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I've seen a few people online giving up jobs, retiring early because they make enough money trading or investing now. Deja vu all over again.

by rb808 7y ago

sct202 7y ago
I've seen it too, and some of them are doing it on the leaner side (<$500k) on the assumption that if things get bad they can just work a little to make up any shortfalls.
- JKCalhoun 7y ago
  I confess that is my outlook — that I could go back to work to make up for unforeseen shortfalls. (Not retired yet, BTW, but I think about it.) To be sure, jobs could become scarce, unemployment skyrocket — always in motion the future is.... But for myself there is another factor that has been weighing more heavily on me which is, what do I want to do with the time I have left on this planet? I'm not sure if that is orthogonal to the market rally of the past decade and if it has more to do with my age though.
  - perfunctory 7y ago
    > But for myself there is another factor that has been weighing more heavily on me which is, what do I want to do with the time I have left on this planet? Please work on solving climate crisis.
  - hogFeast 7y ago
    Yes, it is related to the rally (we saw this in 06/07). And the time at which jobs become scarce is the time your portfolio is down 50-60% in six months, and you are taking income from a rapidly shrinking pile. Don't risk everything you have for something you don't need.
  - cortesoft 7y ago
    > To be sure, jobs could become scarce, unemployment skyrocket — always in motion the future is.... The problem with that plan (go back to work if investments tank) is that the risks are correlated; if the market crashes, jobs become scarce. Your primary and backup plan are likely to fail at the same time.
- ac29 7y ago
  I wonder where they are retiring. 4% of $500k (considered a "safe" withdrawal for retirees of traditional retirement age) is $20k/year. Even if you own your home outright, thats pretty light anywhere in the US.
  - Digory 7y ago
    Likely planning on heavy withdrawals for a few years until social security kicks in. Would be interesting to imagine a world where US retirees are subject to the same safety nets as younger Americans.
  - sct202 7y ago
    From what I've seen some end up in very non-traditional housing situations abroad or in the states like one woman lives in a train car. The ones who blog about it also pick up side jobs (blogs, gig jobs, light freelancing) to make up a few thousand at least a year. And then none of them have kids or plan on having kids.
JKCalhoun 7y ago
Yeah, I remember. What's the strategy that will work in 2020 Sell everything perhaps.... Or are we setting the stage for the Roaring Twenties? Or did we just exit that decade? Maybe the (20)20's will be seen as the Great(er) Depression. Perhaps we're a decade out of phase with the last century.
- rb808 7y ago
  I remember in 98 a lot of investment managers said we're in a bubble and went conservative. They missed out of a lot of upside and many got fired. Nobody knows whats going to happen this year, probably depends mostly on the election.
  - JKCalhoun 7y ago
    That is my frustration: I've been too conservative too early and missed a chunk of the rally. Only a manager of my own investments so not likely to be fired. ;-)
    - ilikehurdles 7y ago
      If you had been too conservative for all 2018 you'd also have missed out on the few down days that eliminated all gains that year. So even if you sat out for a year due to your imprecise prediction, you'd have come out ahead of others who owned stocks. Problem is predicting which 8-12 month period the down days will happen. Seems like it should be reasonable to able to do that, but predictions of weather patterns over the same time range seem more accurate.
  - Scoundreller 7y ago
    Over time, there have been a lot more up days than bad days, but the bad days are really bad. I remember somewhere that tabulated how much you’d have if you only sat in on the top 100 UP days and top 100 DOWN days, you’d have massive losses. But overall, things go up. So sitting out the market in hopes of missing a down day only works if you know what the down days are, otherwise you’re missing out on the gradual average UP days.
PretzelFisch 7y ago
If they are setting themselves up to live off a 3-4% withdrawal rate they should be safe otherwise it's quite the speculation. Maybe it will work out "No body knows nothing"-- John Bogle
- rb808 7y ago
  3-4% withdrawal rate is not safe in an era of negative rates and high asset prices.
- opo 7y ago
  The Trinity study (which is where the oft-quoted 4% rule seems to have originated) is assuming a max of about 30 years of withdrawals before the money is depleted. If people are retiring early, it isn't clear what a reasonable withdrawal rate would be. >...The 4% refers to the portion of the portfolio withdrawn during the first year; it is assumed that the portion withdrawn in subsequent years will increase with the consumer price index (CPI) to keep pace with the cost of living. The withdrawals may exceed the income earned by the portfolio, and the total value of the portfolio may well shrink during periods when the stock market performs poorly. It is assumed that the portfolio needs to last thirty years. The withdrawal regime is deemed to have failed if the portfolio is exhausted in less than thirty years and to have succeeded if there are unspent assets at the end of the period. https://en.wikipedia.org/wiki/Trinity_study https://en.wikipedia.org/wiki/Trinity_study (Also the wikipedia article has a number of criticisms of the study.)

