FIRE Discussion and Resources

[Lex]

11 hours ago, SuperSaints1877 said:

I don’t get this that the economy will tank. If anything it is more likely to grow. By investing in the global companies of the world you are contributing directly to jobs, research, marketing and sales.  

 

We are dealing in complete hypotheticals here, but if everyone decided to start saving 10%+ of their income you are just taking a huge whack of cash out the economy and many companies would struggle with that. Irrelevant though, cause it will never happen.

For an anecdotal example of this, a friend of mine has been a high earner for about 20 years. He is quite open and almost proud of the fact that he saves absolutely nothing because he's all about living for today etc, he doesn't even have a pension.  He drives nice cars and changes them every year, has all the latest tech kit, lives in an expensive property and goes on luxury holidays. His choices and lifestyle are certainly not wrong, just different, and he's perfectly happy with them.  People on his side of things are far more common than people on the FI side of living, which is how it should be.

For those who may prefer the other side of living, i'd recommend two documentaries on Netflix called 'The Minimalists'. Nothing to do with FI or even finance really, but there is some overlap. Basically about two guys who chose to give up their corporate careers and live on less, they also have a podcast. There's a load of good stuff in there about consumerism and why so many of us buy so much stuff.

[resk]

17 hours ago, strichener said:

If everyone adopts FIRE as a concept then the economy will tank due to the lack of spending.  It is only consumerism that keeps the whole thing going.  Stop that and your Starbucks, Pret etc disappear along with associated jobs.  It's what happens when you move to a service based economy.

Would that actually happen though?  For most people in the tiny minority of folk who are into FIRE, it doesn't mean you never spend money ever again.  It means your incomings exceed your outgoings, because you have a monthly budget or whatever, and the difference is invested.  The outgoings don't stop while you're working or after you finish working.  You're probably more intentional (or downright tight!) with your spending, but that doesn't mean never going to Starbucks if that's how you want to spend your money.  

We should all continue to spend everything we earn on mostly pointless shite, because otherwise some folk might lose their jobs, doesn't really seem to me a valid reason for all of us to work until we die.  

I'm going round in circles a bit now.  I've forgotten what my point is.  Sorry.  

[yoda]

Annie Lowrey had an interesting article on index funds a while ago. 

https://www.theatlantic.com/ideas/archive/2021/04/the-autopilot-economy/618497/

[beefybake]

52 minutes ago, yoda said:

Annie Lowrey had an interesting article on index funds a while ago. 

https://www.theatlantic.com/ideas/archive/2021/04/the-autopilot-economy/618497/

To me, in the main, the only real losers in the rise of passive index funds, are the fund managers of active funds.

And this article is one of those snow jobs that complain about passive funds, and the retail investors who put their money into them.

When John/Jack Bogle set up Vanguard it was directly because he considered that retail investors were being screwed by the

financial services industry, with massive conflicts of interest and high fees, with the result that fund managers got rich, and their customers

got far less than they ought.

 

Here in the UK, in the early 80's, I did some work in Surrey as a computer contractor. I rented a flat in the Virginia Water/Sunningdale area.

At the time, that area was known as 'the stockbroker belt' due to the beautiful big houses, surrounded by lush greenery, private driveways..........

I haven't heard it called by that name for a long time, it's all now occupied by rich foreign people with names I can't pronounce.

Edited March 24, 2022 by beefybake

[yoda]

30 minutes ago, beefybake said:

And this article is one of those snow jobs that complain about passive funds, and the retail investors who put their money into them.

It's not a "snow job" just because you don't like it. There's some good points in it, particularly regarding their market power.

[beefybake]

11 minutes ago, yoda said:

It's not a "snow job" just because you don't like it. There's some good points in it, particularly regarding their market power.

It's a 'snow job' because...

1.  It throws a lot of arguable stuff in the air, depending on who you talk to.

2. Downplays, or shows little emphasis to, the alleged main topic. In this case, passive index investing, and the primary reason

    for their existence. 

[beefybake]

3 minutes ago, beefybake said:

It's a 'snow job' because...

1.  It throws a lot of arguable stuff in the air, depending on who you talk to.

2. Downplays, or shows little emphasis to, the alleged main topic.

   In this case, passive index investing, and the primary reason for their existence. 

   Which is that, due to the low fees, they generate better long term returns for investors.

 

Edited March 24, 2022 by beefybake

[SuperSaints1877]

56 minutes ago, beefybake said:

To me, in the main, the only real losers in the rise of passive index funds, are the fund managers of active funds.

And this article is one of those snow jobs that complain about passive funds, and the retail investors who put their money into them.

When John/Jack Bogle set up Vanguard it was directly because he considered that retail investors were being screwed by the

financial services industry, with massive conflicts of interest and high fees, with the result that fund managers got rich, and their customers

got far less than they ought.

 

Here in the UK, in the early 80's, I did some work in Surrey as a computer contractor. I rented a flat in the Virginia Water/Sunningdale area.

At the time, that area was known as 'the stockbroker belt' due to the beautiful big houses, surrounded by lush greenery, private driveways..........

I haven't heard it called by that name for a long time, it's all now occupied by rich foreign people with names I can't pronounce.

