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One of the biggest criticisms of the FIRE movement is how we can’t possibly know if this financial strategy will work in 30-50 years, given all the unexpected calamities that life can throw at us. We’ve lived through 5 bear markets now through the past 7 years of retirement, but will that continue working in the next 10, 20, or 30 years?
Short of having a crystal ball, there’s no other way for us to see what the future holds…
Or is there?
Today, I have the pleasure of welcoming Akaish and Billy to the blog, a couple who FIRE’d before the acronym FIRE was even a thing. Hell, this was before ETFs was even a thing and they still managed to retire at age 38 and travel the world for the past 30 years! So needless to say, reading about their story was like looking into the future.
Here’s an even bigger shocker: they did it without having the so-called pre-requisite 6 figure salaried STEM jobs. Back in 1991, Billy was a French-trained chef turned portfolio manager (he got a job offer in finance from one of his restaurant customers) and Akaisha was a restauranteur, managing the restaurant they co-owned. They lived in Santa Cruz, Calif and owned a home. Even though on paper, they were living their dream, they were burned out and hardly had time for each other.
While managing his clients’ retirement portfolios, he had a lightbulb moment, realizing that if they sold their house, cars, downsized their lifestyles and move somewhere inexpensive, their $500,000 net worth at the time would be enough for them to retire. His clients had lower net worths and were still able to retire, so he figured, why not us?
So, they retired early and started living aboard on $20,000/year. This was before the 4% rule was popularized by the FIRE movement, but they’ve found throughout the past 30 years this was the appropriate withdrawal rate for them.
Now, 30 years later, their expenses have only inflated to $30,000/year but their portfolio has doubled to $1M, despite continuing to draw it down in the past 30 years.
Knowing that they’ve lived through many bear markets (especially 2008) on this portfolio, I’m super curious about what their 30 year retirement has been like, so without further ado, here’s Akisha and Billy:
You retired at 38 in 1991. This was before the FIRE movement even existed. How did you have the courage to know you weren’t making a huge mistake?
RetireEarlyLifestyle: The short answer is that we allowed no room for failure.
We are both independent individuals who traveled solo before we met each other.
Our 6-month trip to Europe in 1979 found French-Chef-trained Billy working in a Restaurant on the island of Isle de Re, France. We traveled throughout France in search of Michelin 3-star restaurants to sample these fine foods in order to know first-hand, what French gourmet food was all about and to examine the culture of famous chefs.
One memorable meal was at Eugénie-les-Bains with Chef/Owner, Michel Guérard, inventor of cuisine minceur. Our dinner for two with a split of wine came to $279.00. Today that is the equivalent of $1,159 USD. It was an amazing experience!
We returned home to Santa Cruz, California with $104USD in our pockets, no jobs and no place to live.
Akaisha talked her previous boss into hiring her again, and meanwhile, Billy searched that tourist beach town for a restaurant to buy. On December 18, 1979, we purchased our restaurant with “no money down” and some creative family financing.
We were 27 years old.
We had 15 employees and were completely in debt. The restaurant business is a very difficult career choice and we were forced to mature quickly.
To make a long story short, after running this business for a decade and Billy becoming a stock-broker-manager of the most profitable office in the Dean Witter Brokerage Corporation, we left the conventional working world January 14, 1991.
We were 38 years old and the S&P 500 Index was 312.49.
This decision of ours to FIRE (unexpectedly) rocked the world of everyone we knew.
Throughout our lives we took calculated chances and FIRE-ing in 1991 was just one of them.
2) Were ETFs even around back then? How did you invest?
RetireEarlyLifestyle: A catastrophic event in our city shut our restaurant down for a week, and it was at that time we decided that we needed another source of income. This is when we began to invest in the stock market.
We bought Exxon stock every chance we could. Mutual funds were around but no ETF’s. Eventually we sold the stock to purchase our home and looking back this was a bad financial move.
If we knew then what we know now, we would never have sold that stock to purchase our house.
3) What was your portfolio allocation when you retired?
RetireEarlyLifestyle: We were 100% long S&P 500 Index. We projected our portfolio to increase in value yearly so that we could pull our expenses out and still have growth. This has worked well for us.
4) Has your investment strategy changed in the past 30 years?
RetireEarlyLifestyle: Yes, as we have aged we started moving into some dividend ETF’s like DVY to increase our cashflow. Today, including our Social Security, we are roughly 50/50 growth to income and between dividends and Social Security covering our expenses, we can let our portfolio grow.
5) You went through some pretty scary stock market crashes like 2008/2009 while retired. How did you make it through with your retirement intact?
