Burnout/downshifting/asset allocation/Finland

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Topic Author
Fireishere
Posts: 103
Joined: Thu May 27, 2021 4:48 am

Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

I would like to know your opinion about my situation.

Background:

- 39 years old, married, one doughter, entrepreneur.
- no debt
- portfolio 2,5M€ (50-60Xexpenses)
- asset allocation about 70% stocks 30% cash
- small pension at age 68 (only about 12k/year)
- free healthcare

I’m having a pretty severe burnout and I’m planning to quit my business. Last five years have been financially great but mentally really bad. I’m noticing that it’s hard to be present at home and going to work feels awful. I have enough money to retire but I want to work at least 10-15 years. If I take “easier” work, my salary will drop to maybe 30-40k per year which means our new contributions makes no significant difference to our portfolio. So what do you think our asset allocation should be? It’s possible that I need to raise money from the portfolio for some time until I find new job and get myself feeling better. I’m thinking 60/40 or 70/30 to keep up with inflation and hopefully some growth, because I’m still relatively young. Lastly, I have enough and making more money is not giving me any motivation anymore. I also just buried my friend (same age, father of three children) who had a stroke. That also changed my perspective for life.
I would really appreciate about your opinions!
andreas
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Joined: Tue Sep 14, 2021 2:07 am

Re: Burnout/downshifting/asset allocation/Finland

Post by andreas »

Can you sell the business or hire someone to do most of the work?
Topic Author
Fireishere
Posts: 103
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

andreas wrote: Sat Feb 04, 2023 1:29 am Can you sell the business or hire someone to do most of the work?
No, because I have a hardware store in a small town. It’s declining business, because people are moving to bigger cities and people are having less money to renovate their homes because of inflation. Value of houses are also declining here so people make lesser and lesser any improvements to their homes. This business also requires pretty much capital and it’s not easy to make it profitable. Good news is that I can sell or rent the building for some other use.
idc
Posts: 271
Joined: Thu Nov 26, 2020 11:50 pm

Re: Burnout/downshifting/asset allocation/Finland

Post by idc »

Sorry for your friend and for the burnout.

It seems like you are mixing up two different things, burnout from the current situation and keeping active. The main motivation for giving up on the business is the burnout. If you would get another job it would not be primarily to make money, but rather to be active, no? So it should matter more that you like it and less how much you make, no?

Also, if you're saying the business is declining, you might end up with fewer profits from your business anyway, no? So perhaps a relatively easy way out would be to shut down the business, which I am guessing should get you more money, both from selling/renting the building, but also by freeing the working capital you might have tied up.

Then perhaps you could try to take a break for a few months and try your hand at something else that keeps you happy, whether employment, another business, volunteering, etc. In my experience, it is so much more fun to work when you can always walk from that work if you don't like it - we call it that you have FU money in US :). Also, not sure how much the burnout for you is the fact that you can't shut off your mind from the business mode after hours. To me, that was the biggest improvement when I switched to Coast FIRE - I can mentally shut off after 5 p.m. from anything related to work.

Good luck regardless. Finland is such a nice place, every house has a sauna :) The only place in the world I know you can discuss business naked and be taken seriously.
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whodidntante
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Re: Burnout/downshifting/asset allocation/Finland

Post by whodidntante »

Sell that puppy and move on. Find something you are passionate about to do. I'm at a similar place myself. I'm not quite financially independent in a way were I can visit every Four Seasons in the world, but at a stage where I am not willing to kill myself for money.

Life is extremely short for us all. It was shorter for your friend. Be yourself.
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galeno
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Re: Burnout/downshifting/asset allocation/Finland

Post by galeno »

A close family member or friend's stroke SHOULD make one stop and think.

Stress, discontent, and consequent poor sleep will kill you faster than smoking 3 packs of cigarrettes per day.

Fate is telling you to take your foot off the gas pedal. Smell the roses.
KISS & STC.
Stork
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Location: Portugal (EU)

Re: Burnout/downshifting/asset allocation/Finland

Post by Stork »

You have my sympathy! We are in a similar situation (if a bit older), had a successful tourism business but found it too hard on having a life outside and put it for sale. Covid came, but we got an offer for the price we had set. This was good, but the sales process and moving burnt us out (after the 2020 Covid season!) and we are trying to find out feet now, bit by bit.

Change! Be there for your family. But also find some work you can go home from, paid or voluntary, to have a purpose. At least that would be my suggestion.

Best of luck, it can take time to get back on top.

