Retire Early: The Simple Guide – I wrote a book

Financial Independence

Retire Early The Simple Guide is now available as an ebook and hardcover! I wrote this book with Thomas Walke, another blogger in Switzerland.

Our book is about guiding the reader to their financial independence and possibly to their early retirement. Retire Early The Simple Guide is a general book applicable to most countries, but we primarily think about European countries.

This article discusses Retire Early: The Simple Guide in detail and how we wrote that book.

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9 Reasons to Aim for Financial Independence

Financial Independence

You have probably heard a lot about Financial Independence. A lot of things on this blog are about my path to Financial Independence (FI). But why would you want to be financially independent? There are many reasons for wanting to reach financial independence. And as you will see, retiring may not be the most significant reason.

In this article, I list the main reasons people want to be Financially Independent. Of course, the reasons may not be the same for everybody, and some will appeal to you more than others. It is fine. Not everybody has the same motivations in trying to reach FI. And not even everybody wants to reach FI!

You may have some reasons to reach financial independence that I did not even think about! Please let me know in the comments if that is the case! I would like to know why you want to be Financially Independent.

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How to Open an Interactive Brokers Account in 2022?

Financial Independence, Investing

Interactive Brokers is an excellent broker from the United States. It is known for its cheap fees and its unique range of offered investment products. It is being used by many personal finance bloggers, for instance.

It is currently the best broker that allows access to U.S. ETFs. And U.S. ETFs are the most efficient ETFs for Swiss investors.

In this guide, I go over how to open an Interactive Brokers account. It is not very difficult, but there are a few things you need to know before you start your application. And I also teach you how to optimize your account to save money!

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Should you use a cash cushion in retirement?

Financial Independence

When you retire based on a safe withdrawal rate, you withdraw from your principal month after month. The main risk is that you run out of money before the end of your retirement.

The main case when that would happen is if you retire just before a major stock market crash. A bad sequence of returns is a big risk for your retirement. One way to reduce the risk is to reduce the safe withdrawal rate you are using. But that means you will need to accumulate significantly more money. And you may also end up with a lot of money left at the end of your retirement.

Another solution that many people wonder about is whether they should hold more cash to protect themselves against that risk. This is exactly what we are will find out today!

I have simulated a few usages of so-called cash cushions in retirement. We will see whether that makes sense or not.

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Should you rebalance your portfolio in retirement?

Investing, Financial Independence

Many people want to know whether they should rebalance their portfolios. This is an excellent question, and it becomes essential once in retirement.

Rebalancing is the fact of selling the shares that have overperformed and then buying the stocks that underperformed. The idea is to keep your portfolio allocation to the same level.

People disagree on whether you should rebalance in retirement or not. People do not even agree on that during the accumulation phase. So we will cover this subject as well.

And since I now have a lot of data about the stock market, I figured it would be great to use. So, I simulate whether it has historically been better to rebalance or not.

The data in this article is based on more than 3.2 million simulations of withdrawal rates! So, without further ado, let’s delve into rebalancing!

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Add some margin of safety to your FIRE plan

Financial Independence

If you plan to retire early based on a withdrawal rate strategy, you base your FIRE plan on historical data. So, what would happen if the future is very different from the past?

We obviously cannot predict the future. So, what can we do? We can improve our FIRE plan with some margin of safety!

In this article, we see several ways of adding some margin of safety into your FIRE planning.

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How to choose a Safe Withdrawal Rate?

Financial Independence

Your Safe Withdrawal Rate (SWR) is an essential component of your retirement planning if you plan to retire based on your investment portfolio. We have already talked at length about this method of retirement, the essence of the Financial Independence and Retire Early (FIRE) movement.

But we have not talked in-depth about how to choose a Safe Withdrawal Rate for your situation. No SWR would fit every situation. And while there are some rules of thumb, it is still something you have to decide for yourself.

So, by the end of this step-by-step guide, you will know how to choose your Safe Withdrawal Rate.

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All you need to know about the Trinity Study

Financial Independence, Investing

You have probably heard of the 4% rule if you are interested in early retirement. This rule states that if you withdraw 4% of your portfolio every year, you can sustain your withdrawals for 30 years. But do you know where it comes from? If you have read a lot about it, you probably heard about the Trinity Study. This study is where it all started.

But do you know what the Trinity Study is? Probably not. A lot of things people are saying about the Trinity Study are not correct. A lot of people talking about this study have not even read the original paper.

There is nothing mystical about this study. It is merely a research paper by three professors of The Trinity University. Hence the name.

And do you know that it has nothing to do with early retirement? So, why is it the cornerstone of most Early Retirement articles?

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Retiring early is simple but not easy

Financial Independence

Many say I make FIRE and early retirement look too simple. And many people are falling into the trap of believing that retiring early is easy.

I want to delve into that critical subject. For me, retiring early is simple. There is no doubt. However, it is not easy! The difference is fundamental. And there are no secrets to getting to FIRE. You need to focus your efforts on that goal. And how much effort you put into it will shape how fast you can retire.

So, let’s see why FIRE and early retirement are simple concepts but not easy to reach.

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