Life aim: Lose one million
I lost tens of thousands in the Great Recession. I lost hundreds of thousands in 2018. One day I will aspire to lose a million dollars. #Life goal
Today's classic is being republished by Doctor on fire. You can see the original Here.
I lost tens of thousands of dollars in the Great Recession. I had only been in my anesthesia career a few years and didn't have much time to build my investment accounts.
I had maxed out a SEP-IRA and put some money aside, but that was about it. The Back door Roth didn't exist, I didn't have an HSA, and I wouldn't start a taxable account until the market recovered again in 2010.
About a decade after the Great Recession, the US stock market lost about 20% of its value in the fall and early winter of 2018. It would recover in the next six months, but that result was far from guaranteed.
While the downturn wasn't nearly as severe in terms of percentages or impact on the national and global economies, my finances were far more affected in terms of total dollar value.
Instead of dropping tens of thousands like that My portfolio In 2008 we "lost" hundreds of thousands of dollars. I use the offers because we haven't actually sold anything that has resulted in a loss.
To know that drops of 20% or more are not uncommon and can appear in a flash (see Black Monday), we have recorded. I've made some Harvesting tax losses close to the bottom but otherwise driven out and again we are close to all time highs again.
It was interesting to have a retirement date as early as the end of August 2019 to watch these portfolio values decline. I argued that A bear market cannot compromise your financial independence, but would I pull the trigger for this early retirement thing if the market fell another 20% this year instead of rising that much?
Maybe not. I would probably take a break, but I could look Locums work soon too long.
Even so, I have now had the experience of losing tens of thousands of dollars and then hundreds of thousands of dollars. What do we do now?
🎶 If I've lost a million dollars (If I've lost a million dollars)
I would sell my K-car. Goodbye, Reliant Automobile. «
The forum freakout
I'll be the first to admit that I spend too much time on forums and forums Facebook groups. Many of them, especially the larger ones and those attracting a younger generation, have some beginners.
Nice that you are here and ask questions. We were all beginners once. Whenever the market has a hiccup – maybe by 5% or 10% – the questions arise.
“I just invested $ 2,000 in VTSAX last month and now I have only $ 1,868. What am I doing wrong? What should I do now?"
The answer, of course, is nothing and nothing. Perhaps you've been investing again since it's been a month. Consider Harvesting tax losses when dealing with higher dollar amounts.
However, I can fully identify when I recall calling the advisor I interned in a Roth IRA when my $ 2,000 contribution was worth about $ 100 less the next day. At this point, I learned about front-end charging. That was normal or something I was told.
It didn't matter that the market was actually up a little bit. I paid 5% for the privilege of investing in this fund with him. I don't want to name names, but I no longer work with him or would ever work with anyone associated with this company that rhymes with "shabby bones".
Eventually I moved my business to T. Rowe Price and now to Vanguard.
Now that I'm a seasoned investor, I don't pay out front-end loads, nor do I freak out if my portfolio drops by $ 100, $ 1,000, or $ 100,000. If you are heavily invested in stocks and want to take advantage of the benefits long term investors get in them, you need to be able to endure the volatility.
When you have an insanely secure payout rate
Our initial payout rate, if all active income streams stopped tomorrow, would be around 2%. provided we continue to spend a similar amount in years to come as in previous years (and add the cost of health insurance).
However, that's not exactly what happens. If I leave medicine behind I will still have an active income on this website. Retired not retired.
With the charitable mission that we have I donated more here than we spent in 2019 (see my tax return for 2019 line by line), and we will continue to have a negative withdrawal rate as we have since I started working.
I don't expect to be able to add as much to our accounts as I did in my full-time anesthesia years, but I'm not going to implement them my drawdown strategy not yet either.
Even if we ignore the online income and plug our numbers into the FIRECalc simulator, 50 years later we will get an average account balance in the tens of millions and nine, which is not impossible until my 100th birthday. Compounding is just amazing.
Just look at all of those million dollar drops
The $ 10 million dream
At the beginning of my career, I dreamed while mowing the lawn. To play with Rule of 72 and when I knew how much we put aside each year, I realized that if I continued to make and save at that rate through the age of 60, we would have a good attempt at net worth $ 10 million.
It was quite a revelation. I didn't have any specific plans for this money, but a nice round number with an 8th digit seemed like a great target.
Over the past few years I've found that we probably wouldn't live much differently with a fraction of it. Only 1/3 of that total would give us an annual budget of $ 100,000 with a very low initial payout rate of 3%. With No mortgage to serviceWe're spending less anyway.
When I say we wouldn't live much differently, that's not entirely true. Our spending habits and our desire for material goods may not change significantly, but we have made a major, deliberate change in lifestyle.
I exchanged a demanding job where I had to be in one place and take great responsibility for the independence of the location and not an alarm clock, pager and none of the life and death.
It was a massive lifestyle change, but not Lifestyle inflation the way we normally talk about it. It's a lifestyle I've dreamed of for years.
I haven't stopped chasing my dreams, but I don't have that $ 10 million dream anymore. However, than I calculatedI realized that our ability to reach that number relied more on market returns than on whether or not I work.
Play with house money
When I look back on my 13 years of work after my residency, I've probably put enough money aside to make us financially independent without relying on ROI. Returns have been quite good – thank you, record bull that ended in 2020 – and this put is in better shape than expected.
If you are playing with house money to use casino language, you can afford to take greater risks with that money. With this mindset, I am still aggressively investing my own portfolioAllocation of only 10% for bonds with the rest in stocks and real estate.
The lower your payout rate, the more volatility you can withstand and the more aggressive your portfolio can be.
Some stop playing as soon as they win the game, take chips off the table and risk as soon as they have the game Enough. Sell stocks, buy bonds, play it safe.
I prefer to leave most of my chips on the table. In this game the investor has the advantage. The house may have a stake in our earnings, but the long-term payoff on the remaining investments in stocks and bonds has been excellent.
Do i need more money? No, but I no longer think about what I need or want. This world is much bigger than my family and me.
Every dollar I have and don't need is a dollar that can be used for something beyond my own enjoyment. If The Giving Pledge only accepted 7-digit people like me, I would sign up immediately.
Back to losing a million dollars
What I have achieved in a very awkward way is the truth, that I hope to keep building our fortunes after we retire. How is that going to happen?
It starts with a very low payout rate. The average market returns are 3 to 4 times our planned return on our retirement accounts.
There is also still earned income. We have now come to a point where we can donate six figures annually and still not touch the money we have earmarked for retirement. I believe there is room to grow that online income as well.
After all, one day I could always consider another career. We have about a decade before we become empty nests. Once our little birds have flown out of the coop I might be interested in doing something completely different with my time.
Ultimately, I want to be in a position where losing a million dollars represents such a small percentage of our net worth that it is considered common and common to suffer such a decline.
I know what it's like to stave off a ten thousand dollar or a hundred thousand dollar loss. Someday I want to shake off the loss of a million.