They All Retired Before They Hit 40. Then This Happened.

[Demovictory9]

They All Retired Before They Hit 40. Then This Happened.
The stock market wasn’t going to create wealth forever. So what about the FIRE movement?

Earlier this month, Eric Richard was in Bali, Indonesia, enjoying the tropical weather and carefree life of a retiree. Last summer, at 29, Mr. Richard had quit his job as a corporate operations manager to become a “digital nomad.”

Now he is hunkered down at his parents’ house in Michigan, having returned to the United States as concerns over the coronavirus outbreak grew and travel bans were put in place around the world. He is in self-isolation as a precaution. And in recent weeks, he said, he has seen his net worth drop by more than $100,000.

“It’s definitely not a great feeling, to say the least,” Mr. Richard said.

He is an adherent of the FIRE movement, the personal finance strategy popular among millennials. It stands for “financial independence, retire early.”

The FIRE movement was born during the stock market’s historic 11-year-long wealth-creating run. Professionals in their 30s and 40s were saving up million-dollar nest eggs and quitting their jobs in the prime of life to live off investments. It was unheard-of in modern times, at least for anyone without a trust fund.
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And with the current travel restrictions, Mr. Richard and others can’t live in a cheap foreign country, a common FIRE tactic known as “geographic arbitrage.” In Bali, for instance, he and his girlfriend were staying in “a lovely guesthouse with a pool,” minutes from the beach, he said, for less than $800 a month. Who knows when he can get back?


Now the coronavirus has thrashed several nations’ economies, from Japan to Germany. The U.S. stock market had its steepest drop ever in March. Naturally, some are predicting the decline or end of the FIRE lifestyle.

Pete Adeney, a.k.a. Mr. Money Mustache, a guru of the movement, said he has been hearing from disciples who are asking if they should “sell everything now.” Reddit’s FIRE message board is filled with nervous chatter, as those “firing” and those who have already “fired” seek advice and comfort.

https://www.nytimes.com/2020/04/02/style/fire-movement-stock-market-coronavirus.html?action=click&module=RelatedLinks&pgtype=Article

[PoindexterOglethorpe]

1. Interesting.

What I think I'm getting from this is that the people profiled were living on every bit of their income, and depending on that income to remain the same and probably increase with the stock market over time.

Kind of like those who are working and depending on a salary.

I wonder if one of the long term effects of this corona virus crisis will be that people will FINALLY understand that however much money they make, they absolutely need to live on less and save. And have a cushion for truly bad times.

Many years ago, as in the late 60s or early 70s, I read an article in Life Magazine about a man who lived on several thousand dollars a year less than his income. I forget the exact amount, which isn't all that important these days. As I recall, the article profiled his acquiring a supply of non-perishable food items. He'd done that over time, which isn't all that surprising. But what has stayed with me over the decades is that he said, "You have to remember, there's always someone down the road from you who's living on a couple of thousand dollars a year less than you are."

[Claustrum]

2. If they can afford retiring and have millions of dollars saved up

If they can afford retiring and have millions of dollars saved up, couldn't they simply cash out of the market right now (even at a 20% loss) and get back into the market at the expected low point later? Their retired life really shouldn't change that much for losing 100k out of millions.

[Progressive Law]

5. B/C they don't have millions of dollars saved up.

[Claustrum]

6. Ok. Reread the article and it says million-dollar nest egg, so not quite millions

Still, even if he has 900k left, that's still more than enough to cash out now and wait till near bottom and re-enter the stock market at that time. Anyways, retiring at 30s or 40s without multi-millions saved up is beyond stupid.

They are in an infinitely better position than most average American families who couldn't have extra few thousand dollars emergency money at any given time.

[Progressive Law]

7. I'd be surprised if even half of that "million-dollar" nest egg is in liquid assets.

[Wednesdays]

8. Not if they borrowed to make their investments

If they bought "on margin," and was financed for half their investment by the broker, a 20% drop translates into a 40% loss.

Such folks are extremely nervous in this kind of atmosphere, because it means that if their stocks lose half their value, then they're completely wiped out (as what happened to the Duke brothers at the end of Trading Places).

[Claustrum]

9. That's not how the article read to me. The people mentioned seem to have earned at least a million

Their concern is that instead of seeing their million dollar turning into multi-millions with monthly gains like the past 11 years, they are panicking when the first stock market downward trend happen. My point is still that losing 100k out of a million doesn't really leave him dead broke yet, or that his lifestyle need a huge change. He still can live a relatively good life with 900k saving.

[Skittles]

3. how stupid are these people?

that's some crazy shit

[HarlanPepper]

4. Boo hoo