Question For You Achievers!
- Thread starter Tommy_Dolitte
- Start date
I believe it would be very difficult to achieve super early retirement (under 40) by saving alone. I believe you have to use some form of leverage (ie other peoples money) such as real estate or business, etc.
We did make a low six figure income, but if we hadn't invested in real estate, we would still be working. If you start at 28 (I started at 29), you can accumulate wealth pretty quickly (with some good investments and a little luck).
By the way, we are 18 months (still newbies
) into early retirement. I'm 37 and my wife is 36 and have had no regrets.
We did make a low six figure income, but if we hadn't invested in real estate, we would still be working. If you start at 28 (I started at 29), you can accumulate wealth pretty quickly (with some good investments and a little luck).
By the way, we are 18 months (still newbies
) into early retirement. I'm 37 and my wife is 36 and have had no regrets.
J
John Galt
Guest
Yep, knowing what I know now (back then) I could have
done it by age 40. Such a thought never entered
my brain until well past that age. Real estate would have been the primary base for me also. Owning my own company helped a lot, but phasing out of what is
basically a one-man show can be tricky. Anyway, no
regrets. I found out today my brother just took a new
sales position (he is 57). Have no idea what his
thoughts are vis-a-vis retirement.
John Galt
done it by age 40. Such a thought never entered
my brain until well past that age. Real estate would have been the primary base for me also. Owning my own company helped a lot, but phasing out of what is
basically a one-man show can be tricky. Anyway, no
regrets. I found out today my brother just took a new
sales position (he is 57). Have no idea what his
thoughts are vis-a-vis retirement.
John Galt
dex
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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- Oct 28, 2003
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Tommy,
I admit it . My wife is the queen of accumulation. A pack rat but also with money. Frugality (and happiness) is not a destination but a way of travelling. After 30 years of wedded bliss we got it because she socked it away.
BUM
Does you wife have a sister about 40 with the same mindset? I'm single
Hyperborea
Thinks s/he gets paid by the post
Two counter-examples are intercst at 38 and Galeno at 36(?). Both just well paid employees and good savers if I remember what they've posted correctly. I'll be out at 46 but I didn't start planning and saving for FIRE until I was ~35 and again just a well paid employee and saving.
Hyperborea,
Another counter-example would be Paul Terhorst, whom I so glad had the vision to write the book that started it all for me. I never said it couldn't been done, I said that I believe it would be difficult to achieve pre-40 retirement just by savings. As you have just stated, if your plan works out it will take you approx 11-12 years to achieve it (that's assuming your plan works as you think it will, I know that mine did not). And what sacrifices are you making in your current lifestyle to do it It also depends on how much you think is enough to live your lifestyle, which is different for all of us.
My wife and I retired at 36 (2 months after my 36th bday, my wife was 35) and we started basically at age 29. We also did not sacrifice on our lifestyle, in fact, aside from maxing our retirement accounts, we weren't very good savors at all .
I'm not trying to be argumentative here, but there is more than one approach and it depends on how quickly you want to achieve your goals. As for me, I felt like I would be dead from stress by age 46. Perhaps you should consider reading Robert Kiyosaki's book "Who took my money" for a different perspective :
In any case, good luck to you in achieving your early retirement goal!
Another counter-example would be Paul Terhorst, whom I so glad had the vision to write the book that started it all for me. I never said it couldn't been done, I said that I believe it would be difficult to achieve pre-40 retirement just by savings. As you have just stated, if your plan works out it will take you approx 11-12 years to achieve it (that's assuming your plan works as you think it will, I know that mine did not). And what sacrifices are you making in your current lifestyle to do it
It also depends on how much you think is enough to live your lifestyle, which is different for all of us.My wife and I retired at 36 (2 months after my 36th bday, my wife was 35) and we started basically at age 29. We also did not sacrifice on our lifestyle, in fact, aside from maxing our retirement accounts, we weren't very good savors at all
.I'm not trying to be argumentative here, but there is more than one approach and it depends on how quickly you want to achieve your goals. As for me, I felt like I would be dead from stress by age 46. Perhaps you should consider reading Robert Kiyosaki's book "Who took my money" for a different perspective :
In any case, good luck to you in achieving your early retirement goal!
