Early-30s couple just beginning our FIRE journey...looking for basic advice!

[beef_stroganoff]

Hello!!!! We've already gotten lots of useful info reading some threads here. We are total investment noobs and eager to learn more about how to FIRE; a lot of what we've seen in other places has been discussing optimal investment strategy, and that's not necessarily what we're here for. We're really fortunate this community exists and we are grateful for all the knowledge here.

Some info about us:
- We live in Minnesota (Not Minneapolis)
- My partner and I are both in our early 30s
- We realized that we could "speedrun" capital accumulation because one job pays for rent / bills / fun / etc. while the other is "extra money"
- We don't own a house yet, but we are looking to buy within the next few years
- We love nature hikes and flower gardens

Our current asset state:
- We have $5k emergency savings in a checking account and $65k in a Roth IRA (all in VTTSX) (I wasn't working jobs that had company matching at the time and was targeting a normal retirement year)
- We are expecting to have ~$30000 available money to invest across a portfolio each year. Sometimes a little more, sometimes a little less, but that's the goal
- We do not have access to employer-match 401K/IRA/etc. (If this changes, how can we use it most effectively besides maxing it out when our goal is explicitly retiring as soon as possible?)

Our desired post-RE lifestyle:
- We'd like to be able to afford travel to Europe / Asia / etc. once or twice a year. (Travel destinations without a significant dollar value advantage)
- We 100% do not want kids or pets in the future.
- National travel is also high on our list. Roadtrips, occasional weekend trips, etc.
- We are hoping to always sit on a $50k emergency fund to weather market downturns. (Is this enough?)

We are not necessarily focused on maximum accumulation of wealth or passing money down to extended family, only being able to stop working as soon as possible and not run out of money late in retirement (while preserving the ability to travel to new places, see friends, etc.) We are hoping to be able to FIRE in 10-15 years, but the sooner the better. I know it isn't a race, but...

Any advice that anyone has is very much appreciated!! Even if it's you telling us that our lifestyle expectations are not lined up with our desired yearly payouts... We need to hear that too

Our first attempt at an investment "strategy":
Our first thought was putting all of our money into a Vanguard dividend-paying ETF with good market exposure (like VIG) as the most hands-off way of accumulating regular wealth, as neither of us feel very confident in our investing chops and we don't necessarily want to pick stocks or actively manage a portfolio. I understand that aiming to build dividend payouts might be losing out on too much growth to be the way to go, and I know the tax situation is not necessarily as favorable as more optimized investment management, but it's a very "set it and forget it" strategy, which is extremely appealing for us. I'd love a way to learn more and compare hypothetical portfolios to historical values as a way to learn more.

In an ideal world, we'd be able to diversify while keeping somewhat consistent payout. We would be willing to wait out market downturns with available savings and liquid assets and rely on the core portfolio holding steady to eventually rebound (with the Roth money + social security covering proper retirement age needs). We are targeting $40k/year in either average dividend payout or average stock sale value, but we could live tighter and travel less in deep market recession. I know $40k is still a lot of money each year, but once we have paid off a house I think that will allow for an extremely comfortable standard of living for us. This isn't Lean FIRE, nor is it Fat FIRE, it's... just FIRE, I guess?

I would love to hear ballpark portfolio compositions and hands-off investment strategies that can help us achieve our goal. If we're in need of a wake-up call on our expectations, we'd really appreciate that too. Thanks again!!

 

[Lewis Clark]

My wife and I were also a two income family with no kids. It certainly helps to accumulate capital. : )

Nature hikes and flower gardens sound like low-cost hobbies. That will help keep expenses down.

You may want to focus on capital appreciation investments instead of dividend paying investments. The dividends will be taxed as ordinary income in the year you receive them. Capital appreciation may have favorable tax rates and you won't pay tax on gains until you sell.

 

[tmitchell]

I highly recommend JL Collins The Simple Path to Wealth. His strategy is the one I used to reach FI and hold no dividend stocks, which turns out to be very handy with regard to ACA and tax planning.

Like you we are DINKs and have essentially the life you want in FI. It took about 15 years to get here and I left work at 54.5 yrs, but I was way behind you guys.

Emergency fund is good anywhere from 3-12 mos of expenses depending on your job stability and things like home condition etc. I’d err on like 6 months if you’re not sure and invest the rest for growth.

Most importantly my advice would be to enjoy the ride to FI and enjoy spending along the way. We never know what the future will hold. I often tell people that once they have 3 yrs expenses saved they are already free to create the life they think the need FI for.

Good luck!

 

[Katiek]

If I have any lessons learned at my age, it would be to focus on tax efficiency more in my investing. Investing in Roths when you're younger is a gift to your future self. I focused most of my investing on index funds, but in retrospect would have done even more. I can handle paying income taxes on the annual dividends, but it's the possibility of a fund's random capital distributions that can trigger unexpected taxes that really stings. You can end up with large capital distributions even when a fund's value is down and you don't need the cash for living expenses.

 

[pacergal]

Welcome to the forum, you have come to the right place for information.

Some great investment/financial reads:

"If You Can: How Millennials Can Get Rich Slowly" by William Bernstein (good for everyone, not just millenials!)
Any book by John Bogle. I like "The Little Book On Common Sense Investing"
"The Millionaire Next Door" by Thomas Stanley

LBYM, Save and invest, but make sure to have fun along the way!

 

[beef_stroganoff]

I wanted to say thanks to everybody who's replied. We know it isn't a race to FIRE, but we are still excited to get started investing in earnest.

We are going to invest any extra income as we earn it in a few different index funds for now without missing out on enjoying our current life. When we get closer to FIRE, we'll start diversifying into a mix of assets that include some dividends so that we can start accessing that money more easily (we don't have employer 401k matches currently, so I think the tax hit is going to hurt either way while we're working).