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Lucky or Good?
Old 03-07-2014, 05:51 PM   #1
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Lucky or Good?

A number of recent articles have suggested that those who have been able to retire early have just been lucky. Really? Maybe there are some who have FIRE'ed because of a windfall like a stock buyout or an inheritance. However, I suspect that the majority have just tried to follow the basic practices that we talk about over and over on this forum, i.e. LBYM, DCA, low cost index funds, asset allocation, re-balancing, etc.

So, how were the last few decades of investing compared to past history? Could FI reached by being by being "good" or did you need to be lucky? It sure didn't feel like such a lucky time: Black Monday, the 90's Recession, the Dot Com bubble, the Great Recession, 9/11, invasions of Kuwait, Afghanistan, Iraq, to name a few.

I've plotted the real returns of someone who was in the stock market for the last 20-years (the 25 and 30-year plots are similar). The red dot is the CAGR for the last 20 year period ending in 2013. You can see that the last few decades have been pretty typical for investing - about 55% of the time the stock market performed better. There is an old saying that goes, "It is better to be lucky than good" Maybe. But good is good enough when it comes to FIRE.

Zorba

(Details: S&P returns with dividends and inflation numbers from Bogleheads forum. The blue dots are the actual returns before binning. Look how badly the real distribution deviates from a Normal distribution (blue line)! A more balanced portfolio would be better but I used the data with the longest time series and doubled checked the basic result using broader market data starting in 1974.)
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Old 03-07-2014, 06:33 PM   #2
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I wish I had been lucky or good. If so, I'd retired in my 40s, and not at age 53 or 54 (my current plan). I have been just so-so except deserving an A+ in LBYM.
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Old 03-07-2014, 06:41 PM   #3
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I was lucky, but I made my own luck. I got stock options with a smaller company that became a megacorp. However, a few years earlier I saw I was locking myself into the previous megacorp job and I addressed some deficient skills and took a chance when it came along and it all paid off. I didn't wait for luck to bonk me on the head.
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Old 03-07-2014, 06:43 PM   #4
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Lucky or Good...it is the same result.
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Old 03-07-2014, 07:43 PM   #5
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We planned, both worked, scrimped (at times), saved consistently, kept our family small, and were fortunate enough to have secure jobs and no major disasters in life.

So a bit of both...
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Old 03-07-2014, 08:16 PM   #6
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I drank and chased women all my life, then found a winning lottery ticket in the gutter and here I am. So, for me - pure skill and hard work.
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Old 03-07-2014, 08:26 PM   #7
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I drank and chased women all my life, then found a winning lottery ticket in the gutter and here I am. So, for me - pure skill and hard work.
Lmfao
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Old 03-07-2014, 08:28 PM   #8
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I prefer to think of myself as lucky and good. That's a good combo.
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Old 03-07-2014, 08:31 PM   #9
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I drank and chased women all my life, then found a winning lottery ticket in the gutter and here I am. So, for me - pure skill and hard work.
And all this time I've been wondering where that ticket went!
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Old 03-07-2014, 08:43 PM   #10
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Anybody who tells my DW she was lucky had better duck!
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Old 03-07-2014, 08:49 PM   #11
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'Lucky' is used as an excuse to raise taxes on those who worked hard and lived below their means.
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Old 03-07-2014, 09:22 PM   #12
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I was lucky to have worked for 3 different private companies who all had DB pension plans, and they all finished those plans AFTER I left, so I was grandfathered in. No way could I claim to be have been good enough to plan that.
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Old 03-07-2014, 09:56 PM   #13
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'Lucky' is used as an excuse to raise taxes on those who worked hard and lived below their means.
Meh, now its just a game. When I was at my peak earning years and killing myself to make the money, I did not relish handing over 35% or more of my income to various tax authorities, but I was philosophical about it. Now that I am at the opposite end of the scale, I will take everything that is legally mine to claim. I will almost certainly never get back what I put in, but that is life.

As for the rest....

"Oh Lord, its hard to be humble when you're perfect in every wayyyy..."
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Old 03-07-2014, 09:57 PM   #14
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Can't distinguish between lucky or good. But maybe it's not necessary to do so.
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Old 03-07-2014, 10:05 PM   #15
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I was good first, so when some luck came my way later on, I was in a position to capitalize on it to retire as early as I did (at 45, 5 years ago).
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Old 03-07-2014, 10:19 PM   #16
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I was lucky. Of course I made the explicit choice to go work for a small startup rather than Megacorp right out of engineering school, but the company could have very easily gone under those first few years. Most startups fail. So I consider myself lucky.
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Old 03-07-2014, 10:21 PM   #17
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What articles are we referring to in this thread? I don't remember seeing anything on this topic recently.
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Old 03-07-2014, 11:01 PM   #18
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Neither lucky, nor unlucky, nor good. Never hit any IPO or other windfalls. Never panicked out at a bottom or got a devastating turn of events. Weathered layoffs, divorce, misc ups and downs. Just kept plodding along and LBYM. It was good enough.
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Old 03-08-2014, 06:45 AM   #19
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Neither lucky, nor unlucky, nor good. Never hit any IPO or other windfalls. Never panicked out at a bottom or got a devastating turn of events. Weathered layoffs, divorce, misc ups and downs. Just kept plodding along and LBYM. It was good enough.
Exactly. Other than the divorce part it pretty much sums up my story as well as many others.
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Old 03-08-2014, 07:15 AM   #20
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My father used to always tell me that "luck is when perpetration meets opportunity"....... I just wish I didn't have to prepare so damn hard to get lucky!!
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