I fully swear by my own experience that everything said and shown in this video is absolutely correct. My husband and I made that decision to coast for financial freedom as soon as he made his decision to work full time on his business. It took us seven years to achieve the level of financial freedom we enjoy today, and until now we keep growing our nest egg aggressively that we can now afford to not only maintain our lifestyle, we are also able to give financial assistance to our other family members as well. That's the power financial independence can really give you, the ability to help yourself and others whenever and however you want.
There are quite a few people who end up going part-time to start (or even to finish! My grandfather worked his whole life. At some point it was more because he loved the social aspects of his job and wanted to always feel productive as opposed to needed to do it to keep food on the table).
I really feel so sorry for you Americans, having to pay for your health is ludicrous. In the UK it is completely free and we don't have to mortgage a house if someone becomes ill.
I didn't even know what coasting FI meant before this video but this explains why I'm so lazy these days, I was saving 50%+ a year and built a sizeable portfolio in a few years... everything compounding in the background makes me an inevitable millionaire one day since I'm only 30!
I'm at Coast Fire now. I am currently 37 years old. Next year I plan to go back to University to get my Bachelors Degree and teach English as a second language in S.E. Asia as my new career. When I turn 60 years old I plan to fully retire.
I have been on the path to fire for a couple of years. I'm considering coasting for the last couple of years. I was not aware that this was a concept thought, and it makes a lot of sense to let the money work for you. I like your videos and this is one of the best ones in my opinion , great work!
Great video! I'm glad there's actually a name for this. My wife and I have been working on this the past year or so. Especially when we realized FIRE was not realistic for us as mid 40-something yr olds. Goal is to develop our multiple streams of income within the next five to ten years and then Coast going forward. I personally don't mind working if it's entrepreneurial, lower stress and partly passive. I could see myself doing that indefinitely and delay usage of our retirement nest egg.
I just started after our lockdown here in Manila and I feel more optimistic and secure than my peers. This strategy will not only help you save and invest faster, it will also alter your beliefs and lifestyle for the better.
I didn't know this term but it's exactly what I'm planning to do in the coming months. I'm transitioning to a part time, less stressful job plus rental income from a paid off apartment. I'll still be able to grow my investments in the coming years but the heavy lifting I did in the first 20 years of my career mean I can make these choices now.
Love the video! The only thing that I get hung up on with average returns is how negative returns affect total returns; how if you lose 10%, you don’t need 10%, you need more like 11%, which means average returns can often be misleading. Compound can interest also works against you. Keep up the good work.
Awesome content. Great key points, we are currently doing EXACTLY what this video is explaining and started doing so at a young age in order to not only achieve financial independence but to be able to live the life we want! Really enjoyed the Coasting Concept!
Could you maybe make some videos on people who don't have 30-40 years until retirement? Let say....folks in their mid to late forties with 100k in their retirement accounts?
Possibly if there is enough support for it. What specifically would you want to see discussed? Much of the major themes I feel remain largely the same with regards to the importance of savings rates, lowering your burn rate as you age, etc. Is there anything in particular you'd want to focus on? Thanks for the suggestion?
@@NextLevelLife I also would appreciate such content. I am late 40s with a net worth of about 700k which includes stocks and real estate plus I will have a pension at 55. Not sure if I should get rid of my real estate and focus on stable stocks or keep them and wait till they are paid off in 7 to 10 years. The kicker is I might be semi retiring at 50 to start my own touring company business which may take 3 plus years to stabilize. Any advice would be appreciated. Thanks
A touring company sounds like it would be a lot of fun! How much time do you plan on spending each week/month working on that once you're semi-retired? And will your tours be taking place close to home and/or your real estate holdings? Not sure if you are into rental properties or if you were just referring to your personal residence (I will be assuming rental properties for the remainder of this reply), but if you have the rental properties this would be something to seriously consider. They can be pretty time consuming and make your schedule less flexible sometimes (even if you have a property manager) which could potentially put a damper on your lifestyle and business prospects over time. As far as specific advice I'm not sure how much I'll be able to give since I know very little about your situation. And like with most personal financial decisions it will really depend on your specific situation, the lifestyle you want to lead once you leave the workforce, and (in this case) your outlook on the asset classes. Let me explain. Stability: There are some people who are going to retire with little wiggle room in their budget (at least based on the math behind the 4% rule). This can be pretty dangerous especially if your investments take serious hits right after you retire. In this situation, some additional income stability can be a godsend. The pension will certainly help tremendously with income stability, but a similar thing could be said about rental income from real estate holdings (especially once they are fully paid off!). There may be some months where you're in between tenants and don't receive an income, but for the most part, you shouldn't be seeing swings in your income like you would see in the valuations of your stock portfolio. Given that you said your business may take 3+ years to stabilize it is possible that keeping that real estate so that you can reap the benefits of that additional stable income would be well worth it. But if you have a good amount of breathing room (which wouldn't surprise me as it sounds like you're well on your way to becoming a millionaire!) then you may be comfortable with a portfolio comprised mostly of stable stocks even with the business venture on the horizon. This is obviously assuming that the costs associated with the business venture are figured into your expenses to start out in retirement. Again I can't really give any specific advice as I just don't know enough about you or your situation but this may be something worth considering. Outlook: Another thing worth considering is your outlook. Your outlook on the investment classes themselves is such an underrated aspect to consider when entering retirement. If you are not very comfortable with the wild swings of the stock market (and yet still decide to have the vast majority of your nest egg tied up in it after leaving the workforce) it can create a lot of stress in your day-to-day life. In a worst-case scenario this could damage your quality of life so much that you find it difficult to enjoy your golden years much at all (or worse yet drive yourself into an early grave due to the stress). How likely something like that is to affect you is something only you can truly answer, but it is worth thinking about. Lifestyle: Also, lifestyle is obviously going to play a key role in your ultimate decision. Like I said at the top of this reply some investments simply take more time and effort (and possibly money) to maintain than others. Sometimes this is perfectly fine. After all, there are many people who do genuinely love real estate (toilets and all!). However, if you're not one of those people you'll have to ask yourself whether it's worth it to maintain those types of investments that are a drag on your lifestyle (even if they come with some monetary perks). I know this was a bit all-over-the-place, but I hope you found some of it relevant. Thanks for the comment and feedback about the potential future video idea!
@@NextLevelLife I plan on working the touring company "full" time. (6 to 8 hours per day) but it will in no way replace our current incomes. Our plan is to relocate to Spain as that is where my wife and step children are from so no, the tours will not be taking place where my properties are which are in Canada. I am leaning towards liquidation so we can focus on the touring company but they do cash flow well but would they would be be near impossible to self manage, so I may have to hire professionals which would not be the end of the world but yes, you are correct, they can be a pain. Both my wife and I are low maintenance and we value freedom and experiences more than material things but I do want to have the piece of mind of having secure and stable investments that provide passive income that at least keep up with inflation and ultimately provide an annual $40,000 a year income which according to my calcs at 4%, we would need a million in investments. Thanks so much as any insight, ideas and thoughts are truly appreciated!
I agree with Sean Rank I would love to see more geared for folks in their 40s who started to invest and how coast FI works in that age group. I would appreciate you running some of the same scenarios you described in this video but for an older person
Nice. This is the kind of fire I want to implement since I don’t plan on retiring. But I would keep investing whatever surplus I have so I can realize even better gains.
