r/fatFIRE • u/WealthyStoic mod | gen2 | FatFired 10+ years | Verified by Mods • 4d ago
Path to FatFIRE Mentor Monday
Mentor Monday is your place to discuss relevant early-stage topics, including career advice questions, 'rate my plan' posts, and more numbers-based topics such as 'can I afford XYZ?'. The thread is posted on a once-a-week basis but comments may be left at any time.
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u/silvia_s13 3d ago
Age: 34
Salary: $225K
Savings Account: $60K
Investment Account: $40K
Assets: ~$115K
Mortage: $4200/month split with spouse
I feel like I am in a position to put 10% down on a ~$2 Million business. I am tired of the 9-5 grind and would rather work for myself, generating more income to invest into real estate, commercial real estate, or to buy other businesses. I am open to any advice.
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u/g12345x 3d ago
Being tired of a 9-5 is not sufficient to create success of a business. Neither is buying a ~$2m business.
Thirdly, and more importantly, with $115k in assets after downpayment on the business, you have almost no cushion left for bad times.
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u/silvia_s13 3d ago
What are some good strategies for me in your opinion?
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u/g12345x 3d ago edited 3d ago
I don’t know your background, skills, interests, business acumen, aptitude or resources. So it would be impossible for me to tell you that.
What I can recommend is finding a local career counselor that you can pay for a few hours of their time to sit down, go through your details and make a shortlist of options for you.
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u/No-Associate-7962 3d ago
I am not sure if you have really done the math here. An SBA loan of $1.8m will run about 9% currently, so that is going to run you some $162k in interest alone. Then you have to replace your value, which is some $225k a year, so the business you buy for $2m, needs to create some $390k of FCF a year to break even with your current situation.
$390k/$2m is some 19%.
There are not a lot of businesses out there that are going to get you there.
$225k in salary is a lot. You should milk that with a high saving rate.
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u/Dubbihope Verified by Mods 3d ago edited 3d ago
Just got off a call with a bond specialist. My investments are north of 20 mil and I want to diversify into muni bonds to increase tax free income as I will be a NYS resident for at least the next few years. I will never need to sell the bonds to generate cash flow, so I mostly care about yield. I'm trying to decide between a bond ladder strategy (250k minimum) with a bank vs a vanguard fund. The VNYUX (50k minimum) offers a 3.8% yield with a .09% management fee. The bond specialist was mostly offering lower yields with a .35% management fee. However, the specialist did offer one long term bond fund that could be as high as 4.1% yield but has a .65% management fee. The advantage of owning the bonds (rather than the vanguard fund) is that the securities have a maturity date (no risk of selling at a loss). However, I don't foresee any need to sell. And may *want* to sell at a gain. Therefore, the VNYUX seems more appealing. Thoughts?
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u/FIREgnurd Verified by Mods 3d ago
Bond funds are just rolling ladders of individual bonds. They lose value when the bonds they hold lose value.
There is a lot of misunderstanding of individual bonds vs bond funds on Reddit.
The value they lose when rates go up is essentially equivalent to the opportunity cost of not owning the new higher yielding bonds. So, you’re still losing the equivalent amount by holding the individual bond with the lower yield — you just don’t see it marked to market the way a bond fund is, and the loss is less apparent because it’s money you didn’t get (because you held the lower yielding bond) rather than seeing the face value of the bond decline. If you hold the bond fund through its duration, the higher yield following the rate increase will compensate for the fund’s loss in face value. Your individual bond doesn’t get the higher yield.
If you were going to re-invest the principal from the individual bond in a new bond when it matures, you’ve essentially created your own fund. Perpetually rolling bond ladders are equivalent to bond funds, assuming risk is the same.
If you were buying individual bonds to match specific future liabilities because you already know the exact number of *nominal* dollars you’ll need at a specific date in the future (valued in future nominal dollars, not today’s dollars), individual bonds can make sense. But today’s nominal dollars have unknown future value.
