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Retire early book
Old 02-24-2006, 08:44 PM   #1
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Retire early book

I'm sure this is not a new book but I had some time to kill today and stopped by the book store and looked through "How to retire early and live well on less than a million dollars." Some of the things he said were very interesting, specifically the high allocation of real estate in a portfolio if it's self managed. One thing I found almost scary was that he was advocating "a 10% return can be done with no problem and a relatively large income can be generated from it." SO for instance if someone had 600k they could pull out 60k per year. Although I was just skimming through it I don't think he ever mentioned the effects of inflation in enough detail as to what it would do to your port. Anyone else read this book? Thoughts?
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Re: Retire early book
Old 02-24-2006, 09:02 PM   #2
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Re: Retire early book

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Originally Posted by Arif
I'm sure this is not a new book but I had some time to kill today and stopped by the book store and looked through "How to retire early and live well on less than a million dollars." Some of the things he said were very interesting, specifically the high allocation of real estate in a portfolio if it's self managed. One thing I found almost scary was that he was advocating "a 10% return can be done with no problem and a relatively large income can be generated from it." SO for instance if someone had 600k they could pull out 60k per year. Although I was just skimming through it I don't think he ever mentioned the effects of inflation in enough detail as to what it would do to your port. Anyone else read this book? Thoughts?
The Gillette Edmunds book? I have read and I think it is pretty good. He isn't full of theories; rather he has done the things he is talking about. He has something some authors lack- real common sense. He also came through a post retirement divorce without letting it sink his ship.

Regarding the 10%, don't forget that his book was written before RE cap rates went to hell.

He has another excellent book called "Comfort Zone Investing". It emphasizes that one had better take one’s personality into account when s/he decide how to seek her/his retirement income.

Ha
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Re: Retire early book
Old 02-24-2006, 09:04 PM   #3
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Re: Retire early book

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Originally Posted by Arif
I'm sure this is not a new book but I had some time to kill today and stopped by the book store and looked through "How to retire early and live well on less than a million dollars." Some of the things he said were very interesting, specifically the high allocation of real estate in a portfolio if it's self managed.
You're talking about Gillette Edmunds' "How to Retire Early and Live Well With Less Than a Million Dollars"?

Let's see, he retired in 1981, right after Volcker killed inflation and just as the world's greatest & longest bull market was getting underway. *Run that scenario in FIRECalc and it succeeds every time. *What inflation? *The S&P500 is returning 15% a year, why worry?

Note that he published in Feb 2000, about a month before the NASDAQ hit an all-time high. *I wonder if he's working on a 2006 edition? *Maybe he's trying to negotiate a royalty rate and get paid for the book tour!

Quote:
Originally Posted by Arif
One thing I found almost scary was that he was advocating "a 10% return can be done with no problem and a relatively large income can be generated from it." SO for instance if someone had 600k they could pull out 60k per year.
To be fair, I think that Edmunds advocates using conservative leverage to achieve at least a 10% return as the house's value rises in a bubble booming market. *John Greaney made this comment in his review. *It'd also be very interesting to read a 2006 update to that review, too.

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Anyone else read this book? Thoughts?
I remember reading it and thinking "Glad I have a pension instead of having to depend on real estate". *But at the time, Hawaii's real estate market was bottoming after a sickening 10-year plunge from the Japanese bubble. *Today Edmunds looks pretty prescient.

But I'd still be leery of anyone basing anything on the period between 1982-2000 without including at least the eight decades before then. *And when it comes to predicting the future, I much prefer the Gordon Equation & "Triumph of the Optimists".
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Re: Retire early book
Old 02-24-2006, 09:13 PM   #4
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Re: Retire early book

I liked the book; it was one of the first ones on early retirement and the conjuncted investing...and I finished it the day I decided to do a google and found this web site!

He does a good job of the pedestrian investment explanation...mrs CFB read that and 'got it' no trouble. His advocation of slicing and dicing and putting more into real estate, energy and emerging markets (in fairly balanced amounts) would have served one well over the last 10 years. Indexes and high returning asset classes are well and good, but looking forward 3 decades and trying to find the hot buttons might not be an awful idea for a few percentage points here and there of your investment stash.

In all, perhaps cutting bits and pieces out of the book to stab with tiny little forks is quite doable, but i've read far worse tomes on early retirement and investing. In fact, I was dubious of my ability to sustain an early retirement until I read the book...it did give me the bones to think I could do it long term. I was dang close to thinking about going back to work "just to be sure".

I did this under a humorous guise. When I hired onto my last company, they gave me a case lot of stationary with my name on it. I actually still have a few notepads and havent completely used up the initial stash.

I dropped an email to my old boss telling him that I was almost out of notepads, so on one point he should bring up at the next cost cutting meeting that perhaps giving new employees 15 years worth of stationary isnt needed...but that I might need to come back to work to get another 15 years worth.

