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If you don't invest, then you're not going to retire any time soon. In fact, all your frugal living and saving is critically offset by the potential revenues l

If you don't invest, then you're not going to retire any time soon. In fact, all your frugal living and saving is critically offset by the potential revenues lost due to a failure to invest.

hkmurakami 11y ago
If he claims he can retire in 5 years, then I assume he's done the math for it. Even a very rosy scenario of 8% compound interest pretax over said 5 years wouldn't change the 5 years to something dramatically smaller. Besides, not everyone is psychologically equipped to handle market swings -- particularly what we've seen in 2016 so far.
- johnloeber 11y ago
  Regarding your first point: According to the graphic in the article, he has a net income of 6200 CHF/mo. He says he saves 80%, that's 5000 CHF/mo, or 60k CHF annually. The graphic says he's 27. I assume he started work at 22. At a constant salary, he will have saved 300k thus far, and will save another 300k in the next five years. So in five years, he will have accumulated 600k savings in cash. That's not sufficient for early retirement -- not even for MMM, who retired on 600k cash + 200k house. I suppose he could make it happen if he bought an extremely cheap apartment and lived more frugally than MMM, but that does not strike me as having a satisfactory quality of life. Regarding your second point: While it is true that investing over the span of 5 years does not significantly change his cash stack, investing matters looking forward: he definitely needs to invest if he plans to retire early on mid six-figure sum.
  - hkmurakami 11y ago
    Whether he can retire on 600k would depend on where he chooses to live. Certainly it would be financial suicide to try to do so in the SF Bay Area. You'd likely be able to live quite well in many parts of SE Asia. He may very well be able to afford a decent life in various parts of the world. Regarding looking forward, one could theoretically just buy an annuity (I don't actually recommend this), or live in a country with a deflationary economy. "Investing" in the most commonly cited way, isn't the only way to provide cash flow from a nest egg and protect against inflation. I myself run a very conventional asset allocation for my own portfolio. Generally speaking, what you say is prudent advice and is good wisdom. But that doesn't mean that there are other, particular, ways to go about designing one's financial life (sort of like edge cases), and his choices shouldn't automatically be considered nonstarters.
emerongi 11y ago
If he accounts for inflation in his retirement plan, then your argument is moot.

If you don't invest, then you're not going to retire any time soon. In fact, all your frugal living and saving is critically offset by the potential revenues lost due to a failure to invest.

hkmurakami 11y ago

If he claims he can retire in 5 years, then I assume he's done the math for it. Even a very rosy scenario of 8% compound interest pretax over said 5 years wouldn't change the 5 years to something dramatically smaller. Besides, not everyone is psychologically equipped to handle market swings -- particularly what we've seen in 2016 so far.

johnloeber 11y ago
Regarding your first point: According to the graphic in the article, he has a net income of 6200 CHF/mo. He says he saves 80%, that's 5000 CHF/mo, or 60k CHF annually. The graphic says he's 27. I assume he started work at 22. At a constant salary, he will have saved 300k thus far, and will save another 300k in the next five years. So in five years, he will have accumulated 600k savings in cash. That's not sufficient for early retirement -- not even for MMM, who retired on 600k cash + 200k house. I suppose he could make it happen if he bought an extremely cheap apartment and lived more frugally than MMM, but that does not strike me as having a satisfactory quality of life. Regarding your second point: While it is true that investing over the span of 5 years does not significantly change his cash stack, investing matters looking forward: he definitely needs to invest if he plans to retire early on mid six-figure sum.
- hkmurakami 11y ago
  Whether he can retire on 600k would depend on where he chooses to live. Certainly it would be financial suicide to try to do so in the SF Bay Area. You'd likely be able to live quite well in many parts of SE Asia. He may very well be able to afford a decent life in various parts of the world. Regarding looking forward, one could theoretically just buy an annuity (I don't actually recommend this), or live in a country with a deflationary economy. "Investing" in the most commonly cited way, isn't the only way to provide cash flow from a nest egg and protect against inflation. I myself run a very conventional asset allocation for my own portfolio. Generally speaking, what you say is prudent advice and is good wisdom. But that doesn't mean that there are other, particular, ways to go about designing one's financial life (sort of like edge cases), and his choices shouldn't automatically be considered nonstarters.

emerongi 11y ago

If he accounts for inflation in his retirement plan, then your argument is moot.