FIRE (Financial Independence, Retire Early) Movement

[artncraft]

people tend to leave out these two pieces of critical info when talking about FIRE

Some privacy is preferred

 

[limster]

at 5% return, your 3.4m portfolio can generate enough income to sustain your expenses. Guess your key concern is your young kids. By 50, they should be almost 20 which seems old enough for you to consider retirement?

the assumption is that the property is an investment property and his networth doesn't include his residence (I agree with excluding value of residence when calculating whether someone can FIRE)

Last year I could have fully retired as my passive income was significantly more than my expenditure. However, I'm still working full-time since I'm quite set in my work routine.

For me, the main differences between working for a living and being financially independent are peace of mind and taking things a lot easier.

My work income is now mostly saved up for a bigger buffer in case I decide to retire once and for all.

I've posted similar thoughts, though the reason I'm still working is not that because I am "set in my work routine." In fact my work routine has probably changed a little after FI.

Once you have an FI mindset, work is not so stressful. You can surf HWZ during office hours while others are hustling to get their next promotion/pay raise.

As long as passive income > expenses, can FIRE already (with whatever margin of safety you feel you need) No need to reveal family structure to calculate whether can FIRE.

The biggest challenge for those that have FI is after you RE, are you able to spend your passive income. Because you may have been cautious and built up an extra buffer/margin of safety, end up find it hard to spend. after calculating my expenses, I find it hard to spend more than $10k a month unless I am going on overseas holiday that month.

 

[BBCWatcher]

Last year I could have fully retired as my passive income was significantly more than my expenditure.

That's not actually how it works, although it's a popular misconception. As we've just seen in other posts/discussions it's very possible to have assets with "high" dividends (which aren't guaranteed and may not even be keeping pace with inflation) and fairly or very rapidly eroding capital.

To test properly whether you're financially ready for retirement you ignore interest and dividends as a standalone matter, and you simply factor them into forecast future total net returns. You then make a few other assumptions such as forecast inflation (which you can stress test), compute a Safe Withdrawal Rate (SWR) (for example, 3.5% of corpus at age 65; lower if retiring earlier), and then decide if the SWR is enough to retire.

Another reasonable "sanity check" is you could get a quotation on a guaranteed 3%/year escalating life annuity (or joint/survivor life annuity if you have a spouse/partner) using the corpus you have today as a single premium. If that monthly figure is too low, you're not ready to retire. But that's only a "sanity check." The SWR computation described in the previous paragraph is the proper way, and it's not hard to do.

"Eyes on the prize."

the assumption is that the property is an investment property and his networth doesn't include his residence (I agree with excluding value of residence when calculating whether someone can FIRE)

I disagree as a generalization. You should properly monetize at least excess home equity even if it happens to be excess primary residence equity. It's rather common to "rightsize" a primary residence at some point well before death. You should factor any such reasonable home rightsizing into your readiness computations if it applies to you. For example, if you have 3 kids who you reasonably expect will leave the house by age 30 (as an example) then you won't need the bedrooms they occupied. As another example, you may decide to "rightsize" a HDB leasehold that runs to age 140 to a leasehold that runs to age 105 (youngest spouse/partner).

If you don't make any "rightsizing" adjustment even when strongly merited then it's going to be that much tougher to "FIRE" because you're excluding too much wealth from your computation.

I think financial plans should be reality-based and fairly but not unreasonably pessimistic. Many (not all!) people can and should "rightsize" their homes. Take it into account if it applies to you.

 

[revhappy]

I suppose if you define 'fail' as underperform MSCI, World then buying SG dividend stock strategy may have underperformed and 'failed'. But that begs the question why the benchmark for SG investor is MSCI World, especially if the investor might need S$ in the future to buy property/do reno, like DW.