Good for you,not everyone can retire,and when I say that I dont mean as in most people cannot retire,what I mean is not everyone can retire even if they have the ABILITY to,because thats how they are.
I really do like the concept of doing the work or the hard part upfront so that you don't have to worry about it. I also prefer the FI part over the RE part of FIRE. If you can make streams of income that are predominantly passive to where you are Financially Independent, then you can Retire Early whenever you want. However, if you Retire Early and something goes awry in your savings/401K/etc. then you may suddenly no longer be Financially Independent. So, FI + large emergency fund = Total FIRE ?
That's a thought that's been occurring to me quite a lot recently. I've been considering doing an examination of things like the 4% rule while also taking into account things like large emergency funds & retirement side hustles/passive income. I think it would be interesting to see how much of a difference they make in various conditions Also, love where your head is at with the passive income strategy :)
I’m working on doing an entrepreneurial version of CoastFI - maybe it’s just coastFI - basically building my side businesses to the point where they sustain my expenses while my assets grow in the background. Anyway fun video!
What's crazy is that this--taxable investing, ie, the S&P-500--doesn't even take into consider how most people also have an employer 401k, maybe a roth, pension, and so on.
But how to do it while remaining single? Unless you'll find someone who also doesn't want kids. I keep noticing this math assumes you're married, which is annoying for me.
@@occultninja4 I'm single. Now. Had a couple wives that weren't on the same page. I have more money being single than I ever had being married. You may not have the second income that a "couple" has, but you are the ONLY one with access to your checking account. :)
@@waynemiller6070 Yeah I get that vibe, that unless you find someone who shares your financial mindset, you're better off single, but if you're single, the lack of the second income screws up the math for FIRE, unless you work over 40 hours or have a really high paying job or hustle. But definitely, being single and only having your expenses and no other expenses is heavenly.
@@occultninja4 Well, of course it takes work. Sometimes a lot of work. But if you put in the time on the right things now, you will have all the time you want later. I would encourage you to not waste your productive time on unproductive activities. Good luck.
I wish all these Financial Planning/Independence videos would have plans that start in your 30s. So many of us didn't have this educational know-how 10 years ago when we were 25, even if we had the money. I can save a lot, but I want a video that shows how it would look for me and roughly how much I need to put in, not for the lucky 25 year olds who still have more time on their side.
I'd say that if you can't do the very basic math required for your case, then you probably should not look into this type of financial plan and get help!
Just set the salary you want to live off of. Then use the formula: $XX, XXX/0.04 which will give you the total amount of money you need saved to get that. Then go and play around with an online compound interest calculator to help you figure out how much time and money is needed to reach that goal. For example if you put away around 39000 dollars a year for 10 years, you could then live off of 26000 dollars till you die, or you could keep working and in another 10 years (20yrs total) you could live off of 72000 dollars till you die. By then that maybe 50-59yrs of age. But had you retired 10 yrs earlier and withdrew 26000 every year youd still retire with over a million dollars. Of course I made a ton of assumptions, like youd get a consistent 10% return, and I didnt adjust for inflation, but I also assumed youd put the same amount of money away and that youd make the same amount each year. If you want to learn more I suggest you check out 'monkeynomics101' by TFM (turd flinging monkey). He took his channel on youtube down but youll find it, its i think a 2hr long video but you need only watch the first 15 or so minutes where he teaches how to retire in the 1% on a limited salary, the rule of 72 and he also accounts for people starting in their 30s. Cheers
I don't agree with paying off your home early. If you pay 4% on your mortgage, paying off your home early is less of a gain than you would investing that money, ESPECIALLY when you consider that your later payments are much less due to amortization. Why pay down debt that is less than 3% effective interest at the time when you can get 7% return on an investment?
I feel it largely depends on what you're trying to achieve. There's numerous reasons to go with either choice. Part of paying off the home early is about risk management as you don't need to have as large of an emergency fund when you have no payments (which is even more important once you are retired or if the economy crashes and you lose your ability to earn an income for a while). Another is about keeping your burn rate low (to either get more out of your income in retirement, invest more month to month during your working years [which depending on your situation could help to make up for the different in yields between the debts and market returns], or achieve financial independence quicker [based on the math behind the 4% rule]). Still others view the guaranteed return of paying off the debt outweighs the potential excess returns of investing in the market. Sure 7% is pretty achievable over the long-term when investing, but over the course of a year (or even a few) 7% may be an overly optimistic or pessimistic assumption. Again it all depends on what you value and what you are trying to achieve. Thanks for sharing your thoughts!
much of this is based on a healthy market returning 7% on average. We should ensure to have good savings too, in order to ride out extended bearish times.
Of course, if you're committed to geo-arbitrage, then you may be able to target a much cheaper yet equally prosperous lifestyle. E.g., if you're earning in Hong Kong but plan on retiring in Chiang Mai, then the current monthly expenses are going to be much higher than the monthly expenses in retirement.
Careful kids, I was thinking this way in my twenties, but the stock market returns in the first decade of the 2000s were essentially flat, definitely not the compounded 7%. I’ll hit Fire eventually, but it will be closer to normal retirement age.
@@Bigboss-xe6lm No, I didn’t market time, but the money I made prior to 2000 didn’t see any net growth until 2012 (check an S&P500 chart). So I’m just saying that the video’s premise that you can save early and then just cruise is questionable, because there may be an entire decade “lost” to no growth.
However the returns since that time have been absolutely phenomenal. As long as you have a long time horizon, none of that matters.
3 роки тому+2
@@BardWannabe So? The last 10 year more than made up for it. Thats how market works and thats why we should invest long time. Because there are periods where nothing happens and then there are periods like few last year where the maret skyrockets. There is nothing to be careful about, if you know this and have the right expectations.
Decide how much you would like to spend per month (let's say example $5000). Multiply that by 12 months per year. ($5000 x 12 = $60,000). Then assume a reasonable interest rate, 4%. ($60,000/0.4 = 1.5 million). So you would need 1.5 million for retirement. Now, I put 1.5M into an investment calculator (like www.calculator.net/investment-calculator.html) and start playing with the numbers. If you have zero to start with and you put away $4000 a month, you can get to 1.5M in 20 years. If you put away $10,000 a month, it will only take 10 years. P.S. I am not a financial advisor. I hope this helps!
This makes sense assuming that the stock market will give you a return of 7%. 7% is average historical return...look at where we are right now...if you begin investing now, or even before 2008, that’s one hell of an emotional roller coaster. For me, relying on mostly capital gains and reinvesting my dividends in hopes that the stock will appreciate higher is too risky for me. Good explanation though!
This would actually be the best time to invest in capital gains, provided that you don't need the money invested in the next 10years. The market is at a discount and if your overall strategy is market growth....this is the best time to invest. Now if you need money for living and did not give yourself a cushion where you have to sell assets to meet your expenses...this is where you are going to have a big issue
You only invest the money you don't need now. If you set your investment target to 10-15 years, this is the best time to invest. Learning how long term investing works makes it much less stressful.
Having your money do nothing, or sit in a high interest bank account is even more risky. Because your money is losing value due to inflation every year. around 2-3% a year.
