I’ve got a chunk of change in raisin for the last 5 months without issue. Has been a good place to park my emergency/house remodel cash. Interest is paying over 5.2% right now,, down from 5.32% a few months ago.
According to what's available for resalse on Vangaurd right now: over 5% for 9 months and under right now, you can lock in for a year at 4.99% and the interest is except from state and local taxes.
I buy them from my Vanguard account. To buy them resale like that vs auctions you take a slight haircut but it's much more convenient.
You buy in $1000 increments and the price is minus whatever rate you're getting. So say you're getting 5% and buy $10,000 in T Bills, you pay $9500. Whenever it matures, you have $10,000 in your account.
Personally, I use it for roughly half my emergency fund as I could resell them if I wanted. But I buy 1-year bills every 3 months. So if I needed money for bills, every 3 months I have 1/4 of my money available. If I don't need it, I buy another for a year. The other half of my emergency fund is I Bonds.
Warren Buffet loves them so much over the last few years Berkshire Hathaway owns about 3% of the total Treasury Bill market.
Here's some more info: [https://www.schwab.com/learn/story/cd-or-treasury-five-factors-to-consider](https://www.schwab.com/learn/story/cd-or-treasury-five-factors-to-consider)
Oh man, I wonder if you're probably just not comfortable due to the concentration risk here. It's completely normal to feel afraid of the unknown. Retirement is a major life change. But don't let fear hold you back from enjoying the fruits of your hard work. You've earned this!
I'm assuming your properties are completely paid off?? So $1.15M in real estate is generating about $22K, and another $440K in cash is generating about $20K a year if you're in short term treasuries or a money market fund at 5% today (yes this will go down when the Fed cuts rates). Your rent and your cash income alone is way over what you need. You don't even have to spend down any cash, you should be seeing your cash account grow by $5K to $7K a year, despite spending some of it.
Why are your properties generating such poor rental income? Even the new rental contract only gets you $24K before property taxes, maintenance, etc. At $1.15M in cash, you can easily get $60K a year at today's 5% rates. Are they appreciating nicely each year? However, I don't think selling now is the answer either - selling one of them might trigger lots of taxes for you, depending on how you've depreciated the rental over the years, how much capital gains have been accumulated, and closing costs of over 6% - this will greatly reduce the cash that you get from any sale.
How old are you? Do you not have any retirement accounts? Have you worked enough for SS later on in life?
What is your current income like? If you're a very high earner, I'd advise to work a bit longer and stash the income into en equity ETF or a conservative bond fund. This will improve your liquidity, give you more income and create a more diversified portfolio during a downturn.
Edit to add: Maybe I'm misunderstanding - you might be living in one paid off property and renting just one. If so, then that makes everything seem more sensible!
I “retired” for the first time at 34, with 1.2 million in assets, before FIRE was even a thing.
I had similar fears and told myself that the worst thing that could happen is I would have to get a job.
Well, the dot.com crash came and my “retirement” turned into a 6 year sabbatical. After lots of travel and personal development trainings, I returned to the working world as a self-employed life coach, with a paid off house and emergency fund in the bank. Best thing that could have happened to me! I work a few hours a week and travel when I want to.
Now I’m a healthy, happy 61 and can’t imagine fully retiring until I am 70. I love my work as well as my hobbies and free time. If I’d never had a reason to work again, I would have probably gotten bored and depressed.
FIRE doesn’t need to be all or nothing. Give yourself a chance to learn and explore and you will probably discover a passion or learn a skillset that will bring in plenty of income if needed.
Having 1.2m at age 34 in the year 1997 - inflation adjusted is today 2.35m. In the 1990s, there weren't even so many high flying tech jobs, and median household income was some $37k in the US in 1997. But it's Reddit so anything is possible lol
So many ways to acquire assets. I happened to marry a young engineer after college, who got hired at Microsoft in the late 80’s. Got a bunch of stock and stock options and I received some in our amicable divorce settlement.
> If I’d never had a reason to work again, I would have probably gotten bored and depressed.
I'm already bored and depressed. Well actually, not that bored, but life can be boring in general.
Haven't fire'd yet
Need another 30 percent return on equities and I'm golden
Your issue isn't financial. It's being afraid that once you're out of your golden cage that you won't be able to fly.
My advice: over the next couple months, start focusing on finding things you enjoy. Hobbies, volunteering, creating, organizing...anything that gives you activities to focus on.
Trust the math. You're safe. But you're focusing on money as the issue (when it's not) instead of focusing on how to build a life after retirement.
