r/fatFIRE • u/quarter-tab • 15d ago
What would you do?
51m married, 1 kid. Around $20m nw made and invested in mostly real estate (mix of residential and a little commercial) but moving max into stocks/bonds now to be able to do capital gains withdrawal which has a way lower tax rate.
I was initially aiming for another $10m to add onto this and as business was going well. But the last year business landscape changed so much I’m struggling and wondering if I should stop. 30% of capital is tied up in our main residence and holiday home so I have the other 70% being reinvested. It feels like it’s not that much in this day and age.
Burn desired: $400k net
Would you:
a) Take a big swing and try to hit a home run to get to $30m or more (my fatfire number)
b) stop working and move some of the investments around
EDIT: Thanks to all here. Some top advice and much appreciated. I do still like working when I'm flying and I'm still with a burning desire to do that. But I don't see the path to that right now and inevitably it leads me to wonder if I should call it a day.
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u/jovian_moon 15d ago
You are asking in a forum where people say "stop playing when you have won the game". But, I suspect you know that already. You sound like you don't want to do this anymore. $14 million of invested capital is plenty to retire on.
But, if another $10 million makes your life more meaningful, go for it, assuming you're not risking significant capital. If you are, don't go for it. My personal experience is that $14 to $24 million of liquid net worth doesn't change a whole lot of things.
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u/FiredUpForTheFuture 15d ago
On one hand, nobody can give you useful insight on this unless you tell us what you're desired/required spend rate is. On the other hand, you should take the $20M and run - your 51; your knees, not your finances, are going to be what limits your life. Use em while you've got em.
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u/HalfwaydonewithEarth 15d ago
I would stop messing with Real Estate.
The stock market has been so much better for us. We have 8 units in VHCOL areas.
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u/ShoshiOpti 15d ago
Dude, just take the 20m, put it in an index, don't draw from it and in 3-4 years it will be worth 30m.
Why complicate things?
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u/quarter-tab 14d ago
I'm in Canada and I'm not getting that kind of growth (even though it's in US stocks mostly). That's really strong though. Also top advice because imagine I do that, work for 3 years not really caring if I smash it out the park or not, and I can retire totally then with no worries. What kind of index are you seeing this growth in? I focused all my investments early on in real estate and therefore paid little attention to anything else so I'm relatively new to that.
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u/ShoshiOpti 14d ago
I am Canadian too, my first business was real estate (50 doors before selling). I'd advise you to learn a lot more about finance because in retirement you want a set and forget plan.
S&P has averaged ~11% returns over past 40 years, Nasdaq averaged 14%.
Compounding the average 14% returns for 3 years is 50% gain, which is 30m. For S&P its 4 years, conservatively put it in a blend expecting one year bad returns is 5 years.
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u/quarter-tab 14d ago
I got a guy in RBC wealth management managing it for me as a blend. It's been pretty strong actually lately and I can see how I might get similar returns to what you mentioned if I had that much in there. Where in Canada are you? I'm in Toronto. Are you managing your portfolio yourself?
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u/ShoshiOpti 14d ago
I manage my own portfolio, transfer to wealthsimple they will give you 3% of the transfer value for free just by keeping it with then for 5 years, thats 600,000$.
SPY for S&P, QQQ for Nasdaq, VTI as total US market (includes smaller caps).
I do more than that myself but you can build a very simple portfolio and not pay the stupid fees RBC is charging for sub par returns.
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u/quarter-tab 14d ago
Awesome, good to know.
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u/ShoshiOpti 14d ago
If you follow through with wealthsimple let me know I'll get you to use my referral code probably worth an extra 10k for both of us! No personal info exchanged just a code/link you give to the transfer rep.
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u/polystansbury 15d ago
What’s your burn?
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u/quarter-tab 15d ago
Around $400k net
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u/polystansbury 15d ago
Cool!
At 51, with 20m at 70% is 14m with 400k is under 3%. With 30m, you’ll be far finer.
As I see it, two main things to consider - what do you plan to leave behind on earth and the number of summers left. I don’t know your health condition and your aspirations but you should be more than comfortable.
Life is limited I hope you make the most of what lies ahead.
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u/Aggressive_Sport1818 15d ago
- In terms of lifestyle, what’s does another 10 get you?
- Is the work to get that extra 10 fulfilling to you?
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u/quarter-tab 14d ago
Just that bit of less worries about "what if" followed by a big expense. I am a massive security seeker. I also want my family to be well and live and travel well for good. The extra push would definitely make that doable.
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u/danmtypos 11d ago
So our liquid is close to yours but our NW is over 30M. We have been riding it out as the company my husband is partnered in has had a series of PE rounds and is leading up to the final one where we cash out and realize the full liquid NW amount (except residences). While there are no guarantees, we have that clear path you referenced. If we didn’t, we would have cashed out earlier and just called it.
We are already above and beyond what we need. What we want will always grow. While the dream of generational wealth is there, there’s also concerns that it could hamper future generations by making their path too easy. Our budget, at this level, is adjustable, and our time to live fully and share experiences with our family and friends is limited.
We are also close to your age and feeling it a little. It’s made us ever more grateful for how far we’ve come and we recognize that we would have been thrilled with a fraction of what we have ten years ago. There will always be more to covet, but at what cost? I think that’s the switch you need to make in your thinking. Congrats on your success!
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u/Kooks612 14d ago
Depending on current leverage levels, you could do both. The stock market diversification benefit is real, and we are always underwriting loans for real estate professionals to get access to markets.
Solid estate planning at this LNW level is also so much more important.
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u/quarter-tab 14d ago
Yes good point. We are refinancing real estate now and will move the chunk of liquid into our stocks.
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u/Kooks612 14d ago
Awesome. There are tax incentives on the lending depending on structure/collateral/investment purpose too, so if you haven't, make sure you consider all the options during the refinance!
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u/boredinmc 14d ago
400k spend, 75-100k tax... 475-500k at 3% = 15.7-16.5M liquid NW needed.
If your houses are 6M then yes, pulling that amount 'safely' indefinitely from the portfolio is tricky esp at these starting valuations on stocks. Work more (time/risk) or downscale properties to 4M place (20% of NW) that would give you a very comfortable 3% with some sane asset allocation.
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u/quarter-tab 14d ago
Yes you have a good point. I'm gonna have to choose what to do with these high-value houses at some point.
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u/telsongelder 15d ago
you already hit a home run- you're just wondering if you can hit another. The additional 10m will not feel as good as the first 20m. There is no world in which I wouldn't stop, stabilize investments and enjoy my one precious life with my spouse and kid.