Oh, and it sounds like both 60/40 and 70/30 would work for you.
123
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Re: Burnout/downshifting/asset allocation/Finland

Post by 123 »

With a portfolio supporting 50-60X expenses and no worries about healthcare costs there is no reason for you to endure stress related to work. It's likely time to close the business, maybe sell the building and move on to the next phase of your life. A portfolio aimed at reducing risk, like 60/40 or 70/30, could serve your family well.

Edited to add:
A question for the OP: How has the Ukraine situation impacted your preferences for your portfolio holdings? Did/Do you have significant equity holdings of companies based in Finland or do you choose generalized European equity investment funds?
The closest helping hand is at the end of your own arm.
IcedTea
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Re: Burnout/downshifting/asset allocation/Finland

Post by IcedTea »

Same happened to me. Best thing for me and my family was for me to move on from the family business. Not only I'm more present in the moments that matter, I can sleep and live a "normal life".

Because you feel burned out in your current job it doesn't mean you will feel the same in the next. While it's ok to take some time off there's no need to retire so early.

Learn to let go and time makes wonders.

Anyway, you did great! Well done! Now focus on what's good for you and your family.

Take care!
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Bernmaster
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Re: Burnout/downshifting/asset allocation/Finland

Post by Bernmaster »

You have my sympathy! You have more than enough money that it should no longer influence your decisions. Do what is best for your health and your family.

Regarding asset allocation, I would keep enough to cover X years of living expenses in cash - "whatever makes you comfortable" (quoting Warren Buffett) and keep the rest in stocks. If you can rent out the building you should have enough cash flow so you never have to worry about money again.
All the best!
"The unsophisticated investor who is realistic about his shortcomings is likely to obtain better results than the knowledgeable professional who is blind to even a single weakness” ― Warren Buffett
DoctorE
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Re: Burnout/downshifting/asset allocation/Finland

Post by DoctorE »

In your situation, at 50x expenses saved, I would close the business if I couldn't find a buyer and rent out or sell the building.
Enjoy life with your family, destress, take some vacations and look for the next step either doing a new business you love and is less stressful or just focus on your hobbies and family.

Diversify your portfolio well beyond Finland and Scandinavian equities. Keep it passive and low cost. You can pretty much live off the dividends from a diversified portfolio of distributing funds or use accumulating funds if tax efficient in your country and sell off 2% a year to spend. Keep a couple of years of expenses liquid.
Valuethinker
Posts: 49035
Joined: Fri May 11, 2007 11:07 am

Re: Burnout/downshifting/asset allocation/Finland

Post by Valuethinker »

Fireishere wrote: Sat Feb 04, 2023 1:23 am I would like to know your opinion about my situation.

Background:

- 39 years old, married, one doughter, entrepreneur.
- no debt
- portfolio 2,5M€ (50-60Xexpenses)
- asset allocation about 70% stocks 30% cash
- small pension at age 68 (only about 12k/year)
- free healthcare

I’m having a pretty severe burnout and I’m planning to quit my business. Last five years have been financially great but mentally really bad. I’m noticing that it’s hard to be present at home and going to work feels awful. I have enough money to retire but I want to work at least 10-15 years. If I take “easier” work, my salary will drop to maybe 30-40k per year which means our new contributions makes no significant difference to our portfolio. So what do you think our asset allocation should be? It’s possible that I need to raise money from the portfolio for some time until I find new job and get myself feeling better. I’m thinking 60/40 or 70/30 to keep up with inflation and hopefully some growth, because I’m still relatively young. Lastly, I have enough and making more money is not giving me any motivation anymore. I also just buried my friend (same age, father of three children) who had a stroke. That also changed my perspective for life.
I would really appreciate about your opinions!
I would suggest something like a global equity ETF.

You want maximum diversification. The Ukraine War and the European Energy Crisis have shown us all just how vulnerable any particular region or country is to "event risk". Total European equity exposure would then be less than 20% of portfolio (if you include the UK as "Europe" - but many of the Swiss & British stocks are huge multinationals like Shell, BP, Nestle).

Cash (or bonds) you would hold in Euros? That plus your state pension (plus possibly any property you own) would all be in Euros.

You've nailed it on lifestyle. You need to phase down, before it kills you.
MH2
Posts: 622
Joined: Thu Oct 28, 2021 3:46 am

Re: Burnout/downshifting/asset allocation/Finland

Post by MH2 »

Fireishere wrote: Sat Feb 04, 2023 1:23 am I would like to know your opinion about my situation.

