nine month update (mar 2018)
Spending: Living expenses for the month came to
$2750. This is $23 under the 2018 monthly targeted amount of $2773. Our
spending is 0.8% under budget for the month, 10.1% under for the year,
and 12.7% over since retirement. We generated $5140 of income this month
from a tax refund, my wife wanting to work, and some of my old book
royalties. Our investment withdrawal was -$2390 this month (a $2390
deposit), thus our pro-rated, annually-adjusted withdrawal rate is
-2.59% for the month, -0.89% for the year, and 1.58% since retirement.
Without the additional income stream, our pro-rated, annually-adjusted
withdrawal rate would have been 2.98% for the month, 2.70% for the year,
and 3.38% since retirement.
Investments: The portfolio went from $1,155,635 to $1,114,925 (a 3.52% decrease for the month), which went up to a new total of (drum-roll) $1,117,315 after cashing the checks and paying the bills. This is an 8.9% increase from the original starting balance of $1,025,772, even after withdrawals of $12,349 for living expenses over nine months. Since retirement, capital income from the investment portfolio has produced the equivalent of a full-time employee generating $66.60/hr of labor income. To sustain the original portfolio balance, $16.98/hr is the pace needed for COL based on spending rate; $7.92/hr is the pace needed for COL based on withdrawal rate. Ignoring possible dividends, VTSAX (62% AA) went down 3.9% this month (1.3% up for the year); VFWAX (21% AA) went down 5.2% (0.2% up for the year); VWLUX (17% AA) went down 0.8% (down 2.3% for the year).
Reflections: Given the wild ride of the market in February, I suspect that many subscribers are curious about my level of investment panic. These are the ten best reasons why I have none: my withdrawal rate thus far has been less than one-half of the 100%-historically-safe fifty-year portfolio survival point (1.58% versus 3.20%); the market showed that I retired well below its maximum appetite when the portfolio increased a further 10% above my goal amount by year-end 2017 (and nearly 20% by the 1/26/2018 peak); portfolio survival is best understood when considering its correlation with CAPE, and nothing has actually changed there (e.g., $1M at peak market value is no more/less historically safe than $900k following a 10% drop); my model still has no reliance upon social security, supplemental income, inheritance, or home equity; I understand the inevitably of corrections and am still light years beyond where I would have been financially if I had listened to any of the dart-throwing monkeys offering their advice over the years on when to jump out; starting a new career at some point seems inevitable considering that I burn through interests, goals, and accomplishments rather quickly; a market downturn due to something like wage inflation is for the overall good of society (and for the good of those new to the financial independence movement); a market downturn would (fairly or not) reflect poorly upon the one person who is already widely regarded by intellectuals as a demagogic moron; my 100-point gratitude list is embarrassingly rich; and I will never regret leaving work since it was for the sake of my physical and mental health, not because I had met my financial goals. Sure, I wish I had temporarily jumped out near the market peak, but I’m also glad I didn’t jump out in 2008/2010/2011/2015 when the monkeys were howling just as loud.
Experiences: I posted a 1:25:04 in my half marathon to earn my first age group award and first top 1% finish (4th out of 406). My previous best was 1:27:57. I miscalculated/overestimated the effort necessary to go sub-1:25 upon completing Mile 12, conceding that I could not go uphill at 6:10/mi pace when it was actually 6:25/mi that was needed. It’s easy for me to suggest this now, but I feel that I could have found a way to shave five more seconds. Math is hard when you are deprived of oxygen. I finished watching Game of Thrones, which I placed at #11 on my favorite shows list. I played the rest of the Gamecube games that I never got around to experiencing, including the excellent Tales of Symphonia. The controller however nearly ruins the system. I am now finally caught up for the first time since 2005 on having played every game, listened to every album, and watched every film that I own. My parents recently had their house and farm appraised at $800k (up from $500k five years ago), which is good news when considering potential inheritance. I neatened up the driveway a bit and detoured water flow in our woods so that we have a small creek after a rain instead of having everything continue to run into a growing sinkhole. I spent a whole day hanging out with an old friend, listening to what he thinks are financially responsible plans for a large profit from the sale of his house. My solicited advice was analogous to a horse and water.
