Our FIRE Portfolios Are Down 20%, What Now?

[@TwoSidesOfFI]

Are you doing anything differently given the current market conditions? Let us know in the comments!

[@jdcarguy1242]

I continue to follow my plan. What good is a plan if it isn't executed faithfully?

[@TwoSidesOfFI]

@@jdcarguy1242 We agree 100%

[@jamieamendolagine205]

Several months ago I re-balanced much of my portfolio with inflation in mind. Lots of my money was put into commodities. That has helped to keep my balance stable. I've started moving some of it back into stocks which were tanking, and still are. I'll continue to monitor this and slowly put things back into stocks. Hopefully this will rebound and will be a huge opportunity later on. I did something similar in 2008 where I put everything into money markets when the drop was imminent. I put most back in very close to the bottom, and it doubled several times in the next few years.

[@lordperilous]

I considered pulling back about 6 weeks ago, but my brother and I talk like you guys do and we came to the conclusion that our timeline (4 years) means we did not have to make a change. I don't watch the numbers as much right now to avoid the emotional response, but I also am buying on the down which makes me happy. As you mentioned on the video, if I was 16 months away from FIRE, I'd be very nervous but I feel this is prime elastic buying for me which may accelerate me out in a year or two and even shorten my date! Keep up the good work guys, love your show!!!

[@FatFIREfamily]

loss harvesting and using this time to increase the cash cushion from the w2 , wait for another week after fed interest raise and buy back into the market .

[@Kim60610]

Another great video! I'm 6 years from FI and am putting as much as I can into index funds (both equities and bonds). Like Warren Buffet said, "Be greedy when others are fearful. Be fearful when others are greedy."

[@TwoSidesOfFI]

So true, and thanks for reminding my (ever anxious) self, Kim! /eric

[@inea-fijourney22]

you have no idea how much I love this podcast! your quality and conversations are just awesomr

[@TwoSidesOfFI]

Thanks so much, Inea! That's high praise and very kind of you to share. We truly appreciate your support.

[@25Soupy]

I reached FI and retired from full-time employee job Jan 1, 2022. I'll admit it's not so great compared to when my portfolio is up. I also don't look at my brokerage account everyday either as it doesn't really matter in the short term. What I did was buy (and still am buying) high yielding dividend ETF's opposed to just the S&P Index. As long as my monthly expenses are being covered all is good. Here's the thing to remember. Every 2 years the stock market drops 10% and every 6 years it drops 25% but it always rebounds. It's not going down 50% and staying down 50% for 20 years.

[@TwoSidesOfFI]

Congratulations on your FIRE achievements, James! We appreciate (and agree with) your optimism in the stock market. Best wishes to you on your journey. Thanks for your support, and please keep us posted on how you're doing.

[@krisj99]

I loved this conversation. Totally feel the concerns related to everything that is happening domestically and worldwide. So appreciate the honesty and humility you project. We are 3 years from retirement and I certainly share the concerns, but listening to you both hash out what it feels like to contend with the unpredictability is helpful. The emphasis on gratitude for what we have is such a key point. I’m a planner and I believe in having a plan. Even with a plan, however, it doesn’t mean you don’t succumb to worry. I love the quote, “ Worry is the interest paid in advance on a debt you may never owe”

[@TwoSidesOfFI]

Thank you! We very much appreciate your feedback and support. Just the fact that we're all here talking about financial independence means that we have so much to be grateful for, and it's clear that you understand that well. With three years to go the finish line is clearly in sight! Best wishes to you on your journey.

[@PowerfulMoneyHabits]

I dollar cost average, adding money weekly so I will continue with my plan. Everything is on sale. Buy, buy, buy. I plan on following Fritz’s 3 bucket plan which seems to be working for him so it should work for me when it’s time.Great conversation! Keep it coming!

[@davidkirkeby9779]

A 20% decline in $250,000 of investments when you are still actively working for your income in accumulation phase for another 30 years does not feel the same as a 20% decline in $2,500,000 of investments when you are in distribution phase looking to your investments for your income, even though -20% is -20%, just on a larger number. The psychological/behavioral factors cannot be understated. It is helpful to undergo sharp declines while you have smaller amounts early on in life so you won’t be as sensitive to similar sharp declines with larger amounts later in life. Even then, it won’t feel the same. Like was said in the video, a good plan before a sharp decline should be a good plan after a sharp decline. Keep up the great work, guys. Your conversations are valuable and your transparency is uncommon.

[@TwoSidesOfFI]

Jason here - Thanks so much, David! You're absolutely right and your point is well made. You simply cannot know how this "feels" in the distribution phase until you're there. I do feel tremendous confidence from having a good plan, and I'm certainly very thankful that I am in this situation. We truly appreciate your feedback and your support!

[@rarelycares8416]

My earliest possible FI date was 01/2023 (rule of 55) now I feel like I will play it by ear and work/invest through the trough, be it 1 year or 2 or even 3. But it's a good position to be in to be able to be flexible.

[@jamies6534]

Good conversation gents & liked the point about the cash buffer allowing you to feel better about the drop in the other areas of the portfolio. Made me realise that I've always needed that buffer myself.. 8 - 12 months of expenses

[@christopherchilton5891]

I appreciate that you use the word privilege. I think about that aspect daily. I will retire in January at 52 with a pension on top of significant pre-tax savings and a small business. Even prior to what's going on in the world, I was thankful for this privilege.

