Financial Independence Thread

[libra08]

^ Having worked in retails in an affluent neighborhood, I would be sad for mankind if we are the greatest thing since slice bread.

According to the IMF, just four countries will be responsible for 50% of global growth….three of them will be in Asia. These countries will surely protect their industries from US companies.

US companies had it good for the last 80 years. Europe and Asia got destroyed during WW2. There was virtually no competition. Everybody wanted to immigrate to the US. US companies could do whatever they wanted, even causing the housing crash in 2008 without one CEO going to prison. Now the money printing machine has finally ran out of ink. With massive debt, high interest rates, stagnated economy at home and fierce competition abroad, where are these companies going to find growth?

I reckon American dominance will continue to decline, but we still will remain the land of innovation attracting the brightest minds from everywhere for foreseeable future..

You really think so? Not according to the data. The number of educated foreign students has not only dropped significantly but the number of them going back home after their education has also spiked.

You can’t depend on growth from foreign talents forever. It is just unnatural and unrealistic.

Now US companies have real competition on their hands. They will win some but they won’t dominate like before.

---

Members don't see this ad.

 

[mentos]

I have avoided European and Japan stocks…they missed the internet, smart phones, social media, clean energy and will probably miss AI, EV.

I have about 25% in emerging markets in Asia.

Still holding NIO? What happened to that stock?

 

[libra08]

Still holding NIO? What happened to that stock?

?

 

[PharmtoCS]

International stocks outperform about 40% of the time. Diversification helps to mitigate losses when the US market is either flat or in a downturn.

Why international stocks may continue to outperform | BlackRock

BlackRock portfolio managers see opportunities in developed ex-U.S. and emerging markets.

www.blackrock.com

 

[mentos]

International stocks outperform about 40% of the time. Diversification helps to mitigate losses when the US market is either flat or in a downturn.

Why international stocks may continue to outperform | BlackRock

BlackRock portfolio managers see opportunities in developed ex-U.S. and emerging markets.

www.blackrock.com

So US stocks do better than international 60% of the time? I like those odds.

 

[libra08]

So US stocks do better than international 60% of the time? I like those odds.

That is with a money printing machine that no longer works

 

[PharmtoCS]

So US stocks do better than international 60% of the time? I like those odds.

This is based on the last 50 years or so of historical returns. But if you decide to retire during that 40% then you won’t do as well as if you had diversified outside the US. Diversifying reduces the overall volatility of your portfolio, especially with headwinds in the US market such as the $33 trillion national debt.

 

[mentos]

Why does everyone say "VTI and chill" instead of "VT and chill"?

 

[PharmtoCS]

Why does everyone say "VTI and chill" instead of "VT and chill"?

Home country bias, a misplaced sense of patriotism, and/or the belief that the USA will remain a superpower forever. The latter is possible but I would want to make sure I invest in a chunk of the entire world instead of just one country. 70/30 or 60/40 seems to be a sweet spot for the largest yearly gains for the least volatility.

Domestic/international - Bogleheads

www.bogleheads.org

 

[libra08]

the belief that the USA will remain a superpower forever.

I have a feeling the next 5 years US perceived economic and military power will be tested. You already see it being tested in Ukraine, Middle East and Asia.

When the USSR collapsed so did its currency. I don’t think the US will collapse but when you can no longer show the world you are the top dog, there will be negative consequences.

The concerns are real. There is a lack of buyers for US treasury. Yield for 30 year US treasury has just passed 5%.

 

[libra08]

I am not looking for a home run. I would be happy with a single.

All of this debt we had borrowed from the Iraq war to covid to Ukraine war is finally coming back. We had put all of it on a credit card and our creditors are no longer buying our debt.

The real test will come…when there is a crisis and a boatload of sellers of US bonds can’t sell their bonds because there is a lack of buyers.

 

[RxPreceptor]

Pretty bad considering how already bloated this country’s national defense is due to pride, anxiety, sticking our noses in random bystander’s business, etc.

*sorry I forgot being a control freak/need to exert dominance (kind of goes hand and hand with aspects of anxiety)

 

[Splenda88]

another way to look at it: top 50% have net worth of >522k. I take that to mean individual, so a married couple would be 1.04M. So roughly half of US household have 1M net worth or more

I look at other surveys; it appears it's household.

 

[Splenda88]

How much you guys have spent on vacation for this year so far?

 

[RN2RPh]

How much you guys have spent on vacation for this year so far?

