Preventing Myself from Doing Something Stupid

[Bankerwithabrain]

I am finding myself more and more wanting to reach that FIRE number and more and more getting closer to making very aggressive investment moves to try and make it quicker.

I know that investing speculatively is dumb and I will most likely lose my shirt.

Does anyone else have these issues?

I keep running through my mind if I can just double my money once I'm done. It's probably the same chemical that runs through a gambling addict.

I really really want to give it a try...

 

[travelover]

How will you feel if you lose 1/2 of what you have now?

 

[samclem]

To make matters worse--sometimes such a gamble makes sense. I recall a movie from about 20 years ago where the main character desperately wanted to be a doctor. He'd been accepted into med school. He had scrimped and saved and had 1/2 of the money he'd need for med school, but it would take years more to save the rest. He decided to go to Vegas and put everything the red or the black. If he won, he'd be golden. If he lost, he'd join the Army and they'd pay for his med school. Either outcome was less bad than what he'd face without the gamble.

But, that's not your situation. You know that, on a risk-adjusted basis, there's a limit to what is smart for you. And, if you get the bet wrong, it will take years to save up your portfolio again.

If the size of your stash isn't more than sufficient when you pull the ripcord, you'll be faced with this same temptation in the future. Build the resolve to resist it or consider taking steps to put the money out of your reach.

 

[Nords]

I am finding myself more and more wanting to reach that FIRE number and more and more getting closer to making very aggressive investment moves to try and make it quicker.
I know that investing speculatively is dumb and I will most likely lose my shirt.
Does anyone else have these issues?
I keep running through my mind if I can just double my money once I'm done. It's probably the same chemical that runs through a gambling addict.
I really really want to give it a try...

Your user name evokes an impression which appears to be at odds with your statements.

Is that deliberate or accidental irony?

If you added up all the ERs who made it on sustained superior savings, and compared them to all the ERs who made it on brilliant investing, then I'm pretty sure the ratio would be about 100:1. So the odds of it happening through doubling your money are probably worse than you thought, assuming any deliberate & logical thought has gone into this.

If you're seeking constructive criticism then I'd also recommend you read the very illuminating threads by Dixonge ("insane options ER strategy") and VaCollector ("Bank of America" stock). They give the impression of being "how to get rich quick" threads, so make sure you read them all the way through to their bitter ends.
http://www.early-retirement.org/forums/f30/insane-emergency-re-strategy-40682.html
http://www.early-retirement.org/forums/f28/adios-and-thanks-for-all-41947.html

He decided to go to Vegas and put everything the red or the black. If he won, he'd be golden. If he lost, he'd join the Army and they'd pay for his med school.

So... what rank is he?

 

[Bankerwithabrain]

Yeah, honestly I'm not sure why I started this thread.

I know the problem and I think realizing your weakness is a sign of brains.

Isn't knowing half the battle?

I know it is just a matter of will power.

I'm now at net worth $360k and everyone tells me I am way to low to FIRE. But I'm definitely depressed about my work situation currently. I just want to be able to call it quits already. I want to get off of this ride.

If only I could invest that up to $1 million.

 

[haha]

Yeah, honestly I'm not sure why I started this thread.

I know the problem and I think realizing your weakness is a sign of brains.

Isn't knowing half the battle?

I know it is just a matter of will power.

I'm now at net worth $360k and everyone tells me I am way to low to FIRE. But I'm definitely depressed about my work situation currently. I just want to be able to call it quits already. I want to get off of this ride.

If only I could invest that up to $1 million.

It's good for the community when people try different approaches. Just be sure to report back, no matter how it works out.

Ha

 

[REWahoo]

If only I could invest that up to $1 million.

If only you'd been born rich you wouldn't have this problem. Maybe you need to sue your parents....

 

[Bankerwithabrain]

HAHAHA

I can't believe nobody on these boards struggles with the same issue!

 

[samclem]

So... what rank is he?

I think it was sufficiently long ago that his rank is likely the same as yours and mine: Mister. (which still sounds just fine to me!)

 

[SunsetSail]

;http://www.early-retirement.org/forums/f30/insane-emergency-re-strategy-40682.html
http://www.early-retirement.org/forums/f28/adios-and-thanks-for-all-41947.html

Thanks for pointing out the links. They were interesting reading.

