tax. Later down the road when you retire you can roll the money to a Roth IRA, and certain amount of it will be tax free. See Go Curry Cracker for info about Roth IRA ladder. http://www.gocurrycracker.com/never-pay-taxes-again/

Rock on bro.

[Wandering MGHOWParticipant 551]

I just opened my first Vanguard brokerage IRA. I maxed it out. Now I am looking to invest more money with Vanguard but I’m a bit of a rookie with this stuff. I have about 30k to play with and want to make it work for me. What are my best options?

[OneforfreedomParticipant 930]

felix wrote:

Here is my advice.  Get Your Spreadsheet Out and track your funds (MONTHLY) against an index like SPX (S&P 500), unfortunately most funds do not beat a basic index.  Kiplinger: How to Pick the Best Index Fund But Don’t Just Take My Advice Here is the advice of a brilliant investor that lives in the part of the country the Washington Insider Beltway’s call the  ‘SLOW DANCING FLY OVER COUNTRY”   Warren Buffet Retirement Advice Also: It is fun to pull of an investment Grand Slam.  If you want to do this set aside a little ‘Mad Money’ and play with options.  The trick is to view it as a Las Vegas Weekend gamble.  Only bet what you are willing to loose. Finally. Use the internet and Learn Learn Learn.  But avoid the ‘can’t lose investment advice’.  Crammer over at ‘The Street’ is usually wrong, some people joke the trick to succeeding in the market is to do the opposite of what Crammer tells his listeners.  The guy was telling people that Lehman’s was a buy the week before it failed. Hope this helps Enjoy.

Will do; I did research the fund I bought before (it’s a Vanguard Mutual Fund with a 10-year average return above 7%) so that’s the good news. Thank you for the other resources though- definitely going to consider going Mad Money :D.

I try to read 10-15 pages of an investment book that I have each night.Thank you again for the input though- it helps! I will look into Buffet’s history as well.

Madman wrote:

Excellent! Once you make the decision, its really not that hard to become financially independent (FI). I think I plugged this website enough already, but Mr. Money Mustache really has all the info you need. Be frugal, spend less than you make, invest the remainder. I am 35 and sort of had a Money Mustache strategy going on before I heard about it, I was doing more of dividend investing in my taxable account, which I think is ok. That account generates ~$800/month in dividends, used to be over~$1k but I sold some stock recently.. transitioning some money over to Vanguard Index funds. All my married/divorced friends are struggling, and here I am with 800 dollars EXTRA every month that I dont even know what to do with (I’m investing it). Front loading your 401K or IRA is a good idea too as it reduces your income tax. Later down the road when you retire you can roll the money to a Roth IRA, and certain amount of it will be tax free. See Go Curry Cracker for info about Roth IRA ladder. http://www.gocurrycracker.com/never-pay-taxes-again/ Rock on bro.

A FELLOW MUSTACHIAN?! Hello!!!

Yeah my basic thought was: get started with SOMETHING that is a good reliable fund (Vanguard! I love you!). Continue to read and learn more, and expand as follows. Thanks for suggesting the Roth IRA strategy rollover. I didn’t know about that before.

Best of luck in your pursuit to be financially independent- it looks like you’re killing it with the $800 dividends.

[BeerParticipant 11832]

1.  That’s the right attitude.  Here’s a pretty cool website to play around with if your interested…you can modify your savings rate, post retirement spending, tax rates, inflation rate, investment returns, etc, and it graphs your net worth by age so you can get a visual on your net worth.  Its pretty neat to see how increasing your savings a few percent, or working an extra year or two, or decreasing your retirement spending can effect your nest egg.  http://www.market~~~ch.com/retirement/tools/retirement-planning-calculator?showsmscrim=true

2.  I’m in the 90-120k range now depending on OT and bonuses, and I’ll probably cap in the 140-180k range.  My strategy is to just max my pre-tax 401k each year(18k pre tax limit this year + employer match), max my HSA(really nice since you can put pre-tax money in and pull it out tax free to pay for any medical expenses regardless of age or employment status), and whatever else I set aside for long term savings goes into a post tax brokerage(I generally lean towards large companies with stable dividends and look at the dividends as my future paycheck without having to sell shares, reinvest dividends while I’m working and just take the cash when I retire).  The younger you are when you can get money into pre-tax accounts the more you’ll benefit from tax free compounding.  You can always cut back on pre-tax savings down the road if you feel like your getting too much in pre-tax accounts.  Just my strategy, but I want to aim to have 2 dollars post tax for every dollar pre-tax.

So yeah…I think that’s pretty much the same strategy you are going for.  Most of your money will be post-tax, and the pre-tax money is nice if you started drawing down your principal if you have a few years with a bad return or unaccounted for expenses during your early retirement, or if not it’ll just be extra fun money some day.

