Why I LOVE Coasting Financial Independence 

There are quite a few people who end up going part-time to start (or even to finish! My grandfather worked his whole life. At some point it was more because he loved the social aspects of his job and wanted to always feel productive as opposed to needed to do it to keep food on the table).

@@NextLevelLife I'll probably be able to do that as well here in Brazil.

That's batista fire

I really feel so sorry for you Americans, having to pay for your health is ludicrous. In the UK it is completely free and we don't have to mortgage a house if someone becomes ill.

@@thelegend9816 must be nice

good, thanks for bragging.

You invest in index Funds or more aggressively/riskily?

That's awesome to hear! Well done :)

I agree. We should be using the stock market’s real rate of return which has been about 6% over the last 100 years.

Thats amazing! I hope to do the same.

Really! How is that even possible?

Ehab Barakat If only there was some kind of video, perhaps on RU-vid, that explained it...

Good for you,not everyone can retire,and when I say that I dont mean as in most people cannot retire,what I mean is not everyone can retire even if they have the ABILITY to,because thats how they are.

Retired? Or sugar daddy?

You can do it!

Thanks!

Possibly if there is enough support for it. What specifically would you want to see discussed? Much of the major themes I feel remain largely the same with regards to the importance of savings rates, lowering your burn rate as you age, etc. Is there anything in particular you'd want to focus on? Thanks for the suggestion?

@@NextLevelLife I also would appreciate such content. I am late 40s with a net worth of about 700k which includes stocks and real estate plus I will have a pension at 55. Not sure if I should get rid of my real estate and focus on stable stocks or keep them and wait till they are paid off in 7 to 10 years. The kicker is I might be semi retiring at 50 to start my own touring company business which may take 3 plus years to stabilize. Any advice would be appreciated. Thanks

A touring company sounds like it would be a lot of fun! How much time do you plan on spending each week/month working on that once you're semi-retired? And will your tours be taking place close to home and/or your real estate holdings? Not sure if you are into rental properties or if you were just referring to your personal residence (I will be assuming rental properties for the remainder of this reply), but if you have the rental properties this would be something to seriously consider. They can be pretty time consuming and make your schedule less flexible sometimes (even if you have a property manager) which could potentially put a damper on your lifestyle and business prospects over time. As far as specific advice I'm not sure how much I'll be able to give since I know very little about your situation. And like with most personal financial decisions it will really depend on your specific situation, the lifestyle you want to lead once you leave the workforce, and (in this case) your outlook on the asset classes. Let me explain. Stability: There are some people who are going to retire with little wiggle room in their budget (at least based on the math behind the 4% rule). This can be pretty dangerous especially if your investments take serious hits right after you retire. In this situation, some additional income stability can be a godsend. The pension will certainly help tremendously with income stability, but a similar thing could be said about rental income from real estate holdings (especially once they are fully paid off!). There may be some months where you're in between tenants and don't receive an income, but for the most part, you shouldn't be seeing swings in your income like you would see in the valuations of your stock portfolio. Given that you said your business may take 3+ years to stabilize it is possible that keeping that real estate so that you can reap the benefits of that additional stable income would be well worth it. But if you have a good amount of breathing room (which wouldn't surprise me as it sounds like you're well on your way to becoming a millionaire!) then you may be comfortable with a portfolio comprised mostly of stable stocks even with the business venture on the horizon. This is obviously assuming that the costs associated with the business venture are figured into your expenses to start out in retirement. Again I can't really give any specific advice as I just don't know enough about you or your situation but this may be something worth considering. Outlook: Another thing worth considering is your outlook. Your outlook on the investment classes themselves is such an underrated aspect to consider when entering retirement. If you are not very comfortable with the wild swings of the stock market (and yet still decide to have the vast majority of your nest egg tied up in it after leaving the workforce) it can create a lot of stress in your day-to-day life. In a worst-case scenario this could damage your quality of life so much that you find it difficult to enjoy your golden years much at all (or worse yet drive yourself into an early grave due to the stress). How likely something like that is to affect you is something only you can truly answer, but it is worth thinking about. Lifestyle: Also, lifestyle is obviously going to play a key role in your ultimate decision. Like I said at the top of this reply some investments simply take more time and effort (and possibly money) to maintain than others. Sometimes this is perfectly fine. After all, there are many people who do genuinely love real estate (toilets and all!). However, if you're not one of those people you'll have to ask yourself whether it's worth it to maintain those types of investments that are a drag on your lifestyle (even if they come with some monetary perks). I know this was a bit all-over-the-place, but I hope you found some of it relevant. Thanks for the comment and feedback about the potential future video idea!

