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Like Lennon and McCartney, sweet and sour pork, and Matt Hancock and his job, there’s multiple tensions at the heart of Monevator.
The biggie probably isn’t active versus passive these days.
Following the lead of Macca in his prime, The Accumulator has produced hit after hit on why and how to use index funds.
Whereas I’ve – metaphorically – taken my naughty stock picking and left the band. At least for now.
No, I’d say our biggest on-site difference of opinion is the RE part of FIRE.
We’ve debated that in the past, too.
In short I nowadays believe that early retirement is a rubbish goal, ill-suited to most who can reach it.
The Accumulator, on the other hand, is living it.
And loving it, apparently.
FIRE in the hold
Of course, both of us are full-square behind achieving financial independence – the FI component of FIRE.
That goes without saying!
Being so ill-versed in the FIRE community and lingo I only just discovered that the kids call my version of reaching it ‘Slow FIRE’.
Monevator reader Ian pointed me towards an article from Business Insider, which explains:
Slow FIRE practitioners focus on designing and achieving their FIRE lifestyle now.
This may include working remotely in order to create more flexibility in their lives.
It’s also a nod to the fact they will work longer in order to hit their FIRE number.
There’s no work-shaming because work factors heavily into Slow FIRE.
Yes! This is what I was trying to get at in You Don’t Have To Go Nuclear On Working For a Living. (In retrospect not such a catchy name for a movement, compared to Slow FIRE.)
Back then I wrote:
I often read retirement bloggers saying they quit work because they couldn’t take kowtowing to The Man anymore.
Yes – The Man sucks – but it’s not a good reason to quit working.
Especially if you’re impoverishing yourself for the rest of your life to do so.
I believed that mostly working from home, mostly on projects I enjoyed, and on my own schedule was a more sustainable way to spend my life than:
killing myself in the rat race, or
jumping off a cliff like an exhausted lemming as soon as I believed I could meet my minimum spending requirements from some vast pool of cash I’d accumulated, just out of sight of my bedsit or RV.
I’ve got nothing against people retiring in their 40s after 20 years of frugality if they choose.
I don’t think it’s morally wrong, or anything silly like that.
You do you.
I’m just saying be sure you’ve thought about all the options first.
Not so shy and retiring
Someday I’ll make my case for this Slow FIRE business more coherently.
In the meantime, Party at the Moontower this week explained why he too is against the ‘retire early’ part of the mantra.
Despite his apparently just now retiring early!
Like me he’s sceptical that sustainable withdrawal rates (SWRs) are a golden bullet to ‘the hardest problem in finance’:
Solving for how much you need to save and for how long, solving for how much you can withdraw annually and for how long, all so you don’t outlive your money.
If you have walked through the Moontower Retirement Model you learned the levers — savings rates, longevity, and post-tax inflation-adjusted returns.
Every one of those terms is impossible to forecast. The problem suffers from intractable amounts of garbage inputs.
The value of the exercise is not the outputs, it’s for articulating the problem in the first place and gaining a low-res appreciation for the sensitivities.
Thinking about your likely SWR is indeed super-valuable. It makes you consider all the variables.
Also, if you’ve never encountered the idea of living off your investments before, then applying 4% to a pot of ‘some number’ can be mindblowing.
Fighting FIRE with fire
However beyond their thoughtprovoking, SWRs only do a perfect job of telling you how you would have done in the past.
Worse, they crumple the edges.
Their fans declare “of course you wouldn’t actually spend your money if you saw it was running out”…
I’m practically a dinosaur in that I believe investing for income is a more intellectually credible way to prep your finances for a long period of living off them. I also hate the idea of spending my capital.
This means more money is needed, and perhaps some active management. Again, more on that some other day.
But none of this is to discredit The Accumulator’s wonderful work on SWRs.
I think his is probably the most readable deep take on the Internet.
The Accumulator has read widely – proper academic research papers and all . In contrast, as ever I’m a bundle of notions and hunches.
So you should certainly read through everything he says on the subject – it’s a goldmine – even if you reach a different conclusion.
Fee FI fo fum
The other solution to getting an income in your later years is to keep doing some work for money.
RE goes out the window, but FI remains front and centre in giving you options and buffers.
To again quote Moontower:
The idea that you can work until you are 75 or 80 is freeing IF you can do it on your terms. If you can take a break for a year sometimes. If you can work 4 days a week, or from wherever you want. If you actually enjoy bringing your uniqueness to the job to be done.
The definition of a sustainable life is one you actually want to sustain.
Nobody wants to sprint forever, and sprinting for a short while doesn’t make the scarcity mindset go away even if you “win”.
This is partly why rich people fear inflation. They thought they were “done”. What is “done” anyway?
Past experience tells me that plenty of you will disagree (which is fine!)
Smart and articulate people tell me they couldn’t do work they half-like on their own terms, although I’ve done just that for 20 years. Their only option is to cane it at a job they hate for the best years of their life, and to smell the roses at the weekends. And then to hope their SWR doesn’t blow up.
Just be aware what you’re saying: can’t, won’t, will.
You’re just saying it in a different order to me.
Maybe it’s all a question of where we choose to put our limits and our faith and to see the uncertainties.
Happiness is a warm run in the stock market
I’m no zealot. The truth is after quitting my ‘big gig’ last year I’ve not put a lot of effort into ramping up my hours and income to replace it.
So maybe I’m leaning a bit more towards RE than I care to admit?
To his credit The Accumulator has also shifted over the years. He is at least trying out doing some work post-retirement.
Again, financial independence lets us both look for our middle ground.
I suppose I’m saying that 40-50 years is a long time to plan to drop out. I doubt even Lennon would have managed that, though sadly he never got the chance.
