How many years of working and saving do I need to be able to invest enough money and retire early?

how many years of working and saving do I need to be able to invest enough money and retire early?

like how many initial capital do I need to save first?

the kneepads, Jim

figure out how much money you need each year

multiply that number by 25

that's the amount you need invested

don't forget about inflation

you don't need to invest any money or work any years.

you just need to have a business that employs one person and runs a 50% or better profit margin.

Youll be working for money till you die.

You just got to find out how to gradually turn your wagecuck job to at home comfy job.

the 4% rule I think you're referencing to accounts for inflation.

A couple different ways I think about independence OP:

If you own a house and land you can be independent. This, to me, is the most basic form of independence throughout time. You own the house you live in, you grow the food you need, ect. Of course, it's not that simple in this day due to things like property taxes, health insurance, ect.

so modified, if you own a home and can generate enough money to pay for those necessary expenses, you can be independent.

Since housing is the largest expense in most people's budget I think this is the simplest way to think about independence.

So maybe a decent house in your area goes for $200k and you need $1,000 a month to pay for you miscellaneous bills, you can do a simple calculation to determine what your principle must be to cover these expenses. I don't like the 4% rule because I don't think it's accurate in our low interest rate and low inflation rate economy. I think the best way to do this calculation is to find 10 or so investment grade bonds, see what the average yield is, and then account for investment taxes and our target inflation rate. This percentage is higher than 4%. It's probably around 6 - 7%. Of course, unlike what the 4% rate implies, you should reevaluate every year. The early years of retirement are the most risky, and then after say 5 years you would hope that your principle and income has outgrown your original budget.

You can do this without owning a house too but I think owning the house drastically reduces risk.

btw in my example you need around $450k.

I worked and lived at home for three years. No rent, no groceries, didn't buy any stupid Apple shit or new clothes. In three years I had more than enough to mess around with investments. Gonna retire in my mid 30s.

MMM and his wife worked roughly 10 years before they could do it.

Kepp in mind that this was two people making over 100k, living on lesd than 20k a year, and basically bought into the stock market at the bottom of the dot com bubble, so they rode it hard with all that money.

You could replicate this exact method

The S&P can't go like this forever. DCA every month until it crashes and then lump sum invest and bust your ass till the next bubble.

>the 4% rule I think you're referencing to accounts for inflation.

that's not what i was referencing

i need $20,000/year to live

$20,000 * 25 = $500,000

it takes me 10 years to grow my investments to $500,000

10 years of 3% inflation means i now need $27,000/year to live

Why are you multiplying by 25? That's where I got the 4% from.

20,000 * 25 = 500,000
20,000 / 4% = 500,000

500k is realistic, but you could do as low as 300k if you can live off $500/mo. Either as a hobo or owning your own house and being extremely frugal

AlternativeL moving to a 3rd world country..

why are you fixated on 4%?

4% drawdown accounts for inflation during the drawdown period, it does nothing about inflation during the growth period

i'll say again

today i need $20,000/year to live, which is a 4% drawdown on a $500,000 investment

it takes me 10 years to grow my investments to $500,000, i think i've reached my goal

oh wait, 10 years of inflation means that i now need $27,000/year to live, which is a 4% drawdown on a $675,000 investment, so i need to continue growing before i can start drawing down

Also possible with lower amounts if you dump all your money into riskier investments like high-yeild REITs or ETFs or investment groups that buy nothing but junk bonds.

You'd be pretty fucked if a recession hit though.

$50K times the number of years you expect to be alive after retiring.

21 bitcoins is still doable

portfolio return is expected to be 7% on average after inflation

4% safe withdrawal rate is always talked about in the value of the dollar in ~the current year~

you may be retarded

if you don't have $500,000 in investments right now, you cannot set your savings goal to $500,000 because by the time you reach it inflation will mean you need more money

This is correct. The 4% figure from the Trinity study is also only a 95% confidence interval to not end up at $0 before the end of a 30 year retirement.

You may notice a couple problems with that. For example, spend down to your last dollar and you'll have to go back to work after 30 years of NEETdom. You're fucked.

For another, we have reasonable odds of developing artificial organs and other life extension technologies within the coming decades. You may retire at 50 and have another 50 years to go. And by the end of that 50, have another 100 years, etc, etc.

3% to 3.5% seem to be more stable indefinite withdrawal rates.

you make no sense....

You said you were not referencing the 4% rule, and in your response you're explicitly using the 4% in your calcs. I was only wondering why you use 25 in your calcs out of general interest and furthering discussion....no need to get angry over your fucked up maths

multiply by 25 is referencing the 4% rule, yes

but when i said "don't forget about inflation" i was not talking about the drawdown period

as you pointed out, the 4% rule accounts for inflation during the drawdown period

when i said "don't forget about inflation" i was talking about inflation during the growth period