Background:

- 39 years old, married, one doughter, entrepreneur.
- no debt
- portfolio 2,5M€ (50-60Xexpenses)
- asset allocation about 70% stocks 30% cash
- small pension at age 68 (only about 12k/year)
- free healthcare

I’m having a pretty severe burnout and I’m planning to quit my business. Last five years have been financially great but mentally really bad. I’m noticing that it’s hard to be present at home and going to work feels awful. I have enough money to retire but I want to work at least 10-15 years. If I take “easier” work, my salary will drop to maybe 30-40k per year which means our new contributions makes no significant difference to our portfolio. So what do you think our asset allocation should be? It’s possible that I need to raise money from the portfolio for some time until I find new job and get myself feeling better. I’m thinking 60/40 or 70/30 to keep up with inflation and hopefully some growth, because I’m still relatively young. Lastly, I have enough and making more money is not giving me any motivation anymore. I also just buried my friend (same age, father of three children) who had a stroke. That also changed my perspective for life.
I would really appreciate about your opinions!
There are several different questions here:
1. Do you sell your business
2. Do you have enough in your portfolio to cover your current living expenses
3. Your portfolio allocation

I always recommend using Portfolio Visualizer for allocation and distribution modeling. They have a very easy to use financial goals calculator. It's free at www.portfoliovisualizer.com/financial-goals.

If you do a simple 60/40 portfolio allocation and go with a 3% annual distribution, over a sixty year period you have a 100% success rate (meaning that the portfolio balance never drops to zero) and an average distribution of 75K EUR. Nine out of ten times your portfolio balance stays above 2M EUR (inflation adjusted).

Now, this doesn't cover capital gains and income taxes, which I imagine are an issue for where you live. However, if you're already able to live off of 30-40K EUR a year, it seems reasonable to me that you should be able to cover your expenses in perpetuity by taking small (3% SWR) distributions without touching your starting balance.

As far as your allocation, the default answer would be to have heavy US or total world exposure (60% of your total portfolio balance) with the remaining 40% in a total bonds ETF. You can also go with a three fund portfolio or something a little more complicated (e.g., by adding a small amount of REIT exposure).

Whether you want to replace the US portion of your portfolio with a Finish or EU total market fund is your call. I think a lot of people on here are more comfortable going with companies listed on US exchanges, which have also given slightly higher returns over the last couple of decades. The past, however, doesn't completely represent the future.
Valuethinker
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Re: Burnout/downshifting/asset allocation/Finland

Post by Valuethinker »

MH2 wrote: Wed Feb 08, 2023 5:20 am
Whether you want to replace the US portion of your portfolio with a Finish or EU total market fund is your call.
Imagine the situation of a full blown military confrontation (not necessarily war) with Russia. Then one would want to be globally diversified, not overexposed to Europe. All markets would go down of course, but some would go down more than others.

OP is already exposed to Finland via pension, perhaps home equity, career. That's quite a lot of exposure.

OTOH if really bad things don't happen, and Europe gets through the next winter in as good shape as it has this winter, that's going to be bullish for European stocks and bullish for the Euro. So you don't want to be underweight, either, necessarily.
I think a lot of people on here are more comfortable going with companies listed on US exchanges, which have also given slightly higher returns over the last couple of decades. The past, however, doesn't completely represent the future.
There are not good reasons to throw away diversification. If we believe markets are efficient, then they have priced in the factors which gave the US higher returns. There's no chance for individuals such as ourselves to know things the markets don't know.
MH2
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Re: Burnout/downshifting/asset allocation/Finland

Post by MH2 »

Valuethinker wrote: Wed Feb 08, 2023 8:21 am There are not good reasons to throw away diversification. If we believe markets are efficient, then they have priced in the factors which gave the US higher returns. There's no chance for individuals such as ourselves to know things the markets don't know.
Where did I recommend a move away from diversification? The default three fund portfolio is domestic, international, and bonds. Domestic, in his case, is either Finnish or EU equities. His call, and as someone who has amassed a 2.5M EUR portfolio in a heavily taxed country, he's perfectly capable of evaluating the risks.

That said, I'd like to remind everyone here that the EU has a 14.4 trillion EUR GDP and 447 million citizens. An total market EU ETF is a perfectly fine replacement for VTI in a three fund portfolio when you live in the EU.
Topic Author
Fireishere
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

idc wrote: Sat Feb 04, 2023 2:02 am Sorry for your friend and for the burnout.

It seems like you are mixing up two different things, burnout from the current situation and keeping active. The main motivation for giving up on the business is the burnout. If you would get another job it would not be primarily to make money, but rather to be active, no? So it should matter more that you like it and less how much you make, no?

