A long time ago, a French philosopher (Blaise Pascal) was weighing the pros and cons of religion and he realized that the devoutly religious were making a bet with unseen odds.
If you were not religious, you would definitely end up in hell. If you were religious you could still end up in hell despite living a devout life simply because you prayed to the wrong God. Some, like modern Bostonian philosopher Patrice O'Neal, claimed better to not risk it at all and at leaat go to hell for something cool like hookers, and cocaine.
The FIRE crowd are praying to the wrong God. Living an ascetic life in the hopes of achieving freedom. But they may end up in the same hell as their coworkers who insisted on always pushing a car note to the edge of what they could afford and living on credit.
The right God is the God of scalable income. Its the only altar worth making sacrifices on, but it requires a touch of bravery as it presents obvious short term risk. While the God of frugality presents a risk that isn't really obvious until you're much further down the line.
Better to be in hell having had a nice car, than being in hell after squandering your youth trying to penny pinch for no goal other than an early retirement. We retire through income generation, not from saving.
People underestimate how pervasive and harmful scarcity mentality is to your success but also your overall well-being. Maybe I just intuitively get this from years of being on both sides of winning and losing but: playing to not lose, scarcity just eats at your soul.
The FIRE crowd just seems like it's making scarcity the be all. That's really the link between why they can't see the possibility of success in entrepreneurship and instead go low cost. Total asymmetry and it's obvious.
Thank You Based BowTied Bull. Show them the light.
Yup, realized at 17 I couldn’t afford to live in SoCal even with a great career such as cybersecurity so I made the decision to go in Online Business and my only regret is not starting sooner
We did a series of posts about all the fallacies with retirement. Using the FIRE tool you have a 95% success rate with the 4% rule....BUT
Inflation runs +2% higher than history ~60% success rate
" " +5% higher " " <20%
Add in Longevity risk. Ave person lives to ~80-85. BUT if you live to retirement age you a more likely to live to almost 90 and there is ~5% chance a retiree lives to 100.
Even using low inflation and historical returns, FIRE is going to fail you close to 1/2 the time if you live to 100.
So not only are you taking timing risk in your portfolio tanking right after you retire (we saw it first hand in 07-08 with new retirees looking to get back into the workforce), but also big inflation and longveity risk. Why risk being 90 and eating cat food?
(not sure if kosher to link to our stack directly, but we walk through it all in the post "Retirement Planning With The 'Tism - Part 2: The 4% Rule & Retirement Targets")
Think the RE part is a bit of a misnomer though. Most people just want the FI part, since everyone that seems to advocate FIRE seems to get a new career/business - they were just looking for a new acronym instead of FI. It's more that since they're FI they can now choose a different career. A few regret getting to just a NW number and thinking that's it and have gone back to finding better meaning.
But, I don't feel they're that mediocre. Considering how few folks ever get to FI/retire with enough capital at all (<5% of the population in a rich market like US, probably lower globally), the fact that you can accumulate enough at a young age is impressive instead of just consuming it all.
It just seems no-one stays RE for long. If you're able to smash a 50-80% saving rate on the back of a high income career and accumulate 1/2/3m usd, you're unlikely to want to watch TV, travel endlessly and just tinker. That isn't the outcome of a high performer.
You may take a sabbatical to decompress from wall street but many seem to get new projects that earn far more than while working, see: financialsamurai, big ERN, Esimoney, mmm, etc. Once you've earned a lot, FI now gives you the time to go out and really work on what moves the needle. So aim for FI, but plan for what's next, not RE.
For the Bogleheads on Wall Street that aren’t near retirement yet, and probably don’t have the time or expertise (or contractual flexibility) to start/buy/turnaround an internet company, the Barbell approach can be really powerful. If you work in capital markets 8+ years odds are you can recognize an anomaly when you see one. If your net worth is say $1mm and salary is $200k+, you can Bogle $900k and keep $100k CASH for anomalies. Not trading, not speculating, not gambling, not your favorite coin... ANOMALIES. You might see zero to three of these a year but when you do go for it with an amount you can make a purely unemotional decision with since the expected value is so good. This captures almost the same returns as an “efficient portfolio” if it doesn’t go well, while having room to take advantage of the very obvious tails. Spotting these shouldn’t be a side hustle if you are already watching markets, so it wouldn’t be as time intensive as a side hustle that would otherwise tie up the same amount of capital. You are dealt pocket aces 1 out of every 221 hands but that is where the vast majority of returns come from. Don’t have an “efficient portfolio” (maxed invested) when you are dealt pocket aces.
This is me minus the beans and rice. We eat a lot of meat and seafood. Military officer in tech career speciality with $60k guaranteed pension, plus health care in less that 5 years. Wife works, we invest almost 100k a year into S and P 500, and BTC. We have kids and travel a lot but are just now starting to live and abandon a scarcity mindset.
Credit card rewards: yes. I’ve been loyal to Marriott Bonvoy Amex for one key reason. You can transfer to a far greater number of airline partners than other cards. But having amassed too many, I diversified to Chase Ultimate Rewards and AmEx Rewards. Now my family is addicted to lie flat seats on the way to Asia, which I redeemed for all points.
A long time ago, a French philosopher (Blaise Pascal) was weighing the pros and cons of religion and he realized that the devoutly religious were making a bet with unseen odds.
If you were not religious, you would definitely end up in hell. If you were religious you could still end up in hell despite living a devout life simply because you prayed to the wrong God. Some, like modern Bostonian philosopher Patrice O'Neal, claimed better to not risk it at all and at leaat go to hell for something cool like hookers, and cocaine.