RetireEarlyLifestyle: Let’s start with the crash of 1987 where the market fell over 20% in one day. We survived. We also survived Y2K. The market downturn of 2008/09, is when we used this opportunity to move from the Index 500 mutual fund to DVY and into SPY and VTI. There is no doubt over the time that you are invested, markets are going to pull back. This is why we recommend a few years of cash to live on so you are not forced to sell in a declining market.
6) You started with $500,000 in 1991 when you retired and your portfolio has grown to $1 million, despite withdrawals, not working, and going through 2008. How did that happen?
RetireEarlyLifestyle: We utilized the power of Compounding and Geo-Arbitrage. We had enough cash to get through this 2008/2009 period and spent more time in countries with lower cost of living and a weaker currency than the USD. The S&P 500 Index has returned 10.36% annually since we began our adventure. We spend a fraction of the 4% rule, which was not yet invented, thus our assets have far outpaced inflation and spending.
Did you work on any passion projects after retirement?
RetireEarlyLifestyle: In 2005, fifteen years after we had been FIRE’d, we wrote our first book The Adventurer’s Guide to Early Retirement, A Common Sense Approach. It came out on a CD-Rom as that was the best format at the time for a digital book. Once again, we were on the cutting edge, this time for E-Books.
We now have a full ebook store on our website, RetireEarlyLifestyle.com.
Our retirement has been full of volunteer projects like Billy importing an electronic scoreboard from the USA for the gymnasium in our adopted town of Chapala, Mexico. He also built 2 new tennis courts in the city park of Cristiania.
Akaisha has taught English as a second language in Chapala, and taught the locals how to do Thai massage.
We are huge advocates of utilizing volunteer work to help others improve their lives. Sometimes we teach a useable skill or guide them in learning the language of finance.
8) I find it fascinating that you’ve been travelling the world for the past 30 years and you did it before Airbnbs, Uber, or even smart phones! Has your travelling style changed over the years?
RetireEarlyLifestyle: In “the old days” we’d lug around Lonely Planets and Rough Guides in our backpacks. We’d arrive in town without reservations and simply look for hotel rooms.
Now we do research online, book online, utilize Uber and love Google maps.
But we still ask hotels for a discount when we stay several nights and, in some locations, we have enjoyed monthly rates in higher-end hotels.
Also, because we have been traveling for over 30 years, we like a little more comfort today than before. We take first class buses, get premier seating on planes, and stay in more upscale hotels.
It only gets better.
Even today we have not yet used an AirBnb. We find them too restrictive to lengthen or shorten our stay. We like to be free to go when we want to go…
We had so many questions for them that this interview turned into a 2-parter, so stay tuned for the 2nd half of this interview next week, where we’ll find out what are they doing about the two biggest worries in retirement: healthcare costs and housing.
In the meantime, be sure to check out Billy and Akaisha’s blog RetireEarlyLifestyle.com
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This couple is an excellent example of old school FIRE !! Kudos to them !!
I’m just old enough (late 40s) to remember all of the old style travel. Prepaying credit cards because you couldn’t pay the bills online, using the Lonely Planet guidebooks, never reserving hotels before you arrived, epically expensive long-distance phone calls (which I almost never used).
In many ways it was MORE carefree because you had to go with the flow more and couldn’t be so organized.
Enjoyed the interview. Love their adventurous spirits.
Congratulation to them for their successful early retirement such a long time ago.
I agree, you don’t need an index fund or mutual funds to FIRE, although it greatly simplify the process, particularly for people who don’t have a deep knowledge in finance. Personally, I never invested in an index fund or mutual fund, an it has worked well for me.
Anyway, awaiting to read your part 2 of this interview.
Can you elaborate on what you did instead of index funds, Manuel?
Yes. Instead of buying an index fund that was already existing and available to buy, I just created my own.
To do so, you simply have to buy a couple of shares of good companies. For example, some of the investments I made at first (in 2005) were Johnson & Johnson & Microsoft. And you hold them long term.
To be call an “index fund”, you would probably want to have a minimum of 30 different companies and have it across different industries, like the Dow Jones.
The most difficult part would be in selecting those investments, because selecting successful companies require a minimum of financial knowledge and business experience. But one way to counteract this difficulty would be to pick companies you like that are already inside an index. Those companies have already been “vetted” as “good investments” by index fund managers, so there are less chances of doing mistakes by investing in bad companies.
The simplest way to build your own index fund would be to simply buy the 30 components of the Dow Jones. But you can also buy a couple of stocks that you like inside the Dow Jones, for example, Apple, Home Depot, Bank of America, Coca-Cola, Nike and Disney, if these are the one you prefer. There you go ! You have your index fund without buying an already existing index fund !