Also, if you're saying the business is declining, you might end up with fewer profits from your business anyway, no? So perhaps a relatively easy way out would be to shut down the business, which I am guessing should get you more money, both from selling/renting the building, but also by freeing the working capital you might have tied up.

Then perhaps you could try to take a break for a few months and try your hand at something else that keeps you happy, whether employment, another business, volunteering, etc. In my experience, it is so much more fun to work when you can always walk from that work if you don't like it - we call it that you have FU money in US :). Also, not sure how much the burnout for you is the fact that you can't shut off your mind from the business mode after hours. To me, that was the biggest improvement when I switched to Coast FIRE - I can mentally shut off after 5 p.m. from anything related to work.

Good luck regardless. Finland is such a nice place, every house has a sauna :) The only place in the world I know you can discuss business naked and be taken seriously.
I’ve come to the same conclusion as you. By shutting down the business I would a) get money for selling or renting the building and b) freeing the capital. My worst enemy is looking in the mirror. It’s hard to make the final decision. My parents started this business 40 years ago and it’s hard to admit that I’m not able to make it work anymore.
Topic Author
Fireishere
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

whodidntante wrote: Sat Feb 04, 2023 3:21 am Sell that puppy and move on. Find something you are passionate about to do. I'm at a similar place myself. I'm not quite financially independent in a way were I can visit every Four Seasons in the world, but at a stage where I am not willing to kill myself for money.

Life is extremely short for us all. It was shorter for your friend. Be yourself.
Well said. I’m trying to let that sink in.
Topic Author
Fireishere
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

galeno wrote: Sat Feb 04, 2023 9:12 am A close family member or friend's stroke SHOULD make one stop and think.

Stress, discontent, and consequent poor sleep will kill you faster than smoking 3 packs of cigarrettes per day.

Fate is telling you to take your foot off the gas pedal. Smell the roses.
You’re absolutely right. That’s what I’m really trying to do.
Topic Author
Fireishere
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

Stork wrote: Sun Feb 05, 2023 11:41 am You have my sympathy! We are in a similar situation (if a bit older), had a successful tourism business but found it too hard on having a life outside and put it for sale. Covid came, but we got an offer for the price we had set. This was good, but the sales process and moving burnt us out (after the 2020 Covid season!) and we are trying to find out feet now, bit by bit.

Change! Be there for your family. But also find some work you can go home from, paid or voluntary, to have a purpose. At least that would be my suggestion.

Best of luck, it can take time to get back on top.

Oh, and it sounds like both 60/40 and 70/30 would work for you.
Sorry to hear about your burnout. It really takes time to recover. Covid was actually good for our business because people stayed at home and they did a lot of renovations. But now inflation is killing us. People’s purchasing power is really getting hit.

Being an entrepreneur has given me a purpose and identity and maybe one thing which keeps me going is a fear of losing that purpose. It may sound ridiculous but I’ve been in to our family business since I barely could walk.
Topic Author
Fireishere
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

123 wrote: Sun Feb 05, 2023 12:01 pm With a portfolio supporting 50-60X expenses and no worries about healthcare costs there is no reason for you to endure stress related to work. It's likely time to close the business, maybe sell the building and move on to the next phase of your life. A portfolio aimed at reducing risk, like 60/40 or 70/30, could serve your family well.

Edited to add:
A question for the OP: How has the Ukraine situation impacted your preferences for your portfolio holdings? Did/Do you have significant equity holdings of companies based in Finland or do you choose generalized European equity investment funds?
50-60X is also fat fire for us. We’re able to cut our expenses if necessary without having a meaningful impact to our life. I’m thinking 70/30 is right for us.

Ukraine situation hasn’t impact for portfolio because, as a Finn, I’ve always wanted to diversify my stock portfolio globally. Without going to (geo)politics you just need to look at the map and read a bit of Finnish history to understand that it’s wise to diversify. My only stock-ETF is a market-weighted global index.
Topic Author
Fireishere
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

IcedTea wrote: Sun Feb 05, 2023 12:24 pm Same happened to me. Best thing for me and my family was for me to move on from the family business. Not only I'm more present in the moments that matter, I can sleep and live a "normal life".

Because you feel burned out in your current job it doesn't mean you will feel the same in the next. While it's ok to take some time off there's no need to retire so early.

Learn to let go and time makes wonders.

Anyway, you did great! Well done! Now focus on what's good for you and your family.

Take care!
Thanks for your kind words. I’m trying to make my decision.
Topic Author
Fireishere
Posts: 103
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

Valuethinker wrote: Wed Feb 08, 2023 3:47 am
Fireishere wrote: Sat Feb 04, 2023 1:23 am I would like to know your opinion about my situation.