Big trip in Jan ~12k
2 small trips in Apr/May ~10k
Spontaneous 5 days EU getaway in Aug ~8k
4-5 weekend getaway ~5k

So it is ~35k plus ~450k points/miles (for mostly airfare & hotel)
I am still planning for a big trip in Nov. So it will probably be another ~ 8k & ~600k points/miles

 

[Splenda88]

Big trip in Jan ~12k
2 small trips in Apr/May ~10k
Spontaneous 5 days EU getaway in Aug ~8k
4-5 weekend getaway ~5k

So it is ~35k plus ~450k points/miles (for mostly airfare & hotel)
I am still planning for a big trip in Nov. So it will probably be another ~ 8k & ~600k points/miles

Wow. I have spent about 25-30k this year and I thought I spent too much for a family of 4.

What is your salary? What is your net worth?

 

[RN2RPh]

Wow. I have spent about 25-30k this year and I thought I spent too much for a family of 4.

What is your salary? What is your net worth?

I also have a family of 4, but occasionally we take the grandparents with us. This is the first year after the pandemic so we probably travel more than usual.
Also to be fair, travel expenses come from both my spouse & me. Collectively, our salaries are ~300k+ annually. We have ~400k in 401k, ~150k in short term CD or HYSA.

 

[mentos]

I also have a family of 4, but occasionally we take the grandparents with us. This is the first year after the pandemic so we probably travel more than usual.
Also to be fair, travel expenses come from both my spouse & me. Collectively, our salaries are ~300k+ annually. We have ~400k in 401k, ~150k in short term CD or HYSA.

That's a lot of short term funds. You didn't want to invest any of it?

 

[RxPreceptor]

How much you guys have spent on vacation for this year so far?

Zero…vacation? 🤪

Pretty modest 4k on my home gym (stay-cation)…sure as hell feels like a getaway from work

 

[Splenda88]

That's a lot of short term funds. You didn't want to invest any of it?

It's in a HYSA or CD; some give > 5% yield

 

[mentos]

It's in a HYSA or CD; some give > 5% yield

I thought stocks or real estate give higher returns.

 

[RN2RPh]

I thought stocks or real estate give higher returns.

Of course we thought about real estate, but once we have saved up enough for a down payment, the housing market & the mortgage rate are just ridiculous. So maybe in 5-6 years, when we pay off our current mortgate, we'll look into it again.

Stocks....unfortuntely it is not my hobby. I already work 40 hrs/week. I don't have a desire to spend more time on making more money. I find it is equally challenging and rewarding thinking about how to spend my money wisely.

 

[RXDOC1986]

Vacation, downtime, is very important to your career longevity. Networth be damned, vacation is important.
We try to do one family trip a year, it's getting increasingly harder with adult kids, you can't just drag them along. Costs, well, you have to up your game, to get the kids interested. Everyone likes cruises, this December, we booked RCCL cruise, in a STAR class Suite, including everything, about $22K +! But well worth it, you even get a full time Butler.
On prior vacations, I would have to plan, execute and finance everything, now I am 4th or 5th in line for decision making and planning. I am just asked to tag along, not say much, and don't embarrass everyone.

 

[RXDOC1986]

Of course we thought about real estate, but once we have saved up enough for a down payment, the housing market & the mortgage rate are just ridiculous. So maybe in 5-6 years, when we pay off our current mortgate, we'll look into it again.

Stocks....unfortuntely it is not my hobby. I already work 40 hrs/week. I don't have a desire to spend more time on making more money. I find it is equally challenging and rewarding thinking about how to spend my money wisely.

My younger son is a registered stock broker, and CFP. He works for eTrade, now part of Morgan Stanley, the largest brokerage house in the country. He spends all day giving financial advice and placing trades. He is very much amused by "amateurs" like you guys trying to gain the system, DayTrade, and speculate in the current stock market., trying to make quick money with "educated" trades. His advice is to take your cash and take a trip to Vegas, at least you will have fun losing your money.
Talk to any CFP, long term, strategic investments is the answer, no one is going to get rich quick. Slow and steady, does the job. Regardless of what people say on this thread, nobody has a "system".
My son studies the stock market every day, spends hours looking at trends and individual stocks, yet he doesn't place trades for his investments.
He has a 401K, index funds, managed by other entities.

Sorry about that, back to your regularly schedule programming. How about that Tesla stocks! They say Bitcoins are the future for the rich!

 

[RN2RPh]

My younger son is a registered stock broker, and CFP. He works for eTrade, now part of Morgan Stanley, the largest brokerage house in the country. He spends all day giving financial advice and placing trades. He is very much amused by "amateurs" like you guys trying to gain the system, DayTrade, and speculate in the current stock market., trying to make quick money with "educated" trades. His advice is to take your cash and take a trip to Vegas, at least you will have fun losing your money.
Talk to any CFP, long term, strategic investments is the answer, no one is going to get rich quick. Slow and steady, does the job. Regardless of what people say on this thread, nobody has a "system".
My son studies the stock market every day, spends hours looking at trends and individual stocks, yet he doesn't place trades for his investments.
He has a 401K, index funds, managed by other entities.