[@sandrarobinson4448]

This was a great conversation. I retired in 2020. I learned to have a good cash cushion so I was able to suspend my distributions during this downturn. I don't look at my account and I am not changing a thing.

[@TwoSidesOfFI]

Thanks, Sandra! Best wishes to you

[@merrybrown6407]

I just love your content….every thing you mention reflects the concerns we all have….thank you 😀

[@TwoSidesOfFI]

Thank you, Merry! Please let us know what else you’d like to see us cover.

[@merrybrown6407]

@@TwoSidesOfFI I haven’t seen all of your videos so you may have already covered, but I would love to know if you have any tips as to how to keep your spirits up in this sort of market. I was supposed to have an FI date of Dec 24 but this has moved way out now. I continue to invest and know I’m buying whilst the market is on sale, but I have lost the excitement that I used to have which used to be a positive thing as it made me more frugal and save more, now it’s more of a begrudge buy 😊

[@EBsDenStudio]

Great conversation, as always. I have been following your FI journeys since the beginning of your channel, and even I'm outside the USA this is very helpful and relatable , as someone that reached FI a few months ago, and is getting into RE in a few weeks, these topics help keeping me on the path, thanks!

[@TwoSidesOfFI]

Thanks, Enrique! We really appreciate the support and feedback. We recognize that much of the nuts and bolts we talk about can be US specific, so it's great to hear you are finding it helpful + relatable. Congrats on your FI achievement and impending RE! Please be sure to keep us posted on how you're doing.

[@stuarthoffman1668]

Been watching for a while. You guys speak for the common man. Thanks. First year of retirement. Not watching the market, letting it ride.

[@TwoSidesOfFI]

Thanks, Stuart! We really appreciate the support. Any lessons learned in year one that you'd like to share? Best wishes to you.

[@XStar_in_a_carX]

32:30 in the video - Watch/track your cost basis. During a down market, you are buying more shares at a lower cost, thereby dropping your overall cost basis/share. If you bought 1000 shares @ $1.00 and then bought another 1k shares during the correction at .50, then when the stock price returns to $1, you will have 2k shares that you paid an average of .75 for, leaving a profit of $500.

[@TwoSidesOfFI]

Thanks. Cost basis is indeed something we must be cognizant of.

[@schoolmsw]

I am staying the course….planning to retire in 3-5 years. I am keeping my savings rate the same. I appreciate the conversation and both perspectives…. I do need to stop looking at my portfolio daily. It’s on my phone….so I look. what would it be like to only look at the quarterly statements?!?!?

[@brucecampbell208]

Very nice video and great discussion. The issue with many people that are new to FI is that they have never experienced a downturn in the market, outside of maybe COVID but that only lasted a few months. It is easy to be confident in your plan when your portfolio is doing well. It isn't at all easy in a bear market, especially when you have a limited time horizon ahead of you. Question for you both, how many stocks or ETFs do you own that pay you a substantial monthly or quarterly dividend? That can help in rocky times and prevent you from having to sell stock in other pure growth plays to get through those times.

[@TwoSidesOfFI]

Jason here - Thanks for the support and the feedback, Bruce. We both own funds and I own small positions in a few single stocks which pay dividends. However, neither of us would classify ourselves as dividends-based investors. Historically I reinvested all dividends for the DCA opportunity. At present, they provide me with a mechanism to rebalance and to reduce the need to sell when it's time to rebalance or refill cash buckets, to your point. Best wishes to you.

[@taylordavis7427]

Love Jason's optimism.

[@TwoSidesOfFI]

Jason here - thanks! It’s earnest. Best wishes to you.

[@xaldath4265]

Run the Monte Carlo. Stress test the portfolio. Have a plan. Rebalance/sell according to the market trends. If. IF we have an unexpectedly long bear market or an above average crash, THEN consider if a change in portfolio or lifestyle is warranted. If we stay within the confines of historical performance including variance, the stress test should give a psychological boost to stay firm on the original plan.

[@summitt9311]

I appreciate this discussion and the importance of talking things through with like-minded individuals.

[@TwoSidesOfFI]

Thanks, Samuel!

[@bfree247365]

Glad I watched until the end because those final "Enough" thoughts were exactly what I was thinking.

[@kendra882]

Thank you for this honest, thoughtful show. One of your best.

[@TwoSidesOfFI]

Thank you so much, Kendra! We really appreciate that.

[@minimalpetite]

I like how cognizant you guys are of the fact that even talking about FI is such a privilege. I’m starting to like you both. Thanks for the video! 👍

[@TwoSidesOfFI]

Thank you very much - and thanks for your support. Indeed, we are very aware of our privilege and try to speak to it whenever we can.

[@monodactyl3975]

Definitely. Clicked the video given the internal panic I was feeling, But having that reminder at the top of the video that people are going through real problems wishing that being down 20% was their biggest problem really gave me a reality check.

[@OnInParGolf]

really like this channel...nice job gents. Keep it coming!

[@TwoSidesOfFI]

Thanks, will do!

