Monday, January 11, 2021

Revisiting my FI

 There are a few big assumptions in this FI journey:

1. I am able to grow my assets at 8% p.a. so that the inflation-adjusted growth rate is 5% p.a.

2. I have captured all my expenses correctly, and nothing needs to be added in the future.

Of these, I think 1. is the most difficult. I revisited it again, and frankly, I think the assumption is incorrect.

My assets include my CPF, cash components, bond, whose returns will not hit 8% p.a.

So now to satisfy the 4% withdrawal rule, I am only going to consider my stock portfolio as my starting balance.

My recalculations are below:

Turns out I have 10 more months to go. 

I will call this FI 2.0 to differentiate from my 'achievement' of FI 1.0 a month ago.

Sunday, January 10, 2021

Your Money or Your Life


So I started reading the book which sparked off the whole FIRE movement (should have read this book 10 years ago).

There are some paragraphs that resonated with me:

On making a dying (Ch 1 The Money Trap: The Old Road Map for Money):

"How many people have you seen who are more alive at the end of the workday than they were at the beginning? Do we come home from our “making a living” activity with more life? Do we bound through the door, refreshed and energized, ready for a great evening with the family? Where’s all the life we supposedly made at work? For many of us, isn’t the truth of it closer to “making a dying”? Aren’t we killing ourselves—our health, our relationships, our sense of joy and wonder—for our jobs? We are sacrificing our lives for money, but it’s happening so slowly that we barely notice. Graying temples and thickening middles along with dubious signs of progress like a corner office, a private secretary or tenure are the only landmarks of the passage of time. Eventually we may have all the comforts and even luxuries we could ever want, but inertia itself keeps us locked into the nine-to-five pattern. After all, if we didn’t work, what would we do with our time? The dreams we had of finding meaning and fulfillment through our jobs have faded into the reality of professional politics, burnout, boredom and intense competition"

On frugality (Ch 6 The American Dream - on a Shoestring):

"The key is remembering that anything you buy and don't use, anything you throw away, anything you consume and don't enjoy is money down the drain, wasting your life energy and wasting the finite resources of the planet. Any waste of your life energy means more hours lost to the rat race, making a dying. Frugality is the user-friendly and earth-friendly lifestyle."

On finding the perfect job (Ch 7 For Love or Money: Valuing Your Life Energy - Work and Income):

"Our jobs are called upon to provide the exhilaration of romance and the depths of love. It's as though we believed that there is a Job Charming out there - like the Prince Charming in fairy tales - that will fill our needs and inspire us to greatness. We've come to believe that, through this job, we would somehow have it all: status, meaning, adventure, travel, luxury, respect, power, tough challenges, and fantastic rewards. All we need is to find Mr. or Ms. Right - Mr. or Ms. Right Job. Indeed, in terms of sheer hours, we may be more wedded to our jobs than to our partners. The vows for better or worse, richer or poorer, in sickness and in health - and often till death do us part - may be better applied to our jobs than to our wives or husbands. Perhaps what keeps some of us stuck in the home-freeway-office loop is this very Job Charming illusion. We're like the princess who keeps kissing toads, hoping one day to find herself hugging a handome prince. Our jobs are our toads."

On how people do FIRE (Ch 8 Catching Fire: The Crossover Point):

"There is now a worldwide community of FIRE practitioners who want the freedom to design their own lives. Getting clear about their finances and how they're spending their life energy empowers them to become masters of their own destiny. They aren't all "set for life" through investments. Yes, some people truly manage to live for the rest of their lives from the capital they build in their accumulation phase. They do it once and are forever free. But not everyone, by any means. For some, FIRE is more like sequential sabbaticals: You work, save, invest, exit paid employment for travel or study or raising kids or retooling skills, and reenter paid employment some months or years later. For some it's FIRE for nine months, seasonal employment for the summer, rinse and repeat. For some it's FIRE as a baseline plus side hustles. For some it's continuing to work - perhaps trying something new or starting your own business - knowing it's optional because you have an FI baseline from investments, retirement plans, or Social Security."

On recessions (Ch 9 Where to Stash Your Cash for Long-Term Financial Freedom):

 "Over the past ninety years, the stock market has taken five big hits (32 to 86 percent drops) with recovery times afterward ranging from four to twenty-seven years. At the risk of finger wagging, here's some data:

      • Great Depression: Down 86 percent, 27 years to recover
      • Mid 1970s: Down 46 percent, almost a decade to recover
      • Late 1987: Down 32 percent in just 3 months, 4 years to recover
      • Great Recession, 2007-09: Down 50 percent, 6 years to recover (or 14 years if you count from the matching dot-com peak in 1999, which had just been regained in 2007)                        

Gems worth remembering.