@@NextLevelLife I plan on working the touring company "full" time. (6 to 8 hours per day) but it will in no way replace our current incomes. Our plan is to relocate to Spain as that is where my wife and step children are from so no, the tours will not be taking place where my properties are which are in Canada. I am leaning towards liquidation so we can focus on the touring company but they do cash flow well but would they would be be near impossible to self manage, so I may have to hire professionals which would not be the end of the world but yes, you are correct, they can be a pain. Both my wife and I are low maintenance and we value freedom and experiences more than material things but I do want to have the piece of mind of having secure and stable investments that provide passive income that at least keep up with inflation and ultimately provide an annual $40,000 a year income which according to my calcs at 4%, we would need a million in investments. Thanks so much as any insight, ideas and thoughts are truly appreciated!

I agree with Sean Rank I would love to see more geared for folks in their 40s who started to invest and how coast FI works in that age group. I would appreciate you running some of the same scenarios you described in this video but for an older person

That's a thought that's been occurring to me quite a lot recently. I've been considering doing an examination of things like the 4% rule while also taking into account things like large emergency funds & retirement side hustles/passive income. I think it would be interesting to see how much of a difference they make in various conditions Also, love where your head is at with the passive income strategy :)

An excellent plan!

Glad it was helpful!

Well done, Clayton!

Decide how much you would like to spend per month (let's say example $5000). Multiply that by 12 months per year. ($5000 x 12 = $60,000). Then assume a reasonable interest rate, 4%. ($60,000/0.4 = 1.5 million). So you would need 1.5 million for retirement. Now, I put 1.5M into an investment calculator (like www.calculator.net/investment-calculator.html) and start playing with the numbers. If you have zero to start with and you put away $4000 a month, you can get to 1.5M in 20 years. If you put away $10,000 a month, it will only take 10 years. P.S. I am not a financial advisor. I hope this helps!

Same

But how to do it while remaining single? Unless you'll find someone who also doesn't want kids. I keep noticing this math assumes you're married, which is annoying for me.

@@occultninja4 I'm single. Now. Had a couple wives that weren't on the same page. I have more money being single than I ever had being married. You may not have the second income that a "couple" has, but you are the ONLY one with access to your checking account. :)

@@waynemiller6070 Yeah I get that vibe, that unless you find someone who shares your financial mindset, you're better off single, but if you're single, the lack of the second income screws up the math for FIRE, unless you work over 40 hours or have a really high paying job or hustle. But definitely, being single and only having your expenses and no other expenses is heavenly.

@@occultninja4 Well, of course it takes work. Sometimes a lot of work. But if you put in the time on the right things now, you will have all the time you want later. I would encourage you to not waste your productive time on unproductive activities. Good luck.

30K at 2% inflation becomes 67.6K after 42 years. so after 42 years thats $1.69M. 30K at 3% inflation becomes 104K after 42 years. so after 42 years thats $2.52M.

isn't that 7% inflation-adjusted?

@@Hellz69 Doesn't matter, you'll still want to figure out what you need to live off of in a few decades time by adjusting the amount you'd need today for expected inflation.

jerrymathewk he does say that but he doesn’t correct for it in the long term calculations.

He already adjusted for inflation, i.e. he is assuming 9% return before inflation so the actual nest egg will be much more than 750k

I'd say that if you can't do the very basic math required for your case, then you probably should not look into this type of financial plan and get help!

Just set the salary you want to live off of. Then use the formula: $XX, XXX/0.04 which will give you the total amount of money you need saved to get that. Then go and play around with an online compound interest calculator to help you figure out how much time and money is needed to reach that goal. For example if you put away around 39000 dollars a year for 10 years, you could then live off of 26000 dollars till you die, or you could keep working and in another 10 years (20yrs total) you could live off of 72000 dollars till you die. By then that maybe 50-59yrs of age. But had you retired 10 yrs earlier and withdrew 26000 every year youd still retire with over a million dollars. Of course I made a ton of assumptions, like youd get a consistent 10% return, and I didnt adjust for inflation, but I also assumed youd put the same amount of money away and that youd make the same amount each year. If you want to learn more I suggest you check out 'monkeynomics101' by TFM (turd flinging monkey). He took his channel on youtube down but youll find it, its i think a 2hr long video but you need only watch the first 15 or so minutes where he teaches how to retire in the 1% on a limited salary, the rule of 72 and he also accounts for people starting in their 30s. Cheers

Keep reading, watching, and learning until it makes sense. You will be glad you did, I promise!

@K Jhnsn Not so basic in the real world.While it is definitely basic,its just that people dont know,that explains why Eric feels this way.

No problem :)

Why the long face? Did you time the market or go lump sum in a bad time?