I've seen a few people online giving up jobs, retiring early because they make enough money trading or investing now. Deja vu all over again.

by rb808 7y ago

I've seen a few people online giving up jobs, retiring early because they make enough money trading or investing now. Deja vu all over again.

sct202 7y ago

I've seen it too, and some of them are doing it on the leaner side (<$500k) on the assumption that if things get bad they can just work a little to make up any shortfalls.

JKCalhoun 7y ago
I confess that is my outlook — that I could go back to work to make up for unforeseen shortfalls. (Not retired yet, BTW, but I think about it.) To be sure, jobs could become scarce, unemployment skyrocket — always in motion the future is.... But for myself there is another factor that has been weighing more heavily on me which is, what do I want to do with the time I have left on this planet? I'm not sure if that is orthogonal to the market rally of the past decade and if it has more to do with my age though.
- perfunctory 7y ago
  > But for myself there is another factor that has been weighing more heavily on me which is, what do I want to do with the time I have left on this planet? Please work on solving climate crisis.
- hogFeast 7y ago
  Yes, it is related to the rally (we saw this in 06/07). And the time at which jobs become scarce is the time your portfolio is down 50-60% in six months, and you are taking income from a rapidly shrinking pile. Don't risk everything you have for something you don't need.
- cortesoft 7y ago
  > To be sure, jobs could become scarce, unemployment skyrocket — always in motion the future is.... The problem with that plan (go back to work if investments tank) is that the risks are correlated; if the market crashes, jobs become scarce. Your primary and backup plan are likely to fail at the same time.
ac29 7y ago
I wonder where they are retiring. 4% of $500k (considered a "safe" withdrawal for retirees of traditional retirement age) is $20k/year. Even if you own your home outright, thats pretty light anywhere in the US.
- Digory 7y ago
  Likely planning on heavy withdrawals for a few years until social security kicks in. Would be interesting to imagine a world where US retirees are subject to the same safety nets as younger Americans.
- sct202 7y ago
  From what I've seen some end up in very non-traditional housing situations abroad or in the states like one woman lives in a train car. The ones who blog about it also pick up side jobs (blogs, gig jobs, light freelancing) to make up a few thousand at least a year. And then none of them have kids or plan on having kids.

JKCalhoun 7y ago

Yeah, I remember. What's the strategy that will work in 2020 Sell everything perhaps.... Or are we setting the stage for the Roaring Twenties? Or did we just exit that decade? Maybe the (20)20's will be seen as the Great(er) Depression. Perhaps we're a decade out of phase with the last century.

rb808 7y ago
I remember in 98 a lot of investment managers said we're in a bubble and went conservative. They missed out of a lot of upside and many got fired. Nobody knows whats going to happen this year, probably depends mostly on the election.
- JKCalhoun 7y ago
  That is my frustration: I've been too conservative too early and missed a chunk of the rally. Only a manager of my own investments so not likely to be fired. ;-)
  - ilikehurdles 7y ago
    If you had been too conservative for all 2018 you'd also have missed out on the few down days that eliminated all gains that year. So even if you sat out for a year due to your imprecise prediction, you'd have come out ahead of others who owned stocks. Problem is predicting which 8-12 month period the down days will happen. Seems like it should be reasonable to able to do that, but predictions of weather patterns over the same time range seem more accurate.
- Scoundreller 7y ago
  Over time, there have been a lot more up days than bad days, but the bad days are really bad. I remember somewhere that tabulated how much you’d have if you only sat in on the top 100 UP days and top 100 DOWN days, you’d have massive losses. But overall, things go up. So sitting out the market in hopes of missing a down day only works if you know what the down days are, otherwise you’re missing out on the gradual average UP days.

PretzelFisch 7y ago

If they are setting themselves up to live off a 3-4% withdrawal rate they should be safe otherwise it's quite the speculation. Maybe it will work out "No body knows nothing"-- John Bogle

rb808 7y ago
3-4% withdrawal rate is not safe in an era of negative rates and high asset prices.
opo 7y ago
The Trinity study (which is where the oft-quoted 4% rule seems to have originated) is assuming a max of about 30 years of withdrawals before the money is depleted. If people are retiring early, it isn't clear what a reasonable withdrawal rate would be. >...The 4% refers to the portion of the portfolio withdrawn during the first year; it is assumed that the portion withdrawn in subsequent years will increase with the consumer price index (CPI) to keep pace with the cost of living. The withdrawals may exceed the income earned by the portfolio, and the total value of the portfolio may well shrink during periods when the stock market performs poorly. It is assumed that the portfolio needs to last thirty years. The withdrawal regime is deemed to have failed if the portfolio is exhausted in less than thirty years and to have succeeded if there are unspent assets at the end of the period. https://en.wikipedia.org/wiki/Trinity_study https://en.wikipedia.org/wiki/Trinity_study (Also the wikipedia article has a number of criticisms of the study.)