This is a little bit more work. But I like it. I try to always learn and improve in the process. And hopefully, maybe one day, I will be able to beat the S&P500 on a consistent basis.
Thank you, Manuel. 🙏👍
I love this feature! Really shows it can be done!! 🙂
That’s fantastic. I love the OG FIRE stories. It’s very cool to see that 100% equities work just fine. You just have to be gutsy and ride though the crashes.
LOL. They “retired” early but still have a web site they need to hustle
i don’t see why you have to be so cynical about a simple website which doesn’t need much time or effort to maintain
if you have time, it’s great to write an e-book and if others are interested, they can pay a nominal sum
more importantly, do they depend on ebooks for survival or the portfolio? seems like it’s more of their stock portfolio
ultimately, each of us has to write our own story on how we want to achieve FI, whether we want to retire early or late etc, whether does a person even want to create the option of retiring early
They escaped the rat race 30 years ago and have since lived happy and fulfilling lives, and that’s all you can come up with in your petty attempt to discredit them? Lol…that’s sad and pathetic, Doc. I guess “Dad MD” is a little bitter that he spent all those years in medical school so he could chase the big bucks and is still punching the clock while others forged a different path.
Very negative view, they have had 30 years to use their creative energy since they were 38. No surprise that some of that would turn into a website or book, they have a interesting story. Good on them! I wish I was in their shoes.
Their story is very encouraging… looking forward to part 2! I’m particularly intrigued by their recommendation to have a “few” years of cash on hand. I was worried we have too much cash that’s not invested (2.5% of net worth), especially considering inflation, but maybe that’s not the case?
This is a wonderful post. Can’t wait for the 2nd part. Obviously, pioneers living a full life on their retirement journey. Love it.
“Even today we have not yet used an AirBnb. We find them too restrictive to lengthen or shorten our stay. We like to be free to go when we want to go…”
Wow! I find this statement amazing.
Could you please math this shit up? At ~10% return and <4% withdrawals shouldn't their $500k portfolio be much more than $1M after ~30 years…?
Loved it, crystal ball indeed! I reckon since when they started, there were no low cost ETFs and despite their 10% yearly returns, the high fees and taxes would have decreased their returns by a bit. But they still found a little extra money to do charity work and donate. Explains their roughly 2.5% yearly portfolio increase after their 4% yearly withdrawal rate. Respect! How they managed on so little! Could they breakdown a typical year for them, the countries they visited and how they balanced their budget? Thanks
How did they get enough credits in for social security with retiring at 38?
https://www.ssa.gov/benefits/retirement/planner/credits.html According to the SSA website you need 40 credits to qualify for Social Security. You can earn up to 4 credits a year and $1,510 in covered earnings equals one credit. So basically if you have 10 years of work that have at least $6,040 in covered earnings then you qualify for Social Security.
Thank-you for the braves, Billy and Akaisha, who gave all of us a better view of the future financial crystal ball…thank-you, thank-you and thank-you!
For the rest of you let’s improve on their execution…
Financial preparation
1. Have minimally 2 years worth of CASH for cushion
2. Do not start with the 4% withdrawal rate, but 2.5% to 3.5% depending on your
starting portfolio. Reserve the 4% withdrawal rate only for emergencies!
Relationship preparation
1. Find yourself another “Akaisha”, my wife would have divorce me had I start with
the 500K portfolio and the 20K starting budget. I would have walked the FIRE
track alone without anyone to share the wonderful experiences.
2. Have a close connection back home for the lows of international travels – the highs
outnumbered the lows, but there are plenty of lows.
Health preparation
1. Medical care in lower standard of living countries are mostly for non urgent
matters, keep yourself mentally and physically healthy is crucial for any successful
FIRE walkers.
Very interesting profile. It’s good to see an example of a couple that embraced geo-arbitrage back when few were doing it. Leaving the US will be key to a successful FIRE in times like these, unless starting with a huge nest egg as inflation is quite devastating and not looking to change much in the short/medium term. And I do hope they’re not still 100% long equities as these next few years are likely to be a very bumpy ride. I personally could not sleep at night if fully invested in this market.
Very exciting story.
Although investing today feels like taking the food out of my kids mouth and putting in this void that will destroy it all in one day like the S&p500 did yesterday. Very sad and frustrating
It was much worse back in the days. The S&P500 went down for years in the early 2000s, just to raise a little bit and then crash even more in 2008.
Today is easy. Stocks are always going up. And people complain as soon as stocks are down a couple of months in a row.
