Our 2019 Finances Part 2

Wanderer
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Continuing on from last week’s 2019 spending roundup, I thought I’d take today to give an update on the earnings side of our 2019.

How did our Blog/Book Do?

Line Item Amount
Gross Income $110,000
Business Expenses $15,000
Estimated Taxes $20,000
Net Income $75,000

I’ve said this before, but I never expected to make any income once we retired. I’d used the POT score (for those of you with college-bound kids or are looking to switch careers, use this score to evaluate and compare degrees) in Quit Like a Millionaire to figure out which degree would increase my income the most per dollar spend on education, but who knew that you could actually make money following your passion? I have to admit, it’s not easy money (we did have to face-plant and get 200 rejections for 7 years learning how to write after all), but every dollar we’ve made from the blog is the most rewarding income we’ve ever gotten.

And of course, this year, we published a book, and it actually did well, hitting #1 best-seller status in multiple Amazon categories. That was a TON of work (who knew media interviews would be as exhausting as they are?), but it’s by far the proudest accomplishment of anything I’ve ever done. My childhood dream was to be a best-selling author, and somehow it all came true in 2019! And it’s all thanks to you, our readers, for helping us make this happen. Hugs to you all!

How’d our Portfolio Do?

But let’s not forget about our investments!

When we started this blog and, much to our surprise, it actually started making money, we decided to split off our investments into two portfolios: Portfolio A which held all the money we saved up before retirement and the one we use to fund our living expenses, while Portfolio B holds all the money we earned after retirement and is used to mostly pay for business expenses. So how did each do last year?

Portfolio A

Portfolio A is structured as a 60% equity/40% fixed income, with our Yield Shield assets mixed in in order to guard against Sequence of Return risk by providing us a nice steady income regardless of capital gains/losses.

We started the year with $1,034,000.

We ended it with $1,200,000.

For a total one year return of 16%.

Wowza.

I have to be honest, I’m not used to these kinds of performance numbers. Unlike some of my FIRE blogger friends, we are relatively gun-shy when it comes to risk, which is why we retired with a 60%/40% portfolio instead of the 90%/10% allocations that they are somehow comfortable with. A portfolio like that is supposed to be posting gains or losses in the mid to high single digit range. A double digit move in either direction is extremely unusual, and this year our portfolio smashed through double digits and just kept going.

This was not due to any cleverness or even good luck. As I mentioned a few weeks ago, despite the overwhelmingly negative headlines in the news last year, the equity markets were on FIRE, with the S&P 500 increasing an eye-watering 28%. And it wasn’t just the US either. Canada went up 20%, and even the EAFE index got to participate in the fun, popping up 18%.

This year, it didn’t matter which geographical location you were invested in. If you were invested in the stock market at all, you made a killing. And if you didn’t, you missed out on one of the best stock market performances I’ve ever seen.

Portfolio B

Portfolio B (which contains all our post-retirement income) is structured as a 75% equity/25% fixed income portfolio. Unlike Portfolio A, it’s a pure indexing portfolio with no Yield Shield, and is built using the same ETF as our Investment Workshop portfolio.

We started the year with $105,000.

We ended the year with $210,000.

For a total one year return of 100%!

All I gotta say is, thank God I put everything into crypto!

I’m kidding, I’m kidding. Don’t put everything into crypto. Because we’ve been putting money as we’ve been earning it into this portfolio over the year, most of the “gains” are phantom gains caused by me adding cash. It’s actually one of the reasons we decided to keep out pre- and post-retirement portfolios separate, since it’s difficult to tell how your portfolio is doing if you add or remove money from it over the year.

Of the $105,000 this portfolio gained over the year, the vast majority of that was new cash added in, which was our net after-tax income of $75k. The other $30k came from investment gains.

Total Net Worth

So by adding these two together, that means that…

Our net worth started the year at $1,139,000.

And it ended the year at $1,410,000.

That means this year, our net worth increased by $271,000.

Double wowza.