[@AKim-uu4hg]

I always appreciate your conversation & the thoughts going on on each side of FI. You two are a great compliment to the other. I love Jason’s ability to listen then thoughtfully respond to the points Eric made. And I love Eric’s real world financial thinking. Much of what Eric thinks and/or is concerned about, I am too. Thank you!!

[@TwoSidesOfFI]

Thanks for your support and kind words! We really appreciate. Best wishes to you.

[@wineguy68]

Great video as always. I made some bond allocation modifications in January (increased 10%), which are actually helping a little with the more recent declines. Other than that, no changes. Like Eric, I probably check my balances more than I should, but working on that. I have stopped watching CNBC and other mainstream media. its just not helpful in any way other than to stoke fears.

[@williamcherry6492]

It still amazes me how the end of the world is a 2% drop in the market. Shutting out the distractions and trying to not look at my positions daily is still a challenge for me as well. Best of luck Wineguy (love that name).

[@dras69360]

I enjoy your real world view of things in your videos. I'm a little older than you guys (early 60's) and planning to retire in a few short months. Having given up virtually all of my portfolio gains of the last 11 months I have to admit I'm getting quite uneasy about the market as a whole. Certainly can't sell everything now and lock in the losses, but I think it's starting to weigh on me more than just a little. The timing couldn't be too much worse for me. Hoping we find a bottom soon. I too am starting to "try" to break the habit of constantly watching the market action. It's getting to the point where it is sometimes ruining an otherwise good day.

[@TwoSidesOfFI]

Thanks, Dave. We appreciate your support + feedback. These times certainly can feel pretty bad particularly when you're so near a major transition point as you are. Wishing you all the best in getting through this time and achieving all your goals.

[@withwilk7473]

My brother in law used to receive 10% in stock and after 10 years his position was huge. Other than private pensions I don't think he had other stocks or indexes at all. And then the company was sold and had a down turn and that position halved in value before he cashed it out. So I agree, liquidate alot of that stock and reinvest it into indexes, or something else just for rebalancing

[@michaelcarver8373]

Good conversation to help keep me grounded to stay the course. Also a good plan to have is multiple income streams that you can pull from when the markets are down such as a little real estate.

[@TooMuch3835]

Great episode!!!!

[@TwoSidesOfFI]

Thanks!

[@Hawking1969]

Some notes to myself: Treasuries are a locked in loss (due to inflation). I find that reducing expenses (being something you can control) *feels* good, and has some level of efficacy. The "fee" in Morgan's book is emotional far more than it's financial: watching your net worth drop 6 or 7 figures is really tough.

[@SimonEllwood]

I have attempted to keep my spending level despite inflation by finding savings that have little or no impact on my lifestyle.

[@Scootir185]

I was all set to pull the trigger on my early retirement at the end of April and then the invasion happened. Still have faith in my 3 buckets and overall strategy but I’ll likely hang in the job longer now with the hope of things looking a little more stable in the months to come. It’s been such a disheartening past year as financial risk after risk has compounded and added to my FIRE anxieties. But I also realize it’s such a lucky problem to have, particularly in context with how others have sufferred recently.

[@TwoSidesOfFI]

Wishing you all the best to achieve your goals. It is a fortunate problem to have, but adjusting our plans can be a tough pill to swallow. It sounds like you've got a very practical approach in place that will only add confidence to your plan.

[@edlinaazmeer7749]

Thank you so much for sharing your thoughts and conversation. Some of the things I have been thinking about as well: is it enough segment really hit home for me and I to probably need to see and contemplate when I can actually achieve FI. Really appreciate the thought process. 😊

[@TwoSidesOfFI]

You're very welcome, Edlina. Thanks so much for your support and your comment.

[@JoyfulLivingWithLisa]

The Psychology of Money is a great book about the behavior side of money management. Just read it this winter and have shared it with my sister as well.

[@Polostar79]

I’m currently reading it. Great book so far.

[@williamcherry6492]

Thanks, was trying to remember the name of the book - adding to my reading list.

[@johnsherwood6395]

Very balanced and honest podcast. I have enjoyed every episode.

[@TwoSidesOfFI]

Thank you! 🙏

[@MW-mx6lu]

I liked the book Psychology of Money too. Very helpful

[@TwoSidesOfFI]

Great! We both really enjoyed it

[@aknorth1053]

I'm a long ways out 20 years or so and to assist with the physiological behavior when tracking my retirement accounts I update them like a ratchet so I only update the totals when they raise so when I look at my duget my networth doesn't drop. Obviously won't work when I'm closer but for now I find it helpful

[@withwilk7473]

I unfortunately lost my job & home in Jan. So usually I would be buying consistently, but I've stopped buying indexes, stocks, all together. Life is very unpredictable haha

[@TwoSidesOfFI]

We're sorry to hear that. Best wishes to you.

[@xaldath4265]

Regarding the psychology of investing, people generally feel losses more than gains and legitimately struggle to look past volatility for the long term gains. The best investors are probably the ones in the middle. Young investors have yet to build the understanding that paper losses are just a part of the journey and older investors are closer to sequence of returns playing a role. In the middle, people tend to have a healthy balance of experience as well as time to weather the storms.

[@TwoSidesOfFI]

Excellent points! Thanks for sharing.

[@getlostblue_coach]

Optimism is not optional if you're going to pursue F.I. and an early retirement. Not always easy, but no other alternative.

