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Old 05-18-2020, 11:48 AM   #41
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Hi Speed Racer,

Welcome to e-r.org. You've come to the right place for good discussion regarding FI and RE. You're doing well to be thinking about retirement at an early age.

You mentioned racing... did you happen to watch the NASCAR race yesterday? I'm not an avid fan but I do enjoy seeing the races when I have time. Interesting to see the race with no fans in the stands. Glad to see a major sporting event back in the saddle - hope more will follow soon.

Cars... There are several members of e-r.org who have an affinity for motorized things - motorcycles, cars, planes. I think of myself as a car guy but don't have anything exotic. An '84 CJ-7 that DW bought before we were married and a '66 El Camino along with an Airstream trailer and an Airstream (Sprinter) motorhome, a 4WD Sierra and a 4WD Suburban round out the fleet.

DW and I always knew we needed to save for our own retirement and did so as soon as we had jobs out of college. We weren't planning for early retirement at the time, just comfortable retirement at a pretty typical 62-65 age. IRA's were available "back in the day" but only about 50% of our peers were utilizing them. A few years later (mid to late 80's) our employer implemented a 401k plan and with that our IRA contributions fell by the wayside so we could be sure to get that employer match. As we transitioned from one job to another over our careers we always rolled the 401k's into IRAs (couldn't move 401k's at the time) and were surprised how many peers simply "cashed out" their 401k when they changed jobs. Their response was typically something along the lines of "it's just a few thousand dollars." Yikes! A few thousand dollars in your 20s is many, many thousands in later years. We always lived below our means and had no consumer debt except for a mortgage and a car payment once in a while over the years.

At some point we realized early retirement was a possibility and we switched into major FIRE mode. That's about when we became familiar with this forum and with FIRECalc. Those things helped change our lives. That, along with reading and earnestly following several principles found in the book Your Money Or Your Life.

We retired early at 52 (me) and 48 (DW) nearly 11 years ago. No regrets, can't understand why more people don't do it. You're definitely on the right track.
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Old 05-18-2020, 11:58 AM   #42
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Nice to meet you, Speed Racer. Welcome! You're light years ahead of where I was at your age, so I suspect you'll achieve your goals one way or another.

As many in here have said, don't rush so fast you don't get to live your life as you wish- and while you are young enough for the challenge.

I didn't get very serious about saving until I was in my late 30s- partly b/c my company was not big (so no 401k until '88 or so). Even during that decade I didn't save a while lot (just enough for the match) as me & my ex were "house poor" for a variety of reasons.

Your degree in finance is very marketable & depending on where you live, you should be able to garner a 6 figure income easily in the first 3 years.

It's a good time now to figure out where you want to live... We are stuck where we are (Houston area) in part due to familial obligations + obtaining high dollar jobs, but I would prefer to be in the mountains somewhere near a city.

I'll look forward to your posts. This is a great place to learn about anything related to retirement.
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Old 05-18-2020, 01:01 PM   #43
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Originally Posted by Scratchy View Post
Given your background in finance and the reading you have done, I'd be curious to know what you have in mind for investment strategy going forward. That's the key to long term success, in my opinion. I'm a big fan of investing in passive index funds, especially vanguard funds and my asset allocation was high in stocks until about 10 years ago. Now I'm about 50/50 equities/bonds.
I'd say I'm actively passive, if that makes sense. With my IRA, right now it's about 40% index funds and 60% individual stocks. Overtime I want to be 50/50 index/stocks, but right now there are still good values individually. So for part of my portfolio I'll put in the money and forget about it, and the other I'll sell if I feel it's the right time/situation. For example, I'll be in Microsoft for the long haul, but Delta I'll probably dump if it gets to its pre COVID levels. As I get older I'll likely go all in on index funds.
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Old 05-18-2020, 01:06 PM   #44
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Originally Posted by nvestysly View Post
Hi Speed Racer,

Welcome to e-r.org. You've come to the right place for good discussion regarding FI and RE. You're doing well to be thinking about retirement at an early age.

You mentioned racing... did you happen to watch the NASCAR race yesterday? I'm not an avid fan but I do enjoy seeing the races when I have time. Interesting to see the race with no fans in the stands. Glad to see a major sporting event back in the saddle - hope more will follow soon.

Cars... There are several members of e-r.org who have an affinity for motorized things - motorcycles, cars, planes. I think of myself as a car guy but don't have anything exotic. An '84 CJ-7 that DW bought before we were married and a '66 El Camino along with an Airstream trailer and an Airstream (Sprinter) motorhome, a 4WD Sierra and a 4WD Suburban round out the fleet.