You have to remember, we’re still relatively new to this whole millionaire thing, so while we understand the ridiculously powerful math behind money’s ability to generate more money, it wasn’t until now when I added up our portfolios that it hit me how powerful this math truly is.

This year, because of the investment gains on our portfolio and the side hustle income we made doing what we love, our net worth increased more than any other year on record. Neither FIRECracker nor I have ever even earned anything close to $270k, let alone saved that amount. Money’s ability to make money is a truly amazing thing, and no year has ever proven that better than this one.

Sure you don’t want to come along?

Is There a Recession Coming?

So this year’s eye-popping stock market gains have of course caused people to ask that age-old question: Does this mean a recession is coming next year?

So here’s my take: I. STILL. DON’T. KNOW.

Also, and this is important: NOBODY KNOWS.

There are plenty of indicators that suggest a recession is imminent. We are now in the longest bull market in history, at 127 months. We are due for a correction, to say the least. The historical P/E ratio of the S&P 500 is 14-15, and right now it’s  above 20. That can’t be good. And oh yeah, we’re heading into a US election year like no other, in which an incumbent US president who has just been impeached will be trying to get re-elected. Any comparison to past elections is pointless, because this situation has literally never happened before. So that should be fun.

But on the other hand, in years where the stock markets rise by 20% or more, the following years tend to actually go up even further, on average about 11%.

The S&P benchmark tends to log an annual return of 11.2% after a year in which it climbs at least 20%

~Here’s how the Dow and S&P 500 perform in years after they ring up gains of 20%, MarketWatch

So once again, we have contraindicating facts and figures, each making convincing arguments for stocks to either rise or fall next year. Also known as, every other year.

We’ve been investing in the stock market on and off for over 10 years. I started my investing journey right before the 2008 crash. And in that time, the stock market is always in two modes:

  1. The market is too hot right now. You’d be an idiot to invest now.
  2. The market is crashing. You’d be an idiot to invest now.

There has literally never been a situation where everybody agreed, “You know, markets look like a good deal right now. You should invest.” Never. It always feels scary to invest in the stock market. The only thing you can do is get over it and do it anyway.

What Changes Are We Planning To Make?

So that being said, are we planning on making any changes to our portfolio in the new year? You betcha. Basically, we’re planning on dropping some of our Yield Shield assets and increasing our equity allocation.

Wait, what? What madness is this? Dropping my yield AND increasing our equity with the markets so hot and a recession possibly looking? Why in the world would I do this?

Because of this.

We wrote in our book the concept of Perpetual Re-retirement, which basically states that in each year of retirement, by entering your new portfolio balance and new projected spending into FireCalc, you can measure how well your retirement plan is going based on whether your success rate increases or decreases for a new 30 year period starting now.

When we retired in 2015, our portfolio was worth $1M and we were spending $40k a year. Now, 4 years later, our portfolio is worth $1.2M, and, thanks to my awesome wife FIRECracker and her awesome budgeting skills, we’re still only spending $40k a year. If we remove $40k from the portfolio to pay for this year’s living expenses, that leaves a portfolio of $1.16M going forward. So by plugging these numbers into FIRECalc, we can see that our success rate has gone from about 95% when we first retired, to 100%.

Meaning we have successfully beaten Sequence of Return Risk. Statistically, we cannot lose anymore going forward.

So that means it’s time to get rid of some of these safeguards I had been using to guard against the possibility of a badly-timed recession destroying our retirement. Our portfolio has grown so much that even if a recession happens right now, we’ll still be fine.

Change #1: Good-bye High Yield Bonds

Change #1 is one I’ve been looking forward to for some time. I first got into High Yield Bonds back in 2012, then attracted to the eye-popping yields of 7% or more. However, as I later found out, there’s a reason for those high yields. It’s because the companies in those ETFs suck.

High Yield Bonds are composed of companies with less than stellar credit ratings, and among bond traders the informal name they call High Yield Bonds is Junk Bonds.