[@TwoSidesOfFI]

That's a great way to put it, thanks!

[@FionaMacDonald]

I am very happy I increased my cash cushion in Dec even tho everyone keeps harking on about cash drag. Cash to cover basic expenses for 5 years let’s me sleep quite happily at night - and it’s not that large a percentage of my overall portfolio. As for inflation, I haven’t really noticed it much other than gas prices. I drive less now I don’t have a commute and with groceries I just adjusted to use less meat. I have lived on the same self imposed monthly budget for over a decade now 🤷‍♀️ Feel privileged to have the ability to spend more if I want because I sacrificed for all those other years.

[@BOULDERGEEK]

Yeah, I only have six months at a time allocated. In this scenario, keeping money in the market for potential growth was a bit of an overreach. I won't have to pull any cash until July. We will see where things stand by then.

[@TwoSidesOfFI]

Great perspective, thanks for sharing, Fiona.

[@monodactyl3975]

Interesting point about a cash position. I wonder how large it would have to be to mitigate the feelings of stress, and how much long run return you would be giving up (not saying it's a long term allocation to cash though). I have a feeling that if you have that cash position for a while, you emotionially normalize to certain levels of P/L So if the market is down, 20% and you're only down 10% due to 50% cash, you might still feel stress given that a 10% drawdown is still a lot more than you're used to.

[@TwoSidesOfFI]

Great question! I suppose this is one of the reasons annuities are popular with some folks, despite their downsides. Guaranteed income is a powerful emotional force.

[@williamcherry6492]

I have a different take on how much is enough cash - mine is based on length of time of down turn I want to bridge a down market (not my idea - can't remember who I stole that from). The equities part of my portfolio is just there to replenish the cash/income parts (once I pull the trigger). Knowing that I have enough cash/income to bridge almost any down turn helps with the stress and is more concrete to me then a %. For me its two years cash and then another 3 in bonds/money market funds, so I can live through a five year down turn without having to do anything else if I really wanted to push it. Although I would probably make changes to my spending side before it got that far.

[@TwoSidesOfFI]

​@@williamcherry6492 ​ Thanks for sharing. I think we're on the same page, and Eric talked about this a little in the episodes about reallocating his portfolio. Sounds like you've got a plan. Best wishes to you.

[@AECH_CH]

The Japan comment is a popular myth... The problem why a lot of people think that Japan didn't recover for 30+ years is, that the Nikkei 225 (Japan's main Index) is weighted by the absolute value of the share - so stock splits basically look like a loss in there... It's not a market weighted index (like the S&P 500 f. e.). That's why it looks like Japans economy didn't recover for 30+ years. If you take a market weighted index with dividends, you are looking at 15-20years or so - which is long ofc, but not unimaginable, even for the US. And this actually makes sense right? Japan's economy and market are more developed and profited from more globalization, so why should it be "smaller" than 30y ago undervalued?

[@TwoSidesOfFI]

True enough, Abenomics and the Japan situation is pretty complex and very different from the US

[@rickchandler2570]

During times like these I’ve very happy I don’t manage my portfolio myself. I can’t say I wouldn’t be freaking out and possibly moving things around and possibly hurting my portfolio. I just don’t have the desire or knowledge to keep on top of things to make intelligent decisions so I pay someone else to do it.

[@TwoSidesOfFI]

And that's a totally reasonable choice! Many underestimate the value that comes from working with financial advisors, which includes the support + confidence that comes in times like these. Best wishes to you.

[@ronloftis9080]

All the FI people who are VTI and chill are in for this ride. VTI is only diversified in the asset class of US stocks. We all have recentcy bias (let's say 10 year past history of a bull market) and we all have some home country bias here in the US.

[@TwoSidesOfFI]

We talk a lot about recency bias, hence we agree. Gotta make sure your portfolio risk is aligned with your current status and goals! The risks a 20 year old far from retirement can take are far different than someone approaching retirement!

[@madman3891]

I've only been investing for a little over a year and wont be changing my investing plans at all. I wasn't in tech at all because I saw it as overvalued the last year and stayed out of it. If the tech sector continues to drop over the next couple of months i'll probably dollar cost average into it. I am quite early in my plans (20+ years before retiring) and very glad to have started and experienced this now.

[@WheresWaldo05]

So after investing for only a year, you are now an expert on stock price valuations and metrics?? 🤣

[@madman3891]

@@WheresWaldo05 Expert? Nope, just sharing what I am planning on doing. Whether I got lucky so far or if I know enough from the resources that are available to us doesn't matter as long as I get results. Pretty happy with the results so far so I must be doing something right. :)

[@OnmywaytoFI]

Good conversation as always. The concept of talking about FI is indeed a privilege but earned from hard work and good decisions. The “enough” conversation I have with myself almost daily. My goodness what a good problem to have. I appreciate y’all pointing out that we are beyond fortunate and need the reality curtain pulled occasionally. We dollar cost average with weekly contributions and the occasional lump sum in this down market. Thank you two for your honest and original conversations.

[@TwoSidesOfFI]

Thanks, Matthew! We appreciate your support. We are truly fortunate. Best wishes to you.

[@davidatkinson5396]

I’m sticking with my personal Investment Policy Statement and associated asset allocation. I would allocate more to equities right now but that would not be in alignment with my IPS. And…this present moment is a good argument for the “bucket” approach…assuming it matches up with your desired asset allocation.

