Author Topic: Mindset  (Read 2924 times)

peaceypz

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Mindset
« on: December 06, 2019, 07:25:50 AM »
et me introduce myself, my name is Brian Zhang, turned 40 this year.  I had always work diligently to be financial independent (via real estate and stocks), however, I had never sat down and did the math about retiring early.  I recently got layoff, have the time to do the math and realized I don’t need to work if I chose not to. 

Currently, I am trying to optimize my investment portfolio which led me to look into Hedge Fund like Renaissance Tech which returns 39% annually from 1989 to 2019.  Talked to my advisor at Morgan and got the material to a fund of fund which charge 5% fee annually for admission which is a non-starter for me.  I am trying to find out if I can access these successful hedge funds directly.  My question is about mindset, although I don’t need more return, I am still trying to be even more financial secured, which could be counter initiative to F.I.R.E.  What’s your thought?  Appreciate your feedback.

Thank you.

Brian Zhang

sfpf

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Re: Mindset
« Reply #1 on: December 08, 2019, 11:24:24 PM »
Sorry to hear about your layoff but happy to hear you're in good financial shape. Glad you turned down that fund too because 5% fees sound like robbery. I'm personally not a fan of hedge fund investments/performance either, but that's just me. Congrats on having enough financial stability to be able to retire early if you choose to do so. It's hard to advise if FIRE is your best move without more info as there's a lot that goes into making that big of a decision. For example, are you single, married, divorced, have dependents or plan to, in good/fair/poor health, in a high cost of living area, how many years of living expenses do you have saved up, want to live very frugally or comfortably for the rest of your life, etc etc. Choosing to FIRE is a very personal decision since there are so many variables that go into it.

As for mindset, I think you're smart to want to feel more financially secured, especially since it seems like you weren't planning on retiring at your age but are just considering it now due to the unexpected layoff. I think a decision this big is one to take seriously. You could also explore part-time work or something less intensive than what you were doing to still bring in some income while having more flexibility and seeing how you adjust to fewer hours. And then go from there.

Sam

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Re: Mindset
« Reply #2 on: December 09, 2019, 10:27:28 AM »
I have a reader who works at Renaissance Tech. He gets to invest a portion of his salary/bonus in the fund, and it has done wonders for him the past 10 years.

The 5% front load is STEEP. But everybody is trying to clamor into that fund, and can't. Might be worth allocating a small percentage and see how it goes. Then again, with the S&P 500 up 25% YTD... I wonder how the fund is doing in comparison as it SHOULD underperform if it's hedging properly.
Regards,

Sam

peaceypz

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Re: Mindset
« Reply #3 on: December 14, 2019, 06:19:01 AM »
Sorry to hear about your layoff but happy to hear you're in good financial shape. Glad you turned down that fund too because 5% fees sound like robbery. I'm personally not a fan of hedge fund investments/performance either, but that's just me. Congrats on having enough financial stability to be able to retire early if you choose to do so. It's hard to advise if FIRE is your best move without more info as there's a lot that goes into making that big of a decision. For example, are you single, married, divorced, have dependents or plan to, in good/fair/poor health, in a high cost of living area, how many years of living expenses do you have saved up, want to live very frugally or comfortably for the rest of your life, etc etc. Choosing to FIRE is a very personal decision since there are so many variables that go into it.

As for mindset, I think you're smart to want to feel more financially secured, especially since it seems like you weren't planning on retiring at your age but are just considering it now due to the unexpected layoff. I think a decision this big is one to take seriously. You could also explore part-time work or something less intensive than what you were doing to still bring in some income while having more flexibility and seeing how you adjust to fewer hours. And then go from there.

Thank you sfpf.  Without going into all the detail math, my financial situation is relatively similar to Sam.  Assuming a 8% average annually return which can cover my family's annual expense, the pot should last in perpetuity.  You are correct, I probably won't retire since I need project here and there.  Currently I am looking into investing in Startups, I did one this year, I think of it as buying lottery because it's such a crapshoot.  However, it is really fun and there is that very very small chance of success (also under the assumption in a low interest rate environment for the foreseeable future, all asset class will be overvalued).  I treat it as fun money, about 1% of total asset.

peaceypz

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Re: Mindset
« Reply #4 on: December 14, 2019, 06:23:53 AM »
I have a reader who works at Renaissance Tech. He gets to invest a portion of his salary/bonus in the fund, and it has done wonders for him the past 10 years.

The 5% front load is STEEP. But everybody is trying to clamor into that fund, and can't. Might be worth allocating a small percentage and see how it goes. Then again, with the S&P 500 up 25% YTD... I wonder how the fund is doing in comparison as it SHOULD underperform if it's hedging properly.

Renaissance Tech I believe is a quant fund, not really a hedge fund, their aim I believe is to generate alpha daily.  I believe there should be affordable access to everyday investor similar to what John Bogle did with Mutual Fund at Vanguard.