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|Subject: Re: I'm so excited.....||Date: 12/10/2003 1:44 PM|
|Author: WeeBeastie||Number: 1521 of 5069|
Care to share what you've done that helped you get to that point?
Sure. Sorry it's been so long since the initial post, but I have been really busy this week.
To be honest, I haven't done anything earth shattering. Just the same old stuff always touted on TMF. Living below my means, maxing out any tax-advantaged savings accounts and then saving more on top.
I don't have any inherited wealth.
I don't have any super-duper quadruple percent return a year investment strategy.
I don't even live in a low cost of living area (I live in SF Bay Area).
I don't live a life of deprivation, but I do evaluate every purchase with an "is this of value to me" preface similar to that detailed in YMOYL. That really stopped me from spending "because I deserve it", "because I have the money" etc. My DH has a much higher value threshold than me, and this is clearly demonstrated by the cars we each drive. However, he's getting better, and knows that I'm not taking away his choices, just asking if it's worth xx months/years of work for whatever. He comes to his own conclusions.
Sometimes I drive myself nuts trying to decide if a 99c bottle of nail polish is really of value!
On investment strategy, most of our money is in index funds. What I did do as a result over the past couple of years is watch what the average P/E ratio is on the funds (large, mid, small caps). I "rebalanced" my portfolio not on the traditional recommendations, but to try and lower my risk. I thought large caps were still a little rich, and small caps had a much lower p/E so I allocated most of my money there. This was not to get better returns, but to lower the risk I perceived. While this has given me a higher return over the past couple of years, I would not recommend it to anyone as it hasn't been time tested or anything, I just felt more comfortable doing that for me.
Just recently, I've moved more into international funds as the US funds are looking a little rich and the weak dollar concerns me (note: this means I increased my allocation to 15-20%, not that I sold everything and went into emerging markets or anything). I view this "strategy" as defensive, and to be honest, because my emotion is involved, it is contrary to all seasoned investment advice out there. It's also probably fairly insignificant to my five year plan, but I had to give you something LOL!
I do have a small portfolio that I manage myself. I do quite well by trying to find stocks that are out of favour with the market. Ninety-five percent are out of favour for good reason, but there are one or two that have been priced poorly. Patience is the hardest factor in this strategy, but I've done okay.
I suppose things like refinancing the mortgage have had an affect also. We're now at much lower rates and I plan to invest the difference. That helped accelerate ER too, I suppose.
It will hopefully be beneficial if I tell you that it seemed that we'd been plugging away at savings and not really getting anywhere. But I think now we're seeing the benefits of compounding or something, because all of a sudden ER wasn't as far away as I thought.
I had originally been targetting retirement at 43, but I was going to push my DH out another 5 years so he could have perhaps been eligible for retirement benefits (healthcare was my biggest concern). He was working one Sunday and called me at home to whine about it, and he made some remark about retiring in Britain. I had never even thought this was an option for him, as our reason for living here is the climate. He said, if we were retired, of course we could go back as we could travel to escape the dreadful weather any time we wanted. That started the frenzy of my calcs.
The area we will move to will have a lower-cost of living which helps living as we will likely buy a house at half what we'll net on our Bay Area house. Admittedly, it will be a much smaller house (British houses are weeny), and it will be in a semi-rural area and so out of the higher priced commute zones. So I get a cash lump sum that wasn't in my original plans, as we were going to stay in our current house in previous calcs.
So while moving to Britain isn't necessarily an option for all here, pretty much everything else would be. I have budgeted around $300K for a house purchase, and anticipate the five year plan should give us income of $40K. We can live on around $30K very comfortably, and less if I'm careful. These are figures that are also applicable in the US. We are choosing Britain because it's much easier to travel from there, our taxes will be negligible, and most importantly, our family are still there.
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