Upcoming: I have nothing major planned this month because Final Fantasy XV gets a PC release on 3/6. I resisted buying a PS4 to play it for over a year. Training intensity will also peak due to my full marathon taking place on 4/7. It’s the state championship, so we’ll see how that goes. These two events will occupy most of my free time in March. I’ll also be doing whatever the fuck I want.
Investments: The portfolio went from $1,155,635 to $1,114,925 (a 3.52% decrease for the month), which went up to a new total of (drum-roll) $1,117,315 after cashing the checks and paying the bills. This is an 8.9% increase from the original starting balance of $1,025,772, even after withdrawals of $12,349 for living expenses over nine months. Since retirement, capital income from the investment portfolio has produced the equivalent of a full-time employee generating $66.60/hr of labor income. To sustain the original portfolio balance, $16.98/hr is the pace needed for COL based on spending rate; $7.92/hr is the pace needed for COL based on withdrawal rate. Ignoring possible dividends, VTSAX (62% AA) went down 3.9% this month (1.3% up for the year); VFWAX (21% AA) went down 5.2% (0.2% up for the year); VWLUX (17% AA) went down 0.8% (down 2.3% for the year).
Reflections: Given the wild ride of the market in February, I suspect that many subscribers are curious about my level of investment panic. These are the ten best reasons why I have none: my withdrawal rate thus far has been less than one-half of the 100%-historically-safe fifty-year portfolio survival point (1.58% versus 3.20%); the market showed that I retired well below its maximum appetite when the portfolio increased a further 10% above my goal amount by year-end 2017 (and nearly 20% by the 1/26/2018 peak); portfolio survival is best understood when considering its correlation with CAPE, and nothing has actually changed there (e.g., $1M at peak market value is no more/less historically safe than $900k following a 10% drop); my model still has no reliance upon social security, supplemental income, inheritance, or home equity; I understand the inevitably of corrections and am still light years beyond where I would have been financially if I had listened to any of the dart-throwing monkeys offering their advice over the years on when to jump out; starting a new career at some point seems inevitable considering that I burn through interests, goals, and accomplishments rather quickly; a market downturn due to something like wage inflation is for the overall good of society (and for the good of those new to the financial independence movement); a market downturn would (fairly or not) reflect poorly upon the one person who is already widely regarded by intellectuals as a demagogic moron; my 100-point gratitude list is embarrassingly rich; and I will never regret leaving work since it was for the sake of my physical and mental health, not because I had met my financial goals. Sure, I wish I had temporarily jumped out near the market peak, but I’m also glad I didn’t jump out in 2008/2010/2011/2015 when the monkeys were howling just as loud.
Experiences: I posted a 1:25:04 in my half marathon to earn my first age group award and first top 1% finish (4th out of 406). My previous best was 1:27:57. I miscalculated/overestimated the effort necessary to go sub-1:25 upon completing Mile 12, conceding that I could not go uphill at 6:10/mi pace when it was actually 6:25/mi that was needed. It’s easy for me to suggest this now, but I feel that I could have found a way to shave five more seconds. Math is hard when you are deprived of oxygen. I finished watching Game of Thrones, which I placed at #11 on my favorite shows list. I played the rest of the Gamecube games that I never got around to experiencing, including the excellent Tales of Symphonia. The controller however nearly ruins the system. I am now finally caught up for the first time since 2005 on having played every game, listened to every album, and watched every film that I own. My parents recently had their house and farm appraised at $800k (up from $500k five years ago), which is good news when considering potential inheritance. I neatened up the driveway a bit and detoured water flow in our woods so that we have a small creek after a rain instead of having everything continue to run into a growing sinkhole. I spent a whole day hanging out with an old friend, listening to what he thinks are financially responsible plans for a large profit from the sale of his house. My solicited advice was analogous to a horse and water.
Upcoming: I have nothing major planned this month because Final Fantasy XV gets a PC release on 3/6. I resisted buying a PS4 to play it for over a year. Training intensity will also peak due to my full marathon taking place on 4/7. It’s the state championship, so we’ll see how that goes. These two events will occupy most of my free time in March. I’ll also be doing whatever the fuck I want.