Fire

itwasntme001

Thrugelmir wrote: »

Then you run a political risk. If profit is distributed in terms of increased wages or benefits. Then dividends and the value of companies will fall. There's only one cake to be divided.

Exactly. This is a big risk that needs to be factored into any decision making process for an early retiree. They will have their investments (capital) but they will not benefit from a transfer of wealth from capital to labor. Very difficult to forecast but do not pretend it does not exist.

ermine

itwasntme001 wrote: »

Over a long period of time (such is the case with early retirees aka FIRE) this could have devastating consequences to ones quality of life compared to those who continued to work and benefit from rising wages.

There are two hidden assumptions in your anti FIRE scenario. One is that the returns on investment fall. I would say that is an eminently reasonable hazard. In the short term valuations are high, it's no secret that all these great success stories are from people who have done very well over the last 10 years or so. The corollary of high valuations is a lower expected return on investment.

The other assumption you are making is that power will shift to labour, and as a result the return on units of labour effort will increase at a higher rate than the return on capital. Thomas Piketty deconstructed that in his book Capital. The evidence and direction of travel doesn't seem to support that at all. AI and robotics will need fewer people. Catastrophic climate change would certainly damage a lot of capital, as would war. Be careful what you wish for, eh?

But the thought of power shifting to labour that seems less and less needed seems fanciful. Political changes could redress some of the balance and prohibit some of the foul working practices. Personally I would like to see a maximum of one intermediary allowed between beneficiary of the labour (what we used to call an employer) and the person doing the work. Agencies seem to just cream off money as intermediaries do and allow employers to to treat workers like crap.

But it's not going to bring skilled manual labour back in a big way. Many of those jobs have gone for good. My Dad was a fitter directly employed by a FTSE100 company, back in the day he made parts to fix or improve systems. Consolidation eliminated his workplace, and now that sort of equipment is serviced by the manufacturers with a service level agreement, you don't machine replacement parts nowadays.

A couple of the jobs I did at the start of my career have all but gone. Trump can say he's going to MAGA all he wants but those factories coming back from China aren't staffed with children of skilled manual workers from yesteryear. They're run by robots and CNC.

The IFS have done some good work in this area. I suspect that the problem is both globalisation and automation. For the first part of my working life the educated workers behind the Iron Curtain and in China were not competition for white-collar workers in the developed world. Since the late 1990s they have been. People are becoming richer and inequality is falling globally. But developed world workers are taking the shaft, relatively, because they are competing with a vastly greater labour pool. I was bright enough to get a job in an FTSE100 industrial research lab. I am in no way bright enough to go work for Google in London. What happened to blue collar workers in the 1980s and 90s is happening to white collar workers now.

Many things may go wrong for the very early retiree quitting work in their 30s or 40s. I suggest that finding developed country average earnings leaving them for dust is one of the less likely scenarios. Much more likely is a slow drop in investment returns, which will give them the comeuppance you seem to think they deserve. There was one precious lot that claimed to be retired @ 31 with CAD1M. I would put real money on that the tide will go out for them, but I probably won't live long enough to see it. I don't think CAD1M is enough for one person to retire at 31 in a developed world country, never mind two.

bugslett

JoeEngland wrote: »

I can't imagine anything like that making me wish I hadn't given up work this week at 53 even if I could have carried on working full-time.

Congratulations. A month down the line, work feels a lifetime away.

itwasntme001 wrote: »

You are missing the point. I am not talking about essentials. We have all that already. What i am talking about is new goods and services. Sure the retiree can decide not to buy these but they will feel more and more in the poor class as these goods and services get more in demand by those who can afford it (those who are working and see rising wages).

I dislike so many modern things. I only got internet at home 3 months ago, it is a necessity now. I drive an old van. I dont want anything to do with the internet of things. My extravagance has been a boat, but that sorts holidays for the next 10 years. I'm happy with a relatively simple life.

JoeEngland

ermine wrote: »

There are two hidden assumptions in your anti FIRE scenario. One is that the returns on investment fall. I would say that is an eminently reasonable hazard. In the short term valuations are high, it's no secret that all these great success stories are from people who have done very well over the last 10 years or so. The corollary of high valuations is a lower expected return on investment.

The other assumption you are making is that power will shift to labour, and as a result the return on units of labour effort will increase at a higher rate than the return on capital. Thomas Piketty deconstructed that in his book Capital. The evidence and direction of travel doesn't seem to support that at all. AI and robotics will need fewer people. Catastrophic climate change would certainly damage a lot of capital, as would war. Be careful what you wish for, eh?

But the thought of power shifting to labour that seems less and less needed seems fanciful. Political changes could redress some of the balance and prohibit some of the foul working practices. Personally I would like to see a maximum of one intermediary allowed between beneficiary of the labour (what we used to call an employer) and the person doing the work. Agencies seem to just cream off money as intermediaries do and allow employers to to treat workers like crap.

But it's not going to bring skilled manual labour back in a big way. Many of those jobs have gone for good. My Dad was a fitter directly employed by a FTSE100 company, back in the day he made parts to fix or improve systems. Consolidation eliminated his workplace, and now that sort of equipment is serviced by the manufacturers with a service level agreement, you don't machine replacement parts nowadays.

A couple of the jobs I did at the start of my career have all but gone. Trump can say he's going to MAGA all he wants but those factories coming back from China aren't staffed with children of skilled manual workers from yesteryear. They're run by robots and CNC.

