Now that we are done with 2023 (which was a great year for me btw), I can revise my monthly expenses with the latest data points.
This revision is particularly important because my status is now different for the first time in my life - I am not working in a salaried job.
As I mentioned in my previous post - https://financeopti.blogspot.com/2024/01/wrapping-up-my-seventh-month-of-fire.html, I busted my Personal budget for 2023. The main reason is that I had to buy a new laptop in 2023. Without this large expense, I estimate I need to allocate a yearly budget of 3000 to the Personal category, which works out to be 250 per month.
I did my spreadsheets and arrived at the below:
So Starting Balance is > Required savings, which means I am still FIRE.
The US market is doing well now. SP500 is at all-time highs, which gave a boost to my stocks.
Also one of my readers suggested a buffer of 2-3 years in annual expenses to ride out any market downturns.
So the no. of years provided by my buffer is given by
(Starting Balance - Required savings) / Annual expenses = (1,715,065.71 - 1,564,396.67) / 46,931.90 = 3.21 years
Which is pretty good, phew!
Hi there,
ReplyDeleteThe way I prepare for market & economic uncertanties in my retirement is by having a cash buffer that is equivalent to two to three years of expenses. This is cash that I parked into high interest instruments such T-bills, DBS multiplier and SSBs. The important thing is that they are liquid.
Having a cash buffer will help us ride out any disruption to our cash flow due to market and economic downturn when businesses cut their dividends.
A buffer of networth does not help ease cash flow problem especially when the asset values can also crash in a market downturn.
So my interpretation of having buffer is very different from yours.
Thanks for your comment! Yes, I do have a cash buffer as well
ReplyDeleteThis is a wise comment. I will take into account in my calculations and post a future post on this. TQ!
ReplyDelete