Month: April 2019

In Defence of the 4% Rule

On By Mr WayIn Finances, FIRE3 Comments

What is the 4% Rule?

The 4% rule was created based on historical market returns data. Simply put, it showed that a typical retiree could withdraw 4% of their portfolio while keeping the initial pot intact. The withdrawn amount would increase by inflation each year.

The rule came about from work by Bengen and later, the Trinity study. Both were based on the same data.

This rule of thumb has been widely adopted in the FIRE movement as a way of calculating the required pot to fund early retirement. It is the basis of Mr Money Mustache’s famous article The Shockingly Simple Math Behind Early Retirement

Negativity

There have recently been a lot of articles criticising the 4% rule. I still think this rule provides a great initial estimate for anyone considering FIRE. That’s why I wanted to create an article giving the other side of the argument.

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Thought Experiment 5

On By Mr WayIn FIRE, Thought Experiment10 Comments

What Will I Do When I Retire?

This is the first time we’ve participated in one of SavingNinja‘s Thought Experiment posts so we’ll add a little explanation.

This is an idea to get bloggers to immediately respond to a question and all post their answers on their blogs. You have to write the first thing you think of and can’t pre-plan or do any major editing.

We’re joining in at Thought Experiment 5 because we only recently started our blog! If you want to see previous versions see SavingNinja’s archives.

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Frugal Fitness

On By Miss WayIn Fitness, Frugality, Mental Health, OptimisationLeave a comment

We Love Exercising!  

Staying physically fit is something that is important to both of us. It fits really well with those who are seeking financial independence. If you aren’t at your physical best, you won’t be able to enjoy the retirement you work so hard for! 

As mentioned in A Way to Less……. Spending! we are always looking for more ways to be frugal and found that reducing our fitness costs was an easy way to do this. 

For many, the cost of fitness can be huge! The fitness industry must make so much money out of all those people with unused and unwanted gym memberships! Don’t get me wrong, there are many people that use their gym membership in a cost-efficient way and really benefit from it, but there is a very large proportion of the population that don’t! 

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My Money Journey

On By Mr WayIn Finances, FIRE2 Comments

The Beginning 

It all started normally enough.  

I grew up in a comfortable lower middle-class household. We never really discussed money. My parents weren’t flashy by any means, but they saw it as a matter of personal pride that we never went without. 

Looking back, it’s fairly clear that there wasn’t any significant money being put into savings (other than for holidays and new cars!). I now know that any savings my parents did have was all held in cash. My Dad has a fear of the stock market – he has a very conservative approach to money!

The conservative version of a money journey - a wallet clamped shut!

The mindset I had been encouraged to adopt was that of the majority of people in my scenario; work hard at school, get a good job, settle down and have a family in a nice big house with a shiny car. After all, it’s not surprising when that’s exactly what my parents have achieved.  These examples were the start of my money journey.

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How Do You Save for ‘FIRE’ in the UK?

On By Mr WayIn Finances, FIRE, Optimisation9 Comments

As somewhat of a personal finance geek, I (Mr Way) have learnt a fair amount over the last few years. As a result, I wanted to share my specific take on saving for FIRE in the UK with you. I am not a qualified financial advisor and nothing in this article should be considered financial advice! This is simply a log of my own findings/opinions in the hope they may help you to do your own research!

Most of the information in this article will be based on my own situation as a full time employed basic rate tax payer. The advice will differ depending on your circumstances so do your own research.

You may well have more efficient ways of saving than I mention below. If so, please let me know!

Mr Way

There are many resources out there on how to save for financial independence. In my experience, most of these are US centric with their own tax and savings implications (401k, Roth IRA, healthcare etc). The general principles are very similar and can be broadly followed. But what about the UK FIRE saving nuances?

Obviously saving for FIRE differs from ‘traditional’ savings techniques because you need to access your money much earlier than traditional retirement dates (55+). If you aren’t planning to retire early, the best course of action will be very different.

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The Importance of Having a Goal

On By A Way to LessIn FIRE, Optimisation, Travel1 Comment

In What is FIRE? we described the process of achieving financial independence and having the freedom to retire early from work. That’s great, but what are you going to do with all that spare time? You need to have a goal!

“One can find time for everything if one is never in a hurry.”

Mikhail Bulgakov, Heart of a Dog
There's a lot of spare time when work is optional. What will you do with it all?!

What Are You Retiring TO?

It’s vital that you understand what you’re retiring TO rather than focussing on what you’re retiring FROM. This is what we mean by ‘have a goal’!

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