Is it all too good to be true?

Albermarle

Starmer24 said:

barnstar2077 said:

horsewithnoname said:

You know the thing that money can’t buy? Time. Obviously it’s ultimately what you enjoy doing, and if it genuinely is work then crack on. But don’t you have family and friends to enjoy yourself with? Don’t you have hobbies or interests that you like to do more of?
only you can answer for yourself. 

This is how I feel.  News flash, we are all dying!  Every week there are new stories on this forum of people with million pound pots discussing whether to take 3.5% or 3.25%, or work one more year etc.  Most of them will only ever spend a fraction of the money.  Most people won't make it to their nineties (with many of them wishing they hadn't) so go as soon as the numbers add up and cut your cloth accordingly.  People can always adjust their spending, but no one can buy more time! 

I think this is certainly me (trying to model different returns etc) and i am now looking to retire either March 25 (4 mths?) , or March 26 (16 mths).   The uncertainty is based on the fact i am not 55 until Feb 2026, and hence going a year before means i will be eating into my capital for 12 mths.

But of course, if i live till 75 i only have 21 yrs to go...do i want to use one of these precious 21 years working in a job i really dislike and having the opportunity cost of not enjoying myself in the meantime

But the decision of time vs money is certainly one i am very conscious of as i have a lot of stuff i want to do now...but also the decision to retire so young (with 3 kids and one in primary school) based on the uncertainties of a DC pension and a lifetime of being prudent isnt something i want to make without proper consideration!

A 55 year old man will on average live for almost another 30 years. If you have had a non manual job, are well educated, financially secure and with no chronic illness, then you will probably live longer than the average. At least a 25% chance of reaching your 90's.
My OH's Uncle lived until he was 99 and was only really struggling for the last year of his life. His wife has just celebrated her 101st. A bit forgetful but otherwise still OK. In their mid 90's they were still going on holidays, and buying an expensive new car !

Cobbler_tone

Dazed_and_C0nfused said:

barnstar2077 said:

horsewithnoname said:

You know the thing that money can’t buy? Time. Obviously it’s ultimately what you enjoy doing, and if it genuinely is work then crack on. But don’t you have family and friends to enjoy yourself with? Don’t you have hobbies or interests that you like to do more of?
only you can answer for yourself. 

This is how I feel.  News flash, we are all dying!  Every week there are new stories on this forum of people with million pound pots discussing whether to take 3.5% or 3.25%, or work one more year etc.  Most of them will only ever spend a fraction of the money.  Most people won't make it to their nineties (with many of them wishing they hadn't) so go as soon as the numbers add up and cut your cloth accordingly.  People can always adjust their spending, but no one can buy more time! 

It hasn't stopped people trying though!

Or maybe it's more it hasn't stopped entrepreneurs from finding ways to get rich people to part with some of their money 😉 

https://www.theguardian.com/science/2015/jan/11/-sp-live-forever-extend-life-calico-google-longevity

For balance, the 'real' news is labour focusing more on the likely scenario many will face at some point. Cheerful for a Monday!

https://www.bbc.co.uk/news/articles/c3vln4pn3gzo

It's enough to grab whatever pension you have and run ASAP! 

IamWood

I might call it a day if my firm starts enforcing RTO. Currently, I WFH 4 days a week (the benefit I negotiated by rejecting any future promotion), and I’m one of the few who knows the system inside out. I can handle my job with little effort while earning a reasonable salary of about £200K. My plan is to stay here for another four years until my boys finish university — or until I get fired!

pterri

Starmer24 said:

barnstar2077 said:

horsewithnoname said:

You know the thing that money can’t buy? Time. Obviously it’s ultimately what you enjoy doing, and if it genuinely is work then crack on. But don’t you have family and friends to enjoy yourself with? Don’t you have hobbies or interests that you like to do more of?
only you can answer for yourself. 

This is how I feel.  News flash, we are all dying!  Every week there are new stories on this forum of people with million pound pots discussing whether to take 3.5% or 3.25%, or work one more year etc.  Most of them will only ever spend a fraction of the money.  Most people won't make it to their nineties (with many of them wishing they hadn't) so go as soon as the numbers add up and cut your cloth accordingly.  People can always adjust their spending, but no one can buy more time! 