Too much leisure time is probably counterproductive, anyway. Studies suggest there’s a sweet spot:
Employed people’s ratings of their satisfaction with life peaked when they had in the neighborhood of two and a half hours of free time a day.
For people who didn’t work, the optimal amount was four hours and 45 minutes.
Working for just a couple of hours a day – or a couple of full days a week – leaves you abundant time to learn Swahili or to see your grandkids.
And a small amount of income is worth a lot. Many years ago I pointed out that £5 a day was worth around £90,000. Today it’d be even more.
Earning to keep FIRE burning
Consider planning to earn a couple of hundred quid a week indefinitely. I suspect you’ll be happier.
It doesn’t have to be working from home or side hustling, either.
A sociable friend of mine wants to retire in her 50s to do a couple of days a week in an independent coffee shop. Some of her fondest memories are of part-time work at Starbucks as a student.
There was seeing the regulars, the free coffees, the short walk to the ‘office’, the lack of responsibility, and being usefully whacked at the end of the day.
It’s not my bag. But then, writing this post on a sunny Saturday morning in bed wouldn’t be hers.
Let’s all find our own way.
Have a great weekend (and Cymru am byth!)
What goes into an ESG index? – Monevator
It’s too late to get into buy-to-let – Monevator
From the archive-ator: How you can enjoy the profits of 2,267 companies around the world for free – Monevator
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1
Government mooting less generous pension lifetime allowance and tax relief – ThisIsMoney
UK facing summer food shortages on lorry driver shortage due to Covid and Brexit – Guardian
Millions of pensioners could receive a record rise in their state pension next year – Which
Bitcoin fell below $30,000 this week; first time since January… – Coindesk
…with a China crypto mining crackdown blamed – CNBC
Brexit blast from the past mini-special
Five years on from the Brexit vote, the UK is more divided than ever – CNN
The key Leave and Remain campaign claims that never happened – Politics Home
The real ‘Brexit dividend’? Minus £800m a week, and counting – Independent
Rejoining the EU is now unthinkable, except for a diehard minority – New Statesman
Why the EU is not missing Britain that much – Guardian
Views from Boston, Britain’s most Eurosceptic town – BBC
Fifth anniversary of Brexit vote marked by inane North Korean-style children’s song – Business Insider
“The most embarrassing anniversary since a sexual health clinic told me to come back in 12 months to check if anything had regrown” – The Investor
Non-EU immigrants have replaced EU immigrants since Brexit referendum, almost one-for-one – ONS
Products and services
Post-Brexit, EE reintroduces roaming charges for UK customers in Europe – Guardian
New flexible train tickets will save this commuter just £7 a year – BBC
Secta lets parents take second mortgage to pay for school fees – ThisIsMoney
A quick review of digital piggy bank apps for kids – ThisIsMoney
Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade
New £50 note featuring Alan Turing goes into circulation – Guardian
Homes for sale in former churches, in pictures – Guardian
Comment and opinion
Lessons learned after decluttering 300-plus items – A Lawyer and Her Money
What to watch for in onerous employment contracts – Indeedably
How much do you need to be financially independent? – Of Dollars and Data
The ups and downs of stocks, and stock markets – Humble Dollar
How wealthy Americans are taught to protect their wealth – MSN
Americans are quitting their jobs en masse: great – Slate
The fastest way to £100,000 – Banker on FIRE
Some quantitative portfolios that go beyond stocks and bonds – Validea
Naughty corner: Active antics
How to listen to Dr Copper – Verdad
Venture capital firms target retail investors for funds [Search result] – FT
Luck – Enso Finance
WallStreetBets lingo decoded [Oh to be 23!] – Business of Business
Building Berkshire 2.0 with Chamath Palihapitiyah [Podcast] – T.I.P.
Is QinetiQ a good dividend growth stock? – UK Value Investor
Bubble expert Jeremy Grantham on ‘epic’ equities euphoria – FA Mag
‘Delta plus’ Covid variant found dozens of times in UK – Evening Standard
Dr Fauci on the thread of the Delta variant – NPR
Balearics and Malta added to UK’s green list – BBC
China is vaccinating 20m people a day – Nature
Nearly all US Covid deaths are now among the unvaccinated – AP
The less than welcome return of social obligations – Axios
Kindle book bargains
The Joy of Work: 30 Ways To Fall In Love With Your job Again by Bruce Daisley – £0.99 on Kindle
Legacy by James Kerr – £0.99 on Kindle
Think and Grow Rich by Napoleon Hill – £0.99 on Kindle
Liars Poker by Michael Lewis – £0.99 on Kindle
A slimy calamity is creeping across the sea – The Atlantic
Majority of UK homes now served by green energy suppliers, but is it all just rebranding? – ThisIsMoney
Off our beat
US government reveals it can’t explain 143 UFO-like flying objects – NBC News
Blood test that finds 50 types of cancer is accurate enough to be rolled out by NHS – Guardian
Jeff Bezos and Elon Musk want to burn their cash in space – Vanity Fair
Mystery of the wheelie suitcase – Guardian
An interview with the tech pioneer and VC Marc Andreessen – Noahpinion
Ricky Gervais on Twitter [Video] – on Twitter
“Never mind that Britain has a German royal family, a Norman ruling elite, a Greek patron saint, a Roman/Middle Eastern religion, Indian food as its national cuisine, an Arabic/Indian numeral system, a Latin alphabet and an identity predicated on a multi-ethnic, globe-spanning empire – ‘fuck the bloody foreigners’.”
– Akala, Natives: Race and Class in the Ruins of Empire
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