[@TwoSidesOfFI]

Sounds like a sound strategy to us, David. As you heard Jason say in the episode, it is tempting to consider taking advantage of down markets to increase equity. But to your point, it's a bad idea to go against your IPS without very good reason to do so. Best wishes to you!

[@SimonEllwood]

You have only lost money if you sell the shares. If not you have the same share portfolio as last month.

[@WheresWaldo05]

And this is exactly why dividend growth portfolios are the king. You never have to sell your shares. (In a taxable account) the stock price doesnt matter. Only the dividends collected one day.

[@amznprime5145]

The whole idea of FIRE is that no bill over budget is ASSUMED to be coming in : ) But life is just not assumptions.

[@TwoSidesOfFI]

Correct! Real life is very different than assumptions and models, hence the value in putting sufficient buffer into budgets to handle these contingencies.

[@Maeda_Toshiie]

Agreed! Morgan Housel's The psychology of money is a fantastic book! Bonds are there to reduce risk. Indeed! A point missed by many when chasing returns. Focusing on what's important. Important point in life to remember, FIRE or no FIRE. Indeed, being able to pursue FIRE is a great privilege. Even for those of us who were born into a safe and developed society, living in one is a privilege.

[@bigfan1069]

Bullish rhymes with foolish. Great conversation guys keep doing this.

[@TwoSidesOfFI]

Thanks, Jose!

[@jackjack8390]

Man, that's complete belief in something to "not look at it". Is that from belief in the data that indexes have "almost always" gone up over the last 100 years or so?

[@TwoSidesOfFI]

Jason here - I mean, what am I going to do? We select a strategy and unless there's a -really- good reason to do so, we stick with it. I look at least quarterly which is plenty often. If I look more often it's only because I'm in my portfolio buying or selling something. And yes, I do have faith in the market in the long term, which is what we are banking on. Make sense?

[@stevenobrien595]

Excellent time for opportunistic Roth conversions. 👍

[@jonathancope2712]

Great content, as always. Thank you. We’re continuing to do our usual work and increasingly focusing on next efforts rather than current news. I’ve been learning more about sustainable food cultivation, which has always been an interest. Having work to do daily is key to my happiness, and my consuming professional life will need to eventually be replaced by side hustles. Not for their economics but for their purpose. We’re only partly dependent on financial markets for our non-earned income so ignoring the equity markets is easier if never easy. Have a nice start to spring. Kind regards.

[@apai811]

Very timely video. I am nervous because right now we are not living in regular economic pattern of boom/recession but possible start of WW3. How does one plan for these. Still 100% in stock funds.

[@TwoSidesOfFI]

Jason here - Thanks for the comment. We all understand nervousness and uncertainty, that's for sure/ But as I mentioned in the video, at times we have to remind ourselves that for all the things that are within our control, there are many more that are not. The world stage, in particular, is out of our hands. We simply do what we can to live responsibly, make all appropriate preparations, and aid those in need where we can. It doesn't help us to worry endlessly of course, though our brains are often wired to do just that. Reflecting on the many things for which we are grateful can help calm us in those stressful times. I wish you all the best.

[@jamaicaigot9335]

Hey, loved your contents, are you also in audea?

[@TwoSidesOfFI]

twosidesoffi.com/ourpodcast/

[@xaldath4265]

Doing things differently? Not on a macro level. I'm not 100% in ETFs, but the majority of the portfolio is and all that is done automatically. The minimal individual picks I make obviously change with the market, though...for the fun of it.

[@markp9083]

Now is a great time to do Roth conversions or Roth rollovers it you have the option

[@bob.popular]

Like the content, guys. You’re handling the pullback well, but I’d encourage you to have some funds available to take advantage of a 40% or 60% decline.

[@TwoSidesOfFI]

Jason here - thanks, Bob. Good guidance. That's why I've got two years of cash and another five years of Treasuries + bond funds in taxable, not counting what I can access in retirement accounts.

[@bob.popular]

@@TwoSidesOfFI If you buy stocks with your cash, what would you buy groceries with? And while bonds will do well during a flight to safety, of course, how will they do in a rising interest rate environment? Would you be willing to sell bonds that are down to buy stocks that are down? I’m not criticizing, just offering food for thought.

[@TwoSidesOfFI]

@@bob.popular Jason here - not sure I'm understanding your question. I'm carrying two years of cash for expenses (like groceries), and not buying stock with the funds in that bucket. Carrying two years at least decreases the likelihood that both stocks and bonds will be down two years out, but naturally I would sell bonds (which would in all likelihood be down less) to refill the cash bucket for expenses.

[@bob.popular]

@@TwoSidesOfFI I originally mentioned having funds available to take advantage of a much steeper equity market decline than we’ve seen recently. You pointed to your cash and bond positions, which I thought implied you would take advantage of a steep decline by using some part of those to buy stocks, thus making them unavailable to buy groceries. Your most recent reply seems to clarify that you would stand pat instead of buying additional equity, which is fine. Apologies for the misunderstanding.

[@davef1923]

Jason, did you look more regularly at your numbers pre-FI, and if so, was it easy to stop post-FI, or your confidence in the plan takes care of all? I'm more like Eric then I care to be on this front...no offense Eric! BTW, really enjoy listening to you both!

