Is making 8% "some what" safely realistic?

[clifp]

Perhaps but he said that he $300K save and he is only 23.. Tough to have that kind of money saved at 20-30K a year at his age, unless he shorted the market last year.

 

[Alan]

Perhaps but he said that he $300K save and he is only 23.. Tough to have that kind of money saved at 20-30K a year at his age, unless he shorted the market last year.

Correct, he did say he had saved $300K (not won it or inherited it or made a bundle in the market).

 

[W2R]

OK, then apparently he is saving $20K-$30K/month. His profile gives his occupation as VP.

 

[Fantasm]

Hi,
No, I'm not a drug dealer nor am I involved in any illegal activities. I have simply worked hard since I was 15 and I am an executive at a technology company. I spent (lost) a good sum of cash in the past few years on mostly cars and toys due to depreciation and the cost of the places I've been living. I'm on my 13th or 14th car now and I'm only 23! It is sort of an obsession for me, but I've been trying to control it harder.

Being so young is actually quite a bit harder to plan for, because of how many years I do have left (God willing, knock on wood). So that's a lot of ifs and maybes to plan for on top of just the general amount of funds I would need if I were to just stop working in a few years.

 

[Alan]

OK, then apparently he is saving $20K-$30K/month. His profile gives his occupation as VP.

Joe Biden is in our Forum?

 

[W2R]

Joe Biden is in our Forum?

Who knew?

 

[Alan]

I spent (lost) a good sum of cash in the past few years on mostly cars and toys due to depreciation and the cost of the places I've been living. I'm on my 13th or 14th car now and I'm only 23! It is sort of an obsession for me, but I've been trying to control it harder.

At 23 you are entitled to have splurged a lot of your money. Many of us have done the same - we just didn't have the same disposal income at that age

It's great that you are now planning for an early retirement - 2016?

 

[W2R]

Hi,
No, I'm not a drug dealer nor am I involved in any illegal activities. I have simply worked hard since I was 15 and I am an executive at a technology company. I spent (lost) a good sum of cash in the past few years on mostly cars and toys due to depreciation and the cost of the places I've been living. I'm on my 13th or 14th car now and I'm only 23! It is sort of an obsession for me, but I've been trying to control it harder.

Being so young is actually quite a bit harder to plan for, because of how many years I do have left (God willing, knock on wood). So that's a lot of ifs and maybes to plan for on top of just the general amount of funds I would need if I were to just stop working in a few years.

Thanks for satisfying our curiousity - - you are doing wonderfully well for someone just 23 years old. Yes, it must be much more difficult to plan as you could have 50-75 more years ahead of you.

 

[Fantasm]

At 23 you are entitled to have splurged a lot of your money. Many of us have done the same - we just didn't have the same disposal income at that age

It's great that you are now planning for an early retirement - 2016?

Yes, my goal and my fathers opinion is that I should try to be retired by 30, or at least in a position where I am FI.
I see that its going to take a lot of work on my own outside of my current employment responsibilities, to ensure that I make the best choices on a continuous schedule (like CD Laddering) to make the most of the saved income and continuing earned income. I definitely want to start taking advantage of compounding as soon as possible.

Perhaps in a few years I will get lucky and we will sell the company and I will get a part of it, hehe. Here's hoping to 'getting a part of it'.
I know I could be FI a lot sooner than 30 if I accepted living on a smaller amount every year ($30,000 maybe?) but I'm attempting to go for at least $120K yearly budget so I don't make too many sacrifices.

 

[Alan]

Yes, my goal and my fathers opinion is that I should try to be retired by 30, or at least in a position where I am FI.
I see that its going to take a lot of work on my own outside of my current employment responsibilities, to ensure that I make the best choices on a continuous schedule (like CD Laddering) to make the most of the saved income and continuing earned income. I definitely want to start taking advantage of compounding as soon as possible.

Perhaps in a few years I will get lucky and we will sell the company and I will get a part of it, hehe. Here's hoping to 'getting a part of it'.
I know I could be FI a lot sooner than 30 if I accepted living on a smaller amount every year ($30,000 maybe?) but I'm attempting to go for at least $120K yearly budget so I don't make too many sacrifices.

Have you used any RE calculators to see what you need to do be FI at 30, with an annual budget of $120K? I would expect that you'd need about $4M to generate $120K/year at a 3% withdrawal rate, before taxes, so you are going to have to be extremely aggressive in saving and/or cut back on your spending targets or work a few more years.

 

[Zathras]

Alan raises a good point. While an annual budget of 120k is no sweat for you now, if you want to maintain that into retirement it would require a hefty nest egg.
While 'getting a part of it' would also be a wonderful windfall (it sounds like) don't plan on that being there. It is far easier to fold that into your planning if it does come through, than readjust your plan if it fails to come through.
Congratulations on your success and bright future

 

[mews]

I see that its going to take a lot of work on my own outside of my current employment responsibilities, to ensure that I make the best choices on a continuous schedule (like CD Laddering) to make the most of the saved income and continuing earned income. I definitely want to start taking advantage of compounding as soon as possible.

Hi there, Fantasm!

I bolded part of your post -

Remember, the 'dither factor' can kill you - a pretty good choice, made, followed up on, and tweaked as needed, is better than perfection late-late-late!

Get what you can into tax-advantaged accounts, including a ROTH IRA.

Save the rest in funds that aren't churned, generating excessive taxes.