DW and I always knew we needed to save for our own retirement and did so as soon as we had jobs out of college. We weren't planning for early retirement at the time, just comfortable retirement at a pretty typical 62-65 age. IRA's were available "back in the day" but only about 50% of our peers were utilizing them. A few years later (mid to late 80's) our employer implemented a 401k plan and with that our IRA contributions fell by the wayside so we could be sure to get that employer match. As we transitioned from one job to another over our careers we always rolled the 401k's into IRAs (couldn't move 401k's at the time) and were surprised how many peers simply "cashed out" their 401k when they changed jobs. Their response was typically something along the lines of "it's just a few thousand dollars." Yikes! A few thousand dollars in your 20s is many, many thousands in later years. We always lived below our means and had no consumer debt except for a mortgage and a car payment once in a while over the years.

At some point we realized early retirement was a possibility and we switched into major FIRE mode. That's about when we became familiar with this forum and with FIRECalc. Those things helped change our lives. That, along with reading and earnestly following several principles found in the book Your Money Or Your Life.

We retired early at 52 (me) and 48 (DW) nearly 11 years ago. No regrets, can't understand why more people don't do it. You're definitely on the right track.
I did watch the race yesterday. It was really weird with no fans in the stands. Almost felt like watching a long practice session. Glad to have racing back though and I'll be watching again Wednesday night, also at Darlington.

I'm kind of like you when it comes to cars. Sure there are expensive old cars I want, like a '59 Eldorado or '61 Continental, but I'd be more than happy buying a '61 Thunderbird for under $15k. The hard part will be learning how to repair them!

Congrats on retiring much earlier than you had anticipated. I certainly hope I can say the same someday.
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Old 05-18-2020, 01:15 PM   #45
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Originally Posted by Speed Racer View Post
I'd say I'm actively passive, if that makes sense. With my IRA, right now it's about 40% index funds and 60% individual stocks. Overtime I want to be 50/50 index/stocks, but right now there are still good values individually. So for part of my portfolio I'll put in the money and forget about it, and the other I'll sell if I feel it's the right time/situation. For example, I'll be in Microsoft for the long haul, but Delta I'll probably dump if it gets to its pre COVID levels. As I get older I'll likely go all in on index funds.
I'd encourage you to keep very careful track of the total return on your stocks vs the total return on your passive funds. Odds are very strong that you will find the stock-picking to be expensive fun. There are thousands of professionally-managed stock-picking funds, just about all of them in fact, that fail to get close to their benchmarks.

To learn about this, start here: https://us.spindices.com/spiva/#/about and then read a few of the US SPIVA reports. You'll get bored quickly; the stock pickers win in approximately the proportion that randomness would predict. No skill is apparent.

Next, look at manager persistence (Do winners continue to be winners?): https://www.spglobal.com/en/research...ence-scorecard (Spoiler: The answer is no. Manager performance is indistinguishable from random noise.)
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Old 05-18-2020, 03:28 PM   #46
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I'd encourage you to keep very careful track of the total return on your stocks vs the total return on your passive funds. Odds are very strong that you will find the stock-picking to be expensive fun. There are thousands of professionally-managed stock-picking funds, just about all of them in fact, that fail to get close to their benchmarks.

To learn about this, start here: https://us.spindices.com/spiva/#/about and then read a few of the US SPIVA reports. You'll get bored quickly; the stock pickers win in approximately the proportion that randomness would predict. No skill is apparent.

Next, look at manager persistence (Do winners continue to be winners?): https://www.spglobal.com/en/research...ence-scorecard (Spoiler: The answer is no. Manager performance is indistinguishable from random noise.)
Oh, I'm absolutely aware of the risks of active vs passive investing. One of my finance professors always drilled that into our heads. As I said though, it's not like I'm going to be a day trader or anything. It's just that right now the market it low, so there is opportunity to earn more with individual companies. Both my IRA and brokerage are higher than the market right now. A few years ago I started playing the Investopedia simulator game and my portfolio is up 152% vs 63% for the NASDAQ. Of course, I know that won't necessarily continue in the future. Once you factor in my 401k, my individual stocks should only comprise maybe 20% of my total contributions each year.
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Old 05-18-2020, 03:50 PM   #47
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Originally Posted by Speed Racer View Post
I'd say I'm actively passive, if that makes sense. With my IRA, right now it's about 40% index funds and 60% individual stocks. Overtime I want to be 50/50 index/stocks, but right now there are still good values individually. So for part of my portfolio I'll put in the money and forget about it, and the other I'll sell if I feel it's the right time/situation. For example, I'll be in Microsoft for the long haul, but Delta I'll probably dump if it gets to its pre COVID levels. As I get older I'll likely go all in on index funds.
Appreciate the follow up to my question. Based on my own experience, I'd strongly encourage you to stick to passive funds and devote the time saved to other fun things in life. Nevertheless, obviously you are very motivated which bodes well for a bright future. Best wishes!
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Old 05-18-2020, 05:42 PM   #48
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... It's just that right now the market it low, so there is opportunity to earn more with individual companies. ...
Really? Link to the research or statistics please.
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Old 05-18-2020, 06:58 PM   #49
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Really? Link to the research or statistics please.
The reasoning for picking a particular stock isn't always based on quantifiable numbers. I mentioned in another post that in a rational world, Tesla wouldn't be $800+ while Ford languishes around $5. Back in 2009, Ford was the company to invest in. It was the only one of the Big 3 that didn't take a bail out and Wall Street viewed Alan Mulally as a guy who could do no wrong. Look where the stock went after he retired. Last month, Microsoft was the company to invest in. It has a bright future in could computing and has slowly been shedding its image as uncool compared to Apple.

