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How to Retire Forever on a Fixed Chunk of Money

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  1. #11

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    Quote Originally Posted by Viktri:
    Not taking unpredictable events into consideration is a mistake.
    Can you please tell me how I can take events into consideration which are unpredictable? How should I know what I don't know? One often reads that these "unknown unknowns" create anxiety.
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  2. #12

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    Quote Originally Posted by Windmill65:
    Can you please tell me how I can take events into consideration which are unpredictable? How should I know what I don't know? One often reads that these "unknown unknowns" create anxiety.
    I think to manage the unknown unknowns, I think it is important to focus on the condition rather than the specific event, since you cannot predict it by definition. Acknowledging that and taking into consideration the fact that the market is likely to crash the longer you stay in the market, that your properties will very likely experience some period of vacancy during the period that you own them, and your base currency or gold/silver assets will lose value when you hold them. It could even occur all at once. And if you are employed, you could also lose your job during that time (could even be related).

    I don't know what event could cause a stock market crash, real estate crash, gold crash, commodities crash, etc. but I'd like to have a portfolio that could withstand that, just in case everything crashes at the same time.

    Specific actions people take: holding cash of various currencies or access to financing, not over-leveraging, developing relationships with agents even when your apartments are fully occupied so that you have a pipeline of future tenants, some sort of hedging (ice cream shop/umbrella shop thing), not putting all your assets in either real estate or the stock market or small businesses, etc. but I think specific actions are not really useful give everyone has their own expenses.
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  3. #13

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    Quote Originally Posted by Viktri:
    I think to manage the unknown unknowns, I think it is important to focus on the condition rather than the specific event, since you cannot predict it by definition. Acknowledging that and taking into consideration the fact that the market is likely to crash the longer you stay in the market, that your properties will very likely experience some period of vacancy during the period that you own them, and your base currency or gold/silver assets will lose value when you hold them. It could even occur all at once. And if you are employed, you could also lose your job during that time (could even be related).

    I don't know what event could cause a stock market crash, real estate crash, gold crash, commodities crash, etc. but I'd like to have a portfolio that could withstand that, just in case everything crashes at the same time.

    Specific actions people take: holding cash of various currencies or access to financing, not over-leveraging, developing relationships with agents even when your apartments are fully occupied so that you have a pipeline of future tenants, some sort of hedging (ice cream shop/umbrella shop thing), not putting all your assets in either real estate or the stock market or small businesses, etc. but I think specific actions are not really useful give everyone has their own expenses.
    Thanks for your detailed reply.
    You mention how you can, at least on paper, make a list of possible crisis scenario's related to each asset class in which you're invested. The thing is, however, that these are the potential crises you can think of. The real problem arises with those crises that you can't think of in advance.

    Whereas you cover the potential headwinds in your investments, you don't cover the "unknown unknowns" in your own life. People in general do mention the potential crisis if you suddenly become dependent on health care (especially if you're living in the USA). That will for sure increase your yearly expenses. However, there could be other cases where you're suddenly faced with unavoidable extra expenses. Some may be incidental, whereas others may impact your cost of living for the rest of your life. These "unknown unknowns" could ruin your entire financial planning and your retirement.
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  4. #14

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    Quote Originally Posted by Windmill65:
    Thanks for your detailed reply.
    You mention how you can, at least on paper, make a list of possible crisis scenario's related to each asset class in which you're invested. The thing is, however, that these are the potential crises you can think of. The real problem arises with those crises that you can't think of in advance.

    Whereas you cover the potential headwinds in your investments, you don't cover the "unknown unknowns" in your own life. People in general do mention the potential crisis if you suddenly become dependent on health care (especially if you're living in the USA). That will for sure increase your yearly expenses. However, there could be other cases where you're suddenly faced with unavoidable extra expenses. Some may be incidental, whereas others may impact your cost of living for the rest of your life. These "unknown unknowns" could ruin your entire financial planning and your retirement.
    Perhaps I wasn't clear in what I wrote.

    An unknown unknown is indeed something that you cannot predict in advance. However, not all unknown unknowns are equal - in fact we rarely care about those that are positive on our portfolio or neutral. We really only care about those unknown unknowns that create negative impacts on our portfolio.

    So in this way, we actually do know something about these unknown unknowns - they have negative effects on our portfolio. That's what I mean by focusing on the condition rather than the specific event.

    That's why having a robust portfolio is the manner in which to mitigate such unknown unknown events. Most famous investors have their own system - Warren Buffet famously uses Ben Graham's margin of safety.

    But if your anxiety is because you expect to be able to mitigate 100% of risks, I think that's unrealistic.
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  5. #15

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    I'm 99% with Mr Moustache. I think some of what he says is a bit too far fetched or only applicable to the USA. I approve his general approach of spending as little as possible, and in return giving yourself the free time to actually live your life, rather than working in order to make money to buy things you don't have time to enjoy. I arrived to the same idea even before I came across his web site. And I think I could retire now, especially given that I live alone and plan to stay in low cost areas of the world.

    Hell, I'm sitting here and waiting for my bosses to fire me, so that I can have an excuse to stop working. But I can't bring myself to resign yet, my greed won't allow me to give up the (not so bad) salary and the job isn't that awful either


  6. #16

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    Quote Originally Posted by orel100x:
    Hell, I'm sitting here and waiting for my bosses to fire me, so that I can have an excuse to stop working. But I can't bring myself to resign yet, my greed won't allow me to give up the (not so bad) salary and the job isn't that awful either
    You might like this

    https://www.financialsamurai.com/how...aying-goodbye/

  7. #17

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    Yeah, well, I will need to work a bit longer before I can ask for a few grands in voluntary redundancy money


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  9. #19

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    @pin - I read that article and at the same time, I was reading something on FT about the "bank of mum and dad". While spending has dropped with previous generations in the past, it is increasingly evident (in my opinion), that these patterns may have to factor in some additional costs of giving the next generation a little boost.


  10. #20

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    Quote Originally Posted by orel100x:
    Yeah, well, I will need to work a bit longer before I can ask for a few grands in voluntary redundancy money
    Whats the point of selling your soul (or opportunity cost if there is any) for a few grand?
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