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FIRE Plan, which port?
Old 11-11-2014, 08:29 PM   #1
Confused about dryer sheets
Join Date: Nov 2013
Posts: 6
FIRE Plan, which port?

I just finished reading Work Less, Live More which left me with a revitalized interest and desire for FIRE. I immediately started playing around with spreadsheets and have devised a strategy and two possible portfolios.


Age: 25
State: FL

I'm employed as a pharmacist and live well below my means. I've been working for about 16 months. In that time, I've managed to go from a networth of -$50k (student loans) to +$45k. I live on about 25% of my salary, another 25% or so to taxes, which has let me save/invest/pay off loans with the remaining 50%. I enjoy what I would call a very comfortable living situation (no interest in lifestyle-creep) and have no plans to increase my spending significantly in the near future. I will have my student loans paid off within 8 months. I do not plan on owning a home in the near future.

Current Assets:

$32k in traditional 401k (25% S&P500, Int Large, Small Cap, Bond)
$12k in Roth IRA (REIT)
$11k ESPP
$13k cash
$20k approximate car value

Current Liabilities:

$30k student loans @6.55%
$13k car note 2.5%

No credit card debt/mortgage


I would like to continue to work full time until age 35, at which point I would like to have a child or two, and drop down to 24hrs/week (which would still let me keep benefits). During these 10 years, I would continue to invest north of $50k/year (including employee match). From 35-55 I would work my 24hrs, and hopefully still manage to max out 401k/IRA (taxable account contributions would stop, only yearly rebalancing). At 55 I would fully retire. Below are two proposed investment strategies. I've used Rick Ferri's 30 year projections for real returns.

Portfolio #1 (conservative 4 fund):

30% Total US (VTSAX) - taxable
30% Total Int (VTIAX) - taxable
30% Total Bond (LAG) - 401k

Estimated yearly real return: 4.2%
Estimated SD of asset classes (not port SD): 16%
Portfolio ER: 0.1%

This portfolio would remain fairly static until 55, at which point I would drop REIT's for intermediate corporates and exchange half of Total Bond for TIPS. In retirement the portfolio would look be:

27.5% Total US (VTSAX) - taxable
27.5% Total Int (VTIAX) - taxable
15% Total Bond (VGSLX) - 401k
15% US TIPS (VAIPX) - 401k
15% US Int Corp (VICSX) - IRA

Portfolio #2 (aggressive 6 fund):

18% S&P500 (SVSPX) - 401k
18% Int Large Val (SSAIX) - 401k
18% Small Cap Value (VSIAX) - taxable
18% Emerging (VEMAX) - taxable
18% Muni Bonds (VWIUX) - taxable

Estimated yearly real return: 5.2%
Estimated SD of asset classes (not port SD): 19.9%
Portfolio ER: 0.14%

This portfolio would favor aggressive asset classes in the beginning (starting with approximately 50% SCV/Emerging, and taper slowly towards retirement, exchanging high risk assets for more bonds each year. In retirement the portfolio would look be:

12% S&P500 (VFIAX) - 401k
12% Dev Int Large (VTMGX) - 401k
12% Emerging Large (VEMAX) - 401k
12% US SCV (VSIAX) - 401k
40% US Muni Bonds (VWIUX) - taxable


I like the conservative portfolio (a la 3 fund + REITS) for its simplicity and relative safety throughout my career. Using my spreadsheets and Rick's numbers, the net at retirement would be approximately $3.1m.

I could also see myself striving for an aggressive portfolio. With a very long time horizon (30 years until retirement with potentially another 30-40 years in retirement) I feel as though I could stand to take additional risk with hopes of a slightly hire return. The estimated net at retirement would be $3.7m for this portfolio, 20% higher.

Any opinions/critiques are highly appreciated regarding my plan and portfolio proposals. Thank you.
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