If you really have the secret sauce that lets you earn 25% on investments year in and year out (more than double what Bernie Madoff was able to do using his best methods) then prove it with a few years of accumulation and retire when your SWR is more normal - like 4%.
The secret sauce isn't a secret. It is margin/leverage right now. I am just working on getting the strategy right. You can get 36% running 2-1 on CEFL, which is a diversified ETN focusing on several closed end funds and would double every 2 years. That said, I'm not that brave and need to learn more about ETN's. Looking on the board, I haven't seen anyone mention CEFL or exchange traded notes.
Your plan is ridiculous.
I was hoping for a bit more substance than "Gee, that's crazy.", although I am sorta used to it. Maybe something on hedging/controlling left tail risk. I'm thinking 20-30% downside protection should be sufficient, looking at 2008. Buying vix or selling puts on it? That is helpful.
I've been told that retiring overseas is crazy and I'd get kidnapped in Ecuador or the Philippines.
I've been told that the philippines is dangerous and some parts are...then again, so is Chicago. At least in the Philippines I can get a .50 cal BMG or a M249 saw. (These are Heavy/light machine guns for the uninitiated, and no, I'm not joking)
I've heard investing in stocks is crazy, real estate is the way to go, no wait, gold, no wait, rare earth metals. I had a spirited debate earlier today with someone suggesting to them that sitting 100% in cash is not a safe thing due to inflation risk and that while it may not have a significant impact today, it will have a substantial impact over time.
Heck, the idea of retirement, much less early retirement, is crazy to some people. My dear mother asks me rhetorically what would you do if you didn't work, and I know there is a thread on here about that.
People say the USA is the greatest country on earth, its crazy to think about living anywhere else. Then I find out these people have never left the states, ever.
Personally, I think its nutso to invest in an actively managed fund as to a mathematical certainty, nearly all of them are going to underperform the market over time, yet there are multiple threads here on about which funds to invest in.
I don't understand why CEF PHK, which was actually recommended here for building an income portfolio, traded at a 70% premium back in 2012 and for 5 years has traded over a 50% premium. I don't understand why good income generating CEF's trade at a 11% discount, but if I had to choose between the two, I'll take the 11% discount with a healthy 7% yield. Is it risky buying a dollar for 89 cents? Maybe, but I'll take my chances.
I'm not really sure why he sought a critique: surely he must know that most people on this board are fairly conservative investors rather than gamblers?
Well, there aren't really many people who are looking at retiring overseas, particularly when they are young, so I figured this would be my best shot especially since early retirement is a fairly unconventional concept. I don't know everything and the more I learn, the more I find out what I don't know. If there is a retire at 40-45 overseas forum, I'd love to check it out.
Writing it down gets the strategy straight in my head and makes me really think about how to execute it. Peer reviews help me look at other elements I may have not considered, like a good withdrawal rate. Maybe I am off base on the taxation element, although IRS.gov seems pretty straightforward. Most of the stuff I have read on living and investing overseas is very heavy on sales and commercial content. Most retirement plans aren't tailored for people retiring at age 40, either so that is an added complexity.
I probably need to go into more detail on the game plan and will do so tomorrow, but like I said, I'm developing it.
Key tenants are going overseas to a lower COL country, making as much tax free money as possible when I am there, while still saving and contributing to retirement accounts. I would ideally like to build/buy a house while in the US and just leave so I would have no mortgage/rent payments, but realistically, I probably need to get boots on the ground for 3-6 months minimum.
Answers lead to more questions. Retiring overseas leads to issues with FACTA, but opportunities with the Foreign earned income exclusion. I've never claimed the deduction, and I don't have a foreign bank account, so I have no personal experience with it.
Anyone interested in making potentially 195k tax free annually, according to IRS.gov? Even if you don't make the max, you can get an instant 15% or more bonus on your investments and deduct housing costs, which you can't do in the states. You may feel better off giving that 15-20% to Uncle Sam, but I think I need that 20% in my pocket instead.
Figuring the Foreign Earned Income Exclusion
Did you know you can potentially skip out on medicare and SS too? I'm not going to get SS at my age, so I'd prefer to avoid paying it.
Social Security Tax Consequences of Working Abroad
Now, 200k tax free may be peanuts to you, but it certainly got my attention. All the cool kids on Wall St. are inverting, so I might as well too. That said, problem #1 is generating 200k annually, but honestly, in a lot of these places, even 100k would be more than enough to live very, very comfortably.
I have been to Ecuador (loved Quito and Cuenca. Want to see the coast) and Costa Rica (Nice, but a little too expensive) country shopping, but there are several countries in South America that I haven't been to that look to have potential (Argentina, Paraguay, Uruguay, Chile) that I have only read about.
Eh, I'm not sure how conservative they are. The CBOE links are pretty darn interesting to me at least from a risk adjusted alpha generating standpoint. Greater returns with less risk backtested 15, 20, and 25 years, I would think someone might be slightly interested in the prospect of lower risk and higher gains. 30% reduction in volatility? Screw that, Options are dangerous.
Granted, these are fairly new concepts and not many funds employing these strategies, so it may be a bit strange and different than what most people have heard of with just investing in an mutual fund for 30 years.