C
Cut-Throat
Guest
personally, I don't like this guy's advice. If we all followed it, I'm guessing that 80% of us would still be working.
Cut-Throat,
I agree that you have to read his stuff cautiously (as with most financial books), but, in his last book, he does make some good points for leverage (he calls it velocity of money). It is what got me here at age 36! Overall, I'm not a huge fan of Kiyosaki, I prefer some of the other authors recommended on this sight.
I agree that you have to read his stuff cautiously (as with most financial books), but, in his last book, he does make some good points for leverage (he calls it velocity of money). It is what got me here at age 36! Overall, I'm not a huge fan of Kiyosaki, I prefer some of the other authors recommended on this sight.
Absolutely, and that is why most of my wealth (not that there is a whole lot) and ALL of my leverage was in real estate. If it had all been "invested" in the stock market (without leverage), I would still be working today. I do not believe that buying stocks "on margin" is a smart strategy.
unclemick
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Leveraged real estate kicked my butt and the stock market bailed me out. I seemed to have had a talent for places with spotted owls, quadupling of school taxes, and salt water(mini earth quake) intrusion into artesian well water.
I may have broken even on real estate over twenty years - provided you don't count inflation.
Location, location, location.
I may have broken even on real estate over twenty years - provided you don't count inflation.
Location, location, location.
I have had about the same luck in the stock market as you have had in real estate. But, you are right, location, location, location and timing timing timing. I am finding it difficult to find good deals in real estate and the stock market these days. :
Hyperborea
Thinks s/he gets paid by the post
As you have just stated, if your plan works out it will take you approx 11-12 years to achieve it (that's assuming your plan works as you think it will, I know that mine did not). And what sacrifices are you making in your current lifestyle to do it
I'm not sure that I'm making any lifestyle sacrifices. I don't have an expensive car or giant SUV, a monster home, eat dinner in a restaurant 5 nights a week etc. etc. that a lot of others in my job do. However, I don't think it is a sacrifice. It may sound kind of weird to some but deciding what matters to you and buying only what you need or really want is quite liberating. We don't have mountains of junk littering the house - abandoned toys that kept us happy for nanoseconds before being discarded. We eat quite well and healthily at home most nights and restaurant meals are a treat that we enjoy and not an expected part of the day.
That said we do spend on what we do really enjoy. We're off to Italy in about 5 weeks, we've gone around China by train, I've got a couple of guitars, until it's sad demise I had an older Porsche that I used to autocross (and do my own maintenance on), we do eat out in some quite nice restaurants once in a while, etc.
As for 11-12 years, you could count it that way but it took a couple of years to turn the finances around to where we were saving appreciably for early retirement. It's a little more like 9 years.
I'm not sure (nor is anybody else other than his acolytes) that Kiyosaki has actually made any money other than as a financial "guru" selling self-help books and seminars. Tony Robbins was in town last week and his acolytes paid $2000 to sit close to the stage, kiss the hem of his pants, and get to walk on hot coals down the streets of San Jose. I'm not sure those paying $2K are getting to ER but Tony Robbins sure is getting wealth off of them. I don't have it in me to become a "guru".
As for real estate, that is a pretty perilous option for short term (i.e. less than 10-15 years) wealth building. It can work out but it can and does fail. Investing in one local real estate market is particularly risky and investing in more than one gets expensive and difficult due to the distance.
Tony Robbins is another great example of a person that has learned how to use leverage as a way to increase his wealth (You don't have to like him to see that). Instead of talking one on one for $300 an hour, he fills an auditorium at $2000 each (I won't be one of them). As far as Kiyosaki goes, I wish I knew another book to recommend that talks about leverage, but I don't. If anyone else does, I would love to know the title.