Sorry about that, back to your regularly schedule programming. How about that Tesla stocks! They say Bitcoins are the future for the rich!

I think you miss my point. I am just not into trading stocks. Even if I am in the future, trading stocks will be just a hobby. For me, hobby means "for fun" and I would not care if I gain or lose money. My "financial strategy" is pretty simple: spend below my means and spend it wisely. I don't think that I would be ever rich enough to have professionals such as your son to look after my wealth. I didn't become a pharmacist to get rich. I just dont want to worry about paying bills every month.
Good luck to your son ! Maybe one day he would be confident enough to place trades for his investments.

 

[RN2RPh]

Vacation, downtime, is very important to your career longevity. Networth be damned, vacation is important.
We try to do one family trip a year, it's getting increasingly harder with adult kids, you can't just drag them along. Costs, well, you have to up your game, to get the kids interested. Everyone likes cruises, this December, we booked RCCL cruise, in a STAR class Suite, including everything, about $22K +! But well worth it, you even get a full time Butler.
On prior vacations, I would have to plan, execute and finance everything, now I am 4th or 5th in line for decision making and planning. I am just asked to tag along, not say much, and don't embarrass everyone.

Ah cruises are definitely nice & it can get quite expensive. Luckily my family is not into cruises yet lol !
Our current hobby is to fly first class when we travel internationally. So for our upcoming Nov trip, we bought 2 first class ticket on Emirates from US to Asia. Cost for each ticket is ~$18k -19k. Then to get back home, we bought first class ticket on Japan Airline and each of them cost ~ $14k. So the airfare itself already cost ~ $66k. Fortunately, I have an option to cover most of the cost by credit card points (which is free) and my out of pocket cash is ~$2.5k. It's definitely not bad for 2 people to fly around the world in first class and only cost ~$2.5k. I guess spend my money wisely this time.

 

[RXDOC1986]

I think you miss my point. I am just not into trading stocks. Even if I am in the future, trading stocks will be just a hobby. For me, hobby means "for fun" and I would not care if I gain or lose money. My "financial strategy" is pretty simple: spend below my means and spend it wisely. I don't think that I would be ever rich enough to have professionals such as your son to look after my wealth. I didn't become a pharmacist to get rich. I just dont want to worry about paying bills every month.
Good luck to your son ! Maybe one day he would be confident enough to place trades for his investments.

Sorry, this wasn't meant to reflect on your post. It's the previous 210 posts on this thread that I was responding to.
My financial strategy is to engage a financial planner, which I did back in 2000, then sit back and do my thing. I don't want my CFP to try to renally dose Vancomycin, in return, I will not try to invest money!

I certainly didn't become a pharmacist to get rich. I have been a top earner since 1986, and through good investments, and some luck, and hard work, have been able to live extremely comfortably.

And it's not a confidence thing with my son, all brokerage houses frown on their traders "playing" the stock market. It's like us, self prescribing meds.

 

[GrandTheftAutumn]

I have been a top earner since 1986

The name checks out

 

[GrandTheftAutumn]

Ah cruises are definitely nice & it can get quite expensive. Luckily my family is not into cruises yet lol !
Our current hobby is to fly first class when we travel internationally. So for our upcoming Nov trip, we bought 2 first class ticket on Emirates from US to Asia. Cost for each ticket is ~$18k -19k. Then to get back home, we bought first class ticket on Japan Airline and each of them cost ~ $14k. So the airfare itself already cost ~ $66k. Fortunately, I have an option to cover most of the cost by credit card points (which is free) and my out of pocket cash is ~$2.5k. It's definitely not bad for 2 people to fly around the world in first class and only cost ~$2.5k. I guess spend my money wisely this time.

What credit card do you use?

 

[RN2RPh]

What credit card do you use?

I mainly use Chase, Amex & Capital One.

 

[GrandTheftAutumn]

Ah cruises are definitely nice & it can get quite expensive. Luckily my family is not into cruises yet lol !
Our current hobby is to fly first class when we travel internationally. So for our upcoming Nov trip, we bought 2 first class ticket on Emirates from US to Asia. Cost for each ticket is ~$18k -19k. Then to get back home, we bought first class ticket on Japan Airline and each of them cost ~ $14k. So the airfare itself already cost ~ $66k. Fortunately, I have an option to cover most of the cost by credit card points (which is free) and my out of pocket cash is ~$2.5k. It's definitely not bad for 2 people to fly around the world in first class and only cost ~$2.5k. I guess spend my money wisely this time.