To me, one of the points about dividend investing is to pick stocks able to grow their earnings and therefore pay a higher dividend. Many SG dividend stocks are doing this. I pulled out the 3 year dividend data of my 8 largest SG stock holdings for reference (all of which are 'dividend stocks'):

	2024	2023	2022
Sembcorp	0.14	0.13	0.07
Singtel	0.168	0.13	0.119
OCBC	0.86	0.8	0.56
UOB	1.73	1.6	1.2
CDL Hospitality Trust	0.057	0.061	0.051
Capitaland Ascott	0.056	0.057	0.034
STI ETF	0.159	0.133	0.112
Comfort Delgro	0.073	0.071	0.064

The dividend picture looks decent, even for the 2 REITs that have done terribly price-wise. Figures from dividendsg, hope they are correct...

At the end of the day, my holding period is forever and I plan to live off passive income, so dividend stability /growth is what I'm looking for. Also, like i mentioned in the dividend thread, my dividend income jumped by 44.8% in 2024 vs 2023. Most of the increase was due to companies paying more dividends rather than capital injection.

Speaking about DW specifically, his aim is to FIRE. So success would mean he is able to quit his job and his passive income is sufficient for his spending needs as of his target date.

Failure would mean lack of confidence to quit his job/delay his resignation by few years etc

DW hasn't said when he plans to quit his job. So it is difficult to know whether his strategy has succeeded or failed.

But we all have one life, if we fail in our strategy and have to delay early retirement, then it is a permanent loss of time, which cannot be recovered. So it is something for DW to consider, with his 760k portfolio will he really be able to FIRE anytime soon?

 

[revhappy]

Dividend warriors started his blog in 2010 as a 30-year-old guy living in Singapore who says he is "a simple man with simple needs"

In 2013, Dividend warrior's portfolio was 200k.
https://www.nextinsight.net/story-a...arrior-i-collected-14370-in-dividends-in-2013

Now, dividend warrior is a 45 year old man with a portfolio of 760k.

 

[hwmook]

Dividend warriors started his blog in 2010 as a 30-year-old guy living in Singapore who says he is "a simple man with simple needs"

In 2013, Dividend warrior's portfolio was 200k.
https://www.nextinsight.net/story-a...arrior-i-collected-14370-in-dividends-in-2013

Now, dividend warrior is a 45 year old man with a portfolio of 760k.

He is 30 years old in 2013, he is actually 42 this year. He started working around 2008 which was the time when interest rate start to drop to zero and during those years dividend play is very common and easy, I also started out during the same timeframe and did a lot of the same things but I took a different view along the way. I started to "value" the stock and start to buy/sell stocks that have price that differ significant from my valuations. I quickly realize that this is a much better way to invest rather than receiving dividends so I move on from those dividend stocks and move on to the greater market. He just stuck to the same stuffs I did a decade ago and never really move on. I won't call it a wrong move, he is still doing better than most of the population who only put money in banks and FD. I don't see investment as a only one right answer and the rest are all wrong kind of thing. It's like some get 70 marks in exam, some 80, some 90. It's ok as long as you pass the exams.

 

[limster]

he is still doing better than most of the population who only put money in banks and FD. I don't see investment as a only one right answer and the rest are all wrong kind of thing. It's like some get 70 marks in exam, some 80, some 90. It's ok as long as you pass the exams.

I totally agree with you. And interestingly enough, there is some Govt data on the amount of non-work income that households received. DW's $4k a month dividend income means he receives more non-work income than the 'average' household total of $3,253 (of course the average is skewed by the 81st-100th percentile households and I suspect the median will be much lower which puts DW in a much better position vs the majority of households).

If you convert from household average to per person average by dividing each quintile's figure by the average household size of that quintile, I think DW's 'outperformance' could be bigger unless he also has dependents.

 

[BBCWatcher]

DW's $4k a month dividend income means he receives more non-work income than the 'average' household total of $3,253 (of course the average is skewed by the 81st-100th percentile households and I suspect the median will be much lower which puts DW in a much better position vs the majority of households).

Let's not overinterpret the available information. For example, is that $4K/month from a basket of S-REITs...that have lost roughly 30% in nominal capital value over the past several years? Or, as another example, is that $4K/month incidental/"accidental" dividend income from a basket of global technology stocks? Leaving aside diversification concerns, the latter would be much more impressive than the former.

It's not particularly complicated. Just look at household financial net worth.