 

[Alan]

I can't believe nobody on these boards struggles with the same issue!

When I hated my job, but did not have enough to retire, I changed my job.

This happened 4 times (and 2 of the jobs were career changes), at ages 29, 32, 49 and 53. Rather than risk blowing it all on Red, have you considered a job change or a career switch? This is also a risky approach, but you are gambling on your own work ability rather than your stock picking ability. i.e. investing in yourself may be your better option.

 

[Bestwifeever]

I agree--change jobs.

 

[FIREd]

HAHAHA

I can't believe nobody on these boards struggles with the same issue!

We did struggle with the same issue. But we satiated our impatience by trying to increase our income (via promotions or job changes) and lower our expenses so that we could move our FIRE date forward. Our nest egg, the product of years of delayed gratification and sacrifice, is far too precious for us to take a gamble with.

 

[Amethyst]

BWAB, this is such a common feeling that it has led to many ER threads
http://www.early-retirement.org/forums/f30/help-i-hate-my-job-19459.html
and a few jokes, e.g.:

Did you hear the Secret Service caught a man climbing on the wall of the White House?
They told him, "Sorry, Mr. President, you have to stay for your full term."

You are not alone! The board is about early retirement, after all. Still, most of us are afraid of losing our stashes through catastrophes and other things we can't control. We sure don't want to lose them through our own actions!

Amethyst

But I'm definitely depressed about my work situation currently. I just want to be able to call it quits already. I want to get off of this ride.

.

 

[JBmadera]

HAHAHA

I can't believe nobody on these boards struggles with the same issue!

I have struggled with this issue numerous times, and in fact if I had never taken any of the gambles (not investments) that I did take I would be much, much better off than I am now.

One classic was back in '98-2001 time frame, brain is a bit fuzzy on the exact dates and I sure don't want to really go back and look, but one of my brilliant investments, er gambles, was taking my monthly stock option proceeds and investing the GROSS into things like the munder net net fund (remember that dog!), so not only bye bye options proceeds but a nice tax liability to boot.

I always rationalized my gambles, pretending they were really just speculative investments, and never more than 10% of my portfolio, well, if I had never done that stupid sh*t the last two layoffs I have endured would be much less painful.

Good luck and I hope you make solid choices

 

[braumeister]

I don't think you're dumb at all.

IF you're well diversified, and
IF you only speculate with a small percentage of your portfolio, and
IF you research your speculative investments well,

then there's nothing wrong with that, IMHO.

Do what you think best, but know what you're doing.

 

[harley]

I've certainly felt the same feelings, but I had been investing long enough to see that for every Apple I bought at <$10, I also bought Enron at $75, Worldcom at $45, and Corning at $68 (sold that one at about $10, rode the other two all the way down). Luckily, only a couple thousand dollars worth of each. Plus, I have a couple of friends who did exactly what you are talking about back in the late 90s, because they were sick of working. They both are still there, and I've been out for 5 years. It sucked at times (lots of times), but I stuck it out, saved my butt off, and was able to bail at an early age (50). Looking back, I made the right choice. Getting out early makes up for a lot of unhappy working days. If the job gets too bad, change jobs. Good luck to you.

 

[kumquat]

Depends on what aggressive moves you are thinking about. I made some decisions that a lot here would question. Mostly, they were to allow my mega-corp options to run, rather than grab gains and diversify.

My thoughts:

• What are you planning to speculate in?
• Are you extremely familiar with the company and its markets?
• Can they provide a GREAT return if you are right?
• What's the downside potential?

Answer these questions objectively and reconsider.

 

[Gumby]

Based on your first post, you are only 26 or 27 now. I think you're doing great so far. However, I hate to break the news to you, but even if you were to triple your fund in the next week and get to $1 million, it is unlikely to be sufficient for a retirement starting then. I think the suggestion to change jobs (or even careers) is a good one. I've done it several times.

 

[Fantasm]

You need way more than $1MM to retire if you dont plan on having your $ work for you ...
I wish I could be done and done already and just do whatever I want, and I just reached $1MM in assets -- but it just isn't enough -- not unless I want to drastically cut down on my life style.