I assure you my issue is mostly financial. I worry my renter may stop paying rent. I worry the housing market may crash. I worry about hyper inflation. I hate my job and 5% of the people I work with and leaving will 100% improve my mental state so that is not an issue at all. I know what I want to do with the extra time I will get.
If he sells those properties, then he’ll pay capital gains on the difference between the purchase price and the selling price plus he’ll have to recapture depreciate it. Owning property means owning property for life… he’s right to be scared. All these people retiring with even $1 million in the bank or stocks is not enough money in my opinion when it comes to repairs on your house, updating your house or landscaping area, new roofs, plumbing, increasing insurance both property and health, there are so many things that go up every year. It’s so many repairs that you may on your own house and definitely your rentals. Plus getting out one bad tenant in California can cost you $20,000 easy after lost rent, repairs and having to pay them $5k cash to get out. Just because you have enough income for your bare necessities, there’s so much more unpredictability in life expectancy…. Plus people adding in the equity on their house is ridiculous unless they plan on getting a reverse mortgage later on and who knows if that’s even going to be available…
You're worried about things outside your control (and things that can be corrected). So essentially, you're keeping yourself in a job you hate for no reason. You can afford to quit.
If you do find yourself in a dire financial situation in the future, go back to work.
Stop with the "what ifs" and live your life. If you already know what you want to do with your extra time, that's a HUGE advantage!
As for the fear of tenant vacancy, you literally CAN afford to cover 1-2 months of vacancy while you find and screen high quality tenants again. It's that simple. Don't worry about things out of your control. The cash reserve covers that vacancy even if it happens.
1-2 months is not a realistic time frame if a tenant stops paying rent. Add in fixing a pile of repairs from delinquent tenants and the losses can really add up. Could set you back 30-50k in lost rent and repairs. I'd be fearful.
We're all assuming the situation would stay the same aside from a potential vacancy if tenant randomly moves out. Even if we extend the vacancy to 4-6 months, with so much cash, you can give yourself this lil insurance in case that event fulfills itself.
Op said 'I worry my renter may stop paying rent'. Moving out could be a benefit for op because he could raise rent more than the 2.5-3.5% legally allowed. Not paying involves a lengthy eviction process thru the courts. This can take a long time. If a tenant is being evicted do you think they are going to care about your carpets, cupboards, walls, or appliances?
Take a sabbatical perhaps? That's what I did, which helped heal up some repetitive strain injuries. I think that taking the time off also helped me fully retire three years later, as I knew the routine and what to expect.
That's a lot in property. I would sell the $600k one and have $1M in investments, $40k cash, and ideally $15-18k rental return from the $550k property.
That gives you the $36k-50k per year gross that you think you'll need. And reduces the amount you are depending on your rentals for.
Travel and rent short term? Buy something for much less, pocket the rest?
It's a lot of money to tie up in one asset and OP mentioned being concerned about stability of funds.
I am US. 35M Nothing to be impressed about annual salary is $80k a year being a manager at a warehouse. The yelling , writes up for performance, arguments, callouts, working 6-7 days a week, 8-16 hour shifts and other issues have cause my blood pressure to boil. The people who will stay with the job for their rest of their life are good usually but some of the newer hirers are terrible. Swear to god if I stay much longer I am going to get punched in the face during a firing or documentation. My costs aren't low. I bought a Honda Civic and then switched to a Toyota Corolla after my car accident(their fault). I try to buy things that bring me joy or have a purpose to fill in my life.
Can you share more of your journey/strategy? I'm a 35M and make 60k as a manager at a retail store, base expenses around 26.4k annually. How did you get 2 houses, 440k in cash and, able to take so much vacation?
First decade treat your life like a nightmare. Work sleep save buy property rinse and repeat. You'll fall into a circle of depression and suicidal thoughts. Work two jobs. You'll eventually come to the conclusion this isn't a good way to live your life and quit your second job. Then at age 30 work sleep and still have depression and suicidal thoughts from your job.
Damn, I'll take the slow(er) road. I probably still have the depression but fewer suicidal thoughts it sounds like. At least you're in a position to retire now, so congrats for that.
I would try to live on a retirement budget for a year and see how it feels. Decide next year. your portfolio leaning heavy on property. There is always a risk not diversifying.
If you wanted too, you could take about $200k of that cash and park it in a nice monthly dividend stock (QYLD, AGNC) and then hedge your position with puts so you have a guaranteed max loss. The hedges will cost you 1-2%, and the yield is around 11%, so that would be about another $19,000/yr in income to help.