We can see the skew rather easily because $3,253 is very close to the figure given for the second top quintile ($3,321). All you can really say is that DW is somewhere in that quintile by this (flawed) income-oriented metric, but (without additional information) it doesn't tell you about the quality and character of that income relative to the same cohort.

Also, it's almost tautological that peak net worth is achieved at or near retirement age. Therefore, whenever you're trying to assess whether someone has accomplished something financially special or not you should control for age. The quintile figures above are not broken out into age brackets. They lump together pre, early, mid, late, and post working career individuals and households.

When all the 2024 numbers are in "just for fun" I might try characterizing my household's passive income which is only incidental, not something that's a strategic investment goal in and of itself. Maybe I can describe it in ratio terms viz a viz earned income from work. Then I'll carefully explain again why passive income doesn't matter in isolation. It only matters insofar as that (reinvested) income adds to total net returns over the long run.

 

[abcde78]

at 5% return, your 3.4m portfolio can generate enough income to sustain your expenses. Guess your key concern is your young kids. By 50, they should be almost 20 which seems old enough for you to consider retirement?

My portfolio is below 5%.
Mid 4%.
And yes, looking to retire BEFORE 50 actually.

In the next 3 years I'll pay up the mortgage from purely my work income.
Passive income to cover annual expenses.

 

[highsulphur]

My portfolio is below 5%.
Mid 4%.
And yes, looking to retire BEFORE 50 actually.

In the next 3 years I'll pay up the mortgage from purely my work income.
Passive income to cover annual expenses.

I'm around 50 now and my SWR at 3% is equivalent to my annual salary at the moment. I just changed job last year and had my annual leave reduced from 25+ at my previous company to less than 16 days now.

Before I changed job, my intention was to retire between 50 and 55. Right now it will probably be closer to 55 rather than 50 as I'm still enjoying the new job despite the less annual leave. Financial considerations are not really a factor right now

 

[abcde78]

I'm around 50 now and my SWR at 3% is equivalent to my annual salary at the moment. I just changed job last year and had my annual leave reduced from 25+ at my previous company to less than 16 days now.

Before I changed job, my intention was to retire between 50 and 55. Right now it will probably be closer to 55 rather than 50 as I'm still enjoying the new job despite the less annual leave. Financial considerations are not really a factor right now

Enjoy your work? What industry?

 

[highsulphur]

Enjoy your work? What industry?

The new job is quite related but different scope from my previous companies. So far has been a great learning experiences but I just need to fulfil the expectations.

Sorry but not keen to disclose industry

 

[revhappy]

Talking about @Dividends Warrior specifically, because he is highly skilled based on
1) Started very early in the investing journey. One of the pioneer SG investors with 200k at the age of 30.
2) Highly skilled person to be able to evaluate companies and most of his picks have been spot on. So he is a fund manager level talented guy.
3) Having the conviction to stick for so long without wavering when there was so much FUD going on.

So we need to take into this skillset level and the early start he had(200k@30) and then evaluate whether it is success or not.

We cannot compare him with median income Singaporean.
Singapore is a financial hub and financial talent is well paid in Singapore.
I would said @d5dude is a good benchmark of a successful investor, he works in the finance domain and has done very well in investing and has retired early with massive corpus. So that is 10/10 on every count.

 

[BBCWatcher]

Talking about @Dividends Warrior specifically, because he is highly skilled based on
1) Started very early in the investing journey. One of the pioneer SG investors with 200k at the age of 30.
2) Highly skilled person to be able to evaluate companies and most of his picks have been spot on. So he is a fund manager level talented guy….

Has any of this been established?

IWDA (maybe as IWRD) has been around since 2009. Would DW be more or less wealthy today if he had merely deployed the same savings flow into IWRD (with dividends reinvested)? That would’ve been a lower risk approach than picking individual stocks, so I think it’s an eminently fair comparison. If he has disclosed his savings schedule (amounts, dates) then an IWRD-based retrospective run could be estimated. Although I could probably estimate the savings flow required to turn S$200K at date X into S$700K at date Y via IWDA/IWRD if I were sufficiently curious, and then you can decide whether that amount (dollars per month) is “impressive“ or not. I don’t think I’m that curious.