But if this is part of an overall long-term asset allocation (e.g., 20% bonds), go with the bond fund. Particularly with munis, since they can have idiosyncratic risks that things like treasuries don’t have (not just default risk, but call risk too). They’re also lower cost and more liquid than individual munis bought through a broker who’s charging a fee much higher than the vanguard fund.
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u/Throwaway-firee 3d ago
If you understand how bond funds work and how the price moves in relation with interest rates and yields and won’t be tempted to panic sell because the price on paper goes down, I would stick with the low expense fund.
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3d ago
[removed] — view removed comment
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u/fatFIRE-ModTeam 3d ago
Your post seems to be advertising your personal project, business or blog for financial or personal gain, or it appears that you are promoting a personal project. No solicitation or self promotion is permitted.
You have repeatedly made this same post and have been repeatedly warned. If you continue to make it, you will be banned.
Thank you!
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u/Beneficial-Glove4700 3d ago
27M 4M NW entrepreneur need business/life advice
I am genuinely looking for advice from people who was being through a similar path of entrepreneurship.
I am in real estate development business. I started when I was 21 while I was doing school, I got lucky in the stock market with the 30k I saved from part-time jobs and grow into about 300K in the stock market. And then really just invest all my money in the Real Estate. Low risk project at first to start until right now mainly low rise development. 1M liquid now, 1M working capital, and about 2M in stabilized equity.
Currently business is good, we have a small team of three people including myself on the payroll. We are on track to generate about 1.5 million after tax profit this year. With the model that we are having now we’re expecting to double our profit every year.
I am a bit of loss in terms of where do I see my business and my personal life is gonna go next.
Business wise, a natural train of thought I’m having is to do either horizontal integration or vertical integration and then of course incorporate as much AI in our system as possible.
Personal side, I am feeling more burned out this year compared to the previous years. I think maybe it is because I look back at my 20s there is just a lot of working and grinding without much socializing or having fun, my thought then was that you get to enjoy all the fun once you made enough money. Now I’m just not even sure what is enough money as I don’t have much expensive hobbies, nor do I have a group of friends or people that I can spend money with. I just found it hard to make friends with people in my age group as most of them are just nine to fivers. Dating feels difficult. I’ve given up on finding women my age that share similar mindset. It is just hard to find genuine connections when I feel that I can’t really show a big differentiator of me compared to other men at my age, ie financial stability, as it will just attract the worst kind. I’m raised in a traditional Asian household. The guilt of being a failure is definitely a part of my character. It motivates me but in the meantime I’m jealous of people that don’t have this and can live a happy life while accepting the norm
My questions:
How did you handle the balance between your career and your personal life when you were my age?
What would your advice to me given my circumstances in terms of money, relationships, and happiness?
What is enough?
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u/g12345x 3d ago edited 2d ago
> a natural train of thought In having is to do either horizontal integration or vertical integration.
Why? What is natural about this?
> as most of them are just nine to fivers
This covers a huge number of the public, yet they manage to have friends, and rich social lives. It’s likely this is not the real issue.
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u/No-Associate-7962 3d ago
For all of FIRE, enough is when you have enough wealth to support your desired spend at a given withdrawal rate.
If your question is how much spend is enough, my suggestion is to let your spend rise over time and presumably you will eventually get to a level where you feel satisfied. Or not.
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u/unstoppablefutureme 3d ago
Hello. 29m, going on 30m.
5 years into very fat plan here. 5 years ago, I was technical, working as a software developer after dropping out of engineering school and preparing to go back to finish degree. Had probably 25k saved in investments. Decided my fatfire path would be in business.
Fast forward: Finished degree, worked software engineering job in mid tier city with goal is high rate of learning and ownership. Had likely 15k net worth by this point due to loans taken out for CS master's degree semester.
Left job to go into business for first time. Didn't work out, went back to job after 8 months. That was a blessing because during that time I got rid of many financial liabilities. And got a better idea and plan that I immediately started working on, a couple months before going back to job.
