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Retired at 33 on $110k net assets
Old 11-30-2010, 12:20 AM   #1
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Retired at 33 on $110k net assets

This is indeed early-retirement extreme. Some questionable strategies but also some food for thought.

» Guest post: Retired at 33 Early Retirement Extreme: — written by Jacob Lund Fisker, Freelancer
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Old 11-30-2010, 12:26 AM   #2
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hmmm...borrows from broker on margin, uses credit cards for capital...

sounds like a very low risk strategy.
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Old 11-30-2010, 12:57 AM   #3
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Do I hear $90,000? $90,000, $90,000, somebody give me $90,000!

This is whole new direction for the board. It makes old JG_1st look like an insurance actuary.

I like it! It should broaden our appeal to the world at large.

One thing I guess I don't quite get about these "extreme" guys- why the PhD? Why not just retire out of high school? One could live in Mom's basement, maybe even eat out of her refrigerator. A little baby-sitting and grass cutting in the neighborhood and the pork rinds and beer are covered.

He could even retire at 18 or so, with no needed capital at all.

Ha
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Old 11-30-2010, 02:59 AM   #4
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This is whole new direction for the board. It makes old JG_1st look like an insurance actuary.

I like it! It should broaden our appeal to the world at large.

One thing I guess I don't quite get about these "extreme" guys- why the PhD? Why not just retire out of high school? One could live in Mom's basement, maybe even eat out of her refrigerator. A little baby-sitting and grass cutting in the neighborhood and the pork rinds and beer are covered.

He could even retire at 18 or so, with no needed capital at all.

Ha
I imagine in some cases, the parents are paying for the PhD, and it beats w*rking. When the degrees and the money run out, it's time to get creative.

I don't think many parents just let the kids hang out once they're 18. I know a couple of examples where that has happened though. The problem with doing that long term, is the parents better be leaving an FI style inheritance. Otherwise, the kid is going to end up on the streets in middle age, with no skills/employment history. Kind of like that old Peter Sellers' movie "Being There".
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Old 11-30-2010, 08:12 AM   #5
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I see a lot of these extreme ERers sleeping on the grates in DC. A number of them have PHDs. Not a life style I would choose nor many of them.
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Old 11-30-2010, 09:15 AM   #6
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Very heavily margined on long term debt? That should all turn out well if rates increase moderately.
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Old 11-30-2010, 09:24 AM   #7
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Living proof that "an idiot with a PhD" is not always an oxymoron. Sheesh!
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Old 11-30-2010, 11:29 AM   #8
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I was reading the very same blog entry myself recently. However, you have to agree that it is working for him, though I would say it must take some cojones to adopt his chosen strategy and it's not one that would work for the majority.

However, he does say that the worst that could happen is he would have to return to the workforce if it goes badly.
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Old 11-30-2010, 11:37 AM   #9
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This is indeed early-retirement extreme. Some questionable strategies but also some food for thought.
Jacob has finally found someone who makes his own ERE strategy seem both opulent and conservative.

At least the guy estimates that he has a 60-75% chance of success, although I couldn't help wondering how that's an improvement over "put it all on red". He also admits that he'd rather screw this up in his 30s (and return to the workforce) than to have to apply for a Wal-Mart job in his 70s.

I bet he gets married, perhaps starts a family, and suddenly finds out that investing on margin for money to buy diapers makes it kinda hard to sleep at night.
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Old 11-30-2010, 11:54 AM   #10
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A touch of idealism, some naivete, and a complete lack of responsibilities makes many young, unattached people feel invincible. Then comes the wake-up call...
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Old 11-30-2010, 12:27 PM   #11
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At least the guy estimates that he has a 60-75% chance of success, although I couldn't help wondering how that's an improvement over "put it all on red". He also admits that he'd rather screw this up in his 30s (and return to the workforce) than to have to apply for a Wal-Mart job in his 70s.
That is sort of my rationale as well. Front load the risk, as he says, right now and hope I can ER around 35 (with still a non-zero risk of failure).

I'll probably know my ER plans are going to fail early on, and I can then choose to find some relatively well paid work at a relatively early age instead of saying "Welcome to Walmart" or "Do you want fries with that" at age 70.

But I am shooting for a success rate much higher than 60-75% for sure. And the way he was investing on margin, I would put the success rate much lower IMHO.
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Old 11-30-2010, 12:49 PM   #12
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Power to him! Hope he succeeds. I'd die from stress if I tried to copy his strategy.

