Thoughts on Retirement Forum

[Anonymous User]

Looking for feedback from the finance folks. I am hoping to retire early (at least by 50, mid 30s now) and trying to game plan.

I currently have as assets:
$350k in brokerage account
$200k in 401k
$120k in stocks and crypto
Have at least $250k equity in my house (although $500k left on mortgage)
I have a good paying job, making $340k and it is stable

I do have a baby, so that's expensive and I am not frugal so not looking to do FIRE and live off $35k a year in my 50s

Any thoughts on things I should do to be able to comfortably retire in less than 15 years?

[Sackboy]

Become frugal, save at a much higher rate, and find a market that you want to retire in that is low cost of living. Do you have a spouse? Kids? You need to do your calculations adjusting $35k/yr. for inflation. $35k/yr. in 2037 when you potentially retire will not be the same as $35k/yr. in 2057. I wouldn't be investing in crypto at all if you're a FIRE person. It's not a stable investment. It might be gangbusters over the next 15 years or you could have below-market growth (or worse, get wiped out). Just buy VOO/SPY every 2 weeks when your paycheck hits.

[glitched]

What more can you do other than spend less, save more, and invest? Maybe take riskier options to accelerate but you're already in crypto which is as risky as it gets.

You can try to generate passive income (e.g., selling on Amazon, buying property to rent) but those all come with its own risks/investments.

[Sackboy]

What more can you do other than spend less, save more, and invest? Maybe take riskier options to accelerate but you're already in crypto which is as risky as it gets.

You can try to generate passive income (e.g., selling on Amazon, buying property to rent) but those all come with its own risks/investments.

Riskier options can also decelerate the speed of retirement. I know you know that. I just wanted to emphasize that, as it's not something that has been emphasized very much in the now 13 or so year bull market.

Real estate investment is almost always an entirely terrible idea in terms of return unless you leverage the shit out of yourself or find bargain prices on a property, which is pretty much not possible in the current RE market both with the booming prices and a lot of professional, much more sophisticated companies doing the exact same thing.

[Anonymous User]

Become frugal, save at a much higher rate, and find a market that you want to retire in that is low cost of living. Do you have a spouse? Kids? You need to do your calculations adjusting $35k/yr. for inflation. $35k/yr. in 2037 when you potentially retire will not be the same as $35k/yr. in 2057. I wouldn't be investing in crypto at all if you're a FIRE person. It's not a stable investment. It might be gangbusters over the next 15 years or you could have below-market growth (or worse, get wiped out). Just buy VOO/SPY every 2 weeks when your paycheck hits.

OP here. Yes, have a kid and spouse. Spouse does comparably well financially. To be clear, crypto is pretty small investment overall (like 30k), agree won't put anything more into it. Just trying to figure out if anything else besides aggressive brokerage account.

[glitched]

What more can you do other than spend less, save more, and invest? Maybe take riskier options to accelerate but you're already in crypto which is as risky as it gets.

You can try to generate passive income (e.g., selling on Amazon, buying property to rent) but those all come with its own risks/investments.

Riskier options can also decelerate the speed of retirement. I know you know that. I just wanted to emphasize that, as it's not something that has been emphasized very much in the now 13 or so year bull market.

Real estate investment is almost always an entirely terrible idea in terms of return unless you leverage the shit out of yourself or find bargain prices on a property, which is pretty much not possible in the current RE market both with the booming prices and a lot of professional, much more sophisticated companies doing the exact same thing.

For real estate, it really comes down to one thing - location. Even during the 2008 crisis (which directly affected housing), the dip was a only a blip in the areas that people want to live. Prices will continue to rise where there is demand (at least that's what's happened historically for the last several decades). Who knows. Maybe we'll get an unpredictable crash, but mid to long term, real estate should be a good investment as long as rental value is greater than the sum of interest, prop tax, and insurance, meaning anything you put down will be going towards principal.

[Neff]

By the numbers I am in a similar position financially as you.

Having read various articles on this (e.g. Financial Samurai, etc) the sense I have for my own situation is that early retirement (i.e. not working or minimally working, not including leaving biglaw for cushy in-house gig at a large pay cut) is not possible until I have (1) fully paid off primary residence, (2) $2 million in investments broadly defined (401k, stocks, investment real estate equity, dogecoin, etc), and (3) no other debts. That's assuming a medium COL area.

Other factors to consider are how many kids beyond 1 you intend to have and whether you plan to send them to private school. K-12 private for two kids, needless to say, puts virtually any kind of early retirement out of the question.