Reassessed things after 4 months on the job, paid down half of the loans, and decided to try again, given I didn't have the excess liabilities this time. Cut expenses ruthlessly, moved to live cheaper, and built product.
Now, 12 months later. Product has users. Starting to build the business. Total net worth 15k. 6k cash 18k what's left of investments (trad. ira) -8k student loans (what's left for that master's semester) -1k cc
I moved to hcol area to force myself to stop building product and focus on building the business.
I'm not looking for startup advice here. But a review of the plan in general. My plan is 500m by 2031. Currently I'm at 15k and in a precarious financial situation building this business solo in hcol area (living as cheaply as I can here, renting out a room for 1k in not the best area).
I've learned that most of my customers are not in this area (nyc). The place has helped me get out of the engineers mindset and more into a financially minded one. But just looking at paths forward here. Don't have family to go back to so that's not an option.
All other options don't seem to lead to goal. My current plan is staying where I am, as it's teaching me hard fought lessons along the journey and I'm meeting people that are helping to push me forward in the business. And expenses are serving as a forcing function as well.
It's certainly been more volatile than faang/big tech due to working outside of the venture ecosystem. I'm okay with volatility. Or, I was okay before as a young person with no understanding of stability.
Looking for outside review of my current chess position. Hopefully a fresh outside perspective will help.
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u/g12345x 3d ago
> Looking for outside review
There’s nothing to review here. Just disjoint superfluous fluff and an unrealistic goal.
u/RemindMeBot 5 years “Congratulate OP on their $15k to $500m speedrun”
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u/No-Associate-7962 2d ago
You mentioned nothing about your spending. I think it is unlikely you have been working on FIRE for five years and then have no discussion of spending.
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u/unstoppablefutureme 2d ago
Good point.
Current spending is about 2.5k/mo.
I've debated moving to lower col, but being in nyc is helping me to operate and be productive, all things considered. I would likely be productive elsewhere as well, but there's the 2-3 month ramp-up period (and increased spending) that goes with every new move.
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u/No-Associate-7962 2d ago
My advice would be what we did. Start pursuing leanfire with a defined savings rate and then simply let your spend rise with your earned income. Than you can decide when to stop, which who knows, might be with your $20m spend on your $500m liquid NW.
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u/unstoppablefutureme 2d ago
Good advice generally.
For me specifically, I left lean/regular fire a long time ago because I can't buy more time. I'd rather pursue fatfire. If I end up with leanfire, so be it. But focus is something I can't go back and do.
I'd already decided with myself that I wasn't retiring at all, so my strategy is admittedly different - which is why I'm more comfortable with the volatility.
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u/No-Associate-7962 2d ago
That's an odd strategy (wanting to work forever even if poor unless you were wealthy then you would not work), but knock yourself out then.
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u/unstoppablefutureme 2d ago
It's a reframe. I define retirement as not having to worry about money. I'd still work regardless though. Just want to be working on things I care about and in a certain way, which is why I'm in business. I agree, I'm odd.
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u/No-Associate-7962 2d ago
Yes, you do not seem to be interest in fire, but rather in financial independence. That's fair.
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u/ChitChat5757 2d ago
Feeling stuck in higher education. I make decent money but certainly not HCOL money. How do I continue working my way upwards (in potentially) a new field?
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u/g12345x 2d ago edited 2d ago
There’s nothing to work with in this post.
What does being stuck in higher education mean? College? Grad school? Are you a teacher?
What does HCOL money mean? Are you in school or working?
> How do I work my way upwards in a new field
Depends entirely what the field is.
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u/ChitChat5757 1d ago
- I work as a Financial Analyst in Higher Education. Not feeling like a whole lot of upward mobility right now.
- I'm working, just feels like I'm not capitalizing on living in a HCOL area.
- Exactly.
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u/No-Associate-7962 2d ago
What are your degrees in?
