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Early retirement strategies

clmason

Member
Sep 29, 2011
603
1,047
San Diego
IMHO, doing this MIGHT make you feel better, but it's among the dumbest financial moves possible.

As a mortgage ages, your payments become far more principle and far less interest--that you paid early on, and it's how banks get rich.

Why would you do this when the odds of Tesla making triple-digit APR returns is almost a sure thing, especially given how so many in the finance media still don't "get" TSLA?

Recommend you not spend a dime to pay off your mortgage: sell NO shares, HODL!

Have no fear, been holding TSLA since 2011 & my mortgage remains intact.
 

ZeApelido

Active Member
Jun 1, 2016
3,517
35,794
The Peninsula, CA
At what stage would you start getting more "conservative" and move funds to say ARK ETFs?

We have ~ 2.5 m in TSLA. I feel like 4 m is an acceptable place to beginning even feeling comfortable with the idea of retirement (not necessarily doing it then though). Conservative case of long term 5% appreciation / year would allow $200k a year which is doable most places on Earth. 2.5 m is not enough for it to be clear cut.

Of course, if I put it in ARK ETFs and they gain > 10% / annum, that would be sufficient even under the current starting amount.

My gut feeling is to wait and see what TSLA does in 2021, particularly if FSD progresses and starts getting partially priced in. $1100 is my price target and I think that is possible this year.
 

dmunjal

Active Member
Aug 17, 2012
1,191
1,379
In the US, a common “conservative” emergency fund strategy is to use a “CD-ladder” where you have certificates of deposit that mature at regular intervals, say every month or every quarter. They get a crappy 2-3% interest, but if you don’t need them, they just rollover. If you do need them, you can withdraw at intervals with no penalties.

I have a year’s needs socked away like this. When the time comes to trim investment earnings, I’ll probably add to it.

Another option is a diversified dividend portfolio. There's also a tax benefit.
 
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adiggs

Well-Known Member
Supporting Member
Sep 25, 2012
5,264
17,580
Portland, OR
but then second case, C20 appears, 10x more transmittable and kills everyone that gets it within a day - whole market collapses, how you going to get by

In this particular case, I think this is a black swan that doesn't get solved with one's market investment choices. This gets solved with your personal investment (ahead of time) in water, food, survival skills, and a hidden compound you can live in while the rest of the world plays zombie apocalypse :D


But your larger point is sound. For now, the way I'm handling this is to have a cash balance that is more like 4 to 6 years of living expenses. It's much much too much, but it's also not needed as ARK / TSLA / index investment either. So I use some of that to write cash secured puts against TSLA. With this situation, I'll benefit from upside moves via shares, and I've got protection to the downside via such a large cash balance (and sufficient income that I might not need to touch the cash).

My long term thesis is that the shares will be a LOT more valuable in 2030 than they are today. But I also expect at least 1 and probably 2 or 3 drops in the share price of 50% between now and then. A high cash balance will let me coast through that sort of a big drop in the share price and still be in good shape on the other side. Or that's my theory anyway.

And of course, if there is an indication that one of these 50% drops are due to financial malfeasance with the company or something else that resets the thesis, then me and my toys will be gone in a heartbeat
 

dmvevguy

Member
Jul 12, 2017
180
512
DC
Y'all are a lot more conservative than me. I'm early retiredish, trading (as long as it suits me) to avoid selling assets.

50% Bitcoin
25% Tesla
15% Rental real estate
7% Equities
3% Precious metals

25% debt to assets

I'm youngish and skilled, so see no reason to be more conservative right now and lose long term returns.

Wow! 50% BTC! I just increased my holdings to 5%. I feel like putting in more, but just nervous to increase my position. My nw is 3M, age 36, and after making so much new wealth from TSLA, I just want to preserve it. I grew up kind of poor to low-middle class, so I'm also not used to this kind of wealth. To be quite honest, I don't really spend any $ and pretty frugal.

I should add more to BTC...I've held since $3k and $6k, and recently added more at $13k. This $30k line has a lot of crazy support...if Elon puts some of TSLA capital to BTC it will soar.
 

reardencode

Member
Supporting Member
Mar 9, 2019
247
1,006
Seattle, WA
Wow! 50% BTC! I just increased my holdings to 5%. I feel like putting in more, but just nervous to increase my position. My nw is 3M, age 36, and after making so much new wealth from TSLA, I just want to preserve it. I grew up kind of poor to low-middle class, so I'm also not used to this kind of wealth. To be quite honest, I don't really spend any $ and pretty frugal.

I should add more to BTC...I've held since $3k and $6k, and recently added more at $13k. This $30k line has a lot of crazy support...if Elon puts some of TSLA capital to BTC it will soar.
Both Bitcoin and Tesla are investments that require deep understanding and philosophical alignment to HODL.

As an anarchist, first principals thinker, technologist, I'm very comfortable with both. 5% is solid exposure if you aren't philosophically aligned with Bitcoin. If you are... Well, you know what to do.
 