3.  I researched it a bit as I planned on buying a rental property a while back and only changed my mind when I got a new job and bumped into a higher tax bracket, but you can start an LLC and own the property via the LLC.  I think the main benefit of it is actually for liability reasons.  If a tenant wants to sue you for whatever reason, they can only sue the LLC that owns the property…they can’t go after your personal property or any other LLCs, even if you own them.  I really don’t think there is much tax incentive as I’m pretty sure you still have to pay income tax rates when you go to pay yourself from LLC funds.  I’m not really sure how it works as far as being able to write off specific operating expenses or if it impacts any tax deductions you’d get otherwise, like writing off property taxes or mortgage interest since its now in the name of the LLC and not in your name.

Ultimately I just decided that getting lawyers and accountants involved in setting that stuff up was just extra expenses, and cutting into my profits even more.  I’m not saying real estate is bad…its just there are a lot of variables to consider, so do your research if its something that interests you.  If you really want to look into it I’m sure there are people on MMM, or even on this forum, that have this set up that would be willing to share some of the tricks of the trade with you.

4.  The way I look at it…even if I have kids, potentially paying child support is still a s~~~ load cheaper than paying child support and getting divorce raped.  You might change your mind on the kids…but don’t marriage f~~~ yourself, and watch out for common law marriage if your state has it!

[OneforfreedomParticipant 930]

Wandering MGHOW wrote:

I just opened my first Vanguard brokerage IRA. I maxed it out. Now I am looking to invest more money with Vanguard but I’m a bit of a rookie with this stuff. I have about 30k to play with and want to make it work for me. What are my best options?

Congrats! What funds did you invest in, if you don’t mind me asking? I’m always on the look out for more choices.

You can make an individual taxable account with Vanguard and contribute as much as you want to that, regardless of the amount in your IRA. You can buy the same funds that you bought with your IRA or different funds.

I invested in Vanguard Wellington shares: https://personal.vanguard.com/us/funds/snapshot?FundId=0021&FundIntExt=INT

The fund managers have done a great job of delivering excellent returns…8.28% since inception, 12.85% 5-year return, 7.8% 10-year. It is 65% stocks, 35% bonds.

If you have 50K or more, you can buy Vanguard Wellington Admiral which has an even lower expense ratio.

[OneforfreedomParticipant 930]

Beer wrote:

1.  That’s the right attitude.  Here’s a pretty cool website to play around with if your interested…you can modify your savings rate, post retirement spending, tax rates, inflation rate, investment returns, etc, and it graphs your net worth by age so you can get a visual on your net worth.  Its pretty neat to see how increasing your savings a few percent, or working an extra year or two, or decreasing your retirement spending can effect your nest egg.  http://www.market~~~ch.com/retirement/tools/retirement-planning-calculator?showsmscrim=true 2.  I’m in the 90-120k range now depending on OT and bonuses, and I’ll probably cap in the 140-180k range.  My strategy is to just max my pre-tax 401k each year(18k pre tax limit this year + employer match), max my HSA(really nice since you can put pre-tax money in and pull it out tax free to pay for any medical expenses regardless of age or employment status), and whatever else I set aside for long term savings goes into a post tax brokerage(I generally lean towards large companies with stable dividends and look at the dividends as my future paycheck without having to sell shares, reinvest dividends while I’m working and just take the cash when I retire).  The younger you are when you can get money into pre-tax accounts the more you’ll benefit from tax free compounding.  You can always cut back on pre-tax savings down the road if you feel like your getting too much in pre-tax accounts.  Just my strategy, but I want to aim to have 2 dollars post tax for every dollar pre-tax. So yeah…I think that’s pretty much the same strategy you are going for.  Most of your money will be post-tax, and the pre-tax money is nice if you started drawing down your principal if you have a few years with a bad return or unaccounted for expenses during your early retirement, or if not it’ll just be extra fun money some day. 3.  I researched it a bit as I planned on buying a rental property a while back and only changed my mind when I got a new job and bumped into a higher tax bracket, but you can start an LLC and own the property via the LLC.  I think the main benefit of it is actually for liability reasons.  If a tenant wants to sue you for whatever reason, they can only sue the LLC that owns the property…they can’t go after your personal property or any other LLCs, even if you own them.  I really don’t think there is much tax incentive as I’m pretty sure you still have to pay income tax rates when you go to pay yourself from LLC funds.  I’m not really sure how it works as far as being able to write off specific operating expenses or if it impacts any tax deductions you’d get otherwise, like writing off property taxes or mortgage interest since its now in the name of the LLC and not in your name. Ultimately I just decided that getting lawyers and accountants involved in setting that stuff up was just extra expenses, and cutting into my profits even more.  I’m not saying real estate is bad…its just there are a lot of variables to consider, so do your research if its something that interests you.  If you really want to look into it I’m sure there are people on MMM, or even on this forum, that have this set up that would be willing to share some of the tricks of the trade with you. 4.  The way I look at it…even if I have kids, potentially paying child support is still a s~~~ load cheaper than paying child support and getting divorce raped.  You might change your mind on the kids…but don’t marriage f~~~ yourself, and watch out for common law marriage if your state has it!

