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03-07-2014, 04:51 PM
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#1
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Recycles dryer sheets
Join Date: Jun 2004
Posts: 78
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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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03-07-2014, 05:33 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Bay Area
Posts: 2,745
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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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03-07-2014, 05:41 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,227
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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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03-07-2014, 05:43 PM
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#4
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Dryer sheet aficionado
Join Date: Jul 2011
Posts: 48
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Lucky or Good...it is the same result.
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03-07-2014, 06:43 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Mar 2012
Posts: 1,555
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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...
__________________
"Growing old is no excuse for growing up."
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03-07-2014, 07:16 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
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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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03-07-2014, 07:26 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Location: GTA
Posts: 1,728
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Quote:
Originally Posted by travelover
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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Lmfao
__________________
Family Motto: "Every penny's a prisoner"
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03-07-2014, 07:28 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,545
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I prefer to think of myself as lucky and good. That's a good combo.
__________________
FIRE'D in July 2009 at 51...Never look back!
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03-07-2014, 07:31 PM
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#9
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,357
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Quote:
Originally Posted by travelover
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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And all this time I've been wondering where that ticket went!
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03-07-2014, 07:43 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2013
Location: Limerick
Posts: 5,655
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Anybody who tells my DW she was lucky had better duck!
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03-07-2014, 07:49 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 17,263
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'Lucky' is used as an excuse to raise taxes on those who worked hard and lived below their means.
__________________
Comparison is the thief of joy
The worst decisions are usually made in times of anger and impatience.
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03-07-2014, 08:22 PM
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#12
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,128
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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.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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03-07-2014, 08:56 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by Chuckanut
'Lucky' is used as an excuse to raise taxes on those who worked hard and lived below their means.
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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..."
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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03-07-2014, 08:57 PM
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#14
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Confused about dryer sheets
Join Date: Jul 2010
Posts: 5
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Can't distinguish between lucky or good. But maybe it's not necessary to do so.
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03-07-2014, 09:05 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,695
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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).
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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03-07-2014, 09:19 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
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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.
__________________
Retired since summer 1999.
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03-07-2014, 09:21 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,999
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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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03-07-2014, 10:01 PM
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#18
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Thinks s/he gets paid by the post
Join Date: Jun 2007
Posts: 2,657
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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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03-08-2014, 05:45 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Mar 2009
Posts: 2,985
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Quote:
Originally Posted by growing_older
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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Exactly. Other than the divorce part it pretty much sums up my story as well as many others.
__________________
Took SS at 62 and hope I live long enough to regret the decision.
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03-08-2014, 06:15 AM
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#20
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Recycles dryer sheets
Join Date: Jul 2013
Location: Mars
Posts: 137
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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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