[@TwoSidesOfFI]

Jason here - Thanks, David! I looked more often, particularly in the last year prior to RE. I suspect overall still less often than most people. I did quarterly net worth statements so at least that often.

[@colsonskur6714]

I am young and buying and loving it

[@alanyoung159]

Forgot who said it, but they said the most important part of the body for investing is not the brain, but our stomach. How much of these bear market can we stomach. Stay the course!

[@TwoSidesOfFI]

Great sentiment! Thanks for sharing

[@anniesshenanigans3815]

so now its June.. how is things going?

[@TwoSidesOfFI]

It's like you read my mind (Eric here)! We're revisiting this topic in our next episode which releases this coming Sunday.

[@dudefromlaveenaz]

Hey guys! I am a little curious. Most folks in the FIRE community are following the 3% or 4% rule. Taking their current spending and multiplying to out to reach their FI number. I'm curious though, no one seems to account for what inflation will do to that spending in the next 5, 7, 10 etc years while they're working towards FIRE. What are your thoughts on accounting for inflation in your FI number?

[@TwoSidesOfFI]

Hey, Eric replying here...yours is a common question and it's a good thing to consider in the planning phase. A couple of things come to mind, first, rather than think of your FI number accounting for current spending, think of it as projected retirement spending. Depending on your time horizon, that may be significantly higher than your current spending (esp. due to inflation as you point out). So, how can you possibly know what that number is if retirement is 10 years away? Well, you can't know for sure but, you can make a best guess using your current spend and projecting future spend. Operate using the best information you have right now and know that you will have to change it as new information presents itself along the way. The FIRE number Laura and I had a few years ago has adjusted to account for new contingencies + expenses and to accommodate the life we want to live post-FI. Second thing: with the 4% rule it's generally accepted that it applies to year one spending only. In year two, you take year one, adjust up for inflation and spend that figure. Year three, take the year two spend and adjust up for inflation. And so on... Hope that helps!

[@reedallred8739]

What fire discord are you talking about?

[@TwoSidesOfFI]

Hi Reed, Jason here. If you'd like to check it out, here you go! discord.gg/ArESGNZRax

[@MrRGBTV]

As the great Peter Lynch says... this is not money you should need in the next 2 or 3 years for college, a wedding, a down payment on a house, etc. If it is, you have no business being in the market. It'll come back as history repeats itself, so just be patient, think longer term and relax. Panicking does zero to help the situation and you only really "lose money" if you sell at a loss.

[@TwoSidesOfFI]

Great guidance, Jonathan! Thanks for sharing.

[@coalyboi7939]

Not my problem

[@bobby_ewan]

FIA and LIRP are a great bond replacement

[@grega4450]

Love the video. I am lucky here in Canada we are heavily resource focused so we have missed most of the down turn and i am heavily invested in Oil /Gas and gold. I have started de risking the portfolio, since I am leaving my job in 6 weeks to early retire. I am 100% in stocks and stock efts. I am a CFA too. Not the smartest thing. Still 100% buy less risky EFTs. I hate bonds...lol (i don`t wanna hold bonds :) I am going to have a hard time not worrying about my portfolio but will try my best. You guys are amazing. Really enjoy the conservations. Update after watching the video a second time... My risk profile is wrong for my age still and I need to fix it. I hit my number at 110% 7 years early because of oil and gas so i have been lucky and i have made changes but not enough to lower the risk. thanks for making me think about the risks... Keep the videos coming.

[@TwoSidesOfFI]

Thanks for the feedback, Greg! We really appreciate it. Congratulations on your impending early retirement! Best wishes to you. Be sure to keep us posted on how you’re doing.

[@joell439]

If investing in a flat market is scary, maybe the right position is to invest in yourself…. ‘Invest’ in cash to create the bucket and isolate from the short-term volatility. Let the rest of the plan ride the wave. I didn’t deliberately plan it that way, but that is how I was positioned when I retired two years ago. And I’ve been blown away at all the empirical data I’ve since found that approaching FI this way with a sizable cash bucket on the books sure makes everything so much easier/calmer. Best of luck to you all…. 👍😎👍

[@Bob-yh7ir]

I laugh at the market downturns. Our portfolios are down 6 figures and it doesn't bother me one bit. Have excess cash on the sideline that I am using to buy more every couple weeks. If you plan and have multiple years of cash and other reserves, then these markets crashes and corrections mean nothing to you. Too much emotion in the market. Don't invest with your heart, invest with your brain.

[@TwoSidesOfFI]

Your last sentence says it all. Thanks for sharing!

[@tech132]

A couple years ago we had Murder Hornets. Now we have Monkey Pox. I am waiting for the next shoe to drop, the Alien Invasion from space to kill us all!

[@TwoSidesOfFI]

There have always been infectious diseases, insects of concern, etc. it’s just the 24 hour news cycle + social media that makes it all seem so much worse! Best wishes to us all

[@boricua_in_wa]

Great conversation. I don’t understand people. How many times do you have to be told this is what stocks do? This is why dead people have the best returns on their portfolios.

[@TwoSidesOfFI]

Thanks! There’s certainly a healthy amount of recency bias in how some people see the market.

