How to build a financial plan for the future?

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bawaso
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Joined: Wed Mar 25, 2020 6:47 pm

How to build a financial plan for the future?

Post by bawaso »

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JoeRetire
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Re: How to build a financial plan for the future?

Post by JoeRetire »

bawaso wrote: Fri Jul 01, 2022 5:51 pm My wife and I are in our late 30s, with a roughly $1.7M net worth, with 70% of that liquid. We're pretty good with budgeting, saving, investing, but really want to start figuring out what is our plan for the next 15-20 years, and how much / how hard we need to work, and where we need to be in terms of $, and how we will get there.

Is there a template for self financial planning that exists or is it better to speak to a financial advisor? We probably don't want to give money to anyone for investing just yet, so if anyone has recommendations on who to go with for financial planning (e.g. Vanguard, Personal Capital?), that would be most appreciated.
Don't waste time and money on a template or advisor until you have some sense of your life goals.
You can't plan a path until you know where you want to go.
This isn't just my wallet. It's an organizer, a memory and an old friend.
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bawaso
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Re: How to build a financial plan for the future?

Post by bawaso »

Well, we want to set some outlandish goals (e.g. moving to Costa Rica when we're 50 and reducing our focus on corporate life), but we also want to be financially comfortable. We're not sure how to determine how much is enough / what are all the sources on income when you save up. E.g. if we save up money and invest it, will dividend investing cover 50% of our expenses, etc.?

If there's any advice on how to set the goals you mention, that would be helpful as well.
sailaway
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Re: How to build a financial plan for the future?

Post by sailaway »

What kind of lifestyle do you want in Costa Rica? How much do other expats say it costs?

There isn't really much difference between collecting dividends and selling stocks to raise cash. In fact, the dividends could cause a tax drag during accumulation.
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JoeRetire
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Re: How to build a financial plan for the future?

Post by JoeRetire »

bawaso wrote: Fri Jul 01, 2022 5:59 pm Well, we want to set some outlandish goals (e.g. moving to Costa Rica when we're 50 and reducing our focus on corporate life), but we also want to be financially comfortable. We're not sure how to determine how much is enough / what are all the sources on income when you save up. E.g. if we save up money and invest it, will dividend investing cover 50% of our expenses, etc.?

If there's any advice on how to set the goals you mention, that would be helpful as well.
Your goals are your goals - outlandish or otherwise.

Sit down with your significant other. Make a list of what you really want. Put them in priority order. If you can, figure out what each of them might cost. Then you might be ready to talk to an hourly, fee-only, fiduciary financial planner to help determine how to achieve them.

Planners/advisors can't help you decide what you want. But they can help you figure out how to achieve your goals financially once you know what your goals are.
This isn't just my wallet. It's an organizer, a memory and an old friend.
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FiveK
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Re: How to build a financial plan for the future?

Post by FiveK »

If you look at https://www.bogleheads.org/wiki/Priorit ... nvestments, where are you in that list?

Although it won't be perfect for everyone, following those suggestions is probably a pretty good way to facilitate whatever goals you set.
marcopolo
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Re: How to build a financial plan for the future?

Post by marcopolo »

bawaso wrote: Fri Jul 01, 2022 5:59 pm Well, we want to set some outlandish goals (e.g. moving to Costa Rica when we're 50 and reducing our focus on corporate life), but we also want to be financially comfortable. We're not sure how to determine how much is enough / what are all the sources on income when you save up. E.g. if we save up money and invest it, will dividend investing cover 50% of our expenses, etc.?

If there's any advice on how to set the goals you mention, that would be helpful as well.
If you are still in your 30's and have a network of $1.7m already, moving to Costa Rica and being financially comfortable does not seem outlandish at all.

We had a much smaller net worth at your age, moved to Hawaii at age 51 and are financially comfortable.

Focus on continuing to increase your income and living well below your means. These are the main things you can control.

Invest in a well diversified portfolio. You will get the returns you get, there is really not much you can control about that.

I think it is too early to set specific spending/portfolio targets, a lot can change in 10-15 years. As it gets closer you can evaluate anticipated costs to support the lifestyle you desire and whether your portfolio will support that. I'd so, great. If not, you can then consider where to compromise, lower expectations, work a little longer, do it anyway knowing you are taking more risk.

Good luck to you.
Once in a while you get shown the light, in the strangest of places if you look at it right.
PowderDay9
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Re: How to build a financial plan for the future?

Post by PowderDay9 »

If you have the time and are willing to learn to learn how to make your own plan, I'd recommend doing that. Nobody is going to care more about your plan and financial future than you. Read a lot on here and ask questions, then develop your own plan.
fourwheelcycle
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Re: How to build a financial plan for the future?

Post by fourwheelcycle »

If you have $1.2M in cash right now, I would invest it ASAP - 50% in Vanguard's 500 Index Admiral shares and 50% in Vanguard's Total Stock Market Index Admiral Shares. If you you have other money tied up in non-liquid assets, I'd move most of that into the two Vanguard funds I suggested, with the balance in Vanguard's Intermediate Term Bond Index. Aim for 80% equity and 20% bonds, aside from your home or other fixed assets.

Don't try to chase higher dividends or live off dividends exclusively. Take the lower dividends you will get from the Vanguard funds I suggested and sell 1-2% of your holdings each year - that will double your dividend income and the total will probably more than cover your living expenses in Costa Rica. Your biggest unknown will be health insurance; I don't have any simple suggestions on that question.

Keep working and save as much as you can, certainly 50% of your income each year after taxes and FICA. If you don't have any health or financial setbacks, and if the stock market doesn't stay down too long, you will probably be able to finance your goals by your early fifties.

You don't mention children. Children kept us happy, and anchored to salaried jobs in the US, right through their college years.
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