floatingdoc
Recycles dryer sheets
- Joined
- Oct 25, 2009
- Messages
- 58
Hello, I introduced myself a while back. I posted this on the boggleheads forum but did not really recieve much in the way of meaningful feedback.
Here is my plan: (like you couldn't tell from the title of the post?)
I am married with no children. My marriage is excellent and stable. I am 43 y.o. and plan to pull the plug (FIRE that is) in about 7 years. This leaves 7 years more in the accumulation phase. I luckily recovered every cent I lost in the recession. During this recession/bear market I sat tight and actually slightly increased my stock positions and my vanguard 3 year curve for "returns" looks like a capital V where the right side is a little longer than the left side of the "V" .
I am sick of dealing with worry about retirement and the stock market and where it is going in the short and long term. I have spent 4 weeks researching alternatives and have looked at many of them. I could not imagine a scenario where 75,000 per year of income in retirement would not be adquate to fund my lifestyle. I love to travel but mainly to warm locations in the winter. In the summer, I love to spend time on my boat in Upstate NY and the northeast.
Current expenses:
Taxes/condo fees...............................................................7500/yr
Boat payment.................................................................21,300/yr (interest deductible)
Mortgage..............................................................................0/yr
Autos (2).(leases).............................................................7200/yr
**Note: will likely only have 1 car when retired- it depends??
Utilities...........................................................................2400/yr
Groceries.........................................................................6000/yr
Insurances.......................................................................1800/yr
Health Insurance..............................................................5000/yr
Travel.............................................................................5000/yr
Total..........................................................................56,200 per year
(note taxes and interest on boat are tax deductions)
Assets:
Condo.(paid for)..............................................................350,000
Office building (paid for)...................................................125,000
(currently) own 174,270 shares of high yield corporate with the goal being TO ACCUMULATE AS MANY SHARES AS POSSIBLE BEFORE I RETIRE
Where does this leave me?? I plan on selling the office building when I am done with it (hopefully as I said in 7 years). If you go to yahoo finance and research the NAV of this fund, it is still historically very low dating back to 1989. I took advantage of this fact and bought as many shares as I could afford at this time. MY PLAN IS TO NEVER SELL A SHARE. Therefore I DO NOT CARE WHAT HAPPENS TO THE VALUE OF THE SHARES. Other people would argue that Junk bond funds are like stocks and I have to look at "total return" to understand the "true" benefits of owning this fund. This was the argument made on the bogglehead forum. I clearly understand this argument. A quick perusal of this funds monthly dividend SINCE 1989 shows it bottomed out at 3 cents per share in the height of the financial crisis in 2/08. Since stocks started recovering it is up to 3.8 cents per share. Did I mention that 5/6 of the shares I own are in an aftertax account with 1/6 being shielded from taxes. I of course know I will owe taxes as I go along. The chart shows the Nav OVER THE LAST 20 YEARS to vary between 6 and 8 dollars a share. 3 cents per share is the lowest it has ever gone in 20 years. My analysis has led to the following win/win analysis:
If the value of shares rise, I make money on share appreciation and HAVE THE OPTION of selling the fund later if I want.
If the value of shares fall, every month I plow dividend (plus my own savings) into more shares of the fund I further increase my monthly dividend down the road.
**The only problem I see is if the dividend falls to something ridiculously low thereby making the "earning power" of my shares less powerful. History (the last 20 years) suggests otherwise. Can you folks please critique this plan. Thanks. Floatingdoc If I retired now my monthly dividend would provide me 72K/yr in dividends
Here is my plan: (like you couldn't tell from the title of the post?)
I am married with no children. My marriage is excellent and stable. I am 43 y.o. and plan to pull the plug (FIRE that is) in about 7 years. This leaves 7 years more in the accumulation phase. I luckily recovered every cent I lost in the recession. During this recession/bear market I sat tight and actually slightly increased my stock positions and my vanguard 3 year curve for "returns" looks like a capital V where the right side is a little longer than the left side of the "V" .
I am sick of dealing with worry about retirement and the stock market and where it is going in the short and long term. I have spent 4 weeks researching alternatives and have looked at many of them. I could not imagine a scenario where 75,000 per year of income in retirement would not be adquate to fund my lifestyle. I love to travel but mainly to warm locations in the winter. In the summer, I love to spend time on my boat in Upstate NY and the northeast.
Current expenses:
Taxes/condo fees...............................................................7500/yr
Boat payment.................................................................21,300/yr (interest deductible)
Mortgage..............................................................................0/yr
Autos (2).(leases).............................................................7200/yr
**Note: will likely only have 1 car when retired- it depends??
Utilities...........................................................................2400/yr
Groceries.........................................................................6000/yr
Insurances.......................................................................1800/yr
Health Insurance..............................................................5000/yr
Travel.............................................................................5000/yr
Total..........................................................................56,200 per year
(note taxes and interest on boat are tax deductions)
Assets:
Condo.(paid for)..............................................................350,000
Office building (paid for)...................................................125,000
(currently) own 174,270 shares of high yield corporate with the goal being TO ACCUMULATE AS MANY SHARES AS POSSIBLE BEFORE I RETIRE
Where does this leave me?? I plan on selling the office building when I am done with it (hopefully as I said in 7 years). If you go to yahoo finance and research the NAV of this fund, it is still historically very low dating back to 1989. I took advantage of this fact and bought as many shares as I could afford at this time. MY PLAN IS TO NEVER SELL A SHARE. Therefore I DO NOT CARE WHAT HAPPENS TO THE VALUE OF THE SHARES. Other people would argue that Junk bond funds are like stocks and I have to look at "total return" to understand the "true" benefits of owning this fund. This was the argument made on the bogglehead forum. I clearly understand this argument. A quick perusal of this funds monthly dividend SINCE 1989 shows it bottomed out at 3 cents per share in the height of the financial crisis in 2/08. Since stocks started recovering it is up to 3.8 cents per share. Did I mention that 5/6 of the shares I own are in an aftertax account with 1/6 being shielded from taxes. I of course know I will owe taxes as I go along. The chart shows the Nav OVER THE LAST 20 YEARS to vary between 6 and 8 dollars a share. 3 cents per share is the lowest it has ever gone in 20 years. My analysis has led to the following win/win analysis:
If the value of shares rise, I make money on share appreciation and HAVE THE OPTION of selling the fund later if I want.
If the value of shares fall, every month I plow dividend (plus my own savings) into more shares of the fund I further increase my monthly dividend down the road.
**The only problem I see is if the dividend falls to something ridiculously low thereby making the "earning power" of my shares less powerful. History (the last 20 years) suggests otherwise. Can you folks please critique this plan. Thanks. Floatingdoc If I retired now my monthly dividend would provide me 72K/yr in dividends
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