It seems that a few people on this board missed my point, and that is if you can find a way to leverage yourself and/or your money (real estate, your own business, writing and selling books, being a musician or athlete or speaking to audiences, whatever, there are lots of ways) you can achieve super-early retirement and with more (sometimes a whole lot more) money. I personally can't sing and am scared to death to speak in front of people, so I chose Real Estate and small business. This strategy worked for me (long before kiyosaki ever wrote a book about leverage) and quite a few other people that I know, but that doesn't mean that it is right for everyone. It was a lot of hard work and there were more than one occasion that I questioned what I had done. Real estate can be risky and you have to research and choose your investments wisely, but the same can be said for the stock market (which I have seen be very risky over the last several years). I have personally met only one person who has gotten wealthy investing prior to age 40, I have met quite a few who have done it in RE or business. I have also met quite a few who failed at all of the above.
Bottom line is I think it is only fair that the author of this thread hear from those of us who have achieved very early retirement and the strategies that we used to get there. Then they can make an informed decision what strategy they want to use in their quest for early retirement.
By the way, Hyperborea, I certainly did not mean to imply that YOU were making sacrifices, as there is no way I could know your situation. It sounds like you are enjoying yourself, and as long as you and your wife don't feel like you are sacrificing...then you are not! Anyway, I drove a Toyota Camry for 12 years, not because I had to but because I wanted to and that is the key. Good luck to you in your quest for Early Retirement, it IS all it's cracked up to be.
(Sorry for the long post)
It seems that a few people on this board missed my point, and that is if you can find a way to leverage yourself and/or your money (real estate, your own business, writing and selling books, being a musician or athlete or speaking to audiences, whatever, there are lots of ways) you can achieve super-early retirement and with more (sometimes a whole lot more) money. I personally can't sing and am scared to death to speak in front of people
, so I chose Real Estate and small business. This strategy worked for me (long before kiyosaki ever wrote a book about leverage) and quite a few other people that I know, but that doesn't mean that it is right for everyone. It was a lot of hard work and there were more than one occasion that I questioned what I had done. Real estate can be risky and you have to research and choose your investments wisely, but the same can be said for the stock market (which I have seen be very risky over the last several years). I have personally met only one person who has gotten wealthy investing prior to age 40, I have met quite a few who have done it in RE or business. I have also met quite a few who failed at all of the above.Bottom line is I think it is only fair that the author of this thread hear from those of us who have achieved very early retirement and the strategies that we used to get there. Then they can make an informed decision what strategy they want to use in their quest for early retirement.
By the way, Hyperborea, I certainly did not mean to imply that YOU were making sacrifices, as there is no way I could know your situation. It sounds like you are enjoying yourself, and as long as you and your wife don't feel like you are sacrificing...then you are not! Anyway, I drove a Toyota Camry for 12 years, not because I had to but because I wanted to and that is the key. Good luck to you in your quest for Early Retirement, it IS all it's cracked up to be.
(Sorry for the long post
)unclemick
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
More books on real estate leverage have been written (and gone out of print) than you can shake a stick at. My first in the 60's was along the lines of: How I Turned $1000 into One Million in Real Estate in My Spare Time by William Nickerson.
Of course the lucky turd lived in California and I believe had a stable job (Ma Bell or something like that).
Location, location, location - mine sucked - although we levered, paid off, and literally sold and consumed our duplex the first ten years of ER. And avoided tapping 401k/IRA - not rich, but not too bad.
Of course the lucky turd lived in California and I believe had a stable job (Ma Bell or something like that).
Location, location, location - mine sucked - although we levered, paid off, and literally sold and consumed our duplex the first ten years of ER. And avoided tapping 401k/IRA - not rich, but not too bad.
Hyperborea
Thinks s/he gets paid by the post
If you can find a way to do so and do it successfully then maybe you can retire "super-early". The problem is that most who try to "leverage themselves" fail. Only 1 in 6 new businesses are around after 5 years and many of those that survive are probably not paying enough to fund a "super-early" retirement. Most musicians aren't mega rock stars getting only the red M&Ms in the candy bowl in their dressing room - most are struggling along doing music teaching or some other day job to pay the bills.
