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Old 09-10-2018, 03:57 PM   #14  
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Joined APC: Apr 2017
Posts: 925

Originally Posted by swaayze View Post
Increased income yearly is exactly the issue/problem. You cannot index yearly to inflation unless you have returns measurably over and above inflation. While that has been very easy for the last ten years that wonít always be the case. Soon (?) that will flip flop for a time and portfolios will decrease, but your minimum expenses will continue to increase, eating into your principal (unless youíre working some); the boat will take on water faster than you can bail without a bigger bucket (other income). Thatís why the best of the promoters are quick to disclose that itís more about FI than RE.

Yet this is what I worry that many of the younger FIRE folks really donít get, because they havenít lived a couple of market cycles as investors (or even employees). For instance, I can assure you that spending more by converting to a ROTH during my two furloughs was the last thing on my mind, tax savings be damned.
A properly diversified portfolio always makes money over the long term and almost always makes money over the medium term. This is why anything less than $2 million just isn't enough to retire on with a 5% withdrawl.
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