In 2008, the PP returned - 0.7 % and followed up in 2009 with a 10.5% gain.jacob wrote:Given the very short periods of time it takes to accumulate FI under ERE, it also depends on whether you have "compound interest" working for you or against you.
People will have had EXTREMELY different experiences depending on whether they've been in it for e.g. 2004-2009 or 2009-2014. The former will feel like treading water or quicksand. The later will feel like having a rocket strapped on your back.
In addition, it will depend a lot on whether you're income has been in the $25-50k range or the 50-100k+ range. The former will fell like you're really working for it. The latter will feel like you played the game on cheat-mode.
Regardless, once you start accumulating enough so that your NW times even conservative returns start equaling your income (likely several years from hence), you will just be blowing by ever higher amounts of six figs---getting from 500k to 600k will happen in the blink of a eye. OTOH, you will also find that a market turndown can complete stomp or even reverse all the earned income you had over a year ... or two. Anyone who already accumulate significant NW and lived through 2008/09 will attest to that.
In summary, you will find that:
1) Initially, it mostly depends on how much you make + your savings rate. And it'll happen at the speed of your salary---for me this was very slow because I was in grad school.
2) In the medium game, it depends on whether you were lucky enough to have this happen during a bull market or unlucky to have it happen during a bear market.
3) In the end game, it's all market based. Your income no longer really matters.
At this point, I've experienced practically all the combinations possible. I recommend that anyone who haven't experienced the suckier ones yet (e.g. low income or markets that return -20%/year) to mentally prepare yourself. Meditate on it. Try to imagine how you would handle it WHEN it happens.
So even in really bad times, people can sleep really well if they are super diversified similar to the PP.
Historically, the worst year for a PP was a -4.1 % loss.
This isn't necessarily a promotion for the PP, just saying if you're diversified enough, your lifestyle doesn't have to change that much year to year.
Now, I am having much wiser years......