FIRE in 10 years time

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alexfoo39
Posts: 235
Joined: Sun Jan 06, 2019 1:00 am

FIRE in 10 years time

Post by alexfoo39 »

I calculated my portfolio (RM250k currently), with conservative annual growth (4.5%, Malaysia), monthly contribution (RM2,200), and 50/50 asset allocation.

With 85% portfolio survival rate (n=34 years), I'm expected to be FI in 2030.

Age 31 now.

Exact calculation
31+ 10 working years = 41 FI
By 41, my calculator shows a RM750k portfolio.
I will be drawing RM2,500/mo, or RM30k a year,
for the next 34 years (age expectancy = 75)

Question:
1) The portfolio survival calculator requires me to maintain a certain asset allocation. I put it as 50/50. It appears that I'm going to continue to risk my retirement money (half of them) in the stock market. Is this wise?
https://retirementplans.vanguard.com/VG ... ggCalc.jsf

2) Can I be even more conservative by considering a lower stock allocation, due to its volatility for the next 10 years? (I perceive 10 years too short for stock to perform well).
BanquetBeer
Posts: 645
Joined: Thu Jul 13, 2017 5:57 pm

Re: FIRE in 10 years time

Post by BanquetBeer »

That is already a very conservative (50:50) portfolio as you will absolutely need to counter inflation long term. Was it only 10 years ago the exchange to USD was 3:1 and I just looked it is now 4:1?

Furthermore, Malaysia is still developing. You might be able to live on 30k rm or $7.5k usd per year today but country wide standard of living increase will price you out of your current rank compared to your neighbors. As they get new cars/whole house air conditioning, you will not be advancing with them to stick to your budget.

I would invest more like 50% global, 20% local stocks and 30% bonds (dunno how secure Malaysian bonds are). What does Malaysia produce? Oil and gas? (Significant figure risk) and coconut/palm oil? Climate changes could risk crop production over the next 50 years.
User avatar
Watty
Posts: 28860
Joined: Wed Oct 10, 2007 3:55 pm

Re: FIRE in 10 years time

Post by Watty »

alexfoo39 wrote: Fri Feb 21, 2020 7:51 am for the next 34 years (age expectancy = 75)
......

2) Can I be even more conservative by considering a lower stock allocation, due to its volatility for the next 10 years? (I perceive 10 years too short for stock to perform well).
If your life expectancy is 75 then there is a 50% chance that you will live longer than that. In retirement planning people often plan to be able to support themself until they are 90 or 95.

Since you are 31 now this means that some of your money would be invested for 60 years or more which makes it a lot more likely that stocks will do well over a longer time frame.

You can play with the numbers all sorts of different ways but your investing time frame is a lot longer than 10 years since the money will still be invested after you are 41 even if you retire then.
Nowizard
Posts: 4842
Joined: Tue Oct 23, 2007 5:33 pm

Re: FIRE in 10 years time

Post by Nowizard »

If you are planning to retire in ten years, begin considering many things other than finances. Retiring early requires either laser focus on asset accumulation, good fortune or both. So does planning for many years of retirement and a clear definition of the term.

Tim
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