So, while this "leveraging" can pay off for some it's kind of like those who win the lottery claiming that the way to retire "super-early" is to win the lottery. Now this "leveraging" is somewhat different in that it requires a lot of hard work but that hard work is the same for those who leverage to the upside and those who leverage to the downside.
If you've retired "super-early" with such a high-risk leveraging strategy then you've probably worked hard and are to be congratulated on your good fortune.
Hyperborea, I sure wish I knew how to put in quotes like you, but I'm not that smart. But for the record we DID retire at 36 years, 2 months for me, 35 for my wife, using this strategy, which I don't consider to be near as risky as, say, investing in a stock market that drops 80% over 2 years (nasdaq). My real estate investments were in resort areas in NC (not in California) that I felt, after researching the market, had a lot of upside (turns out I was right ). My "small business" happened to be a CPA practice that I was able to sell at retirement and generate another few hundred thousand dollars. If I had relied soley on the stock market, I would still be working today, instead I'm living in a nice, paid for, oceanfront condo in Cocoa Beach and enjoying life !
I'm pretty sure that we can agree to disagree on this subject and that is fine. The main thing is that the author of this thread and other "young dreamers" see that there are different ways to achieve there goals and let them decide for themselves.
). My "small business" happened to be a CPA practice that I was able to sell at retirement and generate another few hundred thousand dollars. If I had relied soley on the stock market, I would still be working today, instead I'm living in a nice, paid for, oceanfront condo in Cocoa Beach and enjoying life !I'm pretty sure that we can agree to disagree on this subject and that is fine. The main thing is that the author of this thread and other "young dreamers" see that there are different ways to achieve there goals and let them decide for themselves.
Hyperborea
Thinks s/he gets paid by the post
6 Years to Millions is Speculation and Luck
Hit the quote button on the upper right of the message that you are responding to and then trim the quote down.
Right, I believe you and I'm not disputing the fact that you did. However, the reasoning is post hoc. You've done well to get where you are but just because you succeeded with it and made it through the very large number of business failures (again only ~ 1 in 6 businesses survive 5 years) doesn't mean that it is a highly likely scenario. If you take 6 potential early retirees and have them set up a business only 1 in 6 of them will still be in that business in 5 years. Will that 1 survivor be able to reitre then? How many businesses are returning that kind of money?
Anecdotally, watching the family, friends, friends of family, etc. that have started businesses and my own forrays confirm those statistics. For those that have done well none of them have generated millions in 6 years. Even those that have gone on to make millions took a decade or more. Much of whether they made those millions depended on some chance conditions and they admit so themselves. Many of the businesses that survived the 5 years sputtered on paying an ok salary equivalent, some tax deductions, and a bit of flexible working hours but no fabulous wealth.
If we took 100 would-be market timers and let them go then after 6 years we might have a couple who've done remarkable well. They could also claim that market timing is highly profitable safe and has only upside. These are generally the folks posting about their great market timing skill on web boards (such as The Motley Fool) while the others are silent on the matter of their lack of "skill".
Sure, they should consider all the information for themselves and then decide how lucky they are.
Hit the quote button on the upper right of the message that you are responding to and then trim the quote down.
Right, I believe you and I'm not disputing the fact that you did. However, the reasoning is post hoc. You've done well to get where you are but just because you succeeded with it and made it through the very large number of business failures (again only ~ 1 in 6 businesses survive 5 years) doesn't mean that it is a highly likely scenario. If you take 6 potential early retirees and have them set up a business only 1 in 6 of them will still be in that business in 5 years. Will that 1 survivor be able to reitre then? How many businesses are returning that kind of money?