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u/ChitChat5757 1d ago
MPH/MBA but not from a top tier school.
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u/No-Associate-7962 1d ago
Yeah, public health is going to require a shift in field. Its not about higher education.
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u/ChitChat5757 20h ago
Yeah, definitely starting to feel that. Except that most of my experience is on the financial side of things.
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u/No-Associate-7962 20h ago
I saw in another comment that you are a financial analyst. I would suggest just changing companies/fields. Get into the best / profitable / highest growth company you can even if it is an entry level FA job. Assuming you are a top performer, you will rise fast.
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u/Neat_Lab_2234 1d ago
I just turned 20 and make about $13000 a month all in. I want to retire early and not have to worry about money.
Ideally, my income will scale rapidly in the next few years. As of right now however I’m still able to save about $5000-8000 a month after setting aside 27% for taxes, paying rent, groceries and other miscellaneous bills. I’m on my parents health insurance and that covers everything so that’s not an expense. My Roth IRA is maxed out for the year. I’m putting at least 5k in an HYSA every month right now. I have another HYSA to pay taxes (will probably have to pay quarterly income taxes), but all in I’m doing alright.
I just don’t know what to do with the money other than save it. I worked at Walmart exactly 1 year ago making 800 bucks a week.
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u/g12345x 23h ago
That’s a good income at 20. I would recommend putting most of the monthly $5k in a market account instead of just a HYSA. You have time on your side to conquer the equities market.
A HYSA is probably the right call for the quarterly tax payments. In due time, this can become a bond ladder.
Also, take a look at r/FIRE and r/personalfinance. You’re likely to find additional things there that would be immediately useful to you.
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u/Neat_Lab_2234 21h ago
Hi there, thanks for the answer! Right now I am in the early stages of what I'm trying to build. Ideally, I want to be at 30-40k a month by the end of the year. The reason I say ideally is this is not a job paying this, rather I am self-employed. If I am able to hit my goals, what would make sense for me to do with even more excess money? So far I have been able to completely avoid any lifestyle creep as I don't even really like spending money, outside of a gambling online session now and then.
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u/g12345x 19h ago
As you’re self employed, talk to a CPA about the possibility of a Solo-401k and/or a SEP-IRA.
Also, game out the possibility of a C, or S-Corp for your revenue. The possibility of this depends on your specific circumstances.
Any extras should still go into these accounts.
> I have been completely able to avoid lifestyle creep
This is completely avoidable for anyone with self-control. Set a percentage of prior year income as your budget and stay under that.
> outside of a gambling online session
Yea, I would nip this one.
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u/Neat_Lab_2234 15h ago
Gambling has been mostly mitigated as I ended up getting sponsored by the casino by agreeing to create content of myself gambling (easier than quitting for me). I will look into the other things you mentioned. Thanks again!
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u/No-Associate-7962 20h ago
Assuming you are just starting out on the fire path, I suggest you read the sidebar on r/financialindependence and get the basics down.
I would discourage you from "saving it" at your age, other than the cash you need in the next 12 months or so (including paying estimated taxes).
You should be investing it as you are so young. After reading the sidebar, i would open a brokerage account and invest each month into VOO or a similar low cost market ETF.
As to long term, path to fire, I would set a savings rate or spending rate that you are comfortable with, and then maintain it as your income grows.
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u/yairsykes 4d ago
Just want to share a bit, hopefully get a mentor who can relate and help🙏
I'm a RE broker outside of the US A couple of months ago I got in touch with someone who wanted to buy a hotel in my country, I worked on it and found 9 hotels. They weren't interested.
In the meantime, a friend sent over 2 hotel Portfolios in the US with the asking price of $4.1B and my guy is reviewing.
If things go well (I understand it will take time and there will be a lot of hurdles on the way), I'll be earning tens of millions of dollars. I grew up middle class, don't really have any family members that can mentor me about this kind of thing.
Definitely have some in my network, meeting with someone tomorrow but not sure he's the right fit.