The FIRE crowd are praying to the wrong God. Living an ascetic life in the hopes of achieving freedom. But they may end up in the same hell as their coworkers who insisted on always pushing a car note to the edge of what they could afford and living on credit.
The right God is the God of scalable income. Its the only altar worth making sacrifices on, but it requires a touch of bravery as it presents obvious short term risk. While the God of frugality presents a risk that isn't really obvious until you're much further down the line.
Better to be in hell having had a nice car, than being in hell after squandering your youth trying to penny pinch for no goal other than an early retirement. We retire through income generation, not from saving.
Amen.
People underestimate how pervasive and harmful scarcity mentality is to your success but also your overall well-being. Maybe I just intuitively get this from years of being on both sides of winning and losing but: playing to not lose, scarcity just eats at your soul.
The FIRE crowd just seems like it's making scarcity the be all. That's really the link between why they can't see the possibility of success in entrepreneurship and instead go low cost. Total asymmetry and it's obvious.
Thank You Based BowTied Bull. Show them the light.
Yup, realized at 17 I couldn’t afford to live in SoCal even with a great career such as cybersecurity so I made the decision to go in Online Business and my only regret is not starting sooner
100%. Knock this one dead ser.
We did a series of posts about all the fallacies with retirement. Using the FIRE tool you have a 95% success rate with the 4% rule....BUT
Inflation runs +2% higher than history ~60% success rate
" " +5% higher " " <20%
Add in Longevity risk. Ave person lives to ~80-85. BUT if you live to retirement age you a more likely to live to almost 90 and there is ~5% chance a retiree lives to 100.
Even using low inflation and historical returns, FIRE is going to fail you close to 1/2 the time if you live to 100.
So not only are you taking timing risk in your portfolio tanking right after you retire (we saw it first hand in 07-08 with new retirees looking to get back into the workforce), but also big inflation and longveity risk. Why risk being 90 and eating cat food?
(not sure if kosher to link to our stack directly, but we walk through it all in the post "Retirement Planning With The 'Tism - Part 2: The 4% Rule & Retirement Targets")
Agree with the points.
Think the RE part is a bit of a misnomer though. Most people just want the FI part, since everyone that seems to advocate FIRE seems to get a new career/business - they were just looking for a new acronym instead of FI. It's more that since they're FI they can now choose a different career. A few regret getting to just a NW number and thinking that's it and have gone back to finding better meaning.
But, I don't feel they're that mediocre. Considering how few folks ever get to FI/retire with enough capital at all (<5% of the population in a rich market like US, probably lower globally), the fact that you can accumulate enough at a young age is impressive instead of just consuming it all.
It just seems no-one stays RE for long. If you're able to smash a 50-80% saving rate on the back of a high income career and accumulate 1/2/3m usd, you're unlikely to want to watch TV, travel endlessly and just tinker. That isn't the outcome of a high performer.
You may take a sabbatical to decompress from wall street but many seem to get new projects that earn far more than while working, see: financialsamurai, big ERN, Esimoney, mmm, etc. Once you've earned a lot, FI now gives you the time to go out and really work on what moves the needle. So aim for FI, but plan for what's next, not RE.
Best habit is just being the one to figure things out for yourself. Waiting for others to tell you what to do just guarantees a mediocre life/income.
For the Bogleheads on Wall Street that aren’t near retirement yet, and probably don’t have the time or expertise (or contractual flexibility) to start/buy/turnaround an internet company, the Barbell approach can be really powerful. If you work in capital markets 8+ years odds are you can recognize an anomaly when you see one. If your net worth is say $1mm and salary is $200k+, you can Bogle $900k and keep $100k CASH for anomalies. Not trading, not speculating, not gambling, not your favorite coin... ANOMALIES. You might see zero to three of these a year but when you do go for it with an amount you can make a purely unemotional decision with since the expected value is so good. This captures almost the same returns as an “efficient portfolio” if it doesn’t go well, while having room to take advantage of the very obvious tails. Spotting these shouldn’t be a side hustle if you are already watching markets, so it wouldn’t be as time intensive as a side hustle that would otherwise tie up the same amount of capital. You are dealt pocket aces 1 out of every 221 hands but that is where the vast majority of returns come from. Don’t have an “efficient portfolio” (maxed invested) when you are dealt pocket aces.
This is me minus the beans and rice. We eat a lot of meat and seafood. Military officer in tech career speciality with $60k guaranteed pension, plus health care in less that 5 years. Wife works, we invest almost 100k a year into S and P 500, and BTC. We have kids and travel a lot but are just now starting to live and abandon a scarcity mindset.
You basically summarised the FIRE moment with this sentence—
> you live on lentils, beans and rice to try and guarantee that you retire with the ability to live on… lentils, beans and rice.
One caveat—soon the FIRE movement will be associated with eating bugs.
The psyop will be something like "Bugs are so much cheaper than meat, AND you save the planet too!".
So it'll probably be "bugs and rice" by the time they "retire".
What would you recommend someone to do who’s in no man’s land. IE. Below $2m and 40 years old.
I know start your business but any other advise apart from this?
Credit card rewards: yes. I’ve been loyal to Marriott Bonvoy Amex for one key reason. You can transfer to a far greater number of airline partners than other cards. But having amassed too many, I diversified to Chase Ultimate Rewards and AmEx Rewards. Now my family is addicted to lie flat seats on the way to Asia, which I redeemed for all points.