People talking about F.I.R.E...I just don't understand. You can't even access those funds in retirement accounts until you're 59.5 years old. So unless you dump a TON of money into a taxable account, you can't exactly "retire" now can ya?
Planning to retire in 30 years and planning to live on the same amount as you are now makes no sense. You would need to adjust your future spend for inflation making your FI number nearly double.
If you pay attention to the calculation of the annual return for the investments the inflation is already factored in. The average return of the S&P 500 is 9-10% but the video factored in inflation and put it at 7% instead.
I'm curious what the numbers are if you wanted to coast for say 10 years or so. We're eliminating debt and developing our multiple streams of income and plan to coast on them from ages 55 until.
How did you get $750,000? P * .07 = $30,000 P = $428,571 So don't they just need about $430,000 a year, which grows at 7%, so that makes them a passive income of $30,000?
$750,000 is what they need when using the 4% rule. 4% of 750,000 is 30,000. they can’t use 7% a year because of inflation (2%) and a buffer 1% for years the market doesn’t go up 7%
Of course there is a calculation of education vs. early life income. I spent most of my 20s pursuing PhD and making connections, saving absolutely nothing. But I was able to get much better jobs right afterwards, so in all I probably have the same savings as if I worked through my 20s, but a much more interesting and rewarding job. So, it's not always about quantity and time-in-market.
I'm intrigued and a little concerned by the 4% rule being thrown around in the FIRE community. The FIRE community is exactly who shouldn't be using it, since it came from a study of a 30 year retirement window. I can see someone retiring at 65 using a 4% withdrawal rate, because there are good chances you could live to be 95. That's just one part of it. When you factor in a longer (much longer) retirement span, diversification (which can severely dilute return rate), taxes on withdrawals and a contingency fund, a FIRE withdrawal rate that would hold up would be a lot less than 4%, and we can easily arrive this by running an excel down historical returns and seeing how far it holds up. I know this video isn't about the "4% rule", but I heard it mentioned, so...
In any tax advantaged account if you reach 100 × your annual contribution limits you can stop contributing. Take a Roth IRA. $6k limit right now so that means $600k. If the S&P 500 continues to average 10% per year that means when you reach $600k the next 10% return will be $60k. Your $6k contribution accounts for 10% of that return or 1% of your total wealth (10% of 10%). If that $600k dropped 50% to $300k you now add a whopping 2% to your total - again, the machine runs itself now. Bottom line is that at that point you are better off putting your money towards other investments which have not reached that self-perpetuity. Keep watch over it though.
Coast FI's ok, but doesn't inspire like the FIRE term 'cause by its own definition, there's no retiring early part. It always reminds me of cruise control on the highway.... oh wait, I guess people tend to like cruise control. Not me though, actual cruise control makes me feel lazy and literally makes me lose interest in driving. Same with Coast FI, I get the appeal of no longer having to put one's foot on the gas, but.... ugh, if someone's already had the gumption to get to a certain level of FI, why not go full force? it just seems like a midway point, and not an end in itself
What is the equation for any age number for this coasting growth chart so if im 30 and i still want to retire at 55 what would the eqaution be to find out the number of years for coasting
I don't understand how investing 30k an nually could result on 750k in 3y9m... And investing 2,5k monthly over 45 months could only result on 112,5k? Sure, by the time the couple is 55y.o the money would be USD 750k if they stopped investing at 29 yo, but the living cost when they are 55y.o surely 750k worth less that it is today? Is there something I miss? Because I feel like there is..
I think you got it wrong love. He said if you invest (at 25 y/o) 30K per year for 3 years, 9 months at an average of 7% return, you would have $122,000 by the age of 28/29. If you were to then STOP investing any more money but simply let that $122K compound, by the age of 55 (goal retirement age), at a rate of return of 7%, your portfolio would have naturally grown to $750K, so you would be FI and able to withdraw 4% (30K) to live comfortably. The point he was making is that it would only take just under 4 years of investing, then you can stop and simply ‘coast’ to retirement by watching your investments grow. ALSO, the proposed 7% was adjusted for inflation so ideally he’s basing it on the money having the same purchasing power 30 years from now. Hope you understand! Xx
Like the concept and I get the principle point of Coasting FIRE. I'd be a little more conservative on some of the assumptions. 7% growth? I'd make that 6%. They invest 50% of their gross income...Really don't feel that's feasible for a growing family. They are 25....They haven't experienced life yet. Thus, I would assume 24% savings rate and move jobs to a company that matches with another 6%. Finally, who lives on $30k? iphone, broadband, car, insurance, house, vacations. Come on, the point of life is to live life.... Their budget is a little aggressive. Still, nice work on the numbers.
Coast fire seems pointless to me. If I'm working I'm still gonna put money aside and retire even earlier than if I just let it coast. Just because I've achieved the amount where I can coast I won't stop saving and start spending pointlessly.
It all depends. Sure you'd put away money if you can, but the point is that you can now afford to take a job that you may enjoy more, but that doesn't pay enough to have anything left over after your expenses, so you CAN'T put any more money aside. I hit coast fire a few years ago. I switched to a much lower paying job that I enjoy a lot more than my previous one, I am still putting some money away for retirement, but not nearly as much as I was able to at my last job. Mostly my retirement fund is growing itself based on the returns on the investments. My current target for "full" retirement is about 10 years from now, though honestly I could probably afford to do so almost any time now depending on the lifestyle I want in retirement. That said, I also enjoy my new job enough that I don't really have any pressing need to stop doing it, and I find it quite fulfilling, another thing humans actually need in their lives.
Why did you not adjust their monthly expense with inflation? $30,000 after an inflation of 2% for 30 years will be $54,261 applying the 4% rule and multiplying the yearly expense by 25 we get : $13,56,525 That is almost double the 750,000$ you are taking in your calculations! To achieve this amount they would have to follow the calculations that you did for the $60,000, just to maintain their current standard of living.
Really good video, but it would be more powerful if more realistic annual lifestyle costs were used. $1,300 per month is pretty much impossible even if you’re mortgage is paid off. People will still need to pay property taxes, homeowners insurance, medical insurance premiums, utilities, phone, auto insurance, and home maintenance expenses. A $1,300 per month budget can only work if you’re single and eat Ramen noodles for each meal.
I am not sure where you are getting $1300 from. If a married couple made 60k a year they could save 30k tax free in a 401k. That would leave 2200 for living expenses which is possible to live on in some parts of the country. In others it doesn't cover rent. Ultimately you choose how much taxes you want to pay by the property you choose to live in.
"Adjusted for Inflation"... This is a really big assumption. It is the difference between living on $30,000 and living on $15,000. At a 3% inflation rate, after only 24 years, living on $30,000 would be equivalent to living on $15,000 today. Don't get me wrong, there's nothing wrong with living on that amount, I am doing it right now, but most people are going to draw different assumptions based on the way this is being presented here. If what you really mean is that their returns are actually 10% and not 7%, then that is different, but I don't think that is what is being presented here.
How are you living on that much? Are you in a safe area or rural area? Are you south, mid west? North east, north west? Do you have your own business, or kids? Does your spouse work?
"Assuming they managed to earn 7% per year after inflation." Unrealized capital gains is not earnings. As the s&p currently yields only 1.5 dividend, the stock market in America has become a ponzi. If money stops going in it collapses. I buy a stock for a penny higher then if is currently trading and everyone sees a unrealized capital gain in their portfolio. The value of your portfolio is not the same as money. Until you have sold at a profit you made nothing in capital gains. Stick with safer cash flow investments. Stocks are risky.
