Henk's journey thru life

[DutchGirl]

Hey RootofGood: I like your blog. I'm not sure whether MrMoneyMustache (for example) ever talked about possible dangers of retiring early (... except perhaps: "Arrr! Get over yourself, wussy! Grow a Mustache!"). I like his blog, too, by the way; but his persona has little patience with people who are less courageous

So I thought this post of yours was appropriate as it explores some of the possible pitfalls of retiring early and how to avoid them.

[Hankaroundtheworld]

He RootofGood, wow, 33 in ERE mode, that proves again how fast the new generation is. When I was 33, I just started to explore the world by work/travel, and certainly I was not so mature and aware as you are on that age, so I am impressed. I will start reading your blog as well.

[RootofGood]

Hey RootofGood: I like your blog. I'm not sure whether MrMoneyMustache (for example) ever talked about possible dangers of retiring early (... except perhaps: "Arrr! Get over yourself, wussy! Grow a Mustache!"). I like his blog, too, by the way; but his persona has little patience with people who are less courageous

So I thought this post of yours was appropriate as it explores some of the possible pitfalls of retiring early and how to avoid them.

I tried to quantify exactly what the risks are so that I could determine whether those quantified risks are something I can deal with (by earning some income or reducing spending, for example). Because there certainly are risks from retiring early.

It's just that I think most are way overblown. Inability to ever get a decent paying job ever again being a key overblown risk - look at Jacob, for example, to see a textbook example of un-retiring!

I feel like I should be polite and go introduce myself here!

[RootofGood]

He RootofGood, wow, 33 in ERE mode, that proves again how fast the new generation is. When I was 33, I just started to explore the world by work/travel, and certainly I was not so mature and aware as you are on that age, so I am impressed. I will start reading your blog as well.

I never managed to do the work/travel thing (just the two independently!). Looking forward to more travel soon though. We're taking 5 weeks off this summer and going north along the east coast and hitting DC, Philly, NYC, and then visiting Quebec City, Montreal, Ottawa, and Toronto, before returning to the US with a stop in Niagara Falls. It'll be interesting with our 3 young kids in tow!

I started saving pretty early on, before I even knew about early retirement as a well-defined concept. After 9 years of full time work, here we are! Pretty amazing.

[Hankaroundtheworld]

Amazing indeed, it took me 21 years, but luckily 15 years of that by living in every region of the world.
I saw that you also had quite some pension nest egg size, because you had swings of 65k USD (minus) and around 85k USD (positive) in just 2 Months because of market values of your funds in 2014, that means a nice size of funds -)

[RootofGood]

Amazing indeed, it took me 21 years, but luckily 15 years of that by living in every region of the world.
I saw that you also had quite some pension nest egg size, because you had swings of 65k USD (minus) and around 85k USD (positive) in just 2 Months because of market values of your funds in 2014, that means a nice size of funds -)

Yeah, we have a 7 figure portfolio (but just barely). The last 2 months have been a little crazy with the fluctuations, but our core expenses are roughly equal to our dividend yield (on a non-dividend oriented portfolio), so $50-100k monthly fluctuations don't really matter too much (as bizarre as that sounds...).

[Hankaroundtheworld]

Great, 7-figure in 9 years time.....you did something really good or had some sponsoring I still need to figure out this dividend payouts. At least, I will put more and more in balanced low-cost Index funds, but i have not figured out how to get a nice dividend payout.

[RootofGood]

Great, 7-figure in 9 years time.....you did something really good or had some sponsoring I still need to figure out this dividend payouts. At least, I will put more and more in balanced low-cost Index funds, but i have not figured out how to get a nice dividend payout.

That was all our hard work and savings! We've always been pretty frugal and live in a fairly low cost area (North Carolina). The stock market of the last few years helped push us over the top for sure.

[Hankaroundtheworld]

Kind of depressed today, several reasons, some old stupid investment went further down after being suspended for trading more than 7 years (via "free" advice from "financial Experts", yes, I know, how stupid can I be....). Also my company who is trying to rip me off from my bonus because of system issues !!! And actually more shit going on at this company .... Oh my, how I want to say goodbye to this company, but I need to get my bonus first, I will not give up the fight. All in all, I look forward to the ERE break, and the 1st year I only want to relax and get myself back in shape, mentally and physically ...

[Chad]

Kind of depressed today, several reasons, some old stupid investment went further down after being suspended for trading more than 7 years (via "free" advice from "financial Experts", yes, I know, how stupid can I be....). Also my company who is trying to rip me off from my bonus because of system issues !!! And actually more shit going on at this company .... Oh my, how I want to say goodbye to this company, but I need to get my bonus first, I will not give up the fight. All in all, I look forward to the ERE break, and the 1st year I only want to relax and get myself back in shape, mentally and physically ...

Keep fighting for that bonus. My company does the same thing. They stretch out the payment date, reduce it by arguing that there isn't inflation, change it so you get shares in the company instead of money(non-voting shares of course), etc. Make them pay!