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dakh

Active Member
Supporting Member
Jun 14, 2015
1,142
2,613
Seattle, WA
Y'all are a lot more conservative than me. I'm early retiredish, trading (as long as it suits me) to avoid selling assets.

50% Bitcoin
25% Tesla
15% Rental real estate
7% Equities
3% Precious metals

25% debt to assets

I'm youngish and skilled, so see no reason to be more conservative right now and lose long term returns.

What is your way of holding bitcoins? I've got a bunch of GBTC which is nice, looking to add more but to "diversify" further into holding actual bitcoins. Needs to stay under $150K if self-custody to be legal right?
 

reardencode

Member
Supporting Member
Mar 9, 2019
247
1,006
Seattle, WA
What is your way of holding bitcoins? I've got a bunch of GBTC which is nice, looking to add more but to "diversify" further into holding actual bitcoins. Needs to stay under $150K if self-custody to be legal right?
I hold most in a hardware wallet, with seed backed up in Titanium. No limit on self custody to date in the US AFAIK. Some with BlockFI earning interest and backing a personal loan.

Disclaimer: bitcoin self custody requires study. I've worked in bitcoin (at Casa and another startup)
 
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dakh

Active Member
Supporting Member
Jun 14, 2015
1,142
2,613
Seattle, WA
I hold most in a hardware wallet, with seed backed up in Titanium. No limit on self custody to date in the US AFAIK. Some with BlockFI earning interest and backing a personal loan.

Disclaimer: bitcoin self custody requires study. I've worked in bitcoin (at Casa and another startup)

Very nice, we got bitcoin expert in da house. Is there any guide to doing this right that you know of that you can recommend? Personally I'm very tech savvy so I can do anything but just don't have the time right now for hours of research on this topic.

The $150K is for institutional investors, I wasn't reading the reg link carefully. Still, the tax and other regulatory implications of holding bitcoins is a total enigma to me, gotta research that too.
 

dakh

Active Member
Supporting Member
Jun 14, 2015
1,142
2,613
Seattle, WA
I posted this over on the investment thread but it bears repeating. Yes, definitely. One's portfolio should shift to more stable holdings the closer one gets to retirement. It just wouldn't do to be forced to become a Wal Mart greeter in order to buy groceries just because of a market shift at age 70.

And while this is a fun and useful topic to discuss online, the value of a good financial advisor can't be denied. These folks help people plan for retirement every single day. They have insights and wisdom that's invaluable. Beginning a discussion with "I'd like to retire in X years. Can we work together to make that possible?" is a perfectly valid launching point.

Also, there are some useful retirement calculators online that are fun to play with. The caveat of such tools; however, is that they are only as good as the assumptions that they are fed, so use caution.

Here's a link to three useful retirement calculators that I've been playing with:

The 3 Best Free Retirement Calculators - Can I Retire Yet?

Sorry for replying to a much older post, but I've been educating myself on the topic of wealth management and investment and from what I see I think this post is propagating a easy to overlook but very important fallacy: relative stability of a certain asset does not equal stability of your portfolio. And that is even if we take for granted that portfolio value stability is a desirable quality, which is not a given. There is no such a thing as an asset that remains stable in the face of variety of economic events -- inflation, deflation, various black swan events etc.

What we're looking for is to diversify across asset classes and regions in a way that would keep overall portfolio stable across variety of economic events/trends. Each asset class can be volatile, but if you have holdings in many asset classes with weak or non-existent correlation between each other, overall portfolio will be very stable.

On the topic of financial advisors... I'm personally very skeptical. They all repeat the same spiel and they all are overlooking the fact that we haven't been in the kind of economic situation we're in in anyone living today's lifetime. Technology is changing how we live very quickly and at the same time monetary policy and global economy are in the no-man's land that they're not trained to understand or give advice about. If US dollar for example ceases to be world's reserve currency, which it very likely will just a question of when, how will your portfolio hold up? Are there financial advisors with a deep enough understanding of this to actually recommend something sensible to prepare for that not-so-black-swan event? How many of them have read Nassim Taleb's work, and of those, how many have the right financial tools to suggest?
 
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dakh

Active Member
Supporting Member
Jun 14, 2015
1,142
2,613
Seattle, WA
I hold most in a hardware wallet, with seed backed up in Titanium. No limit on self custody to date in the US AFAIK. Some with BlockFI earning interest and backing a personal loan.

Disclaimer: bitcoin self custody requires study. I've worked in bitcoin (at Casa and another startup)

Ah one more question: why did you decide on holding actual coins vs. GBTC or similar? Just to save on management fees? Looks to me you'd have to pay taxes on any gains either way but with holding coins directly you'd have to keep your own accounting on both cost basis and disposition amounts and times.
 

reardencode

Member
Supporting Member
Mar 9, 2019
247
1,006
Seattle, WA
Very nice, we got bitcoin expert in da house. Is there any guide to doing this right that you know of that you can recommend? Personally I'm very tech savvy so I can do anything but just don't have the time right now for hours of research on this topic.

