I'm new to this forum, cruising anonymously here as JohnDoe123.
I'm Ern but you can call me Big Ern as well.
Also, when I write "naked put sellers" I mean that the puts are naked while I'm fully dressed. We keep this family-friendly here.
I'm in my early 40s, my wife in her mid-30s and we have a little daughter, age 3.
I reached about 90% of the FIRE (Financial Independence, Retire Early) nest egg target. The nice Wall Street bonus check later this month and another one in 2018 should put me over the finish line.
I plan an initial withdrawal rate of about 3.25% p.a. We'll have about 30% assets in tax-deferred accounts and 70% in taxable accounts (with high cost-basis!). My target allocation in retirement: Very little cash, zero bonds and the bulk of the assets as follows:
- 40% U.S. stocks, mostly in the retirement accounts but also a little bit in the taxable accounts.
- 30% futures trading account with Interactive Brokers (taxable account). I short put options on S&P500 futures to generate (relatively) stable passive income: slightly higher returns than S&P, at half the volatility. Quite intriguingly, I haven't found much discussion on this topic in this forum, apart from a few old posts. Selling naked puts seems to be a dirty word in most FIRE circles. I've been doing this for about 6 years with pretty good success.
- 30% Real Estate (through private equity funds, in taxable account, obviously) in multi-family housing with stable rental yield and a little bit of potential for capital gains.
I currently prefer to have no emergency fund (at 60% current savings rate we can cover all expenses, even unexpected ones with a month or two of savings).
I'm not into stock picking. Index investing with Vanguard/Fidelity works just fine for me. But I'm always looking for new ideas to find passive income: So far, I'm outsourcing the real estate investments, but I'm open to learning more about the landlord business. P2P lending platforms is another intriguing passive income source I would like to learn more about.
I'm pretty knowledgeable about options trading (covered calls, naked puts, etc.). I work in the finance industry and know my way around derivatives trading. I prefer the options on index futures because they are Section 1256 contracts (better tax treatment!). If anyone wants to learn more about this I'm happy to help!