This is one of the few assets I personally own that I don’t recommend for our readers. Because while normal bond index ETFs are full of things like government treasuries and financial institutions, my High Yield Bond ETF was full of airlines and oil companies. And during the oil crash in 2015, this fund very nearly blew up as oil companies in Alberta started laying people off left and right and threatening to default on their loans.

So I will be getting rid of this asset this month and good bloody riddance, I say.

Change #2: Good-bye Preferred Shares

I admit, I am going to miss my Preferreds. Issued by healthy, stable financial institutions like banks and insurance companies, these things reliably pumped out a nice, steady stream of income at 5%, and on top of that the income is classified as a dividend, so the money is very tax efficient.

But long term, Preferreds just don’t perform as well as equities since they aren’t actually equity. You own Preferreds for the yield, not long-term growth, and now that we don’t need the yield as much anymore, it’s time to eliminate Preferreds from our portfolio, albeit with a hearty pat on the back for a job well done.

So half of our Yield Shield assets are gone. We still own REITs and High-Dividend stocks, and next year as we enter year 6(!) of our retirement, I’ll be looking at these and seeing if it’s time to get rid of them as well, thus moving us fully back to a plain vanilla indexed portfolio.

Change #3: Upping our Equity Allocation

In the FIRE blogging space, we are a bit out of the ordinary in that we have an inordinately low equity weighting in our retirement portfolios. Part of this came from FIRECracker’s background growing up poor giving her a risk-aversion that’s still a part of her personality, and another came from our engineering backgrounds that are always obsessed with what could go wrong. That’s why we built our retirement plan with multiple backup strategies, where we’re invested in a 60% equity portfolio AND we have a Yield Shield AND we have a Cash Cushion AND we use geographic arbitrage while other bloggers like JL Collins, Justin from RootOfGood and Jeremy from GoCurryCracker.com are seemingly comfortable with going 90/10.

Yes, we always understood the math behind that and why we’re way more likely to be part of the 95% of retirees that succeed beyond their wildest dreams. But that never stopped that tiny voice in the back of our head asking “but what if we’re not?”

Well, now that I can see that we definitely are not, I think it’s time we started upping our equity exposure, so in addition to getting rid of High Yield bonds and Preferred Shares, we will be rebalancing our portfolio to be 70% equity/30% fixed income.

And I know JL Collins would probably read that and go “70%? That’s it? Wimps.” And I don’t disagree. But after lots of discussions with FIRECracker, I think that’s about our comfort level for now.

And We’re Done

So that concludes our 2019 finances. FIRECracker successfully held the defensive line on our spending (as I knew she would), our book and our blog performed surprisingly well financially and our portfolio went gangbusters, all to add up to the most financially successful year we’ve ever had.

Who knows what 2020 will bring, but FIRECracker and I have learned that one of the keys to being happy is to celebrate when things go well rather than worry about what could go wrong all the time, so that’s what we’re going to do!

How about you? How was your 2019 financially? Let’s hear it in the comments below!

 


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57 thoughts on “Our 2019 Finances Part 2”

  1. Congratulations guys!! You deserve every penny gotten from your new book! Will 2020 have a less intense media schedule now? Or do you think the book will generate more interviews?

    1. Aww, thank you!

      We THOUGHT we were done with our media interviews, but we somehow have like 4 scheduled in the next week, plus three talks we’re scheduled to do over the year, and it’s only Jan 16.

      Can we retire from retirement yet?

    2. Congrats on your year and THANK YOU for sharing your planned changes. I wonder what is the easiest way to calculate a portfolio’s annual return when you’ve been contributing to it along the way?

  2. Congratulations! You guys had a great year. Great job making some income from blogging and writing a book. That’s no easy feat.

    “Meaning we have successfully beaten Sequence of Return Risk. Statistically, we cannot lose anymore going forward.”
    This is exactly why early retirement is good. If you wait until 65 and SRR screwed up your portfolio, it’s a lot harder to fix.

    Good luck in 2020!

    1. Thanks Joe! Looking at your financial wrap on your blog, you had a pretty great year yourself too!

      Also, we ended up going to all your food recommendations. We found the secret ice cream place!!!