I think this is certainly me (trying to model different returns etc) and i am now looking to retire either March 25 (4 mths?) , or March 26 (16 mths).   The uncertainty is based on the fact i am not 55 until Feb 2026, and hence going a year before means i will be eating into my capital for 12 mths.

But of course, if i live till 75 i only have 21 yrs to go...do i want to use one of these precious 21 years working in a job i really dislike and having the opportunity cost of not enjoying myself in the meantime

But the decision of time vs money is certainly one i am very conscious of as i have a lot of stuff i want to do now...but also the decision to retire so young (with 3 kids and one in primary school) based on the uncertainties of a DC pension and a lifetime of being prudent isnt something i want to make without proper consideration!

The eternal question, i dont have kids so only have me to worry about. Im as sure as i can be that i can go at 57 (July ‘25). I could even go now actually but making that leap is nerve wracking. By any objective measure I’ve not got much to stress about, £40k from 60 from the DB and enough to bridge the gap to then plus good savings to supplement the £40k as I need it. It’s not always a rational decision even though it probably should be based on future income vs spend 

Albermarle

IamWood said:

I might call it a day if my firm starts enforcing RTO. Currently, I WFH 4 days a week (the benefit I negotiated by rejecting any future promotion), and I’m one of the few who knows the system inside out. I can handle my job with little effort while earning a reasonable salary of about £200K. My plan is to stay here for another four years until my boys finish university — or until I get fired!

A salary six times the average wage is a bit more than reasonable !

IamWood

Albermarle said:

IamWood said:

I might call it a day if my firm starts enforcing RTO. Currently, I WFH 4 days a week (the benefit I negotiated by rejecting any future promotion), and I’m one of the few who knows the system inside out. I can handle my job with little effort while earning a reasonable salary of about £200K. My plan is to stay here for another four years until my boys finish university — or until I get fired!

A salary six times the average wage is a bit more than reasonable !

Cheers @Albermarle

I know.

I could earn much more if I were willing to travel 3/4 days a week, but life is about more than just a big paycheck and the bank accounts as others have pointed out in their comments.

michaels

IamWood said:

Albermarle said:

IamWood said:

I might call it a day if my firm starts enforcing RTO. Currently, I WFH 4 days a week (the benefit I negotiated by rejecting any future promotion), and I’m one of the few who knows the system inside out. I can handle my job with little effort while earning a reasonable salary of about £200K. My plan is to stay here for another four years until my boys finish university — or until I get fired!

A salary six times the average wage is a bit more than reasonable !

Cheers @Albermarle

I know.

I could earn much more if I were willing to travel 3/4 days a week, but life is about more than just a big paycheck and the bank accounts as others have pointed out in their comments.

A huge package and humble too....

Hoenir

Albermarle said:

tichtich said:

I haven't read the whole thread, so apologies if I'm repeating something that's already been said.

I've always found it a bit odd that many people use a withdrawal rate (such as the traditional 4%) based on the market price of their portfolio at the time they retire, without taking into account whether the market is over- or under-priced. If investments are over-priced, then future returns (on that price) are likely to be significantly lower than if they are appropriately- or under-priced.

The same applies if you are still some way from retirement, though probably to a lesser degree, as there is more time to recover from the next down-turn. So I think the OP is wise to apply a discount to his current portfolio price. (I like to call it "price", and save the word "value" for the underlying worth of investments, based on their expected future cash flows.)

A market can not be over or under priced, as if this was the consensus, the market would have already moved to correct that. 
Of course you can have your own personal opinion, but it is just as likely to be wrong as right, especially in the short term. 

Markets are priced on forward expectations not historic. When individual companies fail to meet the expectations set. The shares sell off. When the sell off extends to a greater number of companes.  Then the herd stampedes for the exits.

With the concentration of trading into fewer and fewer global stocks. The risks have steadily increased. Likewise passive investing is generic. Drives price purely on sale or purchase. Who is determining the actual stock prices? 