[DutchGirl]

Hi Henk,

... Then I guess I'm lucky that I have only invested 1000 euros in a similar investment, and that they suspended it for only seven months instead of seven years, and that I'm currently at "only" -20%, so the current value is 800 euros.

Can you sell this investment now (just to finish all these negative feelings)? Or if it's a very small percentage of your net worth, can you just consider it lost, and if you get more than 0 euros out of it, consider that a profit?

No experience with bonuses here. I guess Chad said enough.

[Hankaroundtheworld]

Hiiii, it was 50k USD, and it is now valued at 30k USD (after 7 years suspension), and it is still not sold, even though they promised. This was a fund by Frontier, NEVER BUY FROM THIS FU*KING COMPANY, and also never buy via "free" advice from financial advisers, but that you already know, me too, but too late !!

[DutchGirl]

OK, if it is any comfort... Did I tell you about the time that my then 35-year-old boyfriend put 30,000 of his euros in stock options? After a nice run-up of the money to 45.000... he lost it all.

Maybe that does make you feel better?

PS. Yes, he has learned his lesson. No more stock options since he doesn't actually know very well how they work.

[Hankaroundtheworld]

Hi Dutchgirl, I learnt that I should not compare and feel better because of somebody's else his misery but I know what you mean, we all learn by mistakes. If I count my mistakes from the last 15 years in investments (especially in real estate, but also funds, etc..), I probably end up around 200k Euro in loss. 100k Euro loss was related to off-plan apartment, which is now rented out, so a chance to recover, but the other 100k Euro was truly lost in bad investments.
Anyway, we need to look ahead, and take the good (but expensive) lessons for future steps. I should be happy that ERE is around the corner at age of 47, in good health, good relationship with my wife, ready to travel (more), sooooo.... life if good (I am programming my brain )

[DutchGirl]

You made some mistakes, but you also made some pretty good choices in your life, leading you to being healthy, happy and financially independent at age 47.

Just this morning I read a blogpost about someone else who put in 22 euros per month into some "get rich quick scheme" for 15 years. Payout is around the corner: she made an average annual profit of 1%. Ouch. The people who got rich were apparently on the other side of the table (the institution took a lost of "costs" out of her investments). Another example of being tricked by a financial "advisor" at an investment company (in this case a Dutch one).

My only "luck" is that I was way too young at that time to make any financial decision. I am wondering what errors I'll make... I hope I'll be able to see through some or most of the sweet talking and wooing...

[Hankaroundtheworld]

Well, these forums help you to prepare for any strategy. Nowadays, if you are facing a potential investment, you can double check online in forums, and get the feedback that could prevent you for mistakes.

For instance: I want to start with index-based funds, and I was thinking of the Dutch company called iBeleggen, basically they decide the different index funds for you, but you pay for that (around 0.3% TER outside the index fund costs itself). I was wondering, do I really need those companies, can I not select a few Index funds myself, take a personal Binck bank account (or other Broker), and then buy these funds. I mean, is it worth to let iBeleggen make these investment decisions for 0.3% Costs?

[henrik]

It seems Vanguard operates in the Netherlands as well, have you checked what they are offering?

[Chad]

Well, these forums help you to prepare for any strategy. Nowadays, if you are facing a potential investment, you can double check online in forums, and get the feedback that could prevent you for mistakes.

For instance: I want to start with index-based funds, and I was thinking of the Dutch company called iBeleggen, basically they decide the different index funds for you, but you pay for that (around 0.3% TER outside the index fund costs itself). I was wondering, do I really need those companies, can I not select a few Index funds myself, take a personal Binck bank account (or other Broker), and then buy these funds. I mean, is it worth to let iBeleggen make these investment decisions for 0.3% Costs?

It's not worth it. Read the 1 page blog post at the link below and see how simple it can be.

http://www.ritholtz.com/blog/2013/02/ke ... ng-simple/

You can use Vanguard, as henrik suggested or some other cheap fund/ETF company. I'm not sure what other companies you would have access to, as my suggestions would all be American.

This may not get you the best return, but it's much better than doing nothing. Plus, it's simple, understandable, and easy to implement.

[DutchGirl]

I believe brandnewday.nl and meesman.nl would be other options for you, Henk.

[Tyler9000]

Also my company who is trying to rip me off from my bonus because of system issues !!! And actually more shit going on at this company .... Oh my, how I want to say goodbye to this company, but I need to get my bonus first, I will not give up the fight. All in all, I look forward to the ERE break, and the 1st year I only want to relax and get myself back in shape, mentally and physically ...

That sucks about the bonus. System issues... that's transparently ridiculous. It sounds like you're very wise to be planning your exit.

I once worked at a place that promised a bonus but never paid out. It turns out (was obvious, actually) that they were on very shaky financial ground and were doing shady things behind the scenes. You know it's bad when the CFO quits. The only way people (including me) collected the bonuses was to leave the company -- I assume they preferred to pay former employees (that have nothing to lose by taking them to court) than take the risk of a lawyer taking a look at the finances. I'm much happier now being away from that type of environment.