A person who retired at 35 with safe investments???

Not sure if this is the book you mean, but you might want to check into "Your Money or Your Life" By Joe & Vicki Robbins. I'm not sure of the spelling of their last name. The focus of the book is how to invest, live simply and retire early.

It's cool, thanks for taking a shot at it Green. Hmmmmm.. my next question... I'll see if I can ask in the appropriate thread, thanks again.

BM

wong, i haven't heard of this book or this guy. alot of this really depends on how much he made while he working and how much he saved. i mean if you are making $200,000 a year and living on say $40,000 of it, its easy to save. but if you are basically living pay check to pay check, it isn't that easy.

there are many ways to invest, some safe, some "more aggressive". there is no really safe way to get a huge return, generally larger return = larger risk. if there were, everyone would be doing it. however, there are some very smart ways to save for retirement.

Oh okay that's cool, thanks. What's BM by the way?

BM = bookmark. The person doing it will be notified when someone replies to a topic that interests them.

Hey, Kicky if you want to know more about the Voluntary Simiplicity movement or living on less in order to have more freedom - just ask- I might be able to help.

That's cool, thanks Green.

I found out who it was Derek Foster "Stop Working." He said something about invest where you get paid in dividends, etc. I heard the book was well written and people who opinionated on it found it entertaining.

1mil plus while your in your 30's isn't that the american dream. well part of it

Not really! Considering that people live longer these
days, a 35 year old man might live another 50 years and
if he spends around $ 50,000 per annum for cost of living,
mortgage etc. he'll be broke even before retirement age,
and there aren't inflation or taxes included yet.

Why would he be broke? If he just spends what his chunk of dough earns in interest each year (yearly interest on $1mil should be at least 8 or 9%, even if the guy's an investing ninny, right?), he could live on $80-90k for years and still not have to touch his core chunk of dough.

Or am I missing something?

2 points...

One million won't get you very far if you plan on living off of just that.
It will get eaten up very quickly with inflation. Assume a 5% return which means you are only getting $50K a year. In 10 years inflation will have made that $50K equal to less than 40K. Now imagine 20 years after that.


Second point -
Making one million by the time you are 30 is not a normal return. There are reasons that every investment comes with a disclaimer. At the height of the day trading, one person made headlines when he retired with over a million in investments. At the same time hundreds or thousands were going broke trying the same thing. You might be the lucky one, but probably not. If this person made all his money off getting stock and dividends where he worked then he should feel lucky he didn't work at Enron, Tyco, Worldcom, etc, etc...

It doesn't quite work that way. There is no guarenteed 8% every year. You can average that if you invest in stocks but you are risking the vageries of the market. Say one year the market drops 10%. If you still take out your 8% then you have less than $1 million invested. 2 or 3 down years can do big damage to the principle if you are living off it.

Taxes and inflation also eat into your earnings every year.

Ah, I see.

You are right that there isn't a "guarantee" of 8% every year, but relatively speaking, it isn't difficult to realize 10% if you're young and willing to take even moderate risks. It wouldn't, most likely, be recommended to older investors, but the subject in question is in his early 30's, so has every opportunity to not only live well from his initial investments, but most likely significantly increase his principle.

I haven't read the book, but dividend reinvesting is pretty standard advice. The trick is to do your homework tenfold before investing and every once in a while, follow your instincts.

You can average 10% over the long term, 10 years or more. But that assumes you are not taking any principle out. Once you start taking out the principle to meet needs it can eat into your long term average.

If you have 1mil and earn 10% you will have 1.1 mil at the end of the year you take out .1 and have 1 mil left over to do the same thing next year.

If you have 1 mil and lose 10% you will have .9 mil at the end of the year if you take out .1 it leaves you with .8 mil. That means you have to make 37% on your investments the next year to get to the 1.1 mil and keep pace.

If you retire and make 37% the first year it puts you ahead of the game but it is merely luck.

This was presented as someone that retired at 30 which would imply he is living off his investments. If you have a million at 30 and semi retire but work to pay some or all of your living expenses then I would agree with you JW. That million will continue to grow nicely and by 50 should be 3 or 4 million.

That's assuming you need 50k a year. If you already own your house, you could easily live on less than that.

Given my current expenses, I could live on 20k a year pretty easily.

This will vary depending on your preferred lifestyle and whether or not you have kids (I don't )