  3. This sounds awesome. I’m so glad you are transparent and share this information that is easy to understand and replicate. My family has been paying off a massive amount of students loans, and unfortunately missed out on huge stock gains. But, we killed a massive amount of loans and took the amount of risk that we were comfortable with.

    Very soon those loans will be gone and we can say hello to a growing investment portfolio.

    1. Hey, congrats on killing those loans. That is a huge accomplishment. Imagine how great it’s going to feel once you hit $0 on your balance 🙂

  4. Heck yeah! Thanks to this nutty market, we’ve got similar success to report: our net worth jumped from $574k to $720k even in the face of $20k in home maintenance. That’s more than our W-2 income, just for buying VTI. What a weird system.

    Incidentally, I’m lucky to be commenting from a laid-back apartment in Santiago, Mérida. We miss our neighbors, but two weeks in the Yucatán is just what we needed in midwinter… and we’ll return to a renovated bathroom. ❤️

    1. Ooh, I loved Merida. Muy tranquilo 🙂
      And yeah, nutty markets are pretty fun when they’re going up. Won’t last forever, but let’s enjoy it while it does, right?

  5. Wow! Big bucks! Congrats on your success and making so much money in retirement.

    With two kids, I don’t think I can hack retirement anymore, and want to do what you guys do and try and make some income again.

    Can you share any thoughts on being able to hit and surpass the book advance? Have you guys done that? And how do the economics work for every one book sold past the advance?

    Although I’m back to the grind, I plan to return to early retirement glory in 2022!

    Sam

    1. You have two kids? When did that happen? Someone’s been busy in retirement.

      As for the book stuff, we’ve been really fortunate that we had a really great publicity team at Penguin, and the coverage they got us in the media seems to be the biggest driver for our book sales.

      Are you back working in finance again or are you doing something else?

      1. Way to go Wanderer and Firecracker! I applaud your transparency and the way you’ve separated portfolio A and B. This level of transparency makes your blog posts very high yield for FIRE followers.

        I think it’s great that you’re still making income. Early retirement is a great opportunity to find and nurture your “inner” entrepreneur.

        I

  6. Congratulations! I moved into 7 figure territory in 2019, now engineering the early retirement lay-off, buyout as soon as I can, hoping all wrapped up by year end (or before 👧🏻💕)

  7. Crushing it! That’s the beauty of living below your means and investing the rest. You eventually hit a point where compound interest magically surpasses what you could have done in your T4!

    And were right there with you. If you would have asked us a few years when we would have estimated reaching our hopeful family of 4 FIRE number, I would have hoped for 2023. And we ended up there at the end of 2019, crazy! Thank you crazy bull run.

    Keep crushing it guys and congrats on all the success.

  8. Great post and thanks for the transparency, following someones journey really helps give perspective. It is also great to watch you lay out a plan and see you make the changes living what you preached so to speak.

    I am curious about the preferred share sale at this time. I too own some that I bought because bond yields are so pitiful and preferred’s pay a great tax advantaged dividend. So going forward with interest rates where they are in the short term preferreds would seem to be a better FI component, specifically if rates rise. Who knows if that will happen? But there is not much room for them to fall so anywhere but up?

    So why shift from preferreds now as opposed to moving away from say High Dividend stocks? Or was is a 50/50 call?

    1. Preferreds were a great addition to my portfolio when I needed the yield. Now that I’m less concerned with yield and more interested in longer-term gains, I’m eliminating Yield Shield assets in order of higher-yield first, so that would be
      1) High Yield Bonds
      2) Preferreds
      3) REITs
      4) High-Dividend Stocks

      So I’ve gotten rid of #1 and #2. #3 and #4 will be next on the chopping block, maybe next year.

  9. *There has literally never been a situation where everybody agreed, “You know, markets look like a good deal right now. You should invest.” Never. It always feels scary to invest in the stock market.*

    Exactly!