@@Bigboss-xe6lm No, I didn’t market time, but the money I made prior to 2000 didn’t see any net growth until 2012 (check an S&P500 chart). So I’m just saying that the video’s premise that you can save early and then just cruise is questionable, because there may be an entire decade “lost” to no growth.

A quick look with the Portfolio Visualizer says $10k in the S&P 500 in 2000 would only be $13,599 in 2012. :(

However the returns since that time have been absolutely phenomenal. As long as you have a long time horizon, none of that matters.

@@BardWannabe So? The last 10 year more than made up for it. Thats how market works and thats why we should invest long time. Because there are periods where nothing happens and then there are periods like few last year where the maret skyrockets. There is nothing to be careful about, if you know this and have the right expectations.

A lot of people do that :)

Well the average cost of a child from 0-18 is about 230-250k

for FIRE to work. you need a decent to high income to start with. it wont workk if u barely making in life

The college tuition is just an MSRP. I'd suggest you head over to Choose FI podcast to learn more. One of the earlier episodes goes over this.

This would actually be the best time to invest in capital gains, provided that you don't need the money invested in the next 10years. The market is at a discount and if your overall strategy is market growth....this is the best time to invest. Now if you need money for living and did not give yourself a cushion where you have to sell assets to meet your expenses...this is where you are going to have a big issue

You only invest the money you don't need now. If you set your investment target to 10-15 years, this is the best time to invest. Learning how long term investing works makes it much less stressful.

@@MrKelzos No one can predict the future. Some investors will learn that the hard way.

@@rootstone9883 No one can predict the future. Some investors will learn that the hard way.

Having your money do nothing, or sit in a high interest bank account is even more risky. Because your money is losing value due to inflation every year. around 2-3% a year.

I feel it largely depends on what you're trying to achieve. There's numerous reasons to go with either choice. Part of paying off the home early is about risk management as you don't need to have as large of an emergency fund when you have no payments (which is even more important once you are retired or if the economy crashes and you lose your ability to earn an income for a while). Another is about keeping your burn rate low (to either get more out of your income in retirement, invest more month to month during your working years [which depending on your situation could help to make up for the different in yields between the debts and market returns], or achieve financial independence quicker [based on the math behind the 4% rule]). Still others view the guaranteed return of paying off the debt outweighs the potential excess returns of investing in the market. Sure 7% is pretty achievable over the long-term when investing, but over the course of a year (or even a few) 7% may be an overly optimistic or pessimistic assumption. Again it all depends on what you value and what you are trying to achieve. Thanks for sharing your thoughts!

Would you go borrow money at 4% interest rate to invest and hope for a 7% return? On paper yes, but in practice no because you'd consider the risk.

Looks good on paper, does not work in real life, paid off home is a must

You can get a PhD at any age, but you can’t get compounding / time in the market back ever. I want a PhD but value freedom way more.

Taxes take a small chunk, but not necessarily that much. If you're living on 30k/yr then your marginal tax rate is extremely low. Additionally some of what you withdraw is tax free (e.g. TFSA in Canada, IRA in the USA, original principle in any margin account).

Actually there are several ways to access that money early but there's only so much that can be covered in a single video :)

The fire community use it to explain the consept. I never mez someone on the internet using the rule. People go safe and use at least 3.5% instead

4% rule is just a target. People who save most of their income don't suddenly switch and start spend money like a drunken sailor.

My wife and I are not doing any rules. We are building investments to have $15,000 per month with out W2 jobs and after normal bills are paid.

@@SmithFam2323 what the.. 😂 in which currency, lol What can you possibly need 15k for *after* your bills are paid

@@angelikalaser7778 Dat yacht maintenance ain't cheap

$750,000 is what they need when using the 4% rule. 4% of 750,000 is 30,000. they can’t use 7% a year because of inflation (2%) and a buffer 1% for years the market doesn’t go up 7%

I think you got it wrong love. He said if you invest (at 25 y/o) 30K per year for 3 years, 9 months at an average of 7% return, you would have $122,000 by the age of 28/29. If you were to then STOP investing any more money but simply let that $122K compound, by the age of 55 (goal retirement age), at a rate of return of 7%, your portfolio would have naturally grown to $750K, so you would be FI and able to withdraw 4% (30K) to live comfortably. The point he was making is that it would only take just under 4 years of investing, then you can stop and simply ‘coast’ to retirement by watching your investments grow. ALSO, the proposed 7% was adjusted for inflation so ideally he’s basing it on the money having the same purchasing power 30 years from now. Hope you understand! Xx

If you pay attention to the calculation of the annual return for the investments the inflation is already factored in. The average return of the S&P 500 is 9-10% but the video factored in inflation and put it at 7% instead.

Part of the planning is fracturing in inflation.