The IFS have done some good work in this area. I suspect that the problem is both globalisation and automation. For the first part of my working life the educated workers behind the Iron Curtain and in China were not competition for white-collar workers in the developed world. Since the late 1990s they have been. People are becoming richer and inequality is falling globally. But developed world workers are taking the shaft, relatively, because they are competing with a vastly greater labour pool. I was bright enough to get a job in an FTSE100 industrial research lab. I am in no way bright enough to go work for Google in London. What happened to blue collar workers in the 1980s and 90s is happening to white collar workers now.

Many things may go wrong for the very early retiree quitting work in their 30s or 40s. I suggest that finding developed country average earnings leaving them for dust is one of the less likely scenarios. Much more likely is a slow drop in investment returns, which will give them the comeuppance you seem to think they deserve. There was one precious lot that claimed to be retired @ 31 with CAD1M. I would put real money on that the tide will go out for them, but I probably won't live long enough to see it. I don't think CAD1M is enough for one person to retire at 31 in a developed world country, never mind two.

Is CAD1M a million Canadian dollar? If so that's not a lot to retire on at 31 given that it's the equivalent of 625,000 pound, especially if you are paying rent or not mortgage free.

itwasntme001

ermine wrote: »

There are two hidden assumptions in your anti FIRE scenario. One is that the returns on investment fall. I would say that is an eminently reasonable hazard. In the short term valuations are high, it's no secret that all these great success stories are from people who have done very well over the last 10 years or so. The corollary of high valuations is a lower expected return on investment.

The other assumption you are making is that power will shift to labour, and as a result the return on units of labour effort will increase at a higher rate than the return on capital. Thomas Piketty deconstructed that in his book Capital. The evidence and direction of travel doesn't seem to support that at all. AI and robotics will need fewer people. Catastrophic climate change would certainly damage a lot of capital, as would war. Be careful what you wish for, eh?

But the thought of power shifting to labour that seems less and less needed seems fanciful. Political changes could redress some of the balance and prohibit some of the foul working practices. Personally I would like to see a maximum of one intermediary allowed between beneficiary of the labour (what we used to call an employer) and the person doing the work. Agencies seem to just cream off money as intermediaries do and allow employers to to treat workers like crap.

But it's not going to bring skilled manual labour back in a big way. Many of those jobs have gone for good. My Dad was a fitter directly employed by a FTSE100 company, back in the day he made parts to fix or improve systems. Consolidation eliminated his workplace, and now that sort of equipment is serviced by the manufacturers with a service level agreement, you don't machine replacement parts nowadays.

A couple of the jobs I did at the start of my career have all but gone. Trump can say he's going to MAGA all he wants but those factories coming back from China aren't staffed with children of skilled manual workers from yesteryear. They're run by robots and CNC.

The IFS have done some good work in this area. I suspect that the problem is both globalisation and automation. For the first part of my working life the educated workers behind the Iron Curtain and in China were not competition for white-collar workers in the developed world. Since the late 1990s they have been. People are becoming richer and inequality is falling globally. But developed world workers are taking the shaft, relatively, because they are competing with a vastly greater labour pool. I was bright enough to get a job in an FTSE100 industrial research lab. I am in no way bright enough to go work for Google in London. What happened to blue collar workers in the 1980s and 90s is happening to white collar workers now.

Many things may go wrong for the very early retiree quitting work in their 30s or 40s. I suggest that finding developed country average earnings leaving them for dust is one of the less likely scenarios. Much more likely is a slow drop in investment returns, which will give them the comeuppance you seem to think they deserve. There was one precious lot that claimed to be retired @ 31 with CAD1M. I would put real money on that the tide will go out for them, but I probably won't live long enough to see it. I don't think CAD1M is enough for one person to retire at 31 in a developed world country, never mind two.

You have made some good points and i may have perhaps overstated the risks. I am not saying these FIRE people deserve what they get, I am just saying they should be mindful of potentially missing out on wage growth. But your points are good ones. Perhaps the key risk is investment returns more notably the sequence of returns.

itwasntme001

By the way i consider myself as being FIRE and i am 37. I have £1m investment portfolio and live mortgage and rent free. I will also receive at least £500k in inheritance (hopefully far into the future). Do not want kids and live quite frugally. Just to give everyone context.

Paul_Herring

itwasntme001 wrote: »

They are not. You are just deciding that it can not happen, when actually it very well can.

Now you're simply trolling. Onto my ignore list you go...

Edit:

I have £1m investment portfolio and live mortgage and rent free. I will also receive at least £500k in inheritance (hopefully far into the future). Do not want kids and live quite frugally. Just to give everyone context.

LOL.

Terron

bugslett wrote: »

I dislike so many modern things. I only got internet at home 3 months ago, it is a necessity now.

I got dial-up access in 92 (still have the same email address). I sometimes allowed me to handle a call out from home instead of going into work so was well worth it. I got a ISDN line (0.5Mbs) in 96. I had access to the internet from work around 90, and was using email at work in 82 (and abour 78 at university. It doesn't seem that modern to me.

Terron

itwasntme001 wrote: »

You are missing the point. I am not talking about essentials. We have all that already. What i am talking about is new goods and services. Sure the retiree can decide not to buy these but they will feel more and more in the poor class as these goods and services get more in demand by those who can afford it (those who are working and see rising wages).

I rather think you are missing the point. People who are successful in building wealth tend not to be people who care about what others have or having the latest gear. Maybe you should read The Millionaire Next Door

Marine_life

The FIRE debate seems excessively skewed to the underlying assumption that it is about sacrifice. We need far more discussion about how to maximise physical and financial assets.