Given that, as much as I fantasize about "retiring", I know sadly it's not going to happen within the next 5 years for me with 2 kids + non-working spouse, barring an amazing home run on shiba inu coin or similar ridiculous investment.

[Anonymous User]

By the numbers I am in a similar position financially as you.

Having read various articles on this (e.g. Financial Samurai, etc) the sense I have for my own situation is that early retirement (i.e. not working or minimally working, not including leaving biglaw for cushy in-house gig at a large pay cut) is not possible until I have (1) fully paid off primary residence, (2) $2 million in investments broadly defined (401k, stocks, investment real estate equity, dogecoin, etc), and (3) no other debts. That's assuming a medium COL area.

Other factors to consider are how many kids beyond 1 you intend to have and whether you plan to send them to private school. K-12 private for two kids, needless to say, puts virtually any kind of early retirement out of the question.

Given that, as much as I fantasize about "retiring", I know sadly it's not going to happen within the next 5 years for me with 2 kids + non-working spouse, barring an amazing home run on shiba inu coin or similar ridiculous investment.

OP here. Yeah, unfortunately you are probably right, with the kid probably not retiring until they're at least off to college. Hoping to keep the kid in public school, although that means selling the house and moving to the burbs at some point and starting over again on a mortgage. I think if I am aggressive and returns are decent, I could get over the $2m mark in investments within the decade though

[Sackboy]

For real estate, it really comes down to one thing - location. Even during the 2008 crisis (which directly affected housing), the dip was a only a blip in the areas that people want to live. Prices will continue to rise where there is demand (at least that's what's happened historically for the last several decades). Who knows. Maybe we'll get an unpredictable crash, but mid to long term, real estate should be a good investment as long as rental value is greater than the sum of interest, prop tax, and insurance, meaning anything you put down will be going towards principal.

Everyone who loves RE investments never does the math. If they did, they wouldn't love RE investments. Outside of bargain bin properties, incredible scale, or insane leverage, unless your property is booking continuous 5% annual growth and your renting above mortgage interest + taxes + HOA + insurance + repairs, the odds are you would have come out better by just parking your money in an ETF that covers the S&P 500. You can say "well, just buy in a high growth area like CA", but (1) that ties up even more capital, (2) is going to come with higher taxes and HOAs eating away your profits, and (3) you don't whether it will still be a growing market in 5-10-15-etc. years. Why make making money painful and inefficient when you can just log into Vanguard, buy an ETF, and go live your life?

[glitched]

For real estate, it really comes down to one thing - location. Even during the 2008 crisis (which directly affected housing), the dip was a only a blip in the areas that people want to live. Prices will continue to rise where there is demand (at least that's what's happened historically for the last several decades). Who knows. Maybe we'll get an unpredictable crash, but mid to long term, real estate should be a good investment as long as rental value is greater than the sum of interest, prop tax, and insurance, meaning anything you put down will be going towards principal.

Everyone who loves RE investments never does the math. If they did, they wouldn't love RE investments. Outside of bargain bin properties, incredible scale, or insane leverage, unless your property is booking continuous 5% annual growth and your renting above mortgage interest + taxes + HOA + insurance + repairs, the odds are you would have come out better by just parking your money in an ETF that covers the S&P 500. You can say "well, just buy in a high growth area like CA", but (1) that ties up even more capital, (2) is going to come with higher taxes and HOAs eating away your profits, and (3) you don't whether it will still be a growing market in 5-10-15-etc. years. Why make making money painful and inefficient when you can just log into Vanguard, buy an ETF, and go live your life?

All fair points. The key is finding the market with greater than 5% annual growth and finding the right place at the right price. At 8% annual growth with 3% interest and 20% down, your ROI for that year on your capital is 25%, not accounting for any transaction costs. At 13% growth, you're looking at a 50% ROI. Taking transaction costs into consideration, you need to hold for long enough for it to make sense, but it can make sense. It can make a lot of sense if you're careful.

It of course comes with risks (e.g., will it be a growing market). But in the right market, those risks aren't necessarily higher than just dumping into an ETF. If you bought SPY on Sept. 2000 and kept it in there, it would've taken you 7 years to make it back, and then you would've lost it all again in 2009. VTI has had a crazy fckin run the last ten years. I have a lot of money in VTI so I hope it continues, but I'd rather diversify and buy some property along the way.

Each their own.