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Comment by Zaak | Hacker News Reader

I agree with you. For example, if I had 100 times my current yearly income in savings/investments/etc, I could live my current lifestyle indefinitely (barring eg, a market crash) because even with zero interest, the money would last 100 years, and with minimal effort (ie index funds) the money would grow over the long term at a rate greater than 1%.

Of course, that would require persisting in my current lifestyle in the face of a massive increase in wealth, which takes nontrivial self-discipline.

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Look up the 4% rule and firecalc.com to learn how this 100x multiple is a lot less, more like 25x realistically.

A lot of people are irrationally intolerant of risk. Try not to let fear dominate your intuition about investing.

That 4% is empirically derived from data covering the 20th century and is appropriate for earlyish retirement. There's two reasons to be more conservative:

1) We may be in a low-yield world for a long time.

2) Those studies were based on earlier retirement, not on people leaving the workforce in their 20s and 30s, the way that some very lucky HN readers may do.

To follow up with your first point, there's been some analysis suggesting that financial markets today are more efficient than they were in the 20th century, which means that price discovery happens more quickly. Historically, the markets returned 8-10% for people invested in indices. I've heard that the market returns today are closer to 3-4%, so even with FIRE you'd realistically need to budget for 1-2% to accommodate for market fluctuations.

I'm not sure that the cited figure of 3-4% return today is truly representative of recent years.

For example, for the popular pick VTSAX (Vanguard's Total Stock Market Index Fund), if you look at the average total return % for recent windows of time:

- YTD: 16.23%

- 1-Year: 4.43%

- 3-Year: 13.28%

- 5-Year: 9.97%

- 10-Year: 14.15%

- 15-Year: 8.91%

The 1-year number is just skewed by the late 2018 market correction in the short term.

Source: https://www.morningstar.com/funds/xnas/vtsax/betaquote.html

Although on the flip side, the number also assumes you have no flexibility and don't change your spending according to how much you have left.

It's a tricky one to work out, and 4% is (as you say) definitely not a number you can easily use for retiring in your 30s.

Definitely. If you're willing to constrain consumption when required and work again if you have to, things change. Especially if you continue to work just enough in your professional field during early retirement that you can go back to earning an appreciable fraction of your previous earnings on a temporary basis if/when required.

> Of course, that would require persisting in my current lifestyle in the face of a massive increase in wealth, which takes nontrivial self-discipline.

And you must maintain that self-discipline in a world where you are constantly bombarded with messages to "spoil yourself" because "you're worth it" and "you can afford it". It's not easy.

Also, you better never have children.

In my case, my current income provides a comfortable lifestyle for my family of five. But yes, if you have kids, your expenses are definitely going to go up.

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