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Old 06-27-2016, 03:21 PM   #41
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A little late to the party, but this comic seems to sum up this thread nicely:

Non Sequitur Comic Strip, February 28, 2016 on GoComics.com
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Old 06-27-2016, 09:19 PM   #42
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Originally Posted by thefinancebuff View Post
Another year later person B has $40k and person A has $23k. Another year later ... A higher return gets person B a higher total than person A.

...in the fictional world where someone is able to consistently get 100% returns...
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Old 06-27-2016, 09:49 PM   #43
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Your income is your #1 wealth generating tool.
I guess I lived below my means, but it feels like I earned greater than my desires. I focused on earning and the savings came naturally. Now that I'm close to FIRE, I wonder how much I could have saved had I really buckled down.

It's a recurring theme in my life. I got pretty good grades in school. I wonder what would have happened if I had spent a little less time partying and focused on studying. I've road the above average line most of my life without a lot of effort and now wonder if I'd had been able to actually excel at something if I'd have actually busted my butt and focused on something.

Oh well - life has been good to me. I'm thankful. Maybe I'll excel at something in the next phase which at 55, I hope is coming soon.
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Old 06-27-2016, 10:34 PM   #44
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What had a bigger impact-saving/being frugal or investments - on reaching FIRE? Can you quantify or give one suggestion?
Time in the market. Late 1976 - 2016. Index fund/s aka Bogle's Folly.

However even really really cheap SOB's get old.

heh heh heh - And and I heard this vicious rumor that you can take it with you.
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Old 06-28-2016, 12:16 AM   #45
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I utilize the power of compounding so investing over saving.
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Old 06-28-2016, 06:20 AM   #46
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I guess I lived below my means, but it feels like I earned greater than my desires. I focused on earning and the savings came naturally. Now that I'm close to FIRE, I wonder how much I could have saved had I really buckled down.

It's a recurring theme in my life. I got pretty good grades in school. I wonder what would have happened if I had spent a little less time partying and focused on studying. I've road the above average line most of my life without a lot of effort and now wonder if I'd had been able to actually excel at something if I'd have actually busted my butt and focused on something.

Oh well - life has been good to me. I'm thankful. Maybe I'll excel at something in the next phase which at 55, I hope is coming soon.
I have a bit of this. I think we need to rip the rear view mirror off the windshield and start focusing more on looking forward instead of backwards......
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Old 06-28-2016, 07:59 AM   #47
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What had a bigger impact-saving/being frugal or investments - on reaching FIRE? Can you quantify or give one suggestion?
I really admire those who can sum up their answer in a single post. I would not make a suggestion, because I realize that our own retirement would/will not be a path for others.

In fact, except for circumstances of health, not sure that the 12 years between leaving the workforce and age 65 would have provided much more in wealth or happiness. It was a different time, in the early 90's, when interest rates on savings were higher, housing value gains were substantial, and our untutored thinking that this "capital" appreciation would continue... guided the path towards living within our means, and adjusting our lifestyle accordingly, with no aspirations to wealth to advance our position in life.

Most of the members who post here, have read some parts of our retirement "life story" which has now extended to 27 years. Staying in savings and Ibonds, and with a tiny 2 digit "portfolio", we've managed to keep our heads above water... and the "frugality" has kept our capital virtually intact since 1989, and the balance will now hopefully provide a spend down that lasts beyond our life expectancy. Money is no longer a concern.

So... a different time, a different path, during a different economy, resulting in happiness and peace of mind, beyond our expectations.

Nothing new here, but an answer to the OP that I couldn't squeeze into one post.

Sharing 23 years of Frugal Retirement
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Old 06-28-2016, 08:52 AM   #48
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Originally Posted by thefinancebuff View Post
Another year later person B has $40k and person A has $23k. Another year later ... A higher return gets person B a higher total than person A.
But not if they were both still saving...
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Old 06-28-2016, 09:07 AM   #49
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YMMV But, in my case, I've never been accused of being frugal, or a "saver", or one who practices LBYM. So based on the OP choices, I'd say investments.
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Old 06-28-2016, 09:38 AM   #50
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But not if they were both still saving...
Are you sure? After a second year of saving, person B has $60k, person A has $44k.
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Old 06-28-2016, 10:11 AM   #51
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For us I would have to say saving had the biggest impact - two income household with tech jobs. We tried to stay current with whatever software or methodologies were in short supply / high demand.

We consistently had a LBYMs lifestyle compared to some of our co-workers and neighbors, but in hindsight I would have optimized our expenses even more. Like now we changed where we grocery shop, dropped the expensive cable TV packages, have some seat filler subscriptions for entertainment and made the house more energy efficient. None of those changes have lowered our quality of living, some improved it if anything, and 100+ or so changes like that has had a huge impact on our annual run rate. We could have retired in our forties instead of fifties if we'd done that decades ago.
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Old 06-28-2016, 10:20 AM   #52
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Saving > investing in most cases.

