Hey Veeky Forums

hey Veeky Forums

recently graduated college. been working for about a year in my career, two jobs at tech startups as a developer making good cash.

The problem is, I despise having to work 9-5. I'm starting to get bored of programming and hate the culture associated with it.

Is it possible to, let's say in five years, gain and maintain a steady enough income where I won't have to work again unless I want to? is this viable through investing, or is the risk not even with it?

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Yes. This is a method that's been growing in popularity in recent years, especially among people in well-compensated fields like IT. It's called FIRE (Financially Independent, Retired Early).

The basic principle is that you must accumulate approximately 25x your annual spending, investing in low-cost options like index funds. Once this is accomplished, you can draw down 4% of the total sum (roughly your yearly spending) indefinitely, since the average return should be roughly 7%.

Example:

Joe makes $100k, but only needs 25k a year. For simplicity's sake, we'll assume he has a paid off house.

Joe saves up $650k in about nine years (that's 25k*25). Each year, Joe can withdraw 4% (26k) and live off that without needing to work again. Of course, it's always an option, but you don't NEED to anymore if you don't want to.

Also, you should bear in mind that the process will almost certainly take less time than in the example I quoted, because that doesn't take into account the power of compounding interest and reinvestment of dividends.

Nailed it. Wish we had a sticky

hmm. I'll have to consider that.

the problem is that 25k isn't all that much. It is for me alone, but if I want to have kids in the future, it'd be pretty hard to support them on that.

You might be surprised. There's a blogger that goes by Mr. Money Moustache (MMM for short) that has a wife and kid, and they live on less than that. I'm sure other bloggers have, too. MMM is kind of an extreme case, but it really depends on where you live, and how frugal you can be.

If you're serious about considering FIRE, I'd definitely start off with his blog as a jumping off point. His later stuff is kinda shit, but he can set you on the right path.

is the financial independence sub a good resource? I know that lots of subs for things I'm into are generally bad with bad advice. fitness for example

I don't venture there often, but I can recommend a couple of bloggers I trust in this area:

Living a Fi (doesn't update much anymore, but you might find a lot in common with his story, and his advice is sound)

The Mad Fientist (also hosts a Financial Independence Podcast that you can find on the iTunes).

MMM also has an extensive forum populated with people looking to FIRE and those who have already FIREd offering helpful advice.

Shouldn't have become a webdev you fucking pleb.

thanks for the free bump.

what tech stack do you use and how much do you make if you dare compare?

>tfw my brother is 32 and is an executive making 250k a year
>lives off like 30k a year

I know what he's doing now. Jelly as fuck desu.

man i get FI, but I dont get the RE part

people hate working so much they would rather just never do it again?
first off, if you have capital gains income, why not just work some anyway, for something you like but just pays less
second, this seems to require dumping nearly everything into US stock indices, what if the market crashes? you really think 4% is safe?

There are options to mitigate that. You can take on part-time work if you choose, or you can tighten your belt, or you can build up a cushion during good years to prepare for bad ones.

There was a study done awhile back called the Trinity Study. It mapped out the historical likelihood of success of the 4% drawdown number based on every 30-year period since the 1930s. The study concluded that there was a 95% historical success rate. If you wanted to make it closer to 100% successful, you could make it a 3% drawdown, but a lot of people seem to think that's overkill.

Obviously, this doesn't account for something truly devastating, like a countrywide economic collapse, but if that happens you're fucked anyway, so there's not much you can do about it.

Congratulations, you just figured out why people work their entire lives in order to retire.

$25k is dog shit and people like Mr. Money Mustache are either happy living in poverty or misrepresenting their financials. I know for a fact that MMM does occasional contracting work for supplemental income which he doesn't include in his yearly income blogs. Somehow he still considers himself retired, even though he relies on that supplemental income to provide for his family.

Your stated goal is to retire in five years. This is possible only if you're willing to live in poverty, able to start and sell a successful business, or through gambling (either in a casino or on the stock market).

Google "firecalc" you can run sims

You do know that 25k is just an example, right? If you want more, you just have to save more. it might take you a few more years, but if you want a more luxurious lifestyle, then you can justify working those extra years to afford it. Personally, I could live quite well on $25k annually without ever feeling impoverished.

You are right, though. MMM makes quite a bit more than he lets on, though he says he doesn''t need the extra income, and I believe him. The blog alone pulls in $400k in revenue per year.

My question for you is: what are you going to do with your time when you're 40 y/o, retired and living on 30-35 k a year. That's not enough money to allow you to travel comfortably, especially with a family, or to spend discretionary income on anything meaningful. Basically what you'll be doing is vegetating in your shitty apartment with internet access and thousands of hours on your hands. That sounds miserable to me!

$25k is a convenient example because it's achievable in a short amount of time by someone with a high income. When you start using realistic numbers you end up seeing that it takes decades of dedicated saving to achieve financial independence.

Your contrived example has someone earning $100k after-tax, saving 75% of that, it still takes them 9 years, and even then they only have enough because they're somehow able to avoid capital gains tax on the drawdown.