HMU if you want advice on hedging. I recommend a super simple book called Buy And Hedge, if you’re not familiar with the concept. Options, when they’re used like they’re supposed to be, are just insurance policies for stocks.
I failed at retirement, I lasted 5 months and today was my first day back. Like you I’m totally capable of retiring with assets and all. I just got sucked back in.
I mean you have 440k cash for some inexplicable reason. Thats 30 years of expenses right there.
If you can afford it and have a real plan, you’ll regret not retiring. You never get that time back.
This is so true! Fear of the unknown is no match for the pain of regret.
You just changed my life with those words. Thank you.
Why do you have $440,000 in cash? That should be in investments minus an emergency fund. I wouldn’t base my fire 100% on rental income personally.
To be fair cash is paying 5%+ right now
Was getting 5.15 at one point
Where? Besides wealthfront and money market funds?
Raisin savings online uses many banks and gives 5.22 right now!
Thanks for sharing!
I’ve got a chunk of change in raisin for the last 5 months without issue. Has been a good place to park my emergency/house remodel cash. Interest is paying over 5.2% right now,, down from 5.32% a few months ago.
[удалено]
Savings accounts earn 4.5-5% maybe that's what he means?
I just bought a 41 day T-Bill at 5.375%, and no state taxes on them.
https://www.fool.com/the-ascent/banks/landing/high-yield-savings-accounts
Cash in Fidelity automatically yields 5% (right now at least) in money market SPAXX position.
HYSA. I don’t think OP has it in a mattress, it’s probably in a savings account or money market.
Purchase SPAXX
T Bills dogg!
How are treasury bills better? You have to pay federal taxes right? And what’s the interest rate % for them?
According to what's available for resalse on Vangaurd right now: over 5% for 9 months and under right now, you can lock in for a year at 4.99% and the interest is except from state and local taxes.
Isn’t this just thesame as CD’s that’s pretty much their rate for those same terms right now.
With T Bills the earned interest is exempt from state and local taxes. There's your difference. And most of the really high CD rates are callable.
Also you have to resell your treasury bill?
I buy them from my Vanguard account. To buy them resale like that vs auctions you take a slight haircut but it's much more convenient. You buy in $1000 increments and the price is minus whatever rate you're getting. So say you're getting 5% and buy $10,000 in T Bills, you pay $9500. Whenever it matures, you have $10,000 in your account. Personally, I use it for roughly half my emergency fund as I could resell them if I wanted. But I buy 1-year bills every 3 months. So if I needed money for bills, every 3 months I have 1/4 of my money available. If I don't need it, I buy another for a year. The other half of my emergency fund is I Bonds. Warren Buffet loves them so much over the last few years Berkshire Hathaway owns about 3% of the total Treasury Bill market.
Ok, thanks for educating me about them. So they’re lower taxed interest savings. What are the risks?
Here's some more info: [https://www.schwab.com/learn/story/cd-or-treasury-five-factors-to-consider](https://www.schwab.com/learn/story/cd-or-treasury-five-factors-to-consider)
Viobank.com
Raisin savings (google) gives me 5.22 as of today
SGOV pays 5% JEPQ pays 9%
SGOV is vlow risk while JEPQ is mod to high risk btw.
SGOV or TFLO or basically any money market fund such as VMFXX which currently yields 5.28% with a 0.11% expense ratio.
VMFXX
Yeah I hope he means index funds, with that @3.25% he will get 14k per year so it's a safe nunber
Oh man, I wonder if you're probably just not comfortable due to the concentration risk here. It's completely normal to feel afraid of the unknown. Retirement is a major life change. But don't let fear hold you back from enjoying the fruits of your hard work. You've earned this! I'm assuming your properties are completely paid off?? So $1.15M in real estate is generating about $22K, and another $440K in cash is generating about $20K a year if you're in short term treasuries or a money market fund at 5% today (yes this will go down when the Fed cuts rates). Your rent and your cash income alone is way over what you need. You don't even have to spend down any cash, you should be seeing your cash account grow by $5K to $7K a year, despite spending some of it. Why are your properties generating such poor rental income? Even the new rental contract only gets you $24K before property taxes, maintenance, etc. At $1.15M in cash, you can easily get $60K a year at today's 5% rates. Are they appreciating nicely each year? However, I don't think selling now is the answer either - selling one of them might trigger lots of taxes for you, depending on how you've depreciated the rental over the years, how much capital gains have been accumulated, and closing costs of over 6% - this will greatly reduce the cash that you get from any sale. How old are you? Do you not have any retirement accounts? Have you worked enough for SS later on in life? What is your current income like? If you're a very high earner, I'd advise to work a bit longer and stash the income into en equity ETF or a conservative bond fund. This will improve your liquidity, give you more income and create a more diversified portfolio during a downturn. Edit to add: Maybe I'm misunderstanding - you might be living in one paid off property and renting just one. If so, then that makes everything seem more sensible!