Background:

- 39 years old, married, one doughter, entrepreneur.
- no debt
- portfolio 2,5M€ (50-60Xexpenses)
- asset allocation about 70% stocks 30% cash
- small pension at age 68 (only about 12k/year)
- free healthcare

I’m having a pretty severe burnout and I’m planning to quit my business. Last five years have been financially great but mentally really bad. I’m noticing that it’s hard to be present at home and going to work feels awful. I have enough money to retire but I want to work at least 10-15 years. If I take “easier” work, my salary will drop to maybe 30-40k per year which means our new contributions makes no significant difference to our portfolio. So what do you think our asset allocation should be? It’s possible that I need to raise money from the portfolio for some time until I find new job and get myself feeling better. I’m thinking 60/40 or 70/30 to keep up with inflation and hopefully some growth, because I’m still relatively young. Lastly, I have enough and making more money is not giving me any motivation anymore. I also just buried my friend (same age, father of three children) who had a stroke. That also changed my perspective for life.
I would really appreciate about your opinions!
I would suggest something like a global equity ETF.

You want maximum diversification. The Ukraine War and the European Energy Crisis have shown us all just how vulnerable any particular region or country is to "event risk". Total European equity exposure would then be less than 20% of portfolio (if you include the UK as "Europe" - but many of the Swiss & British stocks are huge multinationals like Shell, BP, Nestle).

Cash (or bonds) you would hold in Euros? That plus your state pension (plus possibly any property you own) would all be in Euros.

You've nailed it on lifestyle. You need to phase down, before it kills you.
I already have a global equity ETF for maximum diversification. Cash and bonds will be in Euros. Do you think it would be wise to diversify to other currencies?
Topic Author
Fireishere
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

Valuethinker wrote: Wed Feb 08, 2023 8:21 am
MH2 wrote: Wed Feb 08, 2023 5:20 am
Whether you want to replace the US portion of your portfolio with a Finish or EU total market fund is your call.
Imagine the situation of a full blown military confrontation (not necessarily war) with Russia. Then one would want to be globally diversified, not overexposed to Europe. All markets would go down of course, but some would go down more than others.

OP is already exposed to Finland via pension, perhaps home equity, career. That's quite a lot of exposure.

OTOH if really bad things don't happen, and Europe gets through the next winter in as good shape as it has this winter, that's going to be bullish for European stocks and bullish for the Euro. So you don't want to be underweight, either, necessarily.
I think a lot of people on here are more comfortable going with companies listed on US exchanges, which have also given slightly higher returns over the last couple of decades. The past, however, doesn't completely represent the future.
There are not good reasons to throw away diversification. If we believe markets are efficient, then they have priced in the factors which gave the US higher returns. There's no chance for individuals such as ourselves to know things the markets don't know.
As you said, our house, business, career are in Finland. That’s why I a global market-weighted stock ETF. I want to diversify as much as possible.
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Fireishere
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

MH2 wrote: Thu Feb 09, 2023 12:25 pm
Valuethinker wrote: Wed Feb 08, 2023 8:21 am There are not good reasons to throw away diversification. If we believe markets are efficient, then they have priced in the factors which gave the US higher returns. There's no chance for individuals such as ourselves to know things the markets don't know.
Where did I recommend a move away from diversification? The default three fund portfolio is domestic, international, and bonds. Domestic, in his case, is either Finnish or EU equities. His call, and as someone who has amassed a 2.5M EUR portfolio in a heavily taxed country, he's perfectly capable of evaluating the risks.

That said, I'd like to remind everyone here that the EU has a 14.4 trillion EUR GDP and 447 million citizens. An total market EU ETF is a perfectly fine replacement for VTI in a three fund portfolio when you live in the EU.
I decided to go with a global equity etf. it’s easy to stay the course and I don’t get tempted to change allocations.
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BrooklynInvest
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Re: Burnout/downshifting/asset allocation/Finland

Post by BrooklynInvest »

Fireishere wrote: Sat Feb 04, 2023 1:23 am I’m noticing that it’s hard to be present at home and going to work feels awful.
I've been there OP. It's one thing when you're young, broke and starting out - we all have to make sacrifices. It's entirely another when you don't have to make sacrifices. And you're now in the second group - congratulations on that achievement!

