ERE in developing/third world nations (as origin)?

[zyd]

Hey folks!

I'm not much of a talker hence the post count despite months of stalking the forum. I'm from a small SEA nation (Malaysia, to be precise) in my mid-twenties and about to roll off in earnest on this.

What I wanted to ask was:
1. Has anyone here either achieved FIRE, or are working towards it in a third world/developing world?
2. What are the concerns, or deviation from standard ERE/FIRE practices that aren't practical for us?
3. Assuming we never leave the nation, does our SWR deviate from the accepted 4%+ range?

I've discovered on my own one particular problem point thus far, in food. Try as I may there's a threshold that I can't keep it below (around 7-10$/day) even after eating locally and cooking my own meals. This translates to about 2.5USD per day, 75$ per month. This is a diet of plain rice and vegetables and tofu and oatmeal + seeds, plus a lot of free office coffee.

Maybe I'm just spoiled though, and I can lower it further with white rice and beans... If anyone has done this in the region, please let me know how you've gone about it!

[BRUTE]

hello. brute doesn't know if any humans have pulled FIRE off while staying in an SEA nation, but at least one had moved to Singapore, which had dramatically increased his savings rate due to very high income and very low taxes. increasing income by moving to SG might be a strategy worth thinking about, even if absolute cost of living would likely be higher. this depends on career and education, brute supposes. SG probably needs more bankers than gardeners.

[jacob]

1) I recall one. I don't think he's active on the forum anymore, but there was a journal. You'll have to go search in the journal section. Note, that I don't really count much of the world as developing/third anymore. Physdude is currently in Malasiya. He made his money elsewhere though: viewtopic.php?t=9396

2) ERE (in the methods and principles sense) should be universal. E-ER depends very much on culture. Some Asian cultures seem to particularly frown upon in. I don't think there's ever been anyone here from Japan (other than expats) ever. Working/stable capital markets is probably the biggest challenge for FIRE.

3) The 4% rule is ONLY valid in the US and a few other nations (Sweden, Canada, New Zealand, and Denmark) insofar you go by historical returns and presume that the 21st will be as good or better than the 20th century. There are many people pursuing FIRE who seem to optimistically ignore that inconvenient fact and even dial up the optimism by another notch by going to 100% stocks---or talk themselves into accepting 5 or 10% failure rates or higher.

See e.g. https://www.forbes.com/sites/wadepfau/2 ... 9e2dca5e29 (see chart on page 3 in the article).

For example for a 100% stock portfolio with Japanese history, the rule is LESS THAN 0.5% SWR! And for several European countries (because of WWII or just generally useless markets), it's less than 1.5% SWR.

[Solvent]

I'm in a developing country but I'm on an expat package so I'm probably not the candidate you had in mind to answer your questions. Still, a few thoughts:

My spouse is from a developing country. Often social safety nets are near non-existent and one may be expected to care for family members, particularly aged parents (causation can run both ways here -> less wealth means more reliance on families rather than society for support, but in a culture where familial support is the expectation, then fewer resources are devoted to social safety nets). This is not something exclusive to developing countries but I'd say it's more prevalent. When my parents-in-law become unable to support themselves my wife and I, and her siblings, will need to figure something out with regards to their upkeep. This could potentially mean a wide range of things.

Volatility and risk burdens. I would hypothesise that there is often more risk of disaster in developing countries. Flooding, fires, theft, violence. These tend to be better managed in developed countries (again, “approximately and on average”, as the statisticians say…). This might mean you will require a bigger cash buffer or to build more resilient personal systems in a developing country, increasing your (opportunity) costs.

Of course there are arguments in favour of living in a developing country, if you can take advantage of lower cost of living. If you can find a way to obtain a developed-world income through working online or finding an international employer, then you might be able to make out pretty well (geographic arbitrage). But (a) this can be difficult and (b) sometimes living in the developing world is not actually much cheaper than a developed country, and I would say this is particularly true if you have an ERE mindset.

[Seppia]

I don't come from SEA but I'm from Italy, which in terms of earning power (in PPP) is probably closer to Malaysia than to NYC, SFO, HK, Singapore and the other hi-cost/hi-wage places.

In my personal experience, moving to the top places in terms of salary has overall been a winning proposition, for a few aspects:

1- Savings Rate really doesn't mean much if you don't plan to FIRE in the same place where your career is.
What matters is the absolute amount of money saved.
It is better to save 10% of $100.000 than save 30% of $20.000.

2- For younger people, spending the first years of their careers in big and fancy places is a boost on future prospects.
The fact that I worked in Paris, Montecarlo and NYC has propelled me to a position now here in Italy that would not have been accessible had I stayed in my home country from the very beginning.

So I basically second BRUTE's recommendation to try and move to SG or HK to beef up your resume and absolute amount of $$$ saved

[Stahlmann]

2- For younger people, spending the first years of their careers in big and fancy places is a boost on future prospects.

This theme goes in and off menay times. Can anyone elaborate on this... or how spot and be selected for such opportunity?

[Seppia]

In my experience it went like this:
You are hired for new jobs by human beings
Human beings have a natural tendency to believe that, all else being equal, a candidate that scored jobX in positionY for companyZ in New York/Paris/London/etc is better qualified than one who has the exact same characteristics in a small(er) city.
Also, employers tend to value international experience, so it's a double win

[TheWanderingScholar]

I agree with Seppia on the last point; potential employers and even graduate schools look highly upon it as well.

Even working as Lodge Host at a national park, my experience living overseas for a year actually made up for my inexperience. The recruiter specifically said my cultural adaptablility was a selling point.

My previous experience living in Finland honestly was the strongest aspect of me actually getting my scholarships to pay for first and tuition waiver, as honestly some of the people I go to school work already have a master's, work in Ministry of Environment for foreign countries, as professional surveyors. Essentially I am the inexperienced newcomer, whose main strength was the cultural flexibility to adapt to a country highly similar to Estonia, alongside coming from the US with a strong GPA foundation, and baseline skill set.

[fiby41]

Which is why I am going for -3% SWR.

[Jean]

From your number and my experience in SEA, I don't think that cutting down on food would be wise, getting rid of vegetables and tofu is not going to let you save a lot of money, and your health might suffer from the lack of them.
What are your income and saving rate?
Would it be possible for you to buy some property and rent it out to tourists or expats, if you want to stay in Malaysia? My impression is that as a local, you have an advantage for this kind of investment over foreigner, and it might be one of the strategy that is easier to pull out in a lower GDP country than in a high GDP place.
I'm curious about your strategy.