Take a look at the historic Tesla share price chart. Entry into the S&P500 and Global Indices was December 2021. Who made the money on the stock. When the indices were forced to rebalance. 

leosayer

Hoenir said:

Albermarle said:

tichtich said:

I haven't read the whole thread, so apologies if I'm repeating something that's already been said.

I've always found it a bit odd that many people use a withdrawal rate (such as the traditional 4%) based on the market price of their portfolio at the time they retire, without taking into account whether the market is over- or under-priced. If investments are over-priced, then future returns (on that price) are likely to be significantly lower than if they are appropriately- or under-priced.

The same applies if you are still some way from retirement, though probably to a lesser degree, as there is more time to recover from the next down-turn. So I think the OP is wise to apply a discount to his current portfolio price. (I like to call it "price", and save the word "value" for the underlying worth of investments, based on their expected future cash flows.)

A market can not be over or under priced, as if this was the consensus, the market would have already moved to correct that. 
Of course you can have your own personal opinion, but it is just as likely to be wrong as right, especially in the short term. 

Markets are priced on forward expectations not historic. When individual companies fail to meet the expectations set. The shares sell off. When the sell off extends to a greater number of companes.  Then the herd stampedes for the exits.

With the concentration of trading into fewer and fewer global stocks. The risks have steadily increased. Likewise passive investing is generic. Drives price purely on sale or purchase. Who is determining the actual stock prices? 

Take a look at the historic Tesla share price chart. Entry into the S&P500 and Global Indices was December 2021. Who made the money on the stock. When the indices were forced to rebalance. 

Stock prices are driven by supply and demand which arises from trading activity. When there is a surplus of buyers over sellers then prices rise. 

The reasons for this might expectations of future company earning but it might be other factors not directly related to this such as an change in the risk-free rate, another company in the same sector offering better returns, changes to individual taxation, a founder selling shares to buy a house, short squeezes eg. Gamestop...the reasons are endless and may have nothing to do with future expected returns. 

There is little evidence that trading activity by index funds has a material impact on stock prices. The upswing in prices in 2021 could equally have been caused by traders buying up stock in expectation of such a rise so it became self-fulfilling.

Hoenir

leosayer said:

Hoenir said:

Albermarle said:

tichtich said:

I haven't read the whole thread, so apologies if I'm repeating something that's already been said.

I've always found it a bit odd that many people use a withdrawal rate (such as the traditional 4%) based on the market price of their portfolio at the time they retire, without taking into account whether the market is over- or under-priced. If investments are over-priced, then future returns (on that price) are likely to be significantly lower than if they are appropriately- or under-priced.

The same applies if you are still some way from retirement, though probably to a lesser degree, as there is more time to recover from the next down-turn. So I think the OP is wise to apply a discount to his current portfolio price. (I like to call it "price", and save the word "value" for the underlying worth of investments, based on their expected future cash flows.)

A market can not be over or under priced, as if this was the consensus, the market would have already moved to correct that. 
Of course you can have your own personal opinion, but it is just as likely to be wrong as right, especially in the short term. 

Markets are priced on forward expectations not historic. When individual companies fail to meet the expectations set. The shares sell off. When the sell off extends to a greater number of companes.  Then the herd stampedes for the exits.

With the concentration of trading into fewer and fewer global stocks. The risks have steadily increased. Likewise passive investing is generic. Drives price purely on sale or purchase. Who is determining the actual stock prices? 

Take a look at the historic Tesla share price chart. Entry into the S&P500 and Global Indices was December 2021. Who made the money on the stock. When the indices were forced to rebalance. 

Stock prices are driven by supply and demand which arises from trading activity. When there is a surplus of buyers over sellers then prices rise. 

Bubbles form and pop, fundamentals will never go out of fashion. The 1980's property and stock market bubble. The 1998-2000 Dot Com bubble. The 2006-2008 property and finance bubble. All had similarities. Not least investor euphoria. With hindsight, the hype and craze surrounding those bubbles were a dead giveaway that they couldn’t last.

Three good rules to follow

Rule No. 1: Don’t Invest in What You Don’t Understand

Rule No. 2: Cash Flow Is King

Rule No. 3: The Valuation Must Make Sense