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Author: whyohwhyoh Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5087  
Subject: 2006 FIRE Update Date: 1/4/2007 5:20 PM
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1. Net worth up 23% in 2006 to 5.6 NW/AI (net worth/annual income) versus goal of 19%.
2. Annualized gain in picked stocks (tax/IRA/401k) was 25.5%! vs. 12% S&P500.
3. Biggest winners were BWLD, BMY, WLT, NUAN. Biggest loser SCSS. Go BMW Method + Hidden Gems!
4. Moved portion of my 401k into picked stocks to take advantage of the returns I have been yielding the past ~6 years.

Current Portfolio:
46% Picked Stocks (Top 4: BMY, BWLD, SBUX, NUAN)
14% 401k Mutual Funds (42% S&P500)
33% Real Estate (House Value*0.93-mortgage)
7% Fixed Income (T-bills, CA-exempt MM)

Graph of past few years of net worth progress. Most of our net worth growth this year came in Q1 and Q4.
http://pic40.picturetrail.com/VOL362/677161/9280113/219196799.jpg

2007 should be a bit less stressful than the previous year, but I am also fully prepared for a serious pullback in the stock market. We have been spoiled by this market the past few years. Our net worth goal for 2007 is a 17% increase, which would bring us to 6.5 NW/AI.

I really have no prediction of when we will FIRE. It now appears that 10NW/AI won't be enough as I have a son now at age 1, and possibly another in the future. My goal is still at age 40, 8 years from now, which at 11% stock market returns would put us at ~16 NW/AI, a comfortable retirement.
--
whyohwhyoh

2005 Update: NW/AI=4.5
http://boards.fool.com/Message.asp?mid=23507890

2004 Update: NW/AI=3.0
http://boards.fool.com/Message.asp?mid=21842676

2003 Update: NW/AI=1.5
http://boards.fool.com/Message.asp?mid=20380221


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Author: Volucris Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3944 of 5087
Subject: Re: 2006 FIRE Update Date: 1/4/2007 6:07 PM
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Nice.

My FIRE accounts were up 20.1% for the year, including returns and investments. I'll take that. Note: This is only investable assets. It does not include house, cars, kids 529 accounts, etc.

FI is a little less than a year away.
FIRE is 6.5 years away.

Note: Above dates depend on market returns, price of tea in China, asteroids, lottery tickets, super volcanoes, goat entrails, etc. etc.

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Author: bighairymike Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3945 of 5087
Subject: Re: 2006 FIRE Update Date: 1/4/2007 10:04 PM
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I really have no prediction of when we will FIRE. It now appears that 10NW/AI won't be enough as I have a son now at age 1, and possibly another in the future. My goal is still at age 40, 8 years from now, which at 11% stock market returns would put us at ~16 NW/AI, a comfortable retirement.
--
whyohwhyoh


I am going to pick on this metric a little bit. I don't intend to be critical or contentious but in the spirit of helping a fellow Fool, I want to give you some things to think about. First of all, you are to be commended for having a plan, keeping records, setting goals, measuring against those goals. That puts you way ahead of many.

But getting to the root of the matter, your NW/AI metric is puzzling to me. For instance, if your income goes up $50K, your NW needs to go up by $280K just to stay at your current 5.6 NW/AI ratio. Even if you save the entire $50K and it earns another $50K, the $100K addition to your NW would still pull down your NW/AI ratio.

A more conventional metric would be shoot for a NW = 25 * AE. Where AE is your estimated annual post retirement living expense whch may be more or less than your current AI.

Just something to think about ....

Best wishes.... bhm





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Author: whyohwhyoh Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3946 of 5087
Subject: Re: 2006 FIRE Update Date: 1/4/2007 11:48 PM
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A more conventional metric would be shoot for a NW = 25 * AE. Where AE is your estimated annual post retirement living expense

I started using NW/AI since it has been mentioned quite a bit on this board as a good metric to follow.

Estimated annual living expenses is more difficult to determine, and would most likely fluctuate more than my current AI. My AI is quite stable now after 9 years in my career and easier to quantify. As I get closer to FIRE, I may switch to "AE" as in the future I may be able to better estimate those expenses.

But something to start thinking about.

--
whyohwhyoh

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Author: varney Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3968 of 5087
Subject: Re: 2006 FIRE Update Date: 1/8/2007 7:55 AM
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Do you use gross AI, or net AI?

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Author: whyohwhyoh Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3971 of 5087
Subject: Re: 2006 FIRE Update Date: 1/9/2007 1:44 AM
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Do you use gross AI, or net AI?


Gross AI, base salary. But don't include bonuses... which some years can be 10-20% and is directed directly into additional savings.

--
whyohwhyoh

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Author: bdgf06 Two stars, 250 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3995 of 5087
Subject: Re: 2006 FIRE Update Date: 1/12/2007 3:50 PM
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Great progress whyohwhyoh! I hope to duplicate this FIRE process in the future myself. Until then, I will keep setting goals and reaching them!

bdgf06
Who has a full page of typed up goals for 2007 ;)

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