All of us ER'ing based on historical studies of market returns take a risk of failure. To each their own.
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Old 11-30-2010, 01:17 PM   #13
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A touch of idealism, some naivete, and a complete lack of responsibilities makes many young, unattached people feel invincible. Then comes the wake-up call...

+1
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Old 11-30-2010, 02:56 PM   #14
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Okay I was unduly harsh in my earlier response to this, mostly because the investment (gambling) approach is so appalling. In an effort to make amends, if I were in my 30's I'd look for ways to craft a lifestyle of long-term semi-retirement. Ernie Zalinski writes wonderfully about this in his book "The Joy of Not Working," and there's another good writer who summarizes the approach here:

http://www.whywork.org/about/feature...etirement.html

In a nutshell, have clear discernment about the things you love to do that don't bring in money, have a bunch of things you don't mind doing (or better yet, love doing) that do generate $, save like crazy, live frugally, plan on working part-time forever rather than slaving away at work you hate and keeling over from a heart attack on the golf course at age 65 or whatever.
Early Semi-Retirement as a goal makes sense no matter what one's age. OTOH investing 700K on margin with 100K in net assets sure sounds crazy at any age.
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Old 12-03-2010, 11:36 AM   #15
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One thing I guess I don't quite get about these "extreme" guys- why the PhD? Why not just retire out of high school? One could live in Mom's basement, maybe even eat out of her refrigerator. A little baby-sitting and grass cutting in the neighborhood and the pork rinds and beer are covered.

Ha
There are very few people who gets the chance to consider alternative ways of living before locking themselves into the educational path of college-student loan-internship to pad resume-job-car loan-30 year mortgage-random spouse-new job-children-divorce-job-next spouse, next job, furniture-loan, first cholesterol lowering drug, promotion, beta-blockers, fourth car, first heat-attack, etc...

Most people who seek early retirement come to realize that maybe they don't like 9-5 work at some point during that path. For instance, I didn't realize that I didn't like career work until management started pushing more and more to "network" rather than "work". Or maybe they decide they simply have other goals than being "employee of the year."

We got a couple of precocious teenagers on the ERE forums, but that's out of a few hundred people. It's rare to have that level of insight in how the socioeconomic system really works when you're 18.

So it's mainly a question of not knowing what opportunities there are in advance and then to some degree being smart and high-earning enough to act on it once it becomes clear.
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Old 12-03-2010, 11:46 AM   #16
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college-student loan-internship to pad resume-job-car loan-30 year mortgage-random spouse-new job-children-divorce-job-next spouse, next job, furniture-loan, first cholesterol lowering drug, promotion, beta-blockers, fourth car, first heat-attack
You left out the nervous breakdown and the mid-life crisis.
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Old 12-03-2010, 11:49 AM   #17
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No joy at all?
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Old 12-03-2010, 01:13 PM   #18
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I think the best way to see extreme early retirement is simply to think of the person working as private asset manager with his own money(*). (Reading the guest post and the following comments in detail it becomes clear that he's more sophisticated than the typical investor with a handful of funds and a standard asset allocation plan.) In that sense, being an investor with $110k in assets is risky in the same way that having an education as a doctor with $100k in student loans is risky or being an carpenter with $110k worth of shop tools. Yes, the investor can lose his money, but the carpenter can lose his hand or his business and the doctor can get hit by a lawsuit or simply die of a heart attack at 55.

(*) Of course any defined contribution plan can be seen like that.

Maybe the key difference is that asset management only takes a few hours a week tops (especially when you don't have to write performance reports) and thus it could be confused with retirement.

As stated, the worst thing that can happen to the guest poster is that he ends up $50k in debt. Being able to live on $12000 a year (a big asset when you think about it) makes it possible to pay such a debt off in a relatively short amount of time, compared to most people.
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Old 12-03-2010, 02:31 PM   #19
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This is whole new direction for the board. It makes old JG_1st look like an insurance actuary.

I like it! It should broaden our appeal to the world at large.

One thing I guess I don't quite get about these "extreme" guys- why the PhD? Why not just retire out of high school? One could live in Mom's basement, maybe even eat out of her refrigerator. A little baby-sitting and grass cutting in the neighborhood and the pork rinds and beer are covered.

He could even retire at 18 or so, with no needed capital at all.

Ha
Simply, the more educated you are, the more likely "living life on your own terms" and pursuing enlightenment would appeal to you.
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Old 12-03-2010, 02:56 PM   #20
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No joy at all?
The politician in me tell me I should say that reading the wide spectrum of opinions on ER on e-r.org is one my life's great joys.
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