Have some fun - but maybe find a cheaper hobby than really neat cars. But I will admit they are shiny and cool!!


ta,
mew

 

[Meadbh]

Hi,
No, I'm not a drug dealer nor am I involved in any illegal activities. I have simply worked hard since I was 15 and I am an executive at a technology company. I spent (lost) a good sum of cash in the past few years on mostly cars and toys due to depreciation and the cost of the places I've been living. I'm on my 13th or 14th car now and I'm only 23! It is sort of an obsession for me, but I've been trying to control it harder.

Being so young is actually quite a bit harder to plan for, because of how many years I do have left (God willing, knock on wood). So that's a lot of ifs and maybes to plan for on top of just the general amount of funds I would need if I were to just stop working in a few years.

Well, good for you! One thing though.....you are definitely an outlier (in a good way) when it comes to personal income and net worth for your age. I'm sure you have worked very hard for this and are very talented, but luck must also have played a part. It would be amazing to remain equally lucky in the long term. You need to plan for lean years and reversion to the mean, both during and after your working life. Heck, how many cars does one person need?

 

[eridanus]

Have you used any RE calculators to see what you need to do be FI at 30, with an annual budget of $120K? I would expect that you'd need about $4M to generate $120K/year at a 3% withdrawal rate, before taxes, so you are going to have to be extremely aggressive in saving and/or cut back on your spending targets or work a few more years.

Saving $25k/month over 7 years gives us $2.1MM. Adding in the $600k (doubled over 7 years, if you're lucky), gives us $2.8MM. A 3% withdrawal rate gives about $80k income before taxes. Yep, Fantasm, you'd better hold off on a new car or 2.

 

[kyounge1956]

Hi there, Fantasm!

I bolded part of your post -

Remember, the 'dither factor' can kill you - a pretty good choice, made, followed up on, and tweaked as needed, is better than perfection late-late-late!

Get what you can into tax-advantaged accounts, including a ROTH IRA.

Save the rest in funds that aren't churned, generating excessive taxes.

Have some fun - but maybe find a cheaper hobby than really neat cars. But I will admit they are shiny and cool!!


ta,
mew

Isn't fantasm's income a wee bit over the limit for Roth IRA eligibility?

 

[FinanceDude]

Definitely a candidate for Vanguard index or target retirement funds. Set it and forget it. Their customer service is fabulous.
I've dealt with several of the major fund families CS over the years (when I took the "Chinese menu" approach to investing before I knew better. )
Good luck!

Not a big fan of the Target Retirement Funds........a portfolio covering various market sectors and balanced for your personal risk is better..........

 

[ziggy29]

Not a big fan of the Target Retirement Funds........a portfolio covering various market sectors and balanced for your personal risk is better..........

True for people who are relatively savvy about investing and have the desire to "roll their own" asset allocation and rebalancing. For people who know little about investing and want to just "set and forget" their retirement savings, you could do a lot worse than a target fund.

 

[Milton]

I have a problem where I get bored of things really quickly, and am always go go go, so because my money isn't making me any real sort of return right now, I am always looking for the next new thing to happen, which ends up being in the form of spending it.

Chasing the highest current returns is usually a prescription for "buy high, sell low".

I am adverse to locking the money away for the long term as I want to see it getting immediate returns which always leads me back to the thoughts of investing in my own businesses ideas or angel investing as those are the fastest and largest methods of earning a return.

There are plenty of former professional athletes who earned huge salaries when they were young, but wound up with low (or zero) net worth (e.g., "Within five years of retirement, an estimated 60% of former NBA players are broke"). Some of them snorted the money up their noses or blew it on fancy cars, houses, etc.; but the majority wasted their savings on dubious, illiquid private investments.

 

[mews]

Isn't fantasm's income a wee bit over the limit for Roth IRA eligibility?

'struth.

What about 2010?

mew

 

[FinanceDude]

True for people who are relatively savvy about investing and have the desire to "roll their own" asset allocation and rebalancing. For people who know little about investing and want to just "set and forget" their retirement savings, you could do a lot worse than a target fund.

So, when you retire, do you really want your equities being moved faster and faster into bonds, and let inflation eat it away to nothing on a systematic? I agree its better than doing nothing, but so far target Funds haven't done much to impress me, no matter whose doing the managing. A lot of them are backing off their "guaranteed withdrawal rates" previously put in writing.

 

[ziggy29]

So, when you retire, do you really want your equities being moved faster and faster into bonds, and let inflation eat it away to nothing on a systematic?

Probably not. Especially not in a stock downturn; I wouldn't want to sell equities there if I could avoid it.

But I am not its target market (no pun intended).

 

[FinanceDude]

Back to making 8% "safely and realistically"............uh...........maybe.........

Realistically? Yes.........

Safely? Depends on whatcha call "safe"........

 

[Fantasm]

Hi,
It doesn't look like Vanguard has office locations like Ameritrade or Schwab does, how would I go about meeting with someone who can advise me on which of their funds / programmes would be best for me?

 

[brewer12345]

You do have a telephone, right?

Seriously, most of the advice you get is dubious at best. Every time I call Schwab to trade a bond, it is extremely clear that I know more than the folks on the other side of the line about corporate credit. Spend a little time educating yourself and cut out the middle man. Or else put it in something like the STAR fund and forget it for 20 years.

 

[FinanceDude]

You do have a telephone, right?

Seriously, most of the advice you get is dubious at best. Every time I call Schwab to trade a bond, it is extremely clear that I know more than the folks on the other side of the line about corporate credit.

Well,I would HOPE so, given your background..........