@@seifeltohamy define "get anywhere". I am enjoying life with a fully paid off house and car, a beautiful family, as much free time as I want, and a career I find very fulfilling. Compared to anyone else I know who are climbing the corporate ladder I'd say I'm "somewhere"and with less stress and more enjoyment.
@@Green__one I'm not talking about climbing the corporate ladder I'm talking about being the ladder itself, it's not just about the house you live it's also about the second or third house you go on holiday in? It's not about having a car to get you from point A to point B it's about constantly selling what you have to upgrade to a newer car every couple of years and finally it is about being able to afford the latest medical care and do get the best doctors and much more
@@seifeltohamy no point in having 3 houses, but no time to visit them. I already have the best car ever made, and in any civilized country you don't need more money to get better medical care. He who dies with the most toys still dies. Might as well have fun along the way, and you don't get that dying behind your office desk.
Yea, true be told, these videos are really aimed at high value viewers. That said however, the basics are still very good, and the advice worth following. I am on less than half the assumed income, and worked my entire life only wishing this kind of info was available when I was a young lad. Thankfully though, I am still young enough to have had enough of a working life remaining to put some of the advice to good use so that I am now a few years from retirement and only want to work 2 days a week in my 60s, and not full time like my colleagues.
Ironic making assumptions of 7% per year in income when right now is the worst weeks in stock market history, and probably the beginnings / middle of a market crash.
@@rootstone9883 Ummmmm ... there are people who don't have decades. And yes, I personally am out of this market in T-Bonds now. My cash flow is still from my R/E, although who knows how long until tenants have difficulty paying their rent. It is a mess now. Personally I out of stocks until a vaccine announced.
@@jonb3189 If the volatility of stock market is too much, then don't invest in to stocks. The 7% talked about in this video is an annualized average of a 10 year investment. It is very likely that, that period has a stock crash in it. If you don't have a decade in you, then this video is probably not meant for you. Nothing really wrong with that, financial plans should be tailored to ones specific situation.
No excuse for not saving & investing of course - but this reasoning is flawed : inflation will kill John & Jane on the long run if they stick to this simplistic plan. Biden decided it is time for inflation to make its come-back, so this video is now obsolete unfortunately. FIRE is doomed, I hate to say it.
The math on this video is terrible. You expect constant rate of return. How does your model account for the 35% crash in the stock market of the last 2 months. That was a 5 year lose in returns by your 5%-7% annual calculation. Not only that 5% to 7% return is terrible. My best crypto trade this year is (+300%) I'm not talking about Bitcoin. You should find a better vehicle then the one you're recommending. My recommendation would be real estate, cryotocurrency, real estate notes could provide a better return than this. Most people can't drop 30,000 a year to make your ridiculous numbers work but they can drop two to five grand and trade something. Trade value is real value and moving your money is more valuable than the ridiculous statements that you guys making these videos. You also learn nothing doing this. You let others do your work and you pay fees for someone else to manage your money.
Heith Miller my house hold has several sources of income not including the stock market. I am shooting for $15000 per month after bills. With something like that we would be able to still put away a ton of cash to invest. The key is have cash flow for life. Get that done and you don’t need to worry about %.
Every single point you are making is missing the mark by a mile. The 7% is an average annual return over a 10 year period, hence it also calculates the market crashes. This isn't a get rich fast scheme, quite the opposite. The 7% comes from the S&P 500 index, which 9-10% annually minus 2-3% inflation. The 30 000 per year savings is for the couple so 15k/person. That is very doable. Also it's not his model. This model has been around for quite some time. Nowhere does it say that they have to let someone else manage their money. For an average person it is much better to just invest in passive index funds on monthly basis and not touch it for a decade. Your 300% investment is very nice, but it doesn't mean anything if it only represents 1% of your entire portfolio. It's all about context.
Taxes take a small chunk, but not necessarily that much. If you're living on 30k/yr then your marginal tax rate is extremely low. Additionally some of what you withdraw is tax free (e.g. TFSA in Canada, IRA in the USA, original principle in any margin account).
I fully swear by my own experience that everything said and shown in this video is absolutely correct. My husband and I made that decision to coast for financial freedom as soon as he made his decision to work full time on his business.
It took us seven years to achieve the level of financial freedom we enjoy today, and until now we keep growing our nest egg aggressively that we can now afford to not only maintain our lifestyle, we are also able to give financial assistance to our other family members as well.
That's the power financial independence can really give you, the ability to help yourself and others whenever and however you want.
I have a coworker that has dropped to 3 days a week at work and keeps her job just for the health insurance benefits.
There are quite a few people who end up going part-time to start (or even to finish! My grandfather worked his whole life. At some point it was more because he loved the social aspects of his job and wanted to always feel productive as opposed to needed to do it to keep food on the table).
@@NextLevelLife I'll probably be able to do that as well here in Brazil.
That's batista fire
I really feel so sorry for you Americans, having to pay for your health is ludicrous.
In the UK it is completely free and we don't have to mortgage a house if someone becomes ill.
@@thelegend9816 must be nice
I love this strategy I achieved lean F.I.R.E. at 25 years old and now I just work because I want to not because I need to.
good, thanks for bragging.
You invest in index Funds or more aggressively/riskily?
I didn't even know what coasting FI meant before this video but this explains why I'm so lazy these days, I was saving 50%+ a year and built a sizeable portfolio in a few years... everything compounding in the background makes me an inevitable millionaire one day since I'm only 30!
I'm at Coast Fire now. I am currently 37 years old. Next year I plan to go back to University to get my Bachelors Degree and teach English as a second language in S.E. Asia as my new career. When I turn 60 years old I plan to fully retire.
That's awesome to hear! Well done :)
I am a nurse and I work 3 days a week most of the time but want to move to only 2 days a week.
I have been on the path to fire for a couple of years. I'm considering coasting for the last couple of years. I was not aware that this was a concept thought, and it makes a lot of sense to let the money work for you. I like your videos and this is one of the best ones in my opinion , great work!
Essentially the more you invest now, the more time compound interest can work, so the faster it'll snowball...
Great video! I'm glad there's actually a name for this. My wife and I have been working on this the past year or so. Especially when we realized FIRE was not realistic for us as mid 40-something yr olds. Goal is to develop our multiple streams of income within the next five to ten years and then Coast going forward. I personally don't mind working if it's entrepreneurial, lower stress and partly passive. I could see myself doing that indefinitely and delay usage of our retirement nest egg.
I just started after our lockdown here in Manila and I feel more optimistic and secure than my peers. This strategy will not only help you save and invest faster, it will also alter your beliefs and lifestyle for the better.
I didn't know this term but it's exactly what I'm planning to do in the coming months. I'm transitioning to a part time, less stressful job plus rental income from a paid off apartment. I'll still be able to grow my investments in the coming years but the heavy lifting I did in the first 20 years of my career mean I can make these choices now.
Great video! My goal is to be able to retire in 15 years, it's gonna be tough but I try to make some kind of tiny progress every day.
You can do it!
Love the video! The only thing that I get hung up on with average returns is how negative returns affect total returns; how if you lose 10%, you don’t need 10%, you need more like 11%, which means average returns can often be misleading. Compound can interest also works against you. Keep up the good work.
