4 ms·

I am currently taking a sabbatical of sorts after slaving away and saving up for 5 years. I threw most of my savings into index funds, and then set up automati

by pyoung 13y ago

I am currently taking a sabbatical of sorts after slaving away and saving up for 5 years. I threw most of my savings into index funds, and then set up automatic withdrawals to my savings account. This forces me to try and live within a certain budget. If all goes well (i.e. market stays healthy), I will have only spent down a small amount of my savings by the time I return to the labor force. In the mean time, I have been taking some coursera classes, toying with some side projects, and doing some R&R. I highly recommend it for people who can afford to do this.

decadentcactus 13y ago
How much savings did you have? I'm considering doing the same at some point, though my quick glance at index funds makes it seem like I'd get basically nothing. What sort of budget does this afford you?
- TheLegace 13y ago
  Same with me as well, I am doing some work in Forex, but that is proving incredibly difficult. As that is live intraday training. I usually work a contract job for my University but I get my money in lump sums, so I was thinking I could put a sum into some sort of index fund, or even a currency fund.
- pyoung 13y ago
  Vangaurd low cost index funds. Supposedly, you can count on 8-10% annual return. I also did/do some occasional stock picking which has gotten good results (but I wouldn't count on that being sustainable). I probably spend about 20k a year, and have savings in the low 6 digits. I waited until I had 5-10x my annual expenses, but obviously you can do it with less. My main recommendation would to be have at least an extra 6 months of living expenses beyond what you need (so if you are taking a year off, have at least 1.5 yrs of living expenses) in case it takes a while to find work again. The main advantage of saving more than that is you can use the returns from your investments to offset some of your costs a bit.
  - resu 13y ago
    You can also count on index funds to lose 50% of their value in two years in an upcoming crisis. The roaring 90s and mid 2000s isn't a pattern that will continue to repeat itself. The fed can't keep printing the S&P500 up forever. I think made a great decision, but you ought to diversify your nest egg.
    - pyoung 13y ago
      I agree that there is some risk, but I am not sure how I would be able to diversify any more than I already have. I have my money split into about 6 different index funds, primarily diversified globally, although I have a few industry/sector specific funds. And then I have about 30% of my savings in stocks that I picked, most of which are pretty stable companies with fairly long term future/outlook (so they would, in theory, come out of a recession in good shape, even if they took a few hits). If there is some other asset class I am missing, let me know. In the meantime, I think I will take my chances with the market. Worst case, if things get bad, I can just go back to work (left my old company, in a fairly recession proof industry, on good terms)

by pyoung 13y ago

decadentcactus 13y ago

How much savings did you have? I'm considering doing the same at some point, though my quick glance at index funds makes it seem like I'd get basically nothing. What sort of budget does this afford you?

TheLegace 13y ago
Same with me as well, I am doing some work in Forex, but that is proving incredibly difficult. As that is live intraday training. I usually work a contract job for my University but I get my money in lump sums, so I was thinking I could put a sum into some sort of index fund, or even a currency fund.
pyoung 13y ago
Vangaurd low cost index funds. Supposedly, you can count on 8-10% annual return. I also did/do some occasional stock picking which has gotten good results (but I wouldn't count on that being sustainable). I probably spend about 20k a year, and have savings in the low 6 digits. I waited until I had 5-10x my annual expenses, but obviously you can do it with less. My main recommendation would to be have at least an extra 6 months of living expenses beyond what you need (so if you are taking a year off, have at least 1.5 yrs of living expenses) in case it takes a while to find work again. The main advantage of saving more than that is you can use the returns from your investments to offset some of your costs a bit.
- resu 13y ago
  You can also count on index funds to lose 50% of their value in two years in an upcoming crisis. The roaring 90s and mid 2000s isn't a pattern that will continue to repeat itself. The fed can't keep printing the S&P500 up forever. I think made a great decision, but you ought to diversify your nest egg.
  - pyoung 13y ago
    I agree that there is some risk, but I am not sure how I would be able to diversify any more than I already have. I have my money split into about 6 different index funds, primarily diversified globally, although I have a few industry/sector specific funds. And then I have about 30% of my savings in stocks that I picked, most of which are pretty stable companies with fairly long term future/outlook (so they would, in theory, come out of a recession in good shape, even if they took a few hits). If there is some other asset class I am missing, let me know. In the meantime, I think I will take my chances with the market. Worst case, if things get bad, I can just go back to work (left my old company, in a fairly recession proof industry, on good terms)