As an aside I was working down in that area during the 80s too. I remember being on the Reading to Waterloo line when we pulled into Staines. Whereupon the whole hushed carriage heard the shouting of a Scots drunk probably from Greenock uttering the line “Staines! Fcuking staines? That’s whit we throw at windaes!” Thinking back that was probably my first sighting of @virginton

[SuperSaints1877]

@Satoshi This is the audio version of J L Collins book Simple Path to Wealth. It’s a book I enjoy. He wrote it for his daughter. Although US centric the underlying concepts are the same. 

Traditional IRAs (sometimes abbreviated to tIRA) and 401ks are equivalent to UK pensions such as SIPPs, stakeholders, and personal pensions. Tax is deferred on the way in and on growth inside the scheme, withdrawals cannot be made (without penalty) until reaching a certain age, and withdrawals are taxable when made.

The closest UK equivalent to a Roth IRA or Roth 401k would be an ISA. Money paid in is post-tax, but growth inside the scheme is tax free and so are withdrawals. Roths have some age and withdrawal restrictions that ISAs do not have, but that's the gist.

 

[euan2020]

my thought process is quite simple - always spend from  income not savings 

although - income does need to be of reasonable size, and most peoples peak earnings are at 47, so people can afford more as they age

@ one time i was paying 37% of salary into pension @ employer was 16%, basically wiping out the 40% tax bracket - currently pay in 19% and employer is 9% (same employer but different contracts )   

That is on way into savings  - on way out when i plan to take drawdown, do not expect to pay taxes because will be located in are, where overseas earned pensions are not taxed   

 

 

[euan2020]

19 minutes ago, oaksoft said:

That's fair enough but it isn't necessary to get to that position. It's quite possible to live off a bit of the capital as well, providing you can budget a decent lifestyle without running out of money before things like your pension kick in.

Your second sentence there highlights the problem - you risk putting off and putting off and putting off when in actual fact you could quite easily retire a few years earlier.

It's down to each individual to decide though.

i was kind of speaking about current income not retirement income - i didn't want to come across as meaning that saving is easy for everyone, because people have their own cost base, and while the UK average salary is around 35K i think - there is peaks and troughs and figures are distorted by 9-15 Million in London/London Metropolitan Area  

I've always saved one way or another from age 19/20 but the values  have increased significantly this last 12 years, due to salary - so easy to make sweeping statements which are not appropriate for other peoples circumstances as you say

Although as they say - life is for living, and money is not worth so much to you at 80 

I just don't want to be working until the age of my colleagues - although i have colleagues at 63-67 who enjoy coming to work, and being challenged, and continue to plan to work  - although this is all office based and guys are very well paid     

[RH33]

11 hours ago, euan2020 said:

i was kind of speaking about current income not retirement income - i didn't want to come across as meaning that saving is easy for everyone, because people have their own cost base, and while the UK average salary is around 35K i think - there is peaks and troughs and figures are distorted by 9-15 Million in London/London Metropolitan Area  

I've always saved one way or another from age 19/20 but the values  have increased significantly this last 12 years, due to salary - so easy to make sweeping statements which are not appropriate for other peoples circumstances as you say

Although as they say - life is for living, and money is not worth so much to you at 80 

I just don't want to be working until the age of my colleagues - although i have colleagues at 63-67 who enjoy coming to work, and being challenged, and continue to plan to work  - although this is all office based and guys are very well paid     

I'll be lucky if I'm back on the property ladder at 42 so I'll be working until 68 at least. A combination of having kids young and marriage breakdown means I'm only just about to start a job that could be a career but it'll never be mega bucks.

But I'll also be working my bar job as I'll have £800 in rent to pay, social housing is rarer than hens teeth. I'll be relying on a gifted deposit.

Retirement age is creeping up as life expectancy does the same, we're fitter for longer. 

[Shandon Par]

This sounds like the sort of thing the FIRE posse would be interested in:

 

[Satoshi]

I didn't see a thread specifically on the budget and there was some FIRE related news with regards to the removal of the lifetime allowance.

As for the policy itself, it's something to be a bit conflicted about as it's a tax break that will only benefit millionaires. On the other hand, it increases the chances of highly paid individuals staying in work for longer (especially doctors who have a very generous pension scheme they can't opt out of). You would expect / hope highly paid workers are highly paid because they are delivering a lot of value (at least in most cases).

It changes things from a FIRE perspective as if you are a higher tax bracket there is additional incentive to put as much into your pension as possible (or at least enough to push you into a lower tax bracket). The risks of this would be that a labour government could reintroduce it (seems fairly likely) or that in the next 20 years or so they will increase the pension age / when you can access private pension. The age is currently 68 and you can access 10 years before, both seem very likely if not certain to change in coming decades.

France, meanwhile, is striking at the outrageous increase from 62 to 64.

Previously the LTA was just over £1m and max contributions per year at £40k (now £60k). This sounds a lot, on a 4% annualised basis would be £40k per year (which historical research indicates you could comfortably claim for 25 years whilst increasing your base amount).

https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

This is a good site if you want to calculate your current pension situation with 4% a conservative annual interest rate increase. If you are decades away from retirement it might be worth checking your pension is invested in 100% equities rather than a 'life strategy' baseline fund which will contain a chunk of bonds. And certainly maximise your employer contribution where possible (phree money).

You would have to be very wealthy / high earning to be excited about putting £60k rather than £40k into your pension per year, wonder how many people this part of the policy will actually affect.

Edited March 16, 2023 by Satoshi