I agree. We should be using the stock market’s real rate of return which has been about 6% over the last 100 years.
Awesome content. Great key points, we are currently doing EXACTLY what this video is explaining and started doing so at a young age in order to not only achieve financial independence but to be able to live the life we want! Really enjoyed the Coasting Concept!
Could you maybe make some videos on people who don't have 30-40 years until retirement? Let say....folks in their mid to late forties with 100k in their retirement accounts?
Possibly if there is enough support for it. What specifically would you want to see discussed? Much of the major themes I feel remain largely the same with regards to the importance of savings rates, lowering your burn rate as you age, etc. Is there anything in particular you'd want to focus on? Thanks for the suggestion?
@@NextLevelLife I also would appreciate such content. I am late 40s with a net worth of about 700k which includes stocks and real estate plus I will have a pension at 55. Not sure if I should get rid of my real estate and focus on stable stocks or keep them and wait till they are paid off in 7 to 10 years. The kicker is I might be semi retiring at 50 to start my own touring company business which may take 3 plus years to stabilize. Any advice would be appreciated. Thanks
A touring company sounds like it would be a lot of fun! How much time do you plan on spending each week/month working on that once you're semi-retired? And will your tours be taking place close to home and/or your real estate holdings? Not sure if you are into rental properties or if you were just referring to your personal residence (I will be assuming rental properties for the remainder of this reply), but if you have the rental properties this would be something to seriously consider. They can be pretty time consuming and make your schedule less flexible sometimes (even if you have a property manager) which could potentially put a damper on your lifestyle and business prospects over time.
As far as specific advice I'm not sure how much I'll be able to give since I know very little about your situation. And like with most personal financial decisions it will really depend on your specific situation, the lifestyle you want to lead once you leave the workforce, and (in this case) your outlook on the asset classes. Let me explain.
Stability:
There are some people who are going to retire with little wiggle room in their budget (at least based on the math behind the 4% rule). This can be pretty dangerous especially if your investments take serious hits right after you retire. In this situation, some additional income stability can be a godsend.
The pension will certainly help tremendously with income stability, but a similar thing could be said about rental income from real estate holdings (especially once they are fully paid off!). There may be some months where you're in between tenants and don't receive an income, but for the most part, you shouldn't be seeing swings in your income like you would see in the valuations of your stock portfolio. Given that you said your business may take 3+ years to stabilize it is possible that keeping that real estate so that you can reap the benefits of that additional stable income would be well worth it.
But if you have a good amount of breathing room (which wouldn't surprise me as it sounds like you're well on your way to becoming a millionaire!) then you may be comfortable with a portfolio comprised mostly of stable stocks even with the business venture on the horizon. This is obviously assuming that the costs associated with the business venture are figured into your expenses to start out in retirement.
Again I can't really give any specific advice as I just don't know enough about you or your situation but this may be something worth considering.
Outlook:
Another thing worth considering is your outlook. Your outlook on the investment classes themselves is such an underrated aspect to consider when entering retirement. If you are not very comfortable with the wild swings of the stock market (and yet still decide to have the vast majority of your nest egg tied up in it after leaving the workforce) it can create a lot of stress in your day-to-day life. In a worst-case scenario this could damage your quality of life so much that you find it difficult to enjoy your golden years much at all (or worse yet drive yourself into an early grave due to the stress). How likely something like that is to affect you is something only you can truly answer, but it is worth thinking about.
Lifestyle:
Also, lifestyle is obviously going to play a key role in your ultimate decision. Like I said at the top of this reply some investments simply take more time and effort (and possibly money) to maintain than others. Sometimes this is perfectly fine. After all, there are many people who do genuinely love real estate (toilets and all!). However, if you're not one of those people you'll have to ask yourself whether it's worth it to maintain those types of investments that are a drag on your lifestyle (even if they come with some monetary perks).
I know this was a bit all-over-the-place, but I hope you found some of it relevant. Thanks for the comment and feedback about the potential future video idea!
@@NextLevelLife I plan on working the touring company "full" time. (6 to 8 hours per day) but it will in no way replace our current incomes. Our plan is to relocate to Spain as that is where my wife and step children are from so no, the tours will not be taking place where my properties are which are in Canada. I am leaning towards liquidation so we can focus on the touring company but they do cash flow well but would they would be be near impossible to self manage, so I may have to hire professionals which would not be the end of the world but yes, you are correct, they can be a pain. Both my wife and I are low maintenance and we value freedom and experiences more than material things but I do want to have the piece of mind of having secure and stable investments that provide passive income that at least keep up with inflation and ultimately provide an annual $40,000 a year income which according to my calcs at 4%, we would need a million in investments. Thanks so much as any insight, ideas and thoughts are truly appreciated!
I agree with Sean Rank I would love to see more geared for folks in their 40s who started to invest and how coast FI works in that age group. I would appreciate you running some of the same scenarios you described in this video but for an older person
Nice. This is the kind of fire I want to implement since I don’t plan on retiring. But I would keep investing whatever surplus I have so I can realize even better gains.
An excellent plan!
Retired at 29. I'm 33 now on a fixed income.
Thats amazing! I hope to do the same.
Really! How is that even possible?
Ehab Barakat If only there was some kind of video, perhaps on UA-cam, that explained it...
Good for you,not everyone can retire,and when I say that I dont mean as in most people cannot retire,what I mean is not everyone can retire even if they have the ABILITY to,because thats how they are.
Retired? Or sugar daddy?
24 now, wish I had started when I was 18.
I would use coasting to save enough to coast and afterwards pay off mortgage. After that either continue current job or get less stressful job
I really do like the concept of doing the work or the hard part upfront so that you don't have to worry about it. I also prefer the FI part over the RE part of FIRE. If you can make streams of income that are predominantly passive to where you are Financially Independent, then you can Retire Early whenever you want. However, if you Retire Early and something goes awry in your savings/401K/etc. then you may suddenly no longer be Financially Independent. So, FI + large emergency fund = Total FIRE ?
That's a thought that's been occurring to me quite a lot recently. I've been considering doing an examination of things like the 4% rule while also taking into account things like large emergency funds & retirement side hustles/passive income. I think it would be interesting to see how much of a difference they make in various conditions Also, love where your head is at with the passive income strategy :)
I’m working on doing an entrepreneurial version of CoastFI - maybe it’s just coastFI - basically building my side businesses to the point where they sustain my expenses while my assets grow in the background. Anyway fun video!
What's crazy is that this--taxable investing, ie, the S&P-500--doesn't even take into consider how most people also have an employer 401k, maybe a roth, pension, and so on.
Great video, fresh viewpoints! Highly appreciated. Thanks!!
I plan to retire in my mid 40s!!! Childfree.
Same
But how to do it while remaining single? Unless you'll find someone who also doesn't want kids. I keep noticing this math assumes you're married, which is annoying for me.
@@occultninja4 I'm single. Now. Had a couple wives that weren't on the same page. I have more money being single than I ever had being married. You may not have the second income that a "couple" has, but you are the ONLY one with access to your checking account. :)
@@waynemiller6070 Yeah I get that vibe, that unless you find someone who shares your financial mindset, you're better off single, but if you're single, the lack of the second income screws up the math for FIRE, unless you work over 40 hours or have a really high paying job or hustle.