Again, this is a small portion of my overall contributions. Although right now I wish it was a larger portion. It's up about 22% compared to about 11% for my total market index in the same time period. I don't think it's a big deal to invest in a few individual companies when the vast majority of my profile is literally invested in the entire market.
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Old 05-19-2020, 02:50 PM   #50
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You folks will be glad to know that for my last contribution into my IRA, I plan to put it all in SPLG. Maybe after that I'll play around with some individual companies.
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Old 08-13-2020, 09:44 AM   #51
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Just a little update, at the end of July my net worth topped $35k. I see others have been doing 6 month updates, so maybe I will too to help me keep on track (and look back in the future). This past week was a little bit rough for my bank account though. I finally got my physical therapy bill (last session was about 10 months ago) and my insurance went up because of an accident that wasn't my fault. My car battery also died to go along with normal expenses that come out around this time. That's coming off the heels of having to buy two new tires since one of them went flat. It's really easy to see how some people struggle when unexpected expenses pop up.
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Old 08-13-2020, 11:06 AM   #52
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Originally Posted by Speed Racer View Post
The reasoning for picking a particular stock isn't always based on quantifiable numbers. I mentioned in another post that in a rational world, Tesla wouldn't be $800+ while Ford languishes around $5. Back in 2009, Ford was the company to invest in. It was the only one of the Big 3 that didn't take a bail out and Wall Street viewed Alan Mulally as a guy who could do no wrong. Look where the stock went after he retired. Last month, Microsoft was the company to invest in. It has a bright future in could computing and has slowly been shedding its image as uncool compared to Apple. ...
My response was to your statement: "... It's just that right now the market it low, so there is opportunity to earn more with individual companies. ..." The fact that one can look in the rear view mirror and pick some winners and losers is irrelevant. One can always do that.

Quote:
Originally Posted by Speed Racer View Post
Again, this is a small portion of my overall contributions. Although right now I wish it was a larger portion. It's up about 22% compared to about 11% for my total market index in the same time period. I don't think it's a big deal to invest in a few individual companies when the vast majority of my profile is literally invested in the entire market.
As long as you view it as amusement and not investment, it's fine and can be a lot of fun. Some people talk about using 5% of their portfolios to do this. There was a very insightful post here a year or so ago where the poster said his worst investing luck ever was when he made money on his first individual stock pick.

If you are struggling to pay the routine expenses of life, though, I guess I'd question whether amusing yourself with individual stock picking is a good use of any of your money. YMMV, of course.

Good job on buying the S&P.
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Old 08-13-2020, 12:29 PM   #53
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My response was to your statement: "... It's just that right now the market it low, so there is opportunity to earn more with individual companies. ..." The fact that one can look in the rear view mirror and pick some winners and losers is irrelevant. One can always do that.

As long as you view it as amusement and not investment, it's fine and can be a lot of fun. Some people talk about using 5% of their portfolios to do this. There was a very insightful post here a year or so ago where the poster said his worst investing luck ever was when he made money on his first individual stock pick.

If you are struggling to pay the routine expenses of life, though, I guess I'd question whether amusing yourself with individual stock picking is a good use of any of your money. YMMV, of course.

Good job on buying the S&P.
I guess I'm not sure what you mean on your first comment. I said nothing about looking in the past to pick winners.

I also have no trouble paying the bills, I was just commenting on how some people can struggle when multiple unexpected expenses come up. I probably won't invest my next paycheck, though.

While I have no regrets picking SPLG, I would have made much more money if I went with AMD like I had originally planned. With movie theatres reopening, those could be a good short term profit maker going forward.
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Old 01-01-2021, 10:08 AM   #54
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Time for my first official update here. Like many, I had a great year in the stock market despite what was going on in the real world. I blew past my goal of increasing my net worth $15-20k. It ended up increasing by about $33,000. Here's a little breakdown:

Cash: ~$1800
Roth 401k: ~$12000
Roth IRA: ~$8000
Taxable: ~$24000 This is larger because it's main purpose is my house down payment fund. Still undecided if I'm going to buy or rent. Might end up doing both in buying a rental property and living downtown like I've always wanted to.
Car equity: ~$5500
HSA: ~$600

It all adds up to being just shy of $52,000. On January 1st of last year, it was a little over $19,000. I'm not sure what this year will bring in terms of moving, so I'm going to keep my goal of increasing my net worth by another $15-20k this year. $70,000 is reasonable, but $75,000 would be even better lol. I certainly don't anticipate another market crash helping my gains. Although I'm off to a nice start with my stimulus check being deposited overnight.

If I don't buy any property, I'll probably pay off my car loan about a year early this time next year. It'll be nice to not have that coming out every month.
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