Anecdotally, watching the family, friends, friends of family, etc. that have started businesses and my own forrays confirm those statistics. For those that have done well none of them have generated millions in 6 years. Even those that have gone on to make millions took a decade or more. Much of whether they made those millions depended on some chance conditions and they admit so themselves. Many of the businesses that survived the 5 years sputtered on paying an ok salary equivalent, some tax deductions, and a bit of flexible working hours but no fabulous wealth.
If we took 100 would-be market timers and let them go then after 6 years we might have a couple who've done remarkable well. They could also claim that market timing is highly profitable safe and has only upside. These are generally the folks posting about their great market timing skill on web boards (such as The Motley Fool) while the others are silent on the matter of their lack of "skill".
Sure, they should consider all the information for themselves and then decide how lucky they are.
Hyperborea,
I think it was the statement "IF YOU'VE RETIRED....." that caused me to believe that you maybe doubted my statement, mostly the IF part.
I also find interesting your new subject line, "RE: Six years to millions is speculative". I couldn't agree more with that comment! I just wonder how you came up with it. I thought this whole board was about the fact that you DON'T have to have millions to retire early. I never said I had millions, because I don't (wish I did though ). I just have enough to retire at 36 and live comfortably, at least according to FireCalc (which was well worth the beer money )
And then there's your comments about small business. Once again, I never said anything about making a huge salary. I just made a nice living (along with my wife's paycheck) working with HUNDREDS of small businesses over the last 15 years. I'm sorry that the fact that You (if I understood your comment correctly) were unsuccessful in business has left such a sour taste in your mouth about it. However, I personally know hundreds of people that have been successful at making a nice living working for themselves, so it can be done. I don't know where you got your 1 out of 6 number (I'm not disputing it, I have heard 2 out of 3 fail in the first 3 years) for business failures, but I do know that the biggest reason is undercapitalization. I would hope people smart enough to contemplate early retirement would not fall into that trap.
Also, as I have said, I made my money with real estate, working for myself did have a lot of perks, but only gave me a salary maybe double what I would have made working for someone else. It did however give me an extra 300K to pad our retirement funds when I sold it. We would still have had enough, though, without the business.
I think it is ashame that you consider what I did "Lucky". There was virtually no risk of loss on the property I purchased and the rents were practically guaranteed. I was fortunate in the fact that the property appreciated at a rate higher than I anticipated. It does not take luck to be a successful real estate investor, it takes knowledge and a bit of hard work.
I must say that, IMHO, you will be the lucky one (and I hope you are) if you are successful in achieving early retirement if you are relying on only one asset class (stocks and bonds) and using only your money to do it. Let's just HOPE that another major bear market doesn't occur right before you get ready to call it quits.
I think it was the statement "IF YOU'VE RETIRED....." that caused me to believe that you maybe doubted my statement, mostly the IF part.
I also find interesting your new subject line, "RE: Six years to millions is speculative". I couldn't agree more with that comment! I just wonder how you came up with it
. I thought this whole board was about the fact that you DON'T have to have millions to retire early. I never said I had millions, because I don't (wish I did though ). I just have enough to retire at 36 and live comfortably, at least according to FireCalc (which was well worth the beer money )And then there's your comments about small business. Once again, I never said anything about making a huge salary. I just made a nice living (along with my wife's paycheck) working with HUNDREDS of small businesses over the last 15 years. I'm sorry that the fact that You (if I understood your comment correctly) were unsuccessful in business has left such a sour taste in your mouth about it. However, I personally know hundreds of people that have been successful at making a nice living working for themselves, so it can be done. I don't know where you got your 1 out of 6 number (I'm not disputing it, I have heard 2 out of 3 fail in the first 3 years) for business failures, but I do know that the biggest reason is undercapitalization. I would hope people smart enough to contemplate early retirement would not fall into that trap.
Also, as I have said, I made my money with real estate, working for myself did have a lot of perks, but only gave me a salary maybe double what I would have made working for someone else. It did however give me an extra 300K to pad our retirement funds when I sold it. We would still have had enough, though, without the business.