But definitely, being single and only having your expenses and no other expenses is heavenly.
@@occultninja4 Well, of course it takes work. Sometimes a lot of work. But if you put in the time on the right things now, you will have all the time you want later. I would encourage you to not waste your productive time on unproductive activities. Good luck.
I just hear talking I don’t understand what’s being explained
Keep reading, watching, and learning until it makes sense. You will be glad you did, I promise!
@K Jhnsn Not so basic in the real world.While it is definitely basic,its just that people dont know,that explains why Eric feels this way.
I wish all these Financial Planning/Independence videos would have plans that start in your 30s. So many of us didn't have this educational know-how 10 years ago when we were 25, even if we had the money. I can save a lot, but I want a video that shows how it would look for me and roughly how much I need to put in, not for the lucky 25 year olds who still have more time on their side.
I'd say that if you can't do the very basic math required for your case, then you probably should not look into this type of financial plan and get help!
Just set the salary you want to live off of. Then use the formula: $XX, XXX/0.04 which will give you the total amount of money you need saved to get that. Then go and play around with an online compound interest calculator to help you figure out how much time and money is needed to reach that goal.
For example if you put away around 39000 dollars a year for 10 years, you could then live off of 26000 dollars till you die, or you could keep working and in another 10 years (20yrs total) you could live off of 72000 dollars till you die. By then that maybe 50-59yrs of age. But had you retired 10 yrs earlier and withdrew 26000 every year youd still retire with over a million dollars.
Of course I made a ton of assumptions, like youd get a consistent 10% return, and I didnt adjust for inflation, but I also assumed youd put the same amount of money away and that youd make the same amount each year.
If you want to learn more I suggest you check out 'monkeynomics101' by TFM (turd flinging monkey). He took his channel on youtube down but youll find it, its i think a 2hr long video but you need only watch the first 15 or so minutes where he teaches how to retire in the 1% on a limited salary, the rule of 72 and he also accounts for people starting in their 30s.
Cheers
Once you reach coast fire, might as well keep contributing when and if we can.
A lot of people do that :)
Thanks for sharing this information. I wish I knew this 10 years ago lol
Glad it was helpful!
Add this to the list of things I wish I knew when I was 18
Oh, I thought the title was "Why I love roasting FIRE". My bad.
Great video and excellent advice
Thanks!
I don't agree with paying off your home early. If you pay 4% on your mortgage, paying off your home early is less of a gain than you would investing that money, ESPECIALLY when you consider that your later payments are much less due to amortization. Why pay down debt that is less than 3% effective interest at the time when you can get 7% return on an investment?
I feel it largely depends on what you're trying to achieve. There's numerous reasons to go with either choice.
Part of paying off the home early is about risk management as you don't need to have as large of an emergency fund when you have no payments (which is even more important once you are retired or if the economy crashes and you lose your ability to earn an income for a while).
Another is about keeping your burn rate low (to either get more out of your income in retirement, invest more month to month during your working years [which depending on your situation could help to make up for the different in yields between the debts and market returns], or achieve financial independence quicker [based on the math behind the 4% rule]).
Still others view the guaranteed return of paying off the debt outweighs the potential excess returns of investing in the market. Sure 7% is pretty achievable over the long-term when investing, but over the course of a year (or even a few) 7% may be an overly optimistic or pessimistic assumption.
Again it all depends on what you value and what you are trying to achieve. Thanks for sharing your thoughts!
Would you go borrow money at 4% interest rate to invest and hope for a 7% return? On paper yes, but in practice no because you'd consider the risk.
Looks good on paper, does not work in real life, paid off home is a must
I love this guy!!!
I don't know where John and Jane live, but 700k won't even last 5 years in my city.
My criticism of FIRE is they rarely mention kids (and paying for kids' college) and paying for a house.
Well the average cost of a child from 0-18 is about 230-250k
for FIRE to work. you need a decent to high income to start with. it wont workk if u barely making in life
The college tuition is just an MSRP. I'd suggest you head over to Choose FI podcast to learn more. One of the earlier episodes goes over this.
It helps that John and Jane don't pay any taxes. Neat trick.
Cool. I've hit my lean coast numbers already.
Well done, Clayton!
much of this is based on a healthy market returning 7% on average. We should ensure to have good savings too, in order to ride out extended bearish times.
Of course, if you're committed to geo-arbitrage, then you may be able to target a much cheaper yet equally prosperous lifestyle. E.g., if you're earning in Hong Kong but plan on retiring in Chiang Mai, then the current monthly expenses are going to be much higher than the monthly expenses in retirement.
Careful kids, I was thinking this way in my twenties, but the stock market returns in the first decade of the 2000s were essentially flat, definitely not the compounded 7%. I’ll hit Fire eventually, but it will be closer to normal retirement age.
Why the long face? Did you time the market or go lump sum in a bad time?
@@Bigboss-xe6lm No, I didn’t market time, but the money I made prior to 2000 didn’t see any net growth until 2012 (check an S&P500 chart). So I’m just saying that the video’s premise that you can save early and then just cruise is questionable, because there may be an entire decade “lost” to no growth.
A quick look with the Portfolio Visualizer says $10k in the S&P 500 in 2000 would only be $13,599 in 2012. :(
However the returns since that time have been absolutely phenomenal. As long as you have a long time horizon, none of that matters.
@@BardWannabe So? The last 10 year more than made up for it. Thats how market works and thats why we should invest long time. Because there are periods where nothing happens and then there are periods like few last year where the maret skyrockets. There is nothing to be careful about, if you know this and have the right expectations.
Can you talk about fat retirement with a coast strategy and where to plug in those numbers to get an idea?
Decide how much you would like to spend per month (let's say example $5000). Multiply that by 12 months per year. ($5000 x 12 = $60,000). Then assume a reasonable interest rate, 4%. ($60,000/0.4 = 1.5 million). So you would need 1.5 million for retirement. Now, I put 1.5M into an investment calculator (like www.calculator.net/investment-calculator.html) and start playing with the numbers. If you have zero to start with and you put away $4000 a month, you can get to 1.5M in 20 years. If you put away $10,000 a month, it will only take 10 years. P.S. I am not a financial advisor. I hope this helps!
Inspiring.
This makes sense assuming that the stock market will give you a return of 7%. 7% is average historical return...look at where we are right now...if you begin investing now, or even before 2008, that’s one hell of an emotional roller coaster. For me, relying on mostly capital gains and reinvesting my dividends in hopes that the stock will appreciate higher is too risky for me. Good explanation though!
This would actually be the best time to invest in capital gains, provided that you don't need the money invested in the next 10years. The market is at a discount and if your overall strategy is market growth....this is the best time to invest. Now if you need money for living and did not give yourself a cushion where you have to sell assets to meet your expenses...this is where you are going to have a big issue
You only invest the money you don't need now. If you set your investment target to 10-15 years, this is the best time to invest. Learning how long term investing works makes it much less stressful.
@@MrKelzos No one can predict the future. Some investors will learn that the hard way.
@@rootstone9883 No one can predict the future. Some investors will learn that the hard way.
Having your money do nothing, or sit in a high interest bank account is even more risky. Because your money is losing value due to inflation every year. around 2-3% a year.