Double that person's spending (for instance, give them a wife and kids) and it'll take them 18 years to reach financial independence. Include capital gains tax in the drawdown and you can add on a few more years of saving to compensate. You assumed they have a fully-paid off house - most people don't magically get those, they take out a mortgage and spend 15-30 years paying it off. Now you're up to 40 years of saving, just like everyone else in the middle class.

With a paid-off condo in a relatively low-cost of living area, I'd probably be spending ~8k/year in housing costs with utilities. That leaves 27k of the hypothetical 35k. Feeding yourself doesn't cost a whole lot, especially when you're a good cook, so that's maybe another 6k, with 2k for eating out. another 8k, so we're down to 19k. My discretionary income is minimal, and I generally don't need more "stuff" in my life than I can manage, so I don't really buy many things for pleasure anymore. I'll admit I don't have much wanderlust, but there are a few places in the world I'd like to see, preferably before I'm too old to enjoy them. I figure I could probably afford one or two of those trips per year on 19k. Sure, I probably won't stay at a resort where they play CNN in English in the lobby, but that's fine by me.

I'd probably write more, I think, and definitely read more (free libraries FTW). And I'd want to spend more time with friends and family. Hell, maybe I'd even do some charity work, like Meals on Wheels or some shit. I could explore my passion for cooking, which goes hand-in-hand with spending more time with people... or I'd do nothing, and that's fine, too. The ultimate point is that I would decide what to do with my life; I wouldn't have to do something I hate just to live.

I wasn't implying that he magically had a house, I just didn't want to overcomplicate the example.

Also, you can buy a decent piece of property most places for 100-200k these days. I don't think somebody making 100k would need a 30-year mortgage on something like that. You're talking a couple of extra years at most.

And yes, I suppose if you want to marry someone who doesn't work and have three kids, then this plan is going to be a bit harder to pull off, but that doesn't make it a dumb idea in general.

This is me, except I earned about $120k per year and spent about $20k and saved about $300k and bought a house for cash so now my only need in life is to earn $15k per year... yet I still earn $120k so in 2 or 3 years I'll be great, thanks for asking.

This is my sentiment. I can seriously quit all my jobs and be in charge of cooking fries at McDonalds for now until retirement and be OK with the income. Anything more than that is a bonus, and not needed.

$25k is, as you know, about $2100 per month which is certainly not poverty.

...

This guy is like me. And he gets 'it'.

I earn way more than you fucking idiots and I bet you feel like you're better than me when you meet me because you're driving an Acura (2/10) and I drive a Mazda (1/10) but I can buy out your car 10 x over and... your clothes? I laugh at them... the same way you laugh at mine... difference being I can buy better than you'd ever dream of, I just don't see the fucking point.

Go on living your life like a pleb.

What's your point? Define 'poverty' as I'm 'living the dream' and to be real, I spent about $500 more than that each month yet I live in Scottsdale Az and I lease a brand new 2016 car and my daughter goes to the best school district here and I drink too much.

I love how you're trying to simultaneously brag about wealth and frugality.

I love being better than you

I want to be a FIRE NEET is this doable?

But I make more money than you, user.

youtube.com/watch?v=gbU4VRs2rro

I got attacked in for bringing this up.

user kept saying that its statistically impossible and that at most our luckiest bet is we'll be in our late fifties and have a few million put away. There is truth to this and its typical for most Americans (at least boomers) when you look at the economy as a whole.

But looking at particular industries like the Canadian oil patch, its entirely possible to pull something like FIRE off.

My synopsis was:
>No living expenses by living on ancestral property
>200k annual salary in oilfield technical job with a shit load of hours
>Save 90% a year in ETFs
>5% ROI
>At the end of year 3 I'd have nearly 600k

Obviously I know nearly no one has this kind of opportunity, but I was gearing up to try and pull something like this off before oil crashed, probably on a smaller scale.

He was being a dick until he calmed down.

Still have to work for 5-10+ years, depending on needs, income, salary.

This suggests you need about $18k p/y to live. If you save for 5 years you'd have about $1M which could easily earn you at least $18k p/y with shit returns... double, triple or more of that depending on returns of course

Most people simply cannot save enough. Cost of living is too high, income is too low, or some combination of the two.

A lot of the early retirement community live like paupers in order to save as much as they do. When they retire, they'll be in a position where they'll either have to maintain the same lifestyle until they die or eventually go back to work. They don't take into account the rising cost of living as they age, either, which is very risky.

If you save 5x what you spend and still live a comfortable lifestyle, more power to you. Most people can't do that.

It's more healthy to just acknowledge that wealth is a product of either time, hard work, luck, or a combination of the three. You can't circumvent that truth, but you can live in such a way that you enjoy the path to wealth.

Fuck off. The majority of development jobs these days are webdev because management is so frightened of the desktop.

dudes salty I get to use cool shit like go and mongo while he's working on an enterprise Java/oracle project.

>uses hipster toy languages
>thinks anybody envies him
kekity kek kek kek

For anyone yesterday who was asking about capital gains tax, I just checked, and apparently if you make below a certain threshold in taxable income ($37,450 for single filers and $74,900 for married couples), you pay nothing in capital gains tax.