Of course I recognize that the median resident adult here in Singapore apparently does not own any stock in any form. Stock ownership is getting more common, but it’s still atypical. One of the reasons many adults don’t own stock is that it’s “too risky.” Picking individual stocks really is riskier than picking a broader index fund. I don’t think individual stock picking will convince many people that it’s OK to enter these waters.

The median American adult does own some stock. It’s frequently via retirement savings accounts such as 401(k)s and IRAs that hold index funds. There are several key ingredients: dollar cost averaging (often via automatic payroll deductions), typically low costs, limited fund choices (“a few good funds”), accounts that are geared toward retirement timescales, and automatic spousal inheritance rights (unless the spouse voluntarily surrenders his/her rights). I certainly have my quibbles with these accounts, but from an investment psychology point of view they hit some good marks.

 

[limster]

Talking about @Dividends Warrior specifically, because he is highly skilled based on
1) Started very early in the investing journey. One of the pioneer SG investors with 200k at the age of 30.
2) Highly skilled person to be able to evaluate companies and most of his picks have been spot on. So he is a fund manager level talented guy.

DW didn't experience the GFC as a stock investor. He appears to have started after the low interest rate fuelled recovery was underway. To his credit, he realised that he was overconcentrated in REITs and added US tech. However he didn't reduce his REIT concentration enough to my liking, but at least he didn't suffer the same fate as those SG bloggers who had zero US stock and overweight SG-REITs.

I was lucky enough to start my stock investing journey around the time of the GFC, which was an interesting experience to say the least, but it shaped my thinking about investments and probably part of the reason why I always believe in holding some cash, which is my warchest of SSB+ T-bills+ cash management accounts. Investing/investing style will inevitably be shaped by your own experience of the market.

limster:
Lesson to learn is that individual stock picking cannot beat ETF in the long run. Eventually non-systemic risk can cause a stock pickers portfolio to blow up.

Another lesson to learn is the DWs last portfolio of only 6 stocks is way too concentrated and exposed to non-systemic risk. DW's previous portoflio where he overconcentrated on REITs was also risky but fortunately did not blow up and he exited profitably.

At best, individual stocks should be part of your 'satellite' portfolio while the core is ETFs. I also need to learn this lesson as I also like to buy individual stocks in addition to ETF.

Post from way back in Jan 2016:
https://forums.hardwarezone.com.sg/...chit-chat-thread-part-2.5285485/post-99399354

 

[yslvlys]

DW didn't experience the GFC as a stock investor. He appears to have started after the low interest rate fuelled recovery was underway. To his credit, he realised that he was overconcentrated in REITs and added US tech. However he didn't reduce his REIT concentration enough to my liking, but at least he didn't suffer the same fate as those SG bloggers who had zero US stock and overweight SG-REITs.

I was lucky enough to start my stock investing journey around the time of the GFC, which was an interesting experience to say the least, but it shaped my thinking about investments and probably part of the reason why I always believe in holding some cash, which is my warchest of SSB+ T-bills+ cash management accounts. Investing/investing style will inevitably be shaped by your own experience of the market.



Post from way back in Jan 2016:
https://forums.hardwarezone.com.sg/...chit-chat-thread-part-2.5285485/post-99399354

Oh I didn't know he suffered significant losses from Silver lake and Sembcorp. All along I thought he was mainly REITS and banks cos he seldom document his wrong moves in his blog

 

[junlove]

the NW u guys posting is oneself or plus wifu?

my wifu only earns 25% of household income, but i need to accord FIRE planning for both

 

[elloz123]

the NW u guys posting is oneself or plus wifu?

my wifu only earns 25% of household income, but i need to accord FIRE planning for both

oneself. if u include house divide by 2.

 

[highsulphur]

the NW u guys posting is oneself or plus wifu?

my wifu only earns 25% of household income, but i need to accord FIRE planning for both

Just myself. No idea what's my wife's NW

 

[BBCWatcher]

my wifu only earns 25% of household income, but i need to accord FIRE planning for both

Yes, if you’re a partnership it’s a joint project. Sometimes the partnership includes elders and/or progeny, for periods of time anyway.