    *And I know JL Collins would probably read that and go “70%? That’s it? Wimps.”*

    Actually, our ccurrent allocation is:

    75% VTSAX
    21% VBTLX
    4% Cash

    pretty much where we want it,

    Like you, our blog income and book royalties bring in more than we spend so the cash keeps piling up. VTSAX had those nice market gains to help it hold on to its percentage.

    Interestingly, if we include Kibanda in the mix…

    7% RE
    3% cash
    20% VBTLX
    70% VTSAX

    So, we are right there -70%-with you.

    It really should be higher. 🙂

    1. Oh, I thought you were a lot higher. OK maybe I don’t feel like such a wuss now, if The Godfather is also 70/30 🙂

  10. Thanks for being a rare, risk-adverse voice in the FIRE community. While I’m fairly risk tolerant, your blog is a reminder that it IS possible to FIRE with a conservative portfolio.

    1. Thanks for that. Yeah, we always did feel like the odd ones out a bit, but as we’ve learned there’s a time to be conservative, and there’s a time to (carefully) kick it up a notch.

    1. About 60% book, the rest from our blog.

      And yes, it’s nice to simplify our portfolio a bit. That was getting to be a LOT of ETFs to manage…

  11. I have a question regarding your every day living expenses portfolio. I assume after reading your blogs that you circumvent inflation by traveling to other countries with lower cost of living? If so, for those of us that will still be living in Northern America (USA, here) during retirement. Is there a different withdraw rate to account for inflation?

    1. The 4% rule actually does account for inflation. Normally, you’d be adjusting your annual spending for inflation each year, but because of our travel we haven’t been doing that.

      If you’re going to be retiring in the US, then yeah go ahead and adjust your spending for inflation. You’ll be just fine. And remember, just because you’re in the US doesn’t mean you still can’t travel in the US…

  12. Re “it’s difficult to tell how your portfolio is doing if you add or remove money from it over the year.”

    Take a look at the XIRR function in excel, it calculates the returns on irregular cash flows. You plug in your starting balance, enter in a new row for each inflow or outflow, and then a final row to zero out. Running this set of cells through XIRR gives you the rate of return, accounting for the inflows and outflows.

    https://exceljet.net/excel-functions/excel-xirr-function

    1. Glad you enjoy these so much. A part of me always wonders why people love these financial breakdown posts every year, but hey, give the people what they want, right?

  13. A related question that I have not seen addressed in either your blog or your book. In both, you recommend setting up a Cash Cushion equal to 3 to 5 years of living expenses, and a Yield Shield of high interest stocks and bonds, both as protection against sequence of return risk during the beginning of retirement. After the first 5 years, you say above and in your book that it is okay to rotate out of the Yield Shield shares and into standard index funds, but what about the Cash Cushion? Is it still necessary to keep that much cash on the sidelines if you have passed the 5 year mark without a massive hit to your portfolio?

    1. Great question.

      Pivoting away from Yield Shield and back into indexing will lower your yield (as a percentage of your portfolio), but if you do this as your portfolio climbs in value then you can keep your Cash Cushion amount relatively unchanged. For example, when we retired, we had $1M, and with our Yield Shield strategy, we were getting 3.5% = $35k in yield. This meant our Cash Cushion target was ($40k – $35k) x 3 = $15k.

      Now, our portfolio is worth $1.2M. We’ve cut out half of our Yield Shield which brought our yield down to 3%. However, because our portfolio is now higher, that 3% is worth $36k. So this means our Cash Cushion target is now ($40k – $36k) x 3 = $12k.

      So as the math works out, by doing our pivot back to indexing slowly and carefully, we can do it in a way that keeps the Cash Cushion target largely the same (or even slowly bringing it down, as we’ve done).

      Hope that helps.
      Kristy

      1. No, not really.

        You are left with 1.16M after your 40k withdrawal. A 3% yield is 34.8k. Thus your cash cushion should be 15.6k per your “rules”. Nothing has substantially changed.

        BTW, your cash cushion sits at 10k. How are you going to deal with that?

