I wanted to check after 5 months of no pay, can I still afford to FIRE.
Especially with the recent market downturn. Currently, both SP500 and Nasdaq are in correction:
The main culprits are the Israel-Hamas war, high inflation, and the stalemate of the Ukraine-Russia war.
I did my spreadsheets and arrived at the below:
So my starting balance is still > required savings, which means I am still FIRE.
What happens if my starting balance falls below the required savings? Hmm I'm not sure actually...
Hi FO,
ReplyDeleteA good practise when planning retirement be it FIRE or normal retirement is to have cash reserves of 2 to 3 years of annual expenses. This cash reserves is to allow you to ride through market cycles without your lifestyle being disrupted by market downturn.
The 2 to 3 years cash buffer should be sufficient for the market to recover from a crisis. If there is no crisis, the incoming flow of passive income can be reinvested.
Although I am not retired, I am practising this concept now, ie holding two to three years of cash buffers which doubles up as my war chest. And thanks to the high T-bill yields, I have parked the cash reserves in them.
Can read more here : https://t.me/CPF_Tree
Ah yes, this is a good tip. Thanks!
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