It all depends. Sure you'd put away money if you can, but the point is that you can now afford to take a job that you may enjoy more, but that doesn't pay enough to have anything left over after your expenses, so you CAN'T put any more money aside. I hit coast fire a few years ago. I switched to a much lower paying job that I enjoy a lot more than my previous one, I am still putting some money away for retirement, but not nearly as much as I was able to at my last job. Mostly my retirement fund is growing itself based on the returns on the investments. My current target for "full" retirement is about 10 years from now, though honestly I could probably afford to do so almost any time now depending on the lifestyle I want in retirement. That said, I also enjoy my new job enough that I don't really have any pressing need to stop doing it, and I find it quite fulfilling, another thing humans actually need in their lives.

Or, you could live in a country where health insurance just isn't needed. Like every other advanced economy in the world other than the USA.

I am not sure where you are getting $1300 from. If a married couple made 60k a year they could save 30k tax free in a 401k. That would leave 2200 for living expenses which is possible to live on in some parts of the country. In others it doesn't cover rent. Ultimately you choose how much taxes you want to pay by the property you choose to live in.

Not everyone aspires to be a "real businessman". Some people aspire to enjoy life.

@@Green__one These people are the same people who never get anywhere in life

@@seifeltohamy define "get anywhere". I am enjoying life with a fully paid off house and car, a beautiful family, as much free time as I want, and a career I find very fulfilling. Compared to anyone else I know who are climbing the corporate ladder I'd say I'm "somewhere"and with less stress and more enjoyment.

@@Green__one I'm not talking about climbing the corporate ladder I'm talking about being the ladder itself, it's not just about the house you live it's also about the second or third house you go on holiday in? It's not about having a car to get you from point A to point B it's about constantly selling what you have to upgrade to a newer car every couple of years and finally it is about being able to afford the latest medical care and do get the best doctors and much more

@@seifeltohamy no point in having 3 houses, but no time to visit them. I already have the best car ever made, and in any civilized country you don't need more money to get better medical care. He who dies with the most toys still dies. Might as well have fun along the way, and you don't get that dying behind your office desk.

he stated after inflation

@@arkinrahl That is a pretty unreasonable after inflation return.

@@blackdahliastudios263 No, not really. The S&P 500 index returned around 10 percent annually.

How are you living on that much? Are you in a safe area or rural area? Are you south, mid west? North east, north west? Do you have your own business, or kids? Does your spouse work?

@@Bigboss-xe6lm That's since inception.

Jon B as long as they keep their money in, they will overall get 7% or more I think.

So what? If the time frame is in decades what does one or two 50% drop mean? Or do you not understand how averages work?

@@rootstone9883 Ummmmm ... there are people who don't have decades. And yes, I personally am out of this market in T-Bonds now. My cash flow is still from my R/E, although who knows how long until tenants have difficulty paying their rent. It is a mess now. Personally I out of stocks until a vaccine announced.

@@jonb3189 If the volatility of stock market is too much, then don't invest in to stocks. The 7% talked about in this video is an annualized average of a 10 year investment. It is very likely that, that period has a stock crash in it. If you don't have a decade in you, then this video is probably not meant for you. Nothing really wrong with that, financial plans should be tailored to ones specific situation.

Keep grinding bro, just remember theres millions out there that also hate their job, thats what keeps me going.

Well, at least you have a definitive date when the payments stop, unlike lifelong alimony.

Most of inflation is in the housing market

2:58 He mentions it is savings adjusted for inflation

It is annually.

Yea, true be told, these videos are really aimed at high value viewers. That said however, the basics are still very good, and the advice worth following. I am on less than half the assumed income, and worked my entire life only wishing this kind of info was available when I was a young lad. Thankfully though, I am still young enough to have had enough of a working life remaining to put some of the advice to good use so that I am now a few years from retirement and only want to work 2 days a week in my 60s, and not full time like my colleagues.

Heith Miller my house hold has several sources of income not including the stock market. I am shooting for $15000 per month after bills. With something like that we would be able to still put away a ton of cash to invest. The key is have cash flow for life. Get that done and you don’t need to worry about %.

Every single point you are making is missing the mark by a mile. The 7% is an average annual return over a 10 year period, hence it also calculates the market crashes. This isn't a get rich fast scheme, quite the opposite. The 7% comes from the S&P 500 index, which 9-10% annually minus 2-3% inflation. The 30 000 per year savings is for the couple so 15k/person. That is very doable. Also it's not his model. This model has been around for quite some time. Nowhere does it say that they have to let someone else manage their money. For an average person it is much better to just invest in passive index funds on monthly basis and not touch it for a decade. Your 300% investment is very nice, but it doesn't mean anything if it only represents 1% of your entire portfolio. It's all about context.

Back door Roth IRA - tax free.