I got laid off from a truly awful job 18 months ago. Mornings were spent dealing with angry emails and ignoring my family as I deal t with fake crisis after fake crisis. It's been very difficult to find a full time job at my level, but I consult for about a third of what I was making with none of the stress. Now I make breakfast for my son, drop him off and go to the gym, and then work for a while... and comment here ;-

I pay my monthly bills with my income and even put a little bit away. I'm a worrier by nature so having a bit of income is mentally much better than having none, even though it probably doesn't make much difference in the numbers.

What's the worst case for you finding a "make a few bucks" job? I'd make sure that was covered by cash and then simple 60-40 or thereabouts... maybe more on the equity side but that's me.

Bond yields are attractive. I'm around 70-30 excluding a year's worth of expenses in cash, but I'm a bit older and closer to "full retirement" than you. That said, you've got a good nest egg. There's also a benefit to being a bit conservative in your allocation - you've won the game so stop playing... or at least don't take so much equity risk?

Yeah I know. But hopefully we're near the end of rate hikes for a while.

Good luck OP! You're asking the right questions and that's a critical step.
idc
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Re: Burnout/downshifting/asset allocation/Finland

Post by idc »

Fireishere wrote: Thu Feb 09, 2023 1:58 pm I’ve come to the same conclusion as you. By shutting down the business I would a) get money for selling or renting the building and b) freeing the capital. My worst enemy is looking in the mirror. It’s hard to make the final decision. My parents started this business 40 years ago and it’s hard to admit that I’m not able to make it work anymore.
You should not feel guilty about it. It is very probable your parents had totally different circumstances business wise. Probably the town was not shrinking and there was no Amazon to compete with. Absolutely no disrespect to your parents, but you can't live their lives, just as I doubt you would expect to have your kids follow on running the business.

Let it go, move on and live your own life, you owe it to your spouse and kids, just as much, or even more as you own respect to your parents.
buylowbuyhigh
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Re: Burnout/downshifting/asset allocation/Finland

Post by buylowbuyhigh »

Fireishere wrote: Sat Feb 04, 2023 1:23 am I would like to know your opinion about my situation.

Background:

- 39 years old, married, one doughter, entrepreneur.
- no debt
- portfolio 2,5M€ (50-60Xexpenses)
- asset allocation about 70% stocks 30% cash
- small pension at age 68 (only about 12k/year)
- free healthcare

I’m having a pretty severe burnout and I’m planning to quit my business. Last five years have been financially great but mentally really bad. I’m noticing that it’s hard to be present at home and going to work feels awful. I have enough money to retire but I want to work at least 10-15 years. If I take “easier” work, my salary will drop to maybe 30-40k per year which means our new contributions makes no significant difference to our portfolio. So what do you think our asset allocation should be? It’s possible that I need to raise money from the portfolio for some time until I find new job and get myself feeling better. I’m thinking 60/40 or 70/30 to keep up with inflation and hopefully some growth, because I’m still relatively young. Lastly, I have enough and making more money is not giving me any motivation anymore. I also just buried my friend (same age, father of three children) who had a stroke. That also changed my perspective for life.
I would really appreciate about your opinions!
You're in a great place financially, congrats! I'm Finnish too and know that there is a very small percentage of people in this country that are doing better, especially considering your age.

My advice is to include the public work pension in your planning. You mention getting another job that will grow your accrued pension of 12k further, and your spouse will probably have a meaningful pension of their own. I know the system is often critisized and many FIRE bloggers tell you to not count on it, but it will likely be a good chunk towards your reasonable expenses. Remember that it has COLA, is paid for life and has constitutional protection. Currently it is also taxed only for the amount exceeding roughly 13k regardless of your capital gains income, and you can take half 3 years earlier than the minimum age. Personally I am planning to bridge some withdrawals from the portfolio until pension age, similar to US retirees with their SS.
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AnnetteLouisan
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Re: Burnout/downshifting/asset allocation/Finland

Post by AnnetteLouisan »

I think burnout could be a thread in itself as it is the unstated subtext of many of the employment and retirement related threads. It’s completely understandable given the pandemic and tsunami of change going on in society and workplaces these days. Simply keeping up with technological change has been a strain but now we have so many other kinds.

Actionably, how can we use money to address burnout, and when is quitting only going to cause more money problems v. When is it the financially smart option to retire or resign? Sometimes the issue is something other than the job and it’s in that case not the solution to leave.
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Fireishere
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Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

Update!

It’s been quite a year but I’ll cut straight to the conclusion we made.