  14. Awesome year congratulations. I totally agree with your strategy of getting out of junk bonds and preferred shares. Post FIRE, I’m a big believer in keeping between 25% and 30% in total market bond index funds. I have a mix of FXNAX Fidelity US bond index fund with a fee of 0.03% and VTABX Vanguard’s total international bond index.

    For me, the real purpose of bonds is to create a bridge over troubled waters. When a market downturn occurs my plan is to stop selling any equities and draw from bonds to pull my 4%. I just use a 2008-2009 chart. When I look at that I see the bridge my bonds created over the dive (deep valley) that equities took in that period.

    1. Yeah, I think 25% is my long term bond holding percentage too. I don’t really feel the need to go much lower.

      Love your name by the way. The Frug. Heh.

  15. Wondering why you don’t include dividends in your S&P 500 return numbers for 2019? With dividends included the 2019 return was ~31%. Your point still stands, it was a ridiculous eye watering return, but many people I talk to fail to include dividends when comparing an investment opportunity to S&P returns, which is why I think it’s relevant to mention here.

    Anyway, great job you two!

  16. ‘We are now in the longest bull market in history, at 127 months. We are due for a correction, to say the least.’

    ,,,,,,,,,,,,,,,,,,

    and you’re changing from 60/40 to 70/30? adding more risk when ‘we are do for a correction , to say the least’

    LOL

    FOMO is awesome, seeing others in 90/10 and watching the markets rise and rise helps fuel recency bias

    when that recession hits , er ‘correction’, lets hope this isnt a repeat;

    SPY
    2000; -9.15%
    2001: -11.86%
    2002; -22.12%

    many of the FIRE are too young, havent been through this kind of beat down (and worse)– you’ll need to re-calculate the 4% WR to see if you’re ‘100% guarenteed’ you wont run out of money

    good grief

  17. Nice job on earning over 100 grand on the book and blog guys! That really added to your net worth this year! Congrats!

    It really was a good year for everyone that had money invested. In a recent post, I equated it to being tied to a rocket ship… it didn’t matter what you did in 2019, you made money.

    This is equal parts happiness and frightening.

    1. “This is equal parts happiness and frightening.”

      Thats a good way to put it. The party’s going to be over one of these days, we just don’t know when.

  18. We went the other direction with our asset allocation this year. We started 2019 at 72/38, but this year we shifted it down to 65/35. We are 13 years into our RE and have recently started collecting SS. With that addition to our income we no longer feel we need to be so aggressive with our portfolio. Also, after suffering a 40% drop in our portfolio back in 08/09, we have recovered to the point that our portfolio is a couple hundred north of where we started at the end of 07. 8^)

    1. Interesting. I’ve also heard the argument that once you start collecting SS, it incentives you to take on MORE risk because your withdrawal needs drop since SS is taking care of part of it.

      1. I’ve heard that too, but my intention is not to agressively grow my nest egg but to preserve it. If and when the next recession arrives, I want to limit the damage. I’ve got plenty in the bond side of my portfolio such that between it and SS we will never run out of money. It’s a comforting place to be. 8^)

  19. Congratulations guys! This is an inspiration all around 🙂 Love seeing the power of the compounding affect in real life.

    I just started a blog and it would be neat to see if it will ever to amount to earning anything.

  20. Wow, that is some pretty good income for 2019! Congratulations on the book and more important for becoming a best-selling author! This is some damn good stuff right there that would surpass any portfolio performance. You guys are leaving a legacy behind you (especially to all these Canadian that are still spending their week in their cubicle and that haven’t wake up yet 😀 – This will thank you for the book at some point in your life).

    We’ve been extremely pleased with the stock market in 2019 and are also quite shocked that we still manage to spend 30K USD / year (or 40K CAD) while hitting a new country every other month. Life is good and we should be grateful to live in one of the best years of the human race, shouldn’t we? Will that last… I DO NOT KNOW either, and that’s why we make sure to make the most of every day, even if we are also still in our 30s 🙂

  21. I love the separation between portfolio A and portfolio B. It both helps you keep a clear view by avoiding those “phantom gains”, but it also proves your retirement math is correct. Stay away, Retirement Police, these guys have it right!