Take two people each earning 100K. Assume for the purposes of this example both put their money away on Jan 1st each year and don't add another dime all year.

Person A saves 20% and gets a modest 7% annual return = $21,400 at the end of the year.

Person B saves 10% and gets a nearly-impossible-to-achieve 100% annual return = $20,000 at the end of the year.

Saving more gets person A a higher total than person B.

A more realistic example of DCA and variable returns will result in different end of year totals, but the concept is the same. Saving more is generally more important and more likely to result in higher totals than the best investors in the world can hope to achieve.
however a saver typically saves in a bank rather than investing and achieving a 7% return.

A: saves 20% + .25% interest x 10 yrs = 223k

B: invests 10% + 7% investment return 10 yrs = 163k. Although it does take 18 yrs for B to pass A

C: invests 10% on a monthly basis + 10% (SPY average) reinvest dividends 10 yrs = 201k. Passes A in 11.5 yrs
http://www.investopedia.com/ask/answ...urn-sp-500.asp

But C got to go out to eat more, vacation every year, never really denied themselves. It's not all "live for tomorrow" sometimes ya gotta smell the roses
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Old 06-28-2016, 10:26 AM   #53
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Would have to be savings for us. We always LBYM'ed and saved hard, but as 2 incomes from megacorp grew over the years, we kept out lifestyle pretty constant and net savings went from 15-ish to nearly 35%. Luckily the little bit of "old money" had a chance to do pretty well growth wise pre-2008, so overall we did pretty well.
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Old 06-28-2016, 10:37 AM   #54
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What had a bigger impact-saving/being frugal or investments - on reaching FIRE? Can you quantify or give one suggestion?
I wouldn't say we were "frugal," but we did save a lot. We had 2 incomes and priority #1 was always to max out both 401Ks, no matter what. We set our lifestyle based on whatever was left. It was tight early on with young kids, but became substantially easier over time as our income grew, and we spent accordingly. Later when the kids went to college and our income was peaking, we also built up the taxable account in a significant way and started to accelerate mortgage repayment in anticipation of ER.

Having said that, I still think that the compounding effect of intelligent and disciplined investing over a long period of time was the larger factor in making ER a reality for us. I hesitate to try and quantify this... but I know exactly how much we put into the 401Ks and the taxable accounts. The current value of our investment assets exceeds that figure by a factor of 3. So obviously, just sticking money in a coffee can would have left us drastically short of what was needed for FIRE.

My "one" suggestion is: start early, work hard, LBYM in a balanced way, save consistently, educate yourself on low-cost passive index investing, make a plan and stick to it, check progress regularly, update the plan as needed, and follow it with the discipline and determination that any important goal requires.
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Old 06-28-2016, 10:38 AM   #55
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But C got to go out to eat more, vacation every year, never really denied themselves. It's not all "live for tomorrow" sometimes ya gotta smell the roses
good luck getting 10% net returns over the next 10 years, js
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Old 06-28-2016, 10:39 AM   #56
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I think savings was a much bigger impact to our FI. We both had/have great jobs in the Aerospace business that allowed us to save a good portion of our salaries in the last ten years of our careers. We never were big spenders. The only thing that I can look back and say we didn't do a good job of keeping expenses down is in the eating out department. We love to eat out! Although I have noticed that we now would rather stay home and cook as we have gotten older. The other stuff like fancy housing, expensive cars, jewelry or other luxury items were never a temptation.
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Old 06-28-2016, 10:48 AM   #57
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good luck getting 10% net returns over the next 10 years, js
Dividend reinvesting

I refuse to deny myself so all my kids can inherit more than 1m each -- says the person who's highest annual income was 66k. They'll be content with the 750k apx each that's there
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Old 06-28-2016, 10:55 AM   #58
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I always contributed the maximum to the TSP, plus the entire over-50 catch-up when it applied. That maximum was a lid on how much I could save in that account that aggravated me no end. Investing really helped a lot although I still wanted to save more in my TSP than was allowed. Still, looking back on how much I saved in the TSP, saving helped more than investing.

Beyond the TSP, I did some pretty extreme LBYM and managed to both pay off my house and build a good sized taxable portfolio.

So overall, I would say that saving helped more for me both in taxable and in the TSP. But really, this is like being asked which of your children is your favorite. Both saving and investing were needed and effective.
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Old 06-28-2016, 10:58 AM   #59
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Dividend reinvesting
still won't get you 10% for 10 years, not at least according to consensus means and standard deviations for any asset class
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Old 06-28-2016, 03:43 PM   #60
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In the early years, maxing out the savings will allow the accounts to grow more than your contributions you make annually. That being said, a continued pattern of maxing out the savings for many years will be the biggest reason your account balances are what they are (remember, if you earn 5% on your accounts, 5% of $1,000,000 will be more than 5% of $100,000).
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