We: married with a 5 year old daughter living in Finland
Ages: me 40, she 39
Debt: none
Portfolio: 3,2M€ 70% stocks 30% bonds/cash
Real estate: one building which is on sale and will bring us at least 500k
Social security: age 70 maybe 20k/year combined

We are starting our early retirement this year. Our base expenses are only about 30k/year. Still, we are going to use VPW (variable percentage withdrawal) method. At least as a ceiling. We don’t plan to leave an inheritance for our child when we die. Instead we want to transfer it her slowly while we’re still alive. So, we are very flexible with our withdrawals. We love to travel but it really is ok for us to tighten the belt during downturns. No need for expensive cars or other material stuff. We have also free healthcare and free education.

Here’s the question: VPW suggests that with our parameters we could pull about 143k this year. And required flexibility puts it down to 95k. We need 80k this year. That contains also travelling and taxes. We are going to give our doughter 10k per every three years because then it’ll be tax free. Of course we need to give much more as we plan to give it all to her while we’re still alive but we’ll figure that out later. So, we need 80k. But it’s no problem to travel more for us or give it to charity. So, would it be okay to withdraw what VPW suggests some good years if we pull much less other years?

And before someone asks, we have no plans to go back to work. Nonetheless, we are pretty entrepreneurial by nature so after we have dealt our fatigue I wouldn’t be surprised to find us getting paid for something we do. What I want to say is that I think we are very very flexible because our necessary expenses are so low and we are okay to do some low paying job.
DoctorE
Posts: 178
Joined: Thu Feb 13, 2014 2:11 am

Re: Burnout/downshifting/asset allocation/Finland

Post by DoctorE »

Fireishere wrote: Tue Feb 20, 2024 2:11 am Update!

It’s been quite a year but I’ll cut straight to the conclusion we made.

We: married with a 5 year old daughter living in Finland
Ages: me 40, she 39
Debt: none
Portfolio: 3,2M€ 70% stocks 30% bonds/cash
Real estate: one building which is on sale and will bring us at least 500k
Social security: age 70 maybe 20k/year combined

We are starting our early retirement this year. Our base expenses are only about 30k/year. Still, we are going to use VPW (variable percentage withdrawal) method. At least as a ceiling. We don’t plan to leave an inheritance for our child when we die. Instead we want to transfer it her slowly while we’re still alive. So, we are very flexible with our withdrawals. We love to travel but it really is ok for us to tighten the belt during downturns. No need for expensive cars or other material stuff. We have also free healthcare and free education.

Here’s the question: VPW suggests that with our parameters we could pull about 143k this year. And required flexibility puts it down to 95k. We need 80k this year. That contains also travelling and taxes. We are going to give our doughter 10k per every three years because then it’ll be tax free. Of course we need to give much more as we plan to give it all to her while we’re still alive but we’ll figure that out later. So, we need 80k. But it’s no problem to travel more for us or give it to charity. So, would it be okay to withdraw what VPW suggests some good years if we pull much less other years?

And before someone asks, we have no plans to go back to work. Nonetheless, we are pretty entrepreneurial by nature so after we have dealt our fatigue I wouldn’t be surprised to find us getting paid for something we do. What I want to say is that I think we are very very flexible because our necessary expenses are so low and we are okay to do some low paying job.
Congratulations.

A 1% based fixed costs is very good. The key to living of your portfolio is low fixed costs, low expenses and tax drag reduction.
Is the Finish tax code friendly to accumulating funds? If so, you should highly consider those if you haven't already as you would only pay taxes on the gain part, while allowing the dividends to get reinvested and compounded.

I'm a big fan of the % of portfolio with a minimum floor approach to withdrawals. Personally, I currently feel comfortable to go up to 3% of portfolio value with a floor of 2% but in reality I end up spending less than the floor. Historically, with an equity heavy global portfolio a "dollar plus inflation" approach of ~3% of initial portfolio value has had very high success even 100%. I want 100% historical success, 98 or 99% is not good enough, especially if not planning to go back to work ever. The 4% rule doesn't apply well to long retirements or perpetual endowment style portfolio withdrawals. I find VPW to be a bit high and too complicated. I prefer to exercise caution the first 10Y of withdrawals in order to avoid Sequence Of Return Risk. I'd rather have the portfolio increase so that the absolute $ amounts increase on a low % withdrawal. Have you ran some simulations with CfireSim, Firecal, FICalc etc?

If I were you I'd aim for 3% of €3.2M in most cases - €96k, but be flexible to drop to 2% / €64k. This is also equivalent to a 3% withdrawal after a 35% portfolio dip. The low is still double your fixed costs and should give a nice cushion for spending.
Topic Author
Fireishere
Posts: 103
Joined: Thu May 27, 2021 4:48 am

Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

DoctorE wrote: Tue Feb 20, 2024 7:34 am
Congratulations.