You’ve done it again, Beer! Terrific post. Going to respond in the same order.

1. I just checked out that website and based on a quick 5 minutes of play, here is my impression: It’s great for, like you said, determining future net worth. But the website is making a mistake in that it assumes I will liquidate all my assets during retirement. I won’t. I will keep the 1.5M capital pool in there for perpetuity, and only withdraw 4% that is the interest on the capital. Is there any way I can make this adjustment?  Also, I played with it a little bit and saw the magic/light in letting the 1.5M compound further at 8% until age 50 without any withdrawals or further contributions (it’ll grow to 2.7M JUST BY SITTING THERE)….so MAYBE now I’m thinking that I’ll contribute to the fund until age 40, hit 1.5M, and then from age 41-50, I’ll work and spend 100% of my post-tax income on whatever the hell I want. Work six months as a traveling doc in the US, spend the next six months in the Virgin Islands or Bermuda….man I love this! This way I’ll stay busy and I’ll still get a bigger and more badass nest egg.  Thanks for showing me this calculator- you just made my day!

2. It looks like you are doing extremely well! Congratulations! You articulated the strategy in a nice way- use pre-tax IRA/401k as “backup” money and taxable as primary income stream. I follow the same plan you do- reinvest all dividends/gains while working. Withdraw when retire. It’s times like these when I wish that, instead of birthday presents and christmas gifts, I got an investment account when I was a small boy. Things could be so amazing right now.

3. Thank you for sharing that perspective about real estate with me. Noone had told me about this before. I had no idea that so much of the income could be taxed at a high rate, go to pay for accountants etc. I think the capital is definitely much more appropriately used in paper assets in our cases. I will still be looking into real estate but suffice to say I’m going to look at the math very carefully.

4.  Alimony is a payment I will never make. My state does have common law marriage. What stinks is even living with a girlfriend can be construed as being married in some cases. Ugh.

I love this discussion people- thank you all so much for contributing!

[BeerParticipant 11832]

Oneforfreedom wrote:

I just checked out that website and based on a quick 5 minutes of play, here is my impression: It’s great for, like you said, determining future net worth. But the website is making a mistake in that it assumes I will liquidate all my assets during retirement. I won’t. I will keep the 1.5M capital pool in there for perpetuity, and only withdraw 4% that is the interest on the capital. Is there any way I can make this adjustment?

It does this automatically for you…in the advanced options tab there is a post retirement investment return % you can type in.  It assumes you are earning that % on your total net worth, its not assuming you just go 100% cash with a 0% return the day you retire.  It has the default % set a little lower for post retirement vs pre-retirement under the assumption you are going to be more conservative post retirement.  I don’t think there is any way to perfectly simulate dividends with this calculator but its pretty neat to see how increasing your savings a few %, decreasing your retirement spending, or working/retiring a few years later/sooner can ultimately effect your nest egg.

[нσтησσвParticipant 830]

Oneforfreedom wrote:

When you say live in the middle of nowhere, what do you mean? and why leave society? I mean I get it, situation is pretty toxic in the US, but I’m planning some awesome sex and travel escapades to Asia for when I retire :D.

I literally mean in the middle of no where 😛

My plan is to buy some cheap land somewhere around 500-1000 acres, build a shack for staging, and start building a home with my own two hands.
I will be growing my own food; i’ve already started developing some green housing techniques, and i’ve figured out how to make green housing in canada in the winter releatively cheap.
Electricity will most likely be from geothermal, and i’ll trench some fibre optic lines to my property and gets some awesome internet for those rainy days.
When all is setup, i will have no real dependencies on the rest of the world… so if feminists go on a crazed manhunt to exterminate the men of the world… it won’t really effect me.

As a secondary goal, if all goes well, i will build extra houses; as when you exclude labour and already paid land costs from a house, the price drops to $50-100k for some very nice buildings. Maybe get some friends to volunteer to help subsides the growth.
From there, start renting out to people and building a community; thus creating my own little society – someone brings up their mangina bulls~~~, “here you go, 1 month notice; bye bye!”

I doubt i will have the energy to proceed with the secondary goal; but you never know 😛

“Why leave society?”
So i don’t have to deal with their s~~~.
No feminism, no manginas, nada.

There are also no alternative countries that you can just move to; to avoid this s~~~.

“I’m planning some awesome sex and travel escapades to Asia for when I retire”
I have no need for sex; infact, if anything i want to avoid having my entire life revolve around it as i want my life to have some meaning.

My Goal: To Leave Society.

[bcrogerParticipant 113]

Nice! Out of curiosity, how do you plan to spend your time once you retire since you plan on not having a wife (since you are a red pill MGTOW)

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