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Projections on FIRE
Old 04-24-2007, 04:26 AM   #1
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Projections on FIRE

We have 4.x years till we FIRE. The timing is partly due to Company Health Insurance @ 55... So FIRE sooner is not likely unless DW or I get an buyout. Anyway, I have been doing some projections. If we could get a 5% compunded rate, we would easily be at our target amount.


Right now, our allocation is 70/30. I am intending to move it to 60/30/10 (Equity/Bond/Cash) by 55 (RE).

What would you do to ensure that market fluctuations do not interrupt your plans to retire in 4.x years?

Do you think the 40% allocation is intermediate bonds/cash is enough. I was wondering if I should not be @ 50% equity, 40% bonds, 10% cash (about 2.5 years expense).

I would like to keep the average compounded rate at least at 8%. According to VG, a 50/50 mix would do that. But on the otherhand, I would like to squeeze another .5% or 1% if possible. I am struggling a little with the best approach to handle the volitility, yet not get too conservative.
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Re: Projections on FIRE
Old 04-24-2007, 07:05 AM   #2
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Re: Projections on FIRE

I would transition to your target allocation and not worrry about it. If you feel really nervous for some reason, you could buy index puts to limit your stock market downside.
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Re: Projections on FIRE
Old 04-24-2007, 08:56 AM   #3
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Re: Projections on FIRE

Quote:
Originally Posted by chinaco
We have 4.x years till we FIRE. The timing is partly due to Company Health Insurance @ 55... So FIRE sooner is not likely unless DW or I get an buyout. Anyway, I have been doing some projections. If we could get a 5% compunded rate, we would easily be at our target amount.


Right now, our allocation is 70/30. I am intending to move it to 60/30/10 (Equity/Bond/Cash) by 55 (RE).

What would you do to ensure that market fluctuations do not interrupt your plans to retire in 4.x years?

Do you think the 40% allocation is intermediate bonds/cash is enough. I was wondering if I should not be @ 50% equity, 40% bonds, 10% cash (about 2.5 years expense).

I would like to keep the average compounded rate at least at 8%. According to VG, a 50/50 mix would do that. But on the otherhand, I would like to squeeze another .5% or 1% if possible. I am struggling a little with the best approach to handle the volitility, yet not get too conservative.
1) Each year sell 2.5% of the equity position to cash. This is the aggressive choice. You lock in some gains by selling, but keep a larger portion invested in equities.
2) sell 10% of equities now and raise the cash needed.
3) make all contributions now to cash accounts

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