People talking about F.I.R.E...I just don't understand. You can't even access those funds in retirement accounts until you're 59.5 years old. So unless you dump a TON of money into a taxable account, you can't exactly "retire" now can ya?
Actually there are several ways to access that money early but there's only so much that can be covered in a single video :)
Planning to retire in 30 years and planning to live on the same amount as you are now makes no sense. You would need to adjust your future spend for inflation making your FI number nearly double.
If you pay attention to the calculation of the annual return for the investments the inflation is already factored in. The average return of the S&P 500 is 9-10% but the video factored in inflation and put it at 7% instead.
Part of the planning is fracturing in inflation.
I'm curious what the numbers are if you wanted to coast for say 10 years or so. We're eliminating debt and developing our multiple streams of income and plan to coast on them from ages 55 until.
How are you guys calculating your coast fire number? I tried walletburst but the numbers don't seem right.
If I'm 82, will this still work for me?
How did you get $750,000?
P * .07 = $30,000
P = $428,571
So don't they just need about $430,000 a year, which grows at 7%, so that makes them a passive income of $30,000?
$750,000 is what they need when using the 4% rule. 4% of 750,000 is 30,000. they can’t use 7% a year because of inflation (2%) and a buffer 1% for years the market doesn’t go up 7%
Of course there is a calculation of education vs. early life income. I spent most of my 20s pursuing PhD and making connections, saving absolutely nothing. But I was able to get much better jobs right afterwards, so in all I probably have the same savings as if I worked through my 20s, but a much more interesting and rewarding job. So, it's not always about quantity and time-in-market.
You can get a PhD at any age, but you can’t get compounding / time in the market back ever. I want a PhD but value freedom way more.
I'm intrigued and a little concerned by the 4% rule being thrown around in the FIRE community. The FIRE community is exactly who shouldn't be using it, since it came from a study of a 30 year retirement window. I can see someone retiring at 65 using a 4% withdrawal rate, because there are good chances you could live to be 95. That's just one part of it. When you factor in a longer (much longer) retirement span, diversification (which can severely dilute return rate), taxes on withdrawals and a contingency fund, a FIRE withdrawal rate that would hold up would be a lot less than 4%, and we can easily arrive this by running an excel down historical returns and seeing how far it holds up.
I know this video isn't about the "4% rule", but I heard it mentioned, so...
The fire community use it to explain the consept. I never mez someone on the internet using the rule. People go safe and use at least 3.5% instead
4% rule is just a target. People who save most of their income don't suddenly switch and start spend money like a drunken sailor.
My wife and I are not doing any rules. We are building investments to have $15,000 per month with out W2 jobs and after normal bills are paid.
@@SmithFam2323 what the.. 😂 in which currency, lol
What can you possibly need 15k for *after* your bills are paid
@@angelikalaser7778 Dat yacht maintenance ain't cheap
In any tax advantaged account if you reach 100 × your annual contribution limits you can stop contributing. Take a Roth IRA. $6k limit right now so that means $600k. If the S&P 500 continues to average 10% per year that means when you reach $600k the next 10% return will be $60k. Your $6k contribution accounts for 10% of that return or 1% of your total wealth (10% of 10%). If that $600k dropped 50% to $300k you now add a whopping 2% to your total - again, the machine runs itself now. Bottom line is that at that point you are better off putting your money towards other investments which have not reached that self-perpetuity. Keep watch over it though.
I don't get it. I need to see the formula.
I'm really new to this.
Thanks
No problem :)
Is this them both saving together or into separate accounts
Coast FI's ok, but doesn't inspire like the FIRE term 'cause by its own definition, there's no retiring early part. It always reminds me of cruise control on the highway.... oh wait, I guess people tend to like cruise control. Not me though, actual cruise control makes me feel lazy and literally makes me lose interest in driving. Same with Coast FI, I get the appeal of no longer having to put one's foot on the gas, but.... ugh, if someone's already had the gumption to get to a certain level of FI, why not go full force? it just seems like a midway point, and not an end in itself
What is the equation for any age number for this coasting growth chart so if im 30 and i still want to retire at 55 what would the eqaution be to find out the number of years for coasting
I don't understand how investing 30k an nually could result on 750k in 3y9m... And investing 2,5k monthly over 45 months could only result on 112,5k? Sure, by the time the couple is 55y.o the money would be USD 750k if they stopped investing at 29 yo, but the living cost when they are 55y.o surely 750k worth less that it is today? Is there something I miss? Because I feel like there is..
I think you got it wrong love. He said if you invest (at 25 y/o) 30K per year for 3 years, 9 months at an average of 7% return, you would have $122,000 by the age of 28/29. If you were to then STOP investing any more money but simply let that $122K compound, by the age of 55 (goal retirement age), at a rate of return of 7%, your portfolio would have naturally grown to $750K, so you would be FI and able to withdraw 4% (30K) to live comfortably. The point he was making is that it would only take just under 4 years of investing, then you can stop and simply ‘coast’ to retirement by watching your investments grow. ALSO, the proposed 7% was adjusted for inflation so ideally he’s basing it on the money having the same purchasing power 30 years from now. Hope you understand! Xx
Like the concept and I get the principle point of Coasting FIRE. I'd be a little more conservative on some of the assumptions. 7% growth? I'd make that 6%. They invest 50% of their gross income...Really don't feel that's feasible for a growing family. They are 25....They haven't experienced life yet. Thus, I would assume 24% savings rate and move jobs to a company that matches with another 6%. Finally, who lives on $30k? iphone, broadband, car, insurance, house, vacations. Come on, the point of life is to live life.... Their budget is a little aggressive.
Still, nice work on the numbers.
I think your not accounting for the taxes you pay when you withdraw from your retirement accounts (RRSP in Canada and 401k in US)?
Back door Roth IRA - tax free.
Coast fire seems pointless to me. If I'm working I'm still gonna put money aside and retire even earlier than if I just let it coast.
Just because I've achieved the amount where I can coast I won't stop saving and start spending pointlessly.
It all depends. Sure you'd put away money if you can, but the point is that you can now afford to take a job that you may enjoy more, but that doesn't pay enough to have anything left over after your expenses, so you CAN'T put any more money aside.
I hit coast fire a few years ago. I switched to a much lower paying job that I enjoy a lot more than my previous one, I am still putting some money away for retirement, but not nearly as much as I was able to at my last job. Mostly my retirement fund is growing itself based on the returns on the investments. My current target for "full" retirement is about 10 years from now, though honestly I could probably afford to do so almost any time now depending on the lifestyle I want in retirement. That said, I also enjoy my new job enough that I don't really have any pressing need to stop doing it, and I find it quite fulfilling, another thing humans actually need in their lives.
Why did you not adjust their monthly expense with inflation?
$30,000 after an inflation of 2% for 30 years will be $54,261
applying the 4% rule and multiplying the yearly expense by 25 we get : $13,56,525
That is almost double the 750,000$ you are taking in your calculations!
To achieve this amount they would have to follow the calculations that you did for the $60,000, just to maintain their current standard of living.
these numbers sound great , except when you retire before 65 , you'll have to buy your own health insurance. and that isn't cheap.
Or, you could live in a country where health insurance just isn't needed. Like every other advanced economy in the world other than the USA.
Saving for retirement in less time than a typical auto loan. 👍
I like this video but you did not account for inflation.....
