Do I Have This Right?

[Tommy_Dolitte]

If you start early enough, budget, and take sensible risk, there is no reason why anyone shouldn't be able to retire early.  

I've been running models that varies investement magnitude, frequency, time in market , rate of return, and target retirement level (e.g. $1MM)---you can achieve $1MM (non-inflation adjusted) by investing $3,000 month and 4% return in 15 years---to chase after larger returns, effectively does not reduce the time (in my opinion) to a level even remotely comparable to the cost and/or risk associated with it.

It seems to me that once you hit that $150 K mark...you are set--the POWER of compounding unleashes itself and it's a free ride to glory.  

Have I oversimplified this?

TD   :-/

"Do not subscribe to inflation...use it as an indicator to CUT your expenses...sometimes you gotta give all the bells and whistles that are offered by the market the FINGER!!"

 

[unclemick]

Nope

Simple is good - we retired with 350k in financial assets - mostly IRA basically didn't touch it - 1993 - 2003 went over 1 mil in 2000 back down 10% and back up to 950k or so this year.

Not pure - put and take into dividend stocks along the way (?10%).

But the decade was good, the general idea works, 90% of of ER stash at the start - index funds balanced 50/50 ala Ben Graham.

Some decades work better than others but the principle works. I did suffer a modest flat from 1966- 1982 - made slower progress then - but like De Gaul - ya gotta have faith.

 

[farmerEd]

>>If you start early enough, budget, and take sensible risk, there is no reason why anyone shouldn't be able to retire early.

Can't say that I agree..there is no way just "anyone" can retire early...savings $3000/month maybe easy for the upper income earners, like many of the folks here, but the median *household* income for 2003 was around $43K per year (thats household, not individual).

So if the median household income is $43K per year, thats 1/2 the people that defintely won't be able to save $3000 per month (unless somehow they can live on $7000 per year).

Don't lose your perspective on how fortunate one is to be able to do it; because clearly not everyone can.

I will concede, there are many people that *could* ER but don't think they can because of the lifestyles they have become accustomed to. (i.e. worshiping "things")

 

[unclemick]

1966 - good salary - 8k was big bucks then - before index, IRA, 401k and all that stuff - the standard mantra I saw most - if memory serves was to put 200/mo into a 'good' mutual fund. I believe minimum wage was still 1.25/hr.

Fundamentals don't change - numbers may - but the earliest $ are still the best - the compounding effect of time works.

 

[Jarhead*]

1966 - good salary - 8k was big bucks then - before index, IRA, 401k and all that stuff - the standard mantra I saw most - if memory serves was to put 200/mo into a 'good' mutual fund. I believe minimum wage was still 1.25/hr.

Fundamentals don't change - numbers may - but the earliest $ are still the best - the compounding effect of time works.

Unclemick:
You are the poster-boy for sticktoivness.
After l966-1982 especially.
Remember the ads in the mags put out by the insurance companies selling annuities in the early 60's? "How I retired with $400.00 a month". (It looked good for a few years).
In any case, you done good!
Regards, Jarhead

 

[Saver to Spender]

There are plenty of real-life examples you could give to achieve $1 million. How about investng only $104 a month in the Janus fund established in 1970. It has made 14% a year on average since inception, so today you would have $1 million (before taxes). If they only had Roth IRAs back then!!!!

Or, if your grandfather had started a $9 per month savings plan for his future grandchild back in 1932 in the Eaton Vance Balanced Fund, and your dad continued the same monthly investment followed by you, today you would have over $1 million. Just think, only $9 per month!!!

 

[sgeeeee]

If you start early enough, budget, and take sensible risk, there is no reason why anyone shouldn't be able to retire early.  

. . .

Have I oversimplified this?

I know families that were hit with unexpected financial catastrophes early in their lives and are still trying to recover from these early debts.

 

[John Galt]

Then there are people who did everything wrong and
just got lucky. Life ain't fair.

John Galt

 

[unclemick]

Nope

Neither is the clock. I'm thinking of doing nothing faster so I can enjoy more ER - before I get too old to enjoy it.

 

[sgeeeee]

Then there are people who did everything wrong and
just got lucky.  Life ain't fair.

John Galt

Yeah . . . I know some of them too. :-/