[@driftingintoretirement]

Eric, it is just a time to buy. Your plan is solid. Thinking of the people of Ukraine 🇺🇦.

[@playacabo6289]

I haven’t changed anything with regards to my investments. I’m pretty content with a 70/30 asset allocation. I have upped my spending due to inflation and return to normalcy after the pandemic. It was hard to do because I love to beat my budget but our spending is just higher (food, restaurants, misc) plus we want to get back to traveling this year and I didn’t want to save there to offset higher spending elsewhere.

[@TwoSidesOfFI]

Thanks for sharing! Have you already retired or perhaps achieved FI but are still working?

[@playacabo6289]

@@TwoSidesOfFI I retired in 2020 👍🏾

[@TwoSidesOfFI]

@@playacabo6289 A belated congrats to your on your retirement! Any key lessons learned in your first two years you'd like to share? Best wishes to you.

[@playacabo6289]

@@TwoSidesOfFI Thanks! One lesson so far has been figuring out my risk tolerance. I realized once I retired my portfolio was too aggressive. I felt a little sick to stomach and stuck for a few months trying to determine the right allocation for me. Fortunately the market was rising while I was researching and figuring out what would work for me. I’m now comfortable with 70/30. I’m also learning to live in the present versus planning out my day in advance. I no longer need a to do list to cross off every day. It took me a year to change this about myself.

[@TwoSidesOfFI]

@@playacabo6289 Thanks for sharing!

[@rpguitar]

The black swan event is the key to my anxiety. A correction from inflation and interest rates is comparatively mundane. The market kicked butt in '21, so we had plenty of extra growth to counter it. But now, with a potential world war holding back any semblance of optimism, there is absolutely a reason to worry. We're one tragic event away from a mass sell-off. Most people tend to plan FIRE using common parameters like 4% withdrawal rate, 7% average returns, 2.5% inflation, etc. - but a giant, protracted drop in the market due to a freak-out from a global threat to our entire worldview? That's not a serious option in the playbook. It's a "hope like hell this doesn't happen" event for most of us that we largely ignore. In January I liquidated enough for about 18 months of cash. Sooo glad I did that. But a black swan could really dash even that sense of security. BTW, don't equate stablecoins with generic crypto. Earning 9% on USDC is not at all a bad option for some of our cash reserves. I'm not suggesting to load it up with $1M, but it is a promising option that shouldn't be blown off.

[@TwoSidesOfFI]

Interesting points, thanks for sharing your perspective. Put all three: random black swan, inflation, and rate hikes together and it's a special kind of party, right?! RE: Stable coins. The lack of liquidity in the crypto exchanges - especially of late - has given me pause with respect to earning yield on crypto. My few experiments weren't that positive (limits on balances earning, introductory rates, high fees to move out, questionable collateralization schemas, etc.) The way I look at it is this: if you're earning 9% yield when everything else is paying .25%, you're pretty far out there on the risk spectrum. Do you have any resources you can share that might make me a more informed consumer? /eric

[@rpguitar]

@@TwoSidesOfFI Hey Eric, in your shoes as someone still in accumulation and not needing a ton of cash, I probably wouldn’t do it. I retired last year and with bonds having such miserable yield, I opted to slowly ramp up. I’m using Voyager. Not enough space to discuss here, but it provides a few hundred $ per month income while holding my second tier of cash. I move a few $k into savings when the latter reaches a certain low threshold. Pleased so far.

[@TwoSidesOfFI]

Appreciate the resource and advice, will look into it. \m/

[@williamcherry6492]

I've seen so many black swans in the last 30 years...its made me realize that no numbers are guaranteed to work in all cases. Flexibility and multiple streams of income are the key, but again no guarantee. The 18 months of cash seems really smart and good timing taking some of the gains of '21 off the table in Jan. And thanks for the info of StableCoin, it may be my entree into Cyrpto.

[@hacktwelver]

wow, very useful

[@leesmith9299]

FI number - something i hear a lot. this to me does not make sense as a target. too much of the current "number" - portfolio value is based on market sentiment. a big conundrum as you probably lose a lot in total return (especially in the last 10 year) but a growing income portfolio gives me at least emotional protection from badly timed bear markets. in a bear market the income a portfolio pay should not fall by anywhere near the amount the share prices do. so the moment i chose to retire did not depend on the markets it depended on the income my portfolio was producing which was a steady grind upwards over the years. way more predictable. this portfolio covers most of my spending and a section of my portfolio earmarked for luxuries is more growth focussed and can be sold down at opportune moments. honestly i've lost out in recent year vs a global tracker as this growth section has been smaller than the markets but mentally if works much better for me. if an income portfolio is off the table for some maybe some other measure can be used to determine the date of FI. maybe the moment the S&P 500 earnings from your tracker reach your spending each year. still stuck with market sentiment effecting your selling proceeds though. a dividend is a $ amount paid, when you sell it depends on market sentiment but selling an amount commensurate with earnings would make me feel better. i'm sure there's lots of flaws with this idea. i literally just thought about it today so not really thought it through.

[@TheUkey79]

I recalled you mentioned that you're super risk tolerant in previous videos. Like you would not bat an eyelid if the market crash 50%. What's changed over these months? Think the proximity to fire is the cause, but I believe it also means that you should relax dude. You're still within your own plan.