Oh the irony …
Always refreshing to see those who are not all about the money, and more into a fulfilling and humble life! Volunteering is truly underrated and I wish more in the FI community would embrace it.
I received my salary today. I transferred to my brokerage account and the amount it fell just today offset all the money I put in today and more. What a disaster ! A month of hard work gone in a couple hours!
I will stop investing. It’s a money pit right now! This feeling is terrible!
You did the right thing. Don’t stop investing! Learn to stop worrying and love the stock market. The “fundamentals” were all BS anyway since who knows how long…1971? When the world was ending in spring 2020 you saw what the Fed did, and they’ll do the same whenever something breaks next time. They can’t do otherwise, or the whole system will fall apart. We’re in a system utterly dependent on perpetual growth, at least nominally, and if that doesn’t happen, we’ll have a lot more to worry about than our portfolio balances.
Maybe I did the right thing but the feeling is awful. To see your sweat going down the drain? Especially for those like me who are a blue collar worker and it’s so much harder to make money and save to invest. My wife wanted to kill me when I told her that I had “lost” everything we saved and invested this month in a day.
What do I tell her? I told this is just temp and in the future we’ll make money but she didn’t budge. There should be a psychological way to make you feel better when that happens because it’s not the first time.
I think that one way to overcome this may be to acknowledge and accept your fears, to acknowledge and to accept your greatest fear, to actually experience it, and then to come out the other side having survived it. If you can’t do this in some form, then it’s probably better not to invest (like Jim Collins WARM model, or ‘should I invest in the market’ articles).
Here’s my example (and I’m sure others have good ones too): when I said “world was ending in spring 2020” that was no exaggeration. I have always been a germophobe, and my worst fear truly was a dangerous pathogen like Covid. Nuclear war is preferable, because then you’re just incinerated in the blink of an eye. I’m a healthcare worker by the way. In early spring of 2020, I was working in an area badly affected by Covid. For several weeks, people were dying at levels 3-4 times the normal rate, and the hospitals were filled up with thousands of Covid patients. I personally saw and smelled death all around me. I genuinely believed this was the end of civilization in current form. Somehow, I managed not to sell any stock, but I also did not buy any stock with a significant excess of cash and bonds I had been saving – I didn’t think any of these would matter anymore. It took until summer for me to overcome this fear and see that things were not as dire as I had believed, and that the government would do anything, absolutely anything, to prevent the disintegration of the system.
Whereas before Covid I had been like you and your wife, these minor drops in the stock market lately don’t cause me any trouble. I don’t lose any sleep over them. I will always remember what they did when the system/civilization was truly threatened, and have somehow managed to internalize the idea that “this too shall pass.”
Hi Shameful investor,
If you’re going to invest, start training yourself about the economy and finance. Don’t go in blindly with no knowledge.
Reading the Millennial Revolution’s book is a good start. But on top of that, it’s super important to know what’s going on in the world and how that affects money. You must be aware that the stock market has been going down all this year, right? And that inflation is very high and interest rates are rising. All this happening means that now is NOT a good time to put your money into stocks. Just keep your money in a savings account and wait for conditions to improve before putting it into an investment.
There are tons of great videos on YouTube that can teach you about investing. Not knowing what to do is like standing on train tracks when a train is spreading towards you.
Good luck!
This story always encouraged me at times of trouble when the market is tanking …
https://www.cnbc.com/2016/08/29/janitor-secretly-amassed-an-8-million-fortune.html
Dollar cost averaging…
Loss is always painful, but if it’s “paper loss”, hope for rebound…
they look like hippies
Hi Shameful investor,
If you’re going to invest, start training yourself about the economy and finance. Don’t go in blindly with no knowledge.
Reading the Millennial Revolution’s book is a good start. But on top of that, it’s super important to know what’s going on in the world and how that affects money. You must be aware that the stock market has been going down all this year, right? And that inflation is very high and interest rates are rising. All this happening means that now is NOT a good time to put your money into stocks. Just keep your money in a savings account and wait for conditions to improve before putting it into an investment.
There are tons of great videos on YouTube that can teach you about investing. Not knowing what to do is like standing on train tracks when a train is spreading towards you.
Good luck!
Blind with no knowledge you say? I have 15 yrs of market experience, I was a trader for Wells Fargo. I know very well how it works. but regardless, when it’s your money, you feel it much harder. That’s my point.
Totally agree with you!
Would you care to share your story in your career change?
This is most interesting post in a while. So many possible questions for these guys. Where have they been living and how? Monthly expenses, how often to they move, any other tips they have for 30 year Olds today.
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