His reply was that they always give great employees a good sized box of the stuff, so as to keep them in paper for the term of their employment and a reason to come back when they finally run out...
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Re: Retire early book
Old 02-24-2006, 09:51 PM   #5
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Re: Retire early book

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Let's see, he retired in 1981, right after Volcker killed inflation and just as the world's greatest & longest bull market was getting underway.* Run that scenario in FIRECalc and it succeeds every time.* What inflation?* The S&P500 is returning 15% a year, why worry?
Yes I did notice that the time frame of his experience was during the recent boom years. While I rolled my eyes at that I read further and was amazed at his description of black Monday. It was a pretty graphic depiction of the emotional side of losing 50% of your nest egg (contemplating suicide, excessive drinking etc.) which I found eye opening and candid.

Quote:
To be fair, I think that Edmunds advocates using conservative leverage to achieve at least a 10% return as the house's value rises in a bubble booming market.* John Greaney made this comment in his review.* It'd also be very interesting to read a 2006 update to that review, too.
Yes he did/does. I think he advocates holding a 50% LTV on real estate while in retirement and upto 80 or 90% preretirement. Although I never looked at it like that I plan to do something similar when I retire by selling off some real estate and using the proceeds to pay off the properties that I hold on to.

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He has another excellent book called "Comfort Zone Investing". It emphasizes that one had better take one’s personality into account when s/he decide how to seek her/his retirement income.
I'll check that book out too.

BTW- I am back in the states this week so I am catching up on my reading materials before I head back to Panama. Nothing like a good book written in english. Good thing my suitcase was half empty when I got here

I even went to the library and got "Four pillars of investing.." Got to the DR part and had to put it down for a minute

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Re: Retire early book
Old 02-25-2006, 11:19 AM   #6
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Re: Retire early book

I had to read The Four Pillars about ten pages at a time. Same with The Millionaire next door. I finally ended up just reading the chapter summaries at the end. People who have to build up to their point with 37 million pieces of data, ground up, building block style...just put me to sleep.
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Re: Retire early book
Old 02-25-2006, 11:20 AM   #7
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Re: Retire early book

Up until the recent publication of Bob Clyatt's "Live More, Work Less," I would have called this book by Gillete Edmunds the single best one out there for ER. Not to say it is flawless, or isn't dated in some ways, but unlike 99% of the others who write on the topic Gillette has been ER'd for ~35 years, lived through market crashes, divorce, personal issues - and done really well.

Others (Scott Burns, especially, is excellent) have picked up on the need to own non-correlated asset classes, but Edmunds was way ahead of them. His second book, "Comfort Zone Investing," makes a very strong case for why most people probably would do better with, and sleep better owning, other asset classes, that don't happen to be sold by Wall Street (e.g. rental real estate, other hard assets). Gillette also published an ebook on REITS (even more in need of updating than "How to....") that's still the best thing on the subject I've read. Check out his site, www.theretiredinvestor.com.

I think Edmunds deserves credit for regarding real estate and REITS as well as energy as separate asset classes long before the rest of the investment community caught on. In my case, ER'ing in 2002, moving a chunk of our assets into REIT funds and oil and gas after reading Edmunds is what gave us 12% plus annual returns despite a heavy bond allocation and bad stock decisions. Edmund's emphasis on owning things you understand and believe in rather than just following the stock-and-bond only herd alone make him worth reading, I.M.O.


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Re: Retire early book
Old 02-25-2006, 12:54 PM   #8
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Re: Retire early book

Thanks for the link Kevin.

CFBS (is that short for Cybil)? I thought I was just slow. Even with a degree in Accounting this stuff gets pretty thick. I'll keep at it though as I am sure there are some gems to be had from this book.

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Re: Retire early book
Old 02-25-2006, 12:58 PM   #9
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Re: Retire early book

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CFBS (is that short for Cybil)? I thought I was just slow. Even with a degree in Accounting this stuff gets pretty thick. I'll keep at it though as I am sure there are some gems to be had from this book.
It's slightly more interesting than a reactor plant manual, but it's much easier to read than his "Intelligent Asset Allocator". Four Pillars does go faster when he works through his theoretical underpinnings and gets to the examples.

Four Pillars might be for accountants but IAA is for statistical mathematicians & people who like to decode Greenspan's prose...
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Re: Retire early book
Old 02-25-2006, 01:05 PM   #10
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Re: Retire early book

Yeah, when he said that the four pillars was a much easier read than his IAA book, I had to give off a heavy sigh.

If the authors have "Piled Higher and Deeper" appended to their name, plan to put the book down a lot or jump to the conclusions. Academics have this thing for building an impenetrable case for their findings before telling you what the hell they are.
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