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Congratulations! It is a great feeling to be debt-free! I paid off my house when I was around 46 right before the last financial crisis.
I live the exact same financial lifestyle as you more or less. I "retired" in my 50's (still make money independently) and LOVE IT! I live a pretty frugal life and have no money worries. It sounds as if you are on the right track- I wish you well in your upcoming retirement!
Congratulations! It is a great feeling to be debt-free! I paid off my house when I was around 46 right before the last financial crisis.
I live the exact same financial lifestyle as you more or less. I "retired" in my 50's (still make money independently) and LOVE IT! I live a pretty frugal life and have no money worries. It sounds as if you are on the right track- I wish you well in your upcoming retirement!
Thank you and great job yourself! It's great to hear that others have successfully retired early and are doing well.
I plan on retiring in about 13 years. My 25 year pension should cover our living expenses and I'll have my brokerage and Roth if I need access to additional funds. I'm hoping to postpone accessing my tax deferred workplace retirement account, and maybe do Roth rollovers while staying in a lower tax bracket. I'll attempt to defer taking social security as late as I can so my wife can have a larger spousal benefit.
Well good news for me since I paid off my mortgage. At 43 I'm now completely debt free with a paid off SFH and cars. Credit cards are paid off every month.
Congratulations!
Quote:
Originally Posted by oneasterisk
The rest is sitting in SPAXX till I decide on how to deploy it.
Just note that you are paying a nosebleed-high expense ratio of 0.42% on SPAXX.
Quote:
Originally Posted by oneasterisk
I have redirected some of the funds to increase my monthly contribution to Roth and brokerage accounts. My workplace retirement account has a healthy balance and I put enough to get the match. I don't want to increase there as I feel I have a lot of money tied up in retirement accounts and my goal is to retire at 56. I'll have access to a 25yr pension then.
Feel free to make any suggestions on the allocation. I currently manage my investments myself with 38% of my net worth in my workplace retirement account, 17% in brokerage and 4% in my Roth. I have about 10k in a HSA but I can no longer contribute to it since I don't have a HDHP. I have 12m emergency fund.
Large Cap Equity (S&P 500) measures the performance of large capitalization U.S. stocks. The S&P 500 is a market-value-weighted index of 500 stocks. The weightings make each company’s influence on the Index performance directly proportional to that company’s market value.
Small Cap Equity (Russell 2000) measures the performance of small capitalization U.S. stocks. The Russell 2000 is a market-value-weighted index of the 2,000 smallest stocks in the broad-market Russell 3000 Index.
Developed ex-U.S. Equity (MSCI World ex USA) is an index that is designed to measure the performance of large and mid cap equities in developed markets in Europe, the Middle East, the Pacific region, and Canada.
Emerging Market Equity (MSCI Emerging Markets) is an index that is designed to measure the performance of equity markets in 24 emerging countries around the world.
U.S. Fixed Income (Bloomberg US Aggregate Bond Index) includes U.S. government, corporate, and mortgage-backed securities with maturities of at least one year.
High Yield (Bloomberg High Yield Bond Index) measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt.
Global ex-U.S. Fixed Income (Bloomberg Global Aggregate ex US Bond Index) is an unmanaged index that is comprised of several other Bloomberg indices that measure the fixed income performance of regions around the world, excluding the U.S.
Real Estate (FTSE EPRA Nareit Developed REIT Index) is designed to measure the stock performance of companies engaged in specific real estate activities in the North American, European, and Asian real estate markets.
Cash Equivalent (90-day T-bill) is a short-term debt obligation backed by the Treasury Department of the U.S. government.
Last edited by moguldreamer; 10-09-2023 at 09:12 AM..
My brain doesn't do math well. Presuming you had a loan with a decent interest rate, is the return from paying it off greater than the return you'd get if you'd continued to pay the mortgage and invest the remainder?
Not for us. I was going to start working on paying down our mortgage, but with a 2.8% mortgage, I can just put the extra payments in a savings account and earn 5% Of course I have to pay income tax on that 5% so it is about a push I think.
Internet "experts" will often tell you that you're better off continuing to pay a low interest loan and investing the money at a higher rate. Unfortunately that advice has two issues, one technical and one psychological. First of all, it only works in a period of low inflation and low interest rates plus a regularly rising stock market. Well, those days are gone, probably for a long time. Secondly, while it sounds like a good plan, what actually happens for a large number of people is that they proceed to spend the money rather than investing it in those (hopefully) higher-return vehicles.
Respectfully, I disagree with the above characterization because it doesn't include the very important economic concept of Risk Tolerance and the very important investment concept of Risk-Adjusted Rates of Return.
Just for clarity, I do not have a mortgage on any of my properties. And of course a house is part of an individual's overall investment portfolio.
In my mind, the issue is determining the acceptable amount of risk in my personal portfolio, and then constructing an optimal portfolio to achieve but not exceed that level of risk. Note that these are TWO VERY DIFFERENT exercises. The first must come before the second. And, when I say "optimal" I mean that the portfolio construction must be Pareto-Efficient in that I cannot find a different allocation that gives me a higher return without incurring more risk.
A decision to simultaneously (a) have a residential mortgage, and (b) invest in the various asset classes is a a decision to deploy leverage..
There is little difference between (1) having, say, a $100,000 mortgage balance while investing $100,000 in the S&P 500, and (2) having a fully paid-off house with no mortgage while borrowing $100,000 to invest in the S&P 500. (Ignore the income tax deduction of a residential mortgage that some people can take). In both cases, you are deploying leverage.
From a personal financial perspective, I don't use leverage even though I'm willing to accept quite a bit of risk in my investment portfolio.
On the other hand, a paid-off loan will not require payments when you get laid off, or incur some kind of large unexpected expense.
Everyone has their own philosophy of personal finance. A very large part of mine, motivated by my years of experience in for-profit businesses, is "always strive to reduce fixed costs." If you have no debt and low running costs, you can weather a period of low or zero income a lot better than the person whose debt service and other fixed costs require a high income. There are an awful lot of high income people who are still living paycheck to paycheck.[/quote]
Yes spaxx has a slightly higher er, but the alternative is money sitting at Ally at 4.25% or my fidelity core fund paying less than 3%. It'll be a good enough enough short term holding bucket.
I've never heard of the Callan Periodic Table method, but I use the KISS method. I'll look into it.
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