Coast FIRE Explained
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- Опубліковано 22 жов 2024
- Coast FIRE is a popular financial independence strategy because relative to the other FIREs, it's relatively easy.
FIRE stands for "Financial Independence, Retire Early" and involves achieving financial security before the traditional retirement age of 65 and exiting the workforce on your own terms. Coast FIRE is a lower-stakes financial independence strategy. It involves aggressively saving when you're young to hit a target amount in investments that will allow your portfolio to grow to an amount sufficient to retire on without any additional contributions. This way you can "coast" to a comfortable retirement, even if you never add another dime.
For example, let's say you need a $1.2 million dollar portfolio at age 65 to ensure a comfortable and secure retirement. You’re currently 25 years old and want to achieve Coast FIRE by age 30. Assuming you can get an average return of 8%, you need a portfolio of at least $81,162 by age 30 to ensure you’ll have $1.2 million at retirement.
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It's excellent for efficient people! Whenever I think of the word lazy, I think efficient. Having options is fantastic for living life to the full. I love this concept.
You nailed this! Coast fire is the best FIRE by far. I'll reach it by 40 (projecting). Its like a semi-retirement. You only have to cover basic living expenses after that. So many options after you reach coast fire. Work less hours, increase your lifestyle, invest more, save for upcoming expenses (sinking funds), etc. Just such an awesome thing.
This is so funny, I have done exactly this but I didn't know it had a name. I just found out by accident a couple of months ago (age 30) that I'd never have to add an extra dollar to my stocks/ETFs account to be able to retire at age 64. I had never calculated this number before and thought I would still be way off!
I started with stocks and ETFs at age 26 (inspired by this blog I stumbled onto in 2015.. called Money After Graduation) and I've worked as a musician since, so not even a highly paid profession!
Thank you Bridget, for changing the course of my life with your blog! (now business)
At 40 we’ve reached our Coast number to retire at 50. How we did it:
1) Start investing day one of employment in 401k, ira
2) pay off student loan debts fast
3) live below our means
4) started a side business at 35 and invest most if not all profits in brokerage and solo 401k. Our brokerage and passive income will bridge us to 59 1/2
Once your debts are paid monthly needs are surprisingly lower than you think.
Good luck everyone and don’t forget to live today and prepare for tomorrow!
I think you should have emphasized a bit more what the "coast" in Coast FIRE refers to: being able to work much less (either in time or intensity) because your only financial worry is covering your living expenses.
To factor in inflation, maybe take 8% interest return rate and subtract 3-4% inflation to figure out how much one needs to save and invest. Is there a (backwards compound interest) calculator that we can use that helps determine the upfront investment needed?
yeah i believe you are correct, and I think that is how the 8% was created because the actual average return for most index funds are a bit higher but they subtracted a few percent for inflation. You are planning for say 1,000,000 in todays dollars but since you altered the growth rate for inflation, when you actually retire that number (the 1,000,000) should be a lot higher. I think it is just easier for us to understand and plan for it in todays dollars. But yes subtract 3-4% for inflation, exactly what I was thinking when she began discussing this.
Great explainer!
Thanks Terri!
///***PLEASE BEAUTIFUL PEOPLE, IT´S TIME TO WAKE UP! IT IS NOT A JOKE***
***Revelation 6:6***, KJV: "And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine."
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***The bible says that the shortage and the financial crisis will be so brutal that you only would be able to buy some wheat with the salary of the whole day. Each and every prophecy is being fulfilled.***
Luke 12:56 (KJV)
***Ye hypocrites***, ye can discern the face of the sky and of the earth; but how is it that ye do not discern this time?
MARANATHA !!! 🎺🎺🎺 WHAT DOES MARANATA MEAN? MATTHEW 4:17 / ROMANS 10: 9 / JOHN 8:58
Matthew 24:39 ^
And they had no care till the waters came and took them all away; so will be the coming of the Son of man.
COME INTO THE ARK, YOU ARE ON TIME MY FRIEND: THERE IS STILL PLACE. REPENT!!! YOU HAVE TO BORN AGAIN. MARANATHA !!!
P.S: 1 Corinthians 2:9 But as it is written: “Eye hath not seen, nor ear heard, neither have entered into the heart of man the things which God hath prepared for them that love Him.”
-
***THIS IS A FATHER'S PROMISE***: JJohn 14:23: Jesus answered and said unto him, “If a man love Me, he will keep My words; and My Father will love him, and We will come unto him and make Our abode with him.
Now i get it!
Does this method work well with retirement accounts like a Roth 457 b that are invested in a target date fund? Or is this usually more effective when using a stock portfolio?
Not a fan of target date funds for young people just starting out. Start off with total market index instead. Yes target date funds are simple to set and forget, but when you just start investing and you have an very long time frame holding a portion of bonds (even 10-15%) will drag down your investments in the long run. Shift to a percentage of bonds once you get closer to your target.
In fact, I believe those earlier investors should allocate a small portion of their investments (10-15%) to 2X or 3X index funds like UPRO in order to supercharge their early savings while risk tolerance is high. Rebalance out once it gets above your target percentage in order to lock in gains and minimize downside risk.
Single EE. Only took 3 years.
This is what I'm doing.
///***PLEASE BEAUTIFUL PEOPLE, IT´S TIME TO WAKE UP! IT IS NOT A JOKE***
***Revelation 6:6***, KJV: "And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine."
-
***The bible says that the shortage and the financial crisis will be so brutal that you only would be able to buy some wheat with the salary of the whole day. Each and every prophecy is being fulfilled.***
Luke 12:56 (KJV)
***Ye hypocrites***, ye can discern the face of the sky and of the earth; but how is it that ye do not discern this time?
MARANATHA !!! 🎺🎺🎺 WHAT DOES MARANATA MEAN? MATTHEW 4:17 / ROMANS 10: 9 / JOHN 8:58
Matthew 24:39 ^
And they had no care till the waters came and took them all away; so will be the coming of the Son of man.
COME INTO THE ARK, YOU ARE ON TIME MY FRIEND: THERE IS STILL PLACE. REPENT!!! YOU HAVE TO BORN AGAIN. MARANATHA !!!
P.S: 1 Corinthians 2:9 But as it is written: “Eye hath not seen, nor ear heard, neither have entered into the heart of man the things which God hath prepared for them that love Him.”
-
***THIS IS A FATHER'S PROMISE***: JJohn 14:23: Jesus answered and said unto him, “If a man love Me, he will keep My words; and My Father will love him, and We will come unto him and make Our abode with him.
Can I ask how much do you put towards savings and investments a month? I’m so lost. I put $6,000 a year into my Roth IRA which is the max for that. That’s really all I’m doing.
Please work on the quality of your audio ...