I think it is ashame that you consider what I did "Lucky". There was virtually no risk of loss on the property I purchased and the rents were practically guaranteed. I was fortunate in the fact that the property appreciated at a rate higher than I anticipated. It does not take luck to be a successful real estate investor, it takes knowledge and a bit of hard work.
I must say that, IMHO, you will be the lucky one (and I hope you are) if you are successful in achieving early retirement if you are relying on only one asset class (stocks and bonds) and using only your money to do it. Let's just HOPE that another major bear market doesn't occur right before you get ready to call it quits.
Hyperborea
Thinks s/he gets paid by the post
I believe that I said "If you can find a way to do so and do it successfully". The problem with message board communication is that the specific and the generic can get intertwined. Perhaps I should have used "one" instead of "you".
I also find interesting your new subject line, "RE: Six years to millions is speculative". I couldn't agree more with that comment! I just wonder how you came up with it
The generation of a million dollars or more profit for a small investor (in real estate or elsewhere) over 6 years or less is specualation and not investment.
Actually, how much is really more a factor of how you wish to live. The minimum "recommended" amount is $1 million per $40K of income desired.
No sour taste at all. Instead, experience that came from trying to turn a nice little extra cash sideline of contract software into a larger business has made me realize how truly difficult it is. I made out ok but I could have done just about as well working for someone else and in the end I did. Too many hours selling the services, giving free seminars, specing jobs, etc. that by the end of it my hourly rate was not as good as working for others.
Again not disputing that some do succeed but it is not the slam dunk key to FIRE in 6 years. I'd have to dig but IIRC the numbers came from one of the small business agencies of the government. Our numbers are consistent if you turn them into the same direction - i.e. 2 out of 3 fail in 3 years and 5 out of 6 fail in 6 years. Now, a number of those who fail sooner or later succeed but it's often on the 3rd or 4th try - definitely a lot longer than 6 years and most not striking the mother lode but just a nice income maybe doing something they like.
So, it's easy to make enough to FIRE using real estate in 6 years no matter where you are and no matter what the RE markets do? Anybody can do it? Not a chance of failure?
Hmmm, what about the folks who live in areas where property values have gone down? They do go down you know.
I've got some friends of the family who've owned rentals before and while it did help their finances it was work, it was no slam dunk, and it certainly didn't bring in mega-bucks in 6 years. Or are we talking about much more speculative stuff with a lot more financial hanky panky involved?
I've never heard bonds and stocks referred to as a single asset class before. Besides I am quite a bit more diversified than just "stocks". Now real estate - that's a single asset class.
Besides for most really early retirements the savings rate is a bigger factor than the return rate. You don't have a lot of time (6 years or 9 years) to get realistic returns without taking speculative risks.
I don't bother with "HOPE". I diversify my portfolio and felt only small decreases in 2000 and have had some good returns due to that diversification over the last few years. Anybody who puts it all into NASDAQ and suffers an 80% decline as you suggest was foolish. It's kind of like putting all their money into real estate in a single market and hoping that the housing bubble doesn't burst before they cash out.
Hyperborea
Thinks s/he gets paid by the post
Re: I think that the harder we work...
Yeah, kind of. We only get those chances at luck if we work hard. It's a necessary condition but it isn't sufficient. There are lots of hard workers who don't get the lucky break. The hard worker who doesn't get that lucky break doesn't usually lose but they don't win the jackpot without the luck too.
Yeah, kind of. We only get those chances at luck if we work hard. It's a necessary condition but it isn't sufficient. There are lots of hard workers who don't get the lucky break. The hard worker who doesn't get that lucky break doesn't usually lose but they don't win the jackpot without the luck too.
This was the "IF" I was referring too!!!
As far as everything else you said, I'd love to see where I said anything was ever a slam dunk. But basically I don't have the time or energy to waste debating with you on this anymore. The bottom line is I DID achieve enough net worth to retire (it took approx 7 years) doing it my way (at age 36) and you HOPE to achieve early retirement doing it your way and I wish you the best of luck.