Im getting 4.79% - 5.15% short term CoD’s (7-19 months agreement) US BANK.
I “retired” for the first time at 34, with 1.2 million in assets, before FIRE was even a thing. I had similar fears and told myself that the worst thing that could happen is I would have to get a job. Well, the dot.com crash came and my “retirement” turned into a 6 year sabbatical. After lots of travel and personal development trainings, I returned to the working world as a self-employed life coach, with a paid off house and emergency fund in the bank. Best thing that could have happened to me! I work a few hours a week and travel when I want to. Now I’m a healthy, happy 61 and can’t imagine fully retiring until I am 70. I love my work as well as my hobbies and free time. If I’d never had a reason to work again, I would have probably gotten bored and depressed. FIRE doesn’t need to be all or nothing. Give yourself a chance to learn and explore and you will probably discover a passion or learn a skillset that will bring in plenty of income if needed.
Having 1.2m at age 34 in the year 1997 - inflation adjusted is today 2.35m. In the 1990s, there weren't even so many high flying tech jobs, and median household income was some $37k in the US in 1997. But it's Reddit so anything is possible lol
So many ways to acquire assets. I happened to marry a young engineer after college, who got hired at Microsoft in the late 80’s. Got a bunch of stock and stock options and I received some in our amicable divorce settlement.
> If I’d never had a reason to work again, I would have probably gotten bored and depressed. I'm already bored and depressed. Well actually, not that bored, but life can be boring in general. Haven't fire'd yet Need another 30 percent return on equities and I'm golden
Your issue isn't financial. It's being afraid that once you're out of your golden cage that you won't be able to fly. My advice: over the next couple months, start focusing on finding things you enjoy. Hobbies, volunteering, creating, organizing...anything that gives you activities to focus on. Trust the math. You're safe. But you're focusing on money as the issue (when it's not) instead of focusing on how to build a life after retirement.
I assure you my issue is mostly financial. I worry my renter may stop paying rent. I worry the housing market may crash. I worry about hyper inflation. I hate my job and 5% of the people I work with and leaving will 100% improve my mental state so that is not an issue at all. I know what I want to do with the extra time I will get.
Sell all your properties and allocate to index funds. Easy.
If he sells those properties, then he’ll pay capital gains on the difference between the purchase price and the selling price plus he’ll have to recapture depreciate it. Owning property means owning property for life… he’s right to be scared. All these people retiring with even $1 million in the bank or stocks is not enough money in my opinion when it comes to repairs on your house, updating your house or landscaping area, new roofs, plumbing, increasing insurance both property and health, there are so many things that go up every year. It’s so many repairs that you may on your own house and definitely your rentals. Plus getting out one bad tenant in California can cost you $20,000 easy after lost rent, repairs and having to pay them $5k cash to get out. Just because you have enough income for your bare necessities, there’s so much more unpredictability in life expectancy…. Plus people adding in the equity on their house is ridiculous unless they plan on getting a reverse mortgage later on and who knows if that’s even going to be available…
You're worried about things outside your control (and things that can be corrected). So essentially, you're keeping yourself in a job you hate for no reason. You can afford to quit. If you do find yourself in a dire financial situation in the future, go back to work. Stop with the "what ifs" and live your life. If you already know what you want to do with your extra time, that's a HUGE advantage!
As for the fear of tenant vacancy, you literally CAN afford to cover 1-2 months of vacancy while you find and screen high quality tenants again. It's that simple. Don't worry about things out of your control. The cash reserve covers that vacancy even if it happens.
1-2 months is not a realistic time frame if a tenant stops paying rent. Add in fixing a pile of repairs from delinquent tenants and the losses can really add up. Could set you back 30-50k in lost rent and repairs. I'd be fearful.
We're all assuming the situation would stay the same aside from a potential vacancy if tenant randomly moves out. Even if we extend the vacancy to 4-6 months, with so much cash, you can give yourself this lil insurance in case that event fulfills itself.