I've heard really good things about the resources here: Bitcoin Guides And Tutorial Videos | Keep It Simple Bitcoin

In terms of hardware wallet products, I'd choose either a BitBox02, who have pretty good apps for phone and desktop, and make storing your bitcoin safely _pretty_ tractable; or a ColdCard, who have worked with KIS Bitcoin to make things pretty tractable. ColdCard is definitely less user friendly overall, but it's also more powerful if you ever fall deep down the Bitcoin rabbit hole and want to do crazy stuff.

The $150K is for institutional investors, I wasn't reading the reg link carefully. Still, the tax and other regulatory implications of holding bitcoins is a total enigma to me, gotta research that too.

From a tax/legal perspective for individuals, Bitcoin is the same as any other personal property. Pay capital gains on transactions.

Ah one more question: why did you decide on holding actual coins vs. GBTC or similar? Just to save on management fees? Looks to me you'd have to pay taxes on any gains either way but with holding coins directly you'd have to keep your own accounting on both cost basis and disposition amounts and times.

As I said, I'm _philosophically_ aligned with Bitcoin. I think it's the money of the future. I think it will usher in a new era of prosperity and human achievement like nothing we have ever imagined. In order for it to do those things, the network that backs it must remain decentralized, and controlled by those who will protect its decentralization and strictly limited supply. It is therefore incumbent on me/us to store our own bitcoin, and to run nodes that participate economically in the network.

Getting a bit far OT for early retirement strategies, but happy to discuss on other threads or PM.
 
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I hold most in a hardware wallet, with seed backed up in Titanium. No limit on self custody to date in the US AFAIK. Some with BlockFI earning interest and backing a personal loan.

Disclaimer: bitcoin self custody requires study. I've worked in bitcoin (at Casa and another startup)

What are your thoughts on the Ledger Nano X or Trezor One?

I know Ledger's customer DB got hacked, but their wallet seems safe. I've only got a few thousand sitting in an exchange, but I will eventually move 5%+ of my portfolio to BTC.
 

reardencode

Member
Supporting Member
Mar 9, 2019
247
1,006
Seattle, WA
What are your thoughts on the Ledger Nano X or Trezor One?

I know Ledger's customer DB got hacked, but their wallet seems safe. I've only got a few thousand sitting in an exchange, but I will eventually move 5%+ of my portfolio to BTC.
Again, getting pretty far off topic, so I'll be brief (my other Bitcoin work is on building a HWW).

HWWs fundamentally protect against phishing, malware, etc., but if equipped with a secure element, they can also protect against many physical attacks.

Trezor products do not have a secure element, so they only protect against the first type of attacks. Trezor will claim that you can use a passphrase for some physical threat protection, but that would be like leaving your seed words written down, but with a passphrase. Trezor, as a company, are beyond reproach... except for their absolute refusal to compromise on open source and use a secure element.

Ledger was my choice of HWW until ColdCard and BitBox02 came out. Their products are indeed solid, and they've done well in responding to vulnerabilities reported in them. As a company, they are not so great - from the incomplete disclosure of the customer information breach, to their general acceptance of privacy invasion by government into their users.

I use BitBox02 and ColdCard preferentially, because both companies support user privacy, and they use a secure element (the same one actually) that is as close to open source as exists (Microchip ATECC608A).
 
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What Is the Rule of 55?

The following additional exceptions apply only to distributions from a qualified retirement plan other than an IRA:

  1. Distributions made to you after you separated from service with your employer if the separation occurred in or after the year you reached age 55, or distributions made from a qualified governmental benefit plan, as defined in section 414(d) if you were a qualified public safety employee (federal state or local government) who separated from service in or after the year you reached age 50.
The Rule of 55 has my attention. I started with a new employer a year and a half ago so I only have ~45 grand in the 401k plan. I'm 55 and retirement is starting to look like it will happen sooner rather than later (knock on wood). If I'm understanding the rule of 55 correctly, it sounds like the money I put into the company 401k can easily be tax free income (so I should be maxing it out).

All the money I put into the 401k is before tax, if I can take it out, penalty free upon retirement, that is tax free income, correct? Or, am I missing something? It seems too good to be true.
 

MP3Mike

Well-Known Member
Feb 1, 2016
17,246
41,863
Oregon
All the money I put into the 401k is before tax, if I can take it out, penalty free upon retirement, that is tax free income, correct? Or, am I missing something? It seems too good to be true.

You are missing something. Tax-free money in = taxed money out. Roth accounts work the opposite: taxed money in = non-taxed money out.
 

dmunjal

Active Member
Aug 17, 2012
1,191
1,379
The Rule of 55 has my attention. I started with a new employer a year and a half ago so I only have ~45 grand in the 401k plan. I'm 55 and retirement is starting to look like it will happen sooner rather than later (knock on wood). If I'm understanding the rule of 55 correctly, it sounds like the money I put into the company 401k can easily be tax free income (so I should be maxing it out).

All the money I put into the 401k is before tax, if I can take it out, penalty free upon retirement, that is tax free income, correct? Or, am I missing something? It seems too good to be true.

You won't have the penalty but still have to pay (ordinary) income taxes on the withdrawals.
 
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