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You missed an important benefit: expenses are mostly post-tax, so reducing your expenses by $1 may reduce the amount you need to earn by $1.50 - $2. Also, 50%
by ryanwaggoner 10y ago
You missed an important benefit: expenses are mostly post-tax, so reducing your expenses by $1 may reduce the amount you need to earn by $1.50 - $2.
Also, 50% in treasuries seems overly conservative for most investors, especially if they're young. That's basically just going to match inflation. You may have your reasons, just wanted to point that out :)
- itamarst 10y agoOh, huh, good point re post-tax benefit of expenses, hadn't thought of that. I'm pretty conservative regarding investment, yes. Been through two massive bubbles+crashes so far :)
- the_gastropod 10y agoAND the lower your expenses, the lower your 25x* expenses number is, so the less you need to save to be financially independent. * If you are going by the 4% rule http://www.investopedia.com/terms/f/four-percent-rule.asp http://www.investopedia.com/terms/f/four-percent-rule.asp
- adviceadam 10y agoIf you're interested in being financially independent, I would take a look at the following article: https://earlyretirementnow.com/2016/12/07/the-ultimate-guide-to-safe-withdrawal-rates-part-1-intro/ https://earlyretirementnow.com/2016/12/07/the-ultimate-guide... They look at the 4% rule, what it's based on, and see if it's actually valuable for those looking into early retirement.
- carsongross 10y agoBeing 50% in treasuries right now is not particularly conservative. The Schiller P/E ratio was only higher in 1929 and 1999: http://www.multpl.com/shiller-pe/ http://www.multpl.com/shiller-pe/ So, broadly, equities look like a pretty bad deal right now.
- the_gastropod 10y agoThe Schiller P/E has historically been pretty useful, but it's not a great tool for comparing pre 2001 and post 2001 market valuations because of changes in GAAP. Check out http://www.philosophicaleconomics.com/2013/12/shiller/ http://www.philosophicaleconomics.com/2013/12/shiller/ for a more in depth explanation.
- carsongross 10y agoThanks for the link, interesting read.
- itamarst 10y agoThere's also q, which has same result as Shiller P/E 10 but is calculated very differently: http://smithers.co.uk/page.php?id=34 http://smithers.co.uk/page.php?id=34
- ryanwaggoner 10y agoI don't time the market. Studies are really clear that people suck at it. You may be convinced you're the exception. I'm convinced that I'm not :)
- carsongross 10y agoThat's certainly a reasonable position.
- ryanwaggoner 10y agoI'm going to start responding to people who disagree like this :)