A 1% based fixed costs is very good. The key to living of your portfolio is low fixed costs, low expenses and tax drag reduction.
Is the Finish tax code friendly to accumulating funds? If so, you should highly consider those if you haven't already as you would only pay taxes on the gain part, while allowing the dividends to get reinvested and compounded.

I'm a big fan of the % of portfolio with a minimum floor approach to withdrawals. Personally, I currently feel comfortable to go up to 3% of portfolio value with a floor of 2% but in reality I end up spending less than the floor. Historically, with an equity heavy global portfolio a "dollar plus inflation" approach of ~3% of initial portfolio value has had very high success even 100%. I want 100% historical success, 98 or 99% is not good enough, especially if not planning to go back to work ever. The 4% rule doesn't apply well to long retirements or perpetual endowment style portfolio withdrawals. I find VPW to be a bit high and too complicated. I prefer to exercise caution the first 10Y of withdrawals in order to avoid Sequence Of Return Risk. I'd rather have the portfolio increase so that the absolute $ amounts increase on a low % withdrawal. Have you ran some simulations with CfireSim, Firecal, FICalc etc?

If I were you I'd aim for 3% of €3.2M in most cases - €96k, but be flexible to drop to 2% / €64k. This is also equivalent to a 3% withdrawal after a 35% portfolio dip. The low is still double your fixed costs and should give a nice cushion for spending.
Thanks for your reply!

Yes, we are using accumulating funds for tax benefits. We are using basic non-US boglehead portfolio VWCE+VAGF+cash.

We’ve been thinking a lot of our withdrawal method. % of the portfolio could be most secure option. The reason why we’ve been thinking of using VPW is that we’re planning to transfer our assets to our daughter while we’re still alive. But it feels pretty scary to start withdraw about 4% as we’re just 40 yo. Maybe we just start our retirement journey by withdrawing 3% as a ceiling and adjust it if necessary. One point taken is that our basic expenses will be lower when we’re about 60 yo and our daughter has moved away.
We’ve been running many different calculators and they all show that we’re good to go. Maybe we are?
DoctorE
Posts: 178
Joined: Thu Feb 13, 2014 2:11 am

Re: Burnout/downshifting/asset allocation/Finland

Post by DoctorE »

€10k in gifting over 3 years shouldn't really dent your 'spending'. It's 0.1%/y. Less than the VWCE expense ratio :) There's no pressure to spend up to a certain % or VPW amount. You can always spend the money later on. It's all about finding balance between what you want to do, what you can do and your age. If you want to go sailing around the world, better do it now if it's within your 3%ish budget, rather than waiting until you are 70yo.
Topic Author
Fireishere
Posts: 103
Joined: Thu May 27, 2021 4:48 am

Re: Burnout/downshifting/asset allocation/Finland

Post by Fireishere »

DoctorE wrote: Tue Feb 20, 2024 4:49 pm €10k in gifting over 3 years shouldn't really dent your 'spending'. It's 0.1%/y. Less than the VWCE expense ratio :) There's no pressure to spend up to a certain % or VPW amount. You can always spend the money later on. It's all about finding balance between what you want to do, what you can do and your age. If you want to go sailing around the world, better do it now if it's within your 3%ish budget, rather than waiting until you are 70yo.
Balance is definitely the key here. We’ll start by withdrawing 2,5-3% and see how it goes. That’s simple enough😄 Thanks again. Btw, I’ve been reading a lot of your comments and I’ve learned so many important things so I really appreciate all the efforts you’ve given here.
DoctorE
Posts: 178
Joined: Thu Feb 13, 2014 2:11 am

Re: Burnout/downshifting/asset allocation/Finland

Post by DoctorE »

Fireishere wrote: Wed Feb 21, 2024 2:50 am
DoctorE wrote: Tue Feb 20, 2024 4:49 pm €10k in gifting over 3 years shouldn't really dent your 'spending'. It's 0.1%/y. Less than the VWCE expense ratio :) There's no pressure to spend up to a certain % or VPW amount. You can always spend the money later on. It's all about finding balance between what you want to do, what you can do and your age. If you want to go sailing around the world, better do it now if it's within your 3%ish budget, rather than waiting until you are 70yo.
Balance is definitely the key here. We’ll start by withdrawing 2,5-3% and see how it goes. That’s simple enough😄 Thanks again. Btw, I’ve been reading a lot of your comments and I’ve learned so many important things so I really appreciate all the efforts you’ve given here.
Thank you. Most of my investment thinking has been formed from many posters on here so I also have to thank them, the community and the forum operators.
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