Really good video, but it would be more powerful if more realistic annual lifestyle costs were used. $1,300 per month is pretty much impossible even if you’re mortgage is paid off. People will still need to pay property taxes, homeowners insurance, medical insurance premiums, utilities, phone, auto insurance, and home maintenance expenses. A $1,300 per month budget can only work if you’re single and eat Ramen noodles for each meal.
I am not sure where you are getting $1300 from.
If a married couple made 60k a year they could save 30k tax free in a 401k.
That would leave 2200 for living expenses which is possible to live on in some parts of the country. In others it doesn't cover rent.
Ultimately you choose how much taxes you want to pay by the property you choose to live in.
i just can't finish the video .. when i saw the expected retired age is 55y ...too old to consider yourself Financial Independence.
"Adjusted for Inflation"...
This is a really big assumption. It is the difference between living on $30,000 and living on $15,000. At a 3% inflation rate, after only 24 years, living on $30,000 would be equivalent to living on $15,000 today.
Don't get me wrong, there's nothing wrong with living on that amount, I am doing it right now, but most people are going to draw different assumptions based on the way this is being presented here.
If what you really mean is that their returns are actually 10% and not 7%, then that is different, but I don't think that is what is being presented here.
he stated after inflation
@@arkinrahl That is a pretty unreasonable after inflation return.
@@blackdahliastudios263 No, not really. The S&P 500 index returned around 10 percent annually.
How are you living on that much? Are you in a safe area or rural area? Are you south, mid west? North east, north west? Do you have your own business, or kids? Does your spouse work?
@@Bigboss-xe6lm That's since inception.
I wish you make barista fire video 🙏
122 k at 7% in 20 years is 472k
"Assuming they managed to earn 7% per year after inflation." Unrealized capital gains is not earnings. As the s&p currently yields only 1.5 dividend, the stock market in America has become a ponzi. If money stops going in it collapses. I buy a stock for a penny higher then if is currently trading and everyone sees a unrealized capital gain in their portfolio. The value of your portfolio is not the same as money. Until you have sold at a profit you made nothing in capital gains. Stick with safer cash flow investments. Stocks are risky.
Ok
A real businessman only retires when he drops dead on his desk
Not everyone aspires to be a "real businessman". Some people aspire to enjoy life.
@@Green__one These people are the same people who never get anywhere in life
@@seifeltohamy define "get anywhere". I am enjoying life with a fully paid off house and car, a beautiful family, as much free time as I want, and a career I find very fulfilling. Compared to anyone else I know who are climbing the corporate ladder I'd say I'm "somewhere"and with less stress and more enjoyment.
@@Green__one I'm not talking about climbing the corporate ladder I'm talking about being the ladder itself, it's not just about the house you live it's also about the second or third house you go on holiday in? It's not about having a car to get you from point A to point B it's about constantly selling what you have to upgrade to a newer car every couple of years and finally it is about being able to afford the latest medical care and do get the best doctors and much more
@@seifeltohamy no point in having 3 houses, but no time to visit them. I already have the best car ever made, and in any civilized country you don't need more money to get better medical care.
He who dies with the most toys still dies. Might as well have fun along the way, and you don't get that dying behind your office desk.
My advice is unless you hate your job work till your last day!
4:15 income : 60,000 dollar
LMAO you're already top 1% usa and 0.01% world.
Who's the target audience of this video?
Yea, true be told, these videos are really aimed at high value viewers.
That said however, the basics are still very good, and the advice worth following.
I am on less than half the assumed income, and worked my entire life only wishing this kind of info was available when I was a young lad. Thankfully though, I am still young enough to have had enough of a working life remaining to put some of the advice to good use so that I am now a few years from retirement and only want to work 2 days a week in my 60s, and not full time like my colleagues.
Ironic making assumptions of 7% per year in income when right now is the worst weeks in stock market history, and probably the beginnings / middle of a market crash.
Jon B as long as they keep their money in, they will overall get 7% or more I think.
So what? If the time frame is in decades what does one or two 50% drop mean? Or do you not understand how averages work?
@@rootstone9883 Ummmmm ... there are people who don't have decades. And yes, I personally am out of this market in T-Bonds now. My cash flow is still from my R/E, although who knows how long until tenants have difficulty paying their rent. It is a mess now. Personally I out of stocks until a vaccine announced.
@@jonb3189 If the volatility of stock market is too much, then don't invest in to stocks. The 7% talked about in this video is an annualized average of a 10 year investment. It is very likely that, that period has a stock crash in it.
If you don't have a decade in you, then this video is probably not meant for you. Nothing really wrong with that, financial plans should be tailored to ones specific situation.
So FIRE doesnt and cant apply to a man who pays child support.
Well, at least you have a definitive date when the payments stop, unlike lifelong alimony.
In today's ZIRP world, a 7% return is very high, and therefore they have probably invested in risky things.
No excuse for not saving & investing of course - but this reasoning is flawed : inflation will kill John & Jane on the long run if they stick to this simplistic plan. Biden decided it is time for inflation to make its come-back, so this video is now obsolete unfortunately. FIRE is doomed, I hate to say it.
STONKS ONLY GO UP LOL
Bro
NONE of these assumptions are realistic.
this all makes sense except for the fact that that you arent factoring in inflation
Most of inflation is in the housing market
2:58 He mentions it is savings adjusted for inflation
ah yes the rente class making $$$$ even while asleep. the ponzi is over my friends.
The math on this video is terrible. You expect constant rate of return. How does your model account for the 35% crash in the stock market of the last 2 months. That was a 5 year lose in returns by your 5%-7% annual calculation. Not only that 5% to 7% return is terrible. My best crypto trade this year is (+300%) I'm not talking about Bitcoin.
You should find a better vehicle then the one you're recommending. My recommendation would be real estate, cryotocurrency, real estate notes could provide a better return than this. Most people can't drop 30,000 a year to make your ridiculous numbers work but they can drop two to five grand and trade something. Trade value is real value and moving your money is more valuable than the ridiculous statements that you guys making these videos. You also learn nothing doing this. You let others do your work and you pay fees for someone else to manage your money.
Heith Miller my house hold has several sources of income not including the stock market. I am shooting for $15000 per month after bills. With something like that we would be able to still put away a ton of cash to invest. The key is have cash flow for life. Get that done and you don’t need to worry about %.
Every single point you are making is missing the mark by a mile.
The 7% is an average annual return over a 10 year period, hence it also calculates the market crashes. This isn't a get rich fast scheme, quite the opposite. The 7% comes from the S&P 500 index, which 9-10% annually minus 2-3% inflation. The 30 000 per year savings is for the couple so 15k/person. That is very doable. Also it's not his model. This model has been around for quite some time. Nowhere does it say that they have to let someone else manage their money. For an average person it is much better to just invest in passive index funds on monthly basis and not touch it for a decade.
Your 300% investment is very nice, but it doesn't mean anything if it only represents 1% of your entire portfolio. It's all about context.
I think your not accounting for the taxes you pay when you withdraw from your retirement accounts (RRSP in Canada and 401k in US)?
Taxes take a small chunk, but not necessarily that much. If you're living on 30k/yr then your marginal tax rate is extremely low. Additionally some of what you withdraw is tax free (e.g. TFSA in Canada, IRA in the USA, original principle in any margin account).