One question that many people have is whether they should rebalance their portfolio or not. And this is even more important in retirement.
Rebalancing is the fact of selling the shares that have overperformed and then buy the shares that underperformed. The idea is to keep your portfolio allocation to the same level.
People do not agree on whether you should rebalance in retirement or not. People do not even agree on that during the accumulation phase. So we are going to cover this subject as well.
And since I have now a lot of data about the stock market, I figured it would be great to use. So, I am also going to simulate whether it has historically been better to rebalance or not.
The data on this article is based on more than 3.2 million simulations of withdrawal rates! Without further ado, let’s delve into rebalancing!
Continue reading “Should you rebalance your portfolio in retirement?”
If you follow any blog about Financial Independence, you probably have heard about Sequence of Returns Risk. Even on this blog, I talked about this concept. But do you know exactly what it is?
A sequence of Returns Risk, or simply Sequence Risk, affects people that regularly invest or regularly withdraw from their portfolio. When you invest, they should average out. But this is more important when you withdraw. The main idea is that negative returns in the early years are much worse than in the later years.
It is a bit difficult to explain with words. But it is very easy to understand with examples. I will show the difference that sequence of returns risks can make to different scenarios.
So let’s delve into Sequences of Returns Risk and what to do about it.
Continue reading “Sequence of Returns Risk can ruin your retirement”
If you are interested in personal finance, you probably have come across the term Emergency Fund. An Emergency Fund is simply some money, available directly, that you can use in case of emergency. Most people will advise you to get such an account. And they will insist heavily on this subject.
It is an interesting subject since not everybody agrees on it. Some people have an emergency fund that can cover one year of expenses. And some people think you do not need one.
Personally, I do not think an emergency fund is a bad thing. But you should be aware of its cost. It also has disadvantages. And you may not need a fund as big as some people tell you. I think that too much people put too much emphasis on the emergency fund.
In this post, we are going to see both sides of the story. We are going to see in details what an emergency fund is.
Continue reading “Emergency Fund – Do you Really Need One in 2019?”
Many people want to retire early! The Financial Independence and Retire Early (FIRE) movement is taking in a lot of momentum. But, few people want to retire early in Switzerland. So, is it even possible to retire early in Switzerland?
I believe it is possible to retire early in Switzerland. But for that, you need to know the differences between Switzerland and other countries. Since most FIRE people are in the United States, we need to know what changes here. It is necessary to see if it is possible and how to adapt to it.
Even though it is possible, I think it is more difficult to retire early in Switzerland than it is in the United States. But some people, including me, could not retire in another country than Switzerland. I would rather continue working my whole life than have to move.
In this post, I am trying to see whether it is possible to retire early in Switzerland. And also, how can we retire early in Switzerland?
Continue reading “How to retire early in Switzerland?”
To become more successful with our money, we can copy what financially successful people are doing! We should see the most important money habits and traits that they have. Once we know that, we can imitate them and improve our finances.
I am going to talk about the most essential habits of successful people. I am not only talking about rich people here. But I am talking about people that are smart with money, and that can reach their goals. This could be people that can retire early. Or that can be people that accumulate ten million dollars.
There are many ways to be successful with money. And we can learn from all kinds of people.
So, let’s see what are the eight most important good habits you can learn to improve your finances!
Continue reading “8 Good Habits of Financially Successful People”
Would you like to know exactly which withdrawal rate is safe and will sustain your lifestyle for a very long time? You will find the answer in this post with updated results from the Trinity Study!
I have recently talked in details about The Trinity Study. This study researched different withdrawal rates for retirement. Although the original research was not about early retirement, it is referred a lot in the Financial Independence and Retire Early (FIRE) movement!
However, for me, there are two caveats with the original study. First, they are only covering the period until 1995. And then, they are not covering more than thirty years of retirement. Thirty years is not enough for some people wanting to retire early.
Therefore, I decided to reproduce all the results of the original study. I used much more recent data from 1871 to 2018. I have also considered periods as long as 50 years.
In this post, you will find how I did it, and all the results I have been able to gather from this data!
Continue reading “Updated Trinity Study Results for 2019 – More Withdrawal Rates!”
Your Net Worth is a very important personal finance metric! This will tell you how much money your assets are really worth. It can also tell you how close you are to being Financially Independent. This is one of the best personal finance metrics that you should always keep track of.
Computing your net worth is not very difficult. However, there are some subtleties when doing. And it is important to get it right.
In this post, we are going to see how to calculate your net worth. It will tell you how much your possessions are really worth, in money. Having a clear idea of your exact net worth is very important. It will help you to see how far you are from reaching your goals. If you keep track of it, you will also see how well you are doing.
So, let’s get into it!
Continue reading “How to Calculate Your Net Worth Easily”
The Financial Independence and Retire Early (FIRE) movement is an excellent thing. It is all about getting financially free from the job. That means you can start a new career or even retire without having money issues. Most people are going to like this!
However, it is not perfect, and by far. A lot of people following the FIRE philosophy are quite depressed. And even some early retirees are feeling depressed even though they reached their goal of becoming Financial Independent.
You should not believe that becoming Financially Independent will solve all your problems! Because it will not! It is not a cure for all your problems. A lot of your issues will carry over to your retirement. It is essential to fix your issues during the FIRE journey and not wait for FI to fix everything for you!
If you already do not know what to do with your weekends, you will be even more bored once you retire! And if you are not careful, you may well run out of money before you think!
Without further ado, let us see what is wrong with the FIRE movement and community!
Continue reading “9 Things that are Terribly Wrong With FIRE”
You probably have heard of the 4% rule if you are interested in Financial Independence. But do you know where it comes from? If you have read a lot about it, you probably heard about the Trinity Study. It is where it all started.
But do you know what the Trinity Study is? Probably not. A lot of things said about the Trinity Study are not correct. I am feeling like 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?
Today, I want to go into details about this paper and what it exactly is! We are going to see what is inside the Trinity Study. And also what this data is showing us. And finally, we are going to see what people get wrong when they talk about the study.
Continue reading “All you need to know about the Trinity Study”
You probably all know what savings rate are. It is simply the percentage of your income that you are saving. If you do not know your personal savings rate, you should probably start with calculating it.
The basic formula is fairly simple. You need to divide your savings by your income. And this gives you your savings rate. It seems simple, right?
Well… Not really that simple. There are many ways to calculate it. The problem comes from what you count as expenses and income. And because of that, it is extremely difficult to really compare savings rates.
And it seems to me that most people on the internet are trying to inflate their savings rate by using the computation that yields the higher number. So today, we are going to see how to increase your savings rate with math!
In this post, I am going to show how we increased our savings by 26% without doing anything! And so can you!
Continue reading “How to make your Savings Rate Explode with Math”