But maybe your life style is more affordable. How much per month do you need to live on?
With that size of cash, you can invest it into some things that will generate your monthly income and you will save (if not grow your assets values).
So your money will make you money at a level that pays for all your monthly expenses -- thus you will be FI, and can go do whatever you want.

Get to $400K, buy yourself 5x $80K houses in cash that you can rent out for $900-$1100 each. Done ... after property taxes and HOI, you have $3300/month (based on $925/month rental -- every year rental rates go up!) income to live on (pre-tax).
Your money is safe in houses that you bought at the bottom of the economic crash, and in houses that you couldn't even BUILD for $80K even 2-3 years ago. You will also earn equity appreciation as the market turns around and your $400K will grow on its own, while still earning you $3300/month.

Move out of the USA and live happily ever after in Columbia, Philippines, Thailand, China, Czech Republic, Estonia, etc etc.
(I would personally pick an Eastern European location vs SE Asia or S.America)

 

[Nords]

I think it was sufficiently long ago that his rank is likely the same as yours and mine: Mister. (which still sounds just fine to me!)

Maybe it's my guilty conscience or old watchstander's trauma, but I still cringe whenever I hear someone call out "Mister Nords!"

Thanks for pointing out the links. They were interesting reading.

I have to pass the credit on to those who had the courage to post about what they were doing and then deal with the consequences... valuable lessons.

 

[jIMOh]

HAHAHA

I can't believe nobody on these boards struggles with the same issue!

Or some of us post less than others

What I do is take chances with small portions of the money.

For example if an allocation is supposed to be:

75% domestic/ 25% foreign
and
45% large cap/15% mid cap/15% small cap/15% foreign large cap and 10% foreign small cap
(100% equity across the board).

How many ways can you create that allocation? It is infinite.

Some of us buy the large cap fund and put 45% in it. Find the mid cap fund, 15% there etc...

I do that with 95% of our assets- my 401k, my Roth, my rollover- each each account has the 45-15-15-15-10 allocation in it.
My wife's 401k also has same allocation.

My wife's Roth and rollover DO NOT follow above. They are 75-25 (domestic-foreign) and also 45% large and similar. But I construct it MUCH differently. I construct it with sector funds. A tech fund, a natural resources fund, a financial services fund, a health care fund etc...

My wife's IRAs are less than 25% of the money invested (it might be 5%, 10% on a really good day).

I make decisions on what to BUY, but I rebalance this account very little (I do not sell much). I can generally rebalance with a years worth of contributions ($5000). I do not have a sector allocation- if I want 50% of the account in tech, 50% will be in tech. I focus on the xray more than the fund allocation (meaning the tech fund owns some large caps and lots of mid/small caps, the financial services owns more large caps and less small caps). I just analyze by xray only and make sure the portfolio never has more than 45% large cap domestic and no more than 25% foreign, and I am coming real close to what target needs to be in that regard.

I generally buy what is down (in 2008 I was buying real estate fund and financial services fund). Now I am focusing more on health care (lagged in 2009) and technology.

If I find a sector which does bad, that is usually the one I buy because it means it is lower than the others and will recover faster (financial services for me between 2008-mid 2009 nearly doubled).

 

[Onward]

I can't believe nobody on these boards struggles with the same issue!

If you only knew how I struggled with it!

If you're absolutely miserable in your j*b, then you have nothing to lose by changing j*bs. If you're like me, and it's the notion of servitude that you object to, then you just have to suck it up till you can afford to jump ship. I was in that phase for some years, and what helped me most was visiting this board, reviewing my finances, and looking for (reliable) ways to increase escape velocity.

 

[Animorph]

Your best bet right now is to see how cheaply you can live. Cut expenses in half instead of doubling your portfolio. Always good practice anyway. I was on our retirement budget for a couple of years before we retired, including CPI raises.

Not sure what your investments look like now. Certainly going 100% stocks would not be too far off the beaten path. I'm still doing that. So are you looking at just one or two stocks for the entire portfolio?

 

[freebird5825]

How will you feel if you lose 1/2 of what you have now?

+1