[@cyrillebaillif]

Hi Eric, Jayson! I really like your show a lot! To the point that I would like to create a similar one in term of format, that would be the 17yo NYer and my best friend back in Paris 12 years ago after living 10 years in Miami! Can you please give some advice as I am about to create a channel, and invest in a new laptop? Any movie edited app/software you recommend, and do you use for your video chats? You are inspiring me! Back to your show, I still don't get why you both haven't invested 1-5% in crypto. I'm 44yo and started 15 months ago going heavy on BTC and eth, I'm around 10% of my total ptf. This is the future for sure, and about to explode within 3-6m. But I'm in for the long term, 2030 mini. Just saying...

[@TwoSidesOfFI]

Thanks, Cyril! We use Final Cut Pro X as we both use Mac and Eric has tons of experience video ediing using it. There are lower cost options available and you'll find tons on KZbin about them - we haven't used any of them though. You will definitely want to have a look at the recommended specs for whatever package you use as video editing can be very processor + memory intensive. We're both interested in crypto and as you may have seen in earlier eps, have small positions only. We appreciate the potential of blockchain tech but presently we view it as too speculative to be a larger part of our portfolios. Of course that may change! Best wishes to you.

[@benr4978]

Hey Eric - I have been following your 30x40 channel for a while now. I'd be real curious to hear your reasons for wanting to get out of architecture sooner rather than later. I am 35 and have been in architecture for 10 years now. Is it the lack of design freedom architects seem to be facing more and more? That is the main thing I am trying to come to terms with, and I am trying to figure out how to navigate it.

[@TwoSidesOfFI]

Hey, Ben- Eric here, thanks for following 30X40's channel, I really appreciate it! To answer your question, I'm a little ahead of you as I've been at this for 26 years. I still love designing homes and working with clients and tradespeople. However, I have so many creative interests I simply need more time to chase them all down. FI is a means for allowing me to do that. Architecture will likely always be a part of what I do, but the orbit of what keeps me challenged and interested is always expanding. Freedom, autonomy, independence; it's all wrapped up together. For more on how to design a business that feeds your creative life as an architect, be sure to check out my A+E Course, sounds like it might be a good fit for you: thirtybyforty.com/a-e-course Wishing you all the best... -Eric

[@NettieFIRE]

I can image that Eric’s unease would be a lot higher - than it currently is - had he not rebalance in Nov 2021. 😳 A good lesson avoided can be invaluable, provided you remember to reflect on its worth. In good financial times, when you feel that it’s *time* for you to change your investment allocation - as you move into the next phase of F.I. - then, its time! Hopefully for those ‘late to the party’ they will take the opportunity to make a diary note that, once this downturn ends (and it will eventually end) that, portfolio reallocations strategies are critical and if any one *had been* delaying their rebalancing or had delayed the move to a more conservative strategy (because it was time for them) then, it might then be the time (after individual circumstances are considered) to take the necessary action steps. I remain conscious that ‘risk windback’ steps often need to be spread over months (or years) so, each person is going to need a decent block of time to execute the adjustment; frustratingly it is not sometime we should doing in one hit; patience will be essential. But, F.I. is - and will always be - a patience game. 😬

[@stewartcotton9954]

I respect the intro...

[@Bluponi]

Another great episode Gentlemen. I'm still in the market, still working and still contributing, so dollar cost average is in effect, buying opportunities are in effect, but trying to decide... Lots of financial experts are predicting an 80 % correction in the market because we are in the longest running " Bull Market " that has ever existed and a market crash is inevitable. Most experts think we are in the biggest bubble of all time. Valuations and P/E ratios are out of this world... I'm thinking If I don't sell, and these people are right, I would lose much more than if I sold, and these people are wrong... Some people recommend 50 % of your assets being invested in Real Estate, perhaps rental properties. I would be interested in hearing your thoughts. Thank you

[@TwoSidesOfFI]

Thanks! We favor diversification for sure. Neither of us presently hold investment real estate as part of our portfolio. But the idea has merit and in many areas can make good sense. Just remember the lessons learned over the past 15 years: RE is far from certain as well. Best wishes to you.

[@Bluponi]

@@TwoSidesOfFI Thank you. Keep the people of blue and gold in your hearts !

[@TheQUBANQT]

I haven’t changed my long term plan in this market but in add’t to my usual buys I have made some extra buys recently, nothing significant but enough to take advantage of this “sale” (taxable brokerage). Part of my current compensation package includes company stocks. I usually keep it at a 10% max. I don’t babysit my Roth401k portfolio but these past 2 years I found myself timing the market & once I made that realization I 🛑 looking altogether & let the automatic buys do their thing. I just recently took a 👀 & currently have 40% portion of company stock. Granted I haven’t rebalanced in 2 years bc of Covid but am wondering wtf 🤬 should I sell it in this market & reinvest as usual or hold on until the crazy is done? 😩 this is the worst it’s been in ages. I work in finance (audits)& know this is a 💩 situation that could’ve been avoided. 🤦🏻‍♀️

[@cheaserceaser]

Sell and buy Doge. Easy money!

[@TwoSidesOfFI]

How’s that working out?

[@cheaserceaser]

@@TwoSidesOfFI Just paper losses...diamond hands. I still got 20% left.