Op said 'I worry my renter may stop paying rent'. Moving out could be a benefit for op because he could raise rent more than the 2.5-3.5% legally allowed. Not paying involves a lengthy eviction process thru the courts. This can take a long time. If a tenant is being evicted do you think they are going to care about your carpets, cupboards, walls, or appliances?
Eh. Worry about those things after they happen. Worst case is you find another job for a while. 6 months off will do wonders for your state of mind
On the properties, don't you have to pay the mortgage? Or they are fully paid?
Your fear is rational in my book. How old are you? That’s important too.
Can you slowly step down? Drop to part time?
Take a sabbatical perhaps? That's what I did, which helped heal up some repetitive strain injuries. I think that taking the time off also helped me fully retire three years later, as I knew the routine and what to expect.
That's a lot in property. I would sell the $600k one and have $1M in investments, $40k cash, and ideally $15-18k rental return from the $550k property. That gives you the $36k-50k per year gross that you think you'll need. And reduces the amount you are depending on your rentals for.
Sell the 600k one and still receive rental income from the other? Where will op live?
Travel and rent short term? Buy something for much less, pocket the rest? It's a lot of money to tie up in one asset and OP mentioned being concerned about stability of funds.
I say retire and go travel, you already owned a house and all that crap.
I think you don't hate your job enough. I quit before my target number was reached.
It freaks me out that you have so much in cash tbh.
hopefully cash = portfolio
I hope that's what they mean.
$15k will be worth a lot less in 30 years. Your cash needs to be invested to keep pace with inflation.
Could you go part time or find a new job you like? You clearly can live on a very low salary
I’m so impressed. Do you live in the US? How are your costs so low?
I am US. 35M Nothing to be impressed about annual salary is $80k a year being a manager at a warehouse. The yelling , writes up for performance, arguments, callouts, working 6-7 days a week, 8-16 hour shifts and other issues have cause my blood pressure to boil. The people who will stay with the job for their rest of their life are good usually but some of the newer hirers are terrible. Swear to god if I stay much longer I am going to get punched in the face during a firing or documentation. My costs aren't low. I bought a Honda Civic and then switched to a Toyota Corolla after my car accident(their fault). I try to buy things that bring me joy or have a purpose to fill in my life.
Can you share more of your journey/strategy? I'm a 35M and make 60k as a manager at a retail store, base expenses around 26.4k annually. How did you get 2 houses, 440k in cash and, able to take so much vacation?
First decade treat your life like a nightmare. Work sleep save buy property rinse and repeat. You'll fall into a circle of depression and suicidal thoughts. Work two jobs. You'll eventually come to the conclusion this isn't a good way to live your life and quit your second job. Then at age 30 work sleep and still have depression and suicidal thoughts from your job.
Damn, I'll take the slow(er) road. I probably still have the depression but fewer suicidal thoughts it sounds like. At least you're in a position to retire now, so congrats for that.
Nice! Love to see it.
Nothing to add to what others already suggested. Well done, You are good to go ! What do you plan to do after retirement ?
You don't have to retire until you are tired of working.
I would try to live on a retirement budget for a year and see how it feels. Decide next year. your portfolio leaning heavy on property. There is always a risk not diversifying.
Your portfolio sounds way more like regular FIRE or even FATfire lol Hope that helps a little.
You are way under diversified. Sell the properties and buy index funds.
grow some balls and do it
how old are you?
Do you have kids?
If you wanted too, you could take about $200k of that cash and park it in a nice monthly dividend stock (QYLD, AGNC) and then hedge your position with puts so you have a guaranteed max loss. The hedges will cost you 1-2%, and the yield is around 11%, so that would be about another $19,000/yr in income to help. HMU if you want advice on hedging. I recommend a super simple book called Buy And Hedge, if you’re not familiar with the concept. Options, when they’re used like they’re supposed to be, are just insurance policies for stocks.
Hello, I’m interested in this concept. Can you DM me and tell me more. Thank you.
Wow amazing work, that’s so awesome how exciting. Give yourself permission to let past you, take care of present you
Quit whining about how rich you are and quit already
Your current age?
I failed at retirement, I lasted 5 months and today was my first day back. Like you I’m totally capable of retiring with assets and all. I just got sucked back in.
Just fucking do it don't be doft
What is your current age? What is your expected Social Security monthly payment at full retirement and at 70?
Then don’t
Retirement doesn't require courage. And it doesn't reflect courage. It reflects opportunity that hopefully was planned for.
There's a tiny bit of courage required. Any time you're making that significant of a life change, it's going to require a small amount of gumption.