  22. Congratulations on a kick ass year.

    I appreciate that you kept two separate portfolios.

    I always appreciate your logic.

    As we approach retirement, I shifted our allocation from 90/10 to 75/25 a few weeks ago. The cash cushion is also pretty cushy these days.

    My very simple logic is that if the market takes a dump by 50%, we can still live pretty well if we lose 50% of 75% of our assets.

    As you pointed out, noone knows what the market will do. I’ve read numerous predictions from the “experts” that a market crash has been coming for at least 6 years now. On the other hand, there have been the recommendations to stay away from bonds due to interests rates for quite some time as well.

    The best you can do is to keep your expenses low and maintain an asset allocation that you are comfortable with.

    Looking forward to another great and exciting year in 2020… No matter what the markets do.

  23. ‘Way to go Wanderer and FIRECracker !
    Yeah… I’m also thinking about possible downturn. I’m retiring this Summer and I’ve rebalanced such that my yield shield is bringing in my living expenses plus 15%. I’ve also got my Armageddon fund (5 years cash to make up difference if my yield shield takes a 50% hit….i.e., my 3.5% yield drops to 1.75%..a very dire scenario).

    Since last fall, I’ve been very slowly trickling equities into cash at opportune times (big up-days), and all new money is sitting in cash. I’m now sitting on a couple six-figures of cash..and yes, I do feel like a total jackass !! I feel confident that sometime within the next few years, markets will be significantly lower than they are currently. As a goal, I wanted to be sitting on a boatload of cash when that day comes.

  24. You guys have been, and continue to be, a great inspiration to many; young and even us older folks. Thank you, and keep on doin’ what you’re doin’.

    Due to the fantastic returns last year, we’re just $15K shy of $2M (CAD) net worth and about 5 months from retiring early(ish). Other than travelling, being a ‘free-only money coach’ for our three kids, and thinking about life, the universe and stuff, we have NO plans. And that’s just how we like it.

  25. Congratulations on a very successful year.

    Sounds like you are planning a full 4% withdrawal from your portfolio while leaving the cash cushion alone. Is that correct?

    What are your thoughts on funding the cash cushion up being that this was a very positive year, and you had to access it last year?

  26. I just discovered your website and am really enjoying the wealth of information! I am halfway through your book and can really relate to the portfolio safeguards such as the yield shield. We are 3 years away from FI and was wondering what your thoughts would be on housing? I agree that renting preserves capital and adds flexibility which is key. However, we were thinking of downsizing to a smaller quaint home in an area that would be easy to rent as an Airbnb. That would allow us to do our World Travel without having to eat all the costs of our home base while we were gone. It would also allow us a place for our stuff as George Carlin would say:) I think of having a home as a lifestyle choice and not as the best investment. Do you have a home base that you rent? Or are you true world nomads?

  27. Sorry to burst your bubble but you guys are giving yourself way too much credit for being “conservative” investors. your “yield shield” was in fact just as volatile as an equity position with it being comprised of high risk assets like junk bonds, REITs and high div stocks ( I mean, “stock” already IS equity).

    These are not safe havens as you’ve since discovered so I’m not sure why you think you’ve been playing it safe? If anything, your portfolio has been a lot riskier than the 60/40 breakdown you intended, which – to your benefit – explains much of the outperformance you received this year.

    Also re: living through 2008, it’s a totally different experience to go through a market crash with 50k in the account or 1mil. I wouldn’t discount the difference in psychological impact from scale so readily.

  28. Looking back at your posts, you claim you have only withdrawn 35k for 2018 expenses and another 35k for 2019 expenses. 2020 expenses withdrawal were left as an “if”. But let’s not even go into 2020.

    So from 2015 you have been living mostly from a (gigantic over 140k) cash cushion. That’s 200k of expenses at 40k/year since 2015, and you have covered it with only 70k of withdrawals? You haven’t been following the 4% rule yet you talk like the 4% rule is working for you.

    And you wrote a book about that? Seriously!?

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