How much do you spend on your credit card to earn enough points to bring $66k airfare down to $2.5k? I only know Chase Sapphire Reserve, but generally, the most points you can earn is 10% on hotels and car rentals booked on Chase Travel. Then you can redeem them for 1.5x on Chase Travel. So you have to spend more than $400k to accumulate enough points for $66k airfare. What am I missing?

 

[PharmDminus]

How much do you spend on your credit card to earn enough points to bring $66k airfare down to $2.5k? I only know Chase Sapphire Reserve, but generally, the most points you can earn is 10% on hotels and car rentals booked on Chase Travel. Then you can redeem them for 1.5x on Chase Travel. So you have to spend more than $400k to accumulate enough points for $66k airfare. What am I missing?

its probably credit card churning for sign-up bonuses, and transferring Chase or Amex points to airline miles for better value

 

[GrandTheftAutumn]

its probably credit card churning for sign-up bonuses, and transferring Chase or Amex points to airline miles for better value

I believe the sign-up bonus for Chase Sapphire Reserve is $750 equivalent points- nowhere near enough to offset $66k airfare (even if you combined sign-up bonuses from Amex and Capital One). Then you have to subtract the annual fee too.

What's the conversation rate to airline miles? I just use Chase Travel to redeem my points for 1.5x

 

[RN2RPh]

How much do you spend on your credit card to earn enough points to bring $66k airfare down to $2.5k? I only know Chase Sapphire Reserve, but generally, the most points you can earn is 10% on hotels and car rentals booked on Chase Travel. Then you can redeem them for 1.5x on Chase Travel. So you have to spend more than $400k to accumulate enough points for $66k airfare. What am I missing?

1. The points/miles I use for my trips comes from various cards (both sign up bonuses & actual spends) so I have no idea how much money I have to spend. However, I know for sure that it is much less than $400k.
2. Like someone mentions above "credit card churning & transfer points to travel partners" is indeed the key of the so-called "travel hacking". However, no bank like their customers to churn its credit cards. So you have to be careful not to churn too much and risk having your accounts shut down. Also, not all airlines or hotels are travel partners and thus the only way to earn their miles/points is to fly/stay with them or just buy their points (it makes sense doing this sometimes). You can easily learn about this by googling "award travel"
3. I never redeem my credit card points using their travel portal. Why? Let assume my Emirates ticket cost $15k on Chase travel portal => you'll need 1 million points to buy it => you'll need to spend $100k !! However, the same ticket only cost you ~ 200k Emirates points => you only need to transfer 200k Chase point to Emirates. I can also transfer Citi/Amex/Capitol One points to my Emirates account => I just need to open 2-3 credit cards with sign up bonus ranging from 60k-100k points, spend $8k -$12k (usually $4k is the spending requirement). So from spending $100k (travel only) down to ~$12k (on anything), now that $15k cash ticket is much more affordable. However, the cons are: it takes time to save up enough points and the award ticket may not be available on the date you want.

 

[mentos]

1. The points/miles I use for my trips comes from various cards (both sign up bonuses & actual spends) so I have no idea how much money I have to spend. However, I know for sure that it is much less than $400k.
2. Like someone mentions above "credit card churning & transfer points to travel partners" is indeed the key of the so-called "travel hacking". However, no bank like their customers to churn its credit cards. So you have to be careful not to churn too much and risk having your accounts shut down. Also, not all airlines or hotels are travel partners and thus the only way to earn their miles/points is to fly/stay with them or just buy their points (it makes sense doing this sometimes). You can easily learn about this by googling "award travel"
3. I never redeem my credit card points using their travel portal. Why? Let assume my Emirates ticket cost $15k on Chase travel portal => you'll need 1 million points to buy it => you'll need to spend $100k !! However, the same ticket only cost you ~ 200k Emirates points => you only need to transfer 200k Chase point to Emirates. I can also transfer Citi/Amex/Capitol One points to my Emirates account => I just need to open 2-3 credit cards with sign up bonus ranging from 60k-100k points, spend $8k -$12k (usually $4k is the spending requirement). So from spending $100k (travel only) down to ~$12k (on anything), now that $15k cash ticket is much more affordable. However, the cons are: it takes time to save up enough points and the award ticket may not be available on the date you want.

Damn that sounds like a lot of work. Is that flight worth it? I usually sleep on long flights.

 

[RN2RPh]

Damn that sounds like a lot of work. Is that flight worth it? I usually sleep on long flights.

Haha I expect "travel hacking" to be "a lot of work" so that it will deter a lot of people from doing it.
I enjoy flying so flying First class is a part of my vacation. Points/miles enable me to experience something I can never afford with my RPh salary. So yes, for me it is worth it. Just try flying First class once (on 6hr+ international flight) and see if it is worth it for you.