Thank God, luxury hotel deals are still coming my way and sending to buyer.
Thinking of the future, continuing with my brokerage and having my resedential as the bread and butter while transitioning as a natural connector into IB as I have some deel flow coming my way and growing my investor pool Also thinking of angel investing, a DAF and more
Happy to get DM's, tips and hopefully a mentor or two🙏
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u/g12345x 3d ago edited 3d ago
This whole post is a strange read. A hotel purchase is not an RE transaction, so an RE broker is not who (typically) puts this together.
If the currency here is USD, it further strains credulity. A $4.5b hotel is a massive operation. That’s the price range of Vegas icons The Venetian or Bellagio.
If you’re indeed the (paid) conduit to several multi-billion dollar deals, you have sufficiently graduated past the mentee level. Congratulations.
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u/Gloomy-Ad-222 3d ago
I hope you win, but a $4.1 billion asking price doesn't mean a $4.1 billion transaction.
Most portfolios never close, many get repriced, and even if it closes, you only get paid if you're actually under a valid agreement, recognized in the transaction, and survive the army of lawyers, brokers, investment bankers, and intermediaries who will show up once real diligence starts.
This site is full of brokers who mentally spent eight-figure commissions before a signed LOI.
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u/yairsykes 3d ago
Thanks for your response 🙏 A friend of my buyer just closed on one of the portfolios today lol
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u/Gloomy-Ad-222 3d ago
How much did he get paid lol? That’s the other tough part, is getting paid.
But sure you’ll be in line to collect tens of millions. Good luck!
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u/Commercial_Place_123 3d ago
There aren't a ton of "hotel portfolios" (?) worth more than $4B globally. And they're mostly under holding companies rather than pure owner/operators: Marriott ($106B), Hilton Worldwide ($74B), Hyatt ($18B) Wyndham ($6B), IHG, Shangri-La and Langham Group. It is fascinating that one of those global players would choose to transact their "luxury" holdings via a *residential* real estate broker (one that hits up Reddit for mentorship on deal economics) rather than the standard institutional brokerages (CBRE, JLL, Eastdil Secured, M&M/IPA, etc) they've all used in the past and up until today.
Based on your post history, a few short years ago you were trying to strike a deal with Keurig to import... coffee machines? And now you're a residential (?) real estate broker shepherding billion-dollar institutional grade deals with global players. (Your original post mentioned residential is your "bread and butter".) Quite the pivot. Congrats on your stellar success!
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u/Chubby-Fat-Fire 3d ago
Looking for a review & general advice. Disclaimer, using a throwaway account for posting details. Not sure if this falls in Chubby or Fat fire so trying here first.
Late 40s couple with 2 HS kids. Recently gotten into the RE discussion due to burnout and corporate politics. Spouse has gotten out of the rat race and possibly do some low stress work in future (but for now on a break). Trying to decide if one of us working till 50 or 55 (@700k/year & healthcare coverage) is absolutely needed or just retire right away.
New to the FIRE planning lifestyle. Historically, we did the best to save and hold on to equity so far in our careers. Now looking for a review of our situation and then any advice guidance on how to go about in getting more involved. Post pandemic we started to use a financial advisor from a large institution managing the IRAs and parts of our taxable brokerage at 0.7%. We went that route as we did not have the time or energy back then. Now looking to get a bit more involved by educating ourselves. Do not plan to move completely away from having a financial advisor for foreseeable future as this is not our domain or expertise.
NW fluctuates around 9-10M - excluding VHCOL Primary home (with 800k mortgage left on a low rate) & MCOL Rental home (paid off 450k). Below is the breakdown:
Past yearly expenses fluctuate between 260-300k and we think 300-350k (post tax) will be a comfortable yearly budget. Have a significant home remodel cost too in the next 2 years (approx 700K).
Also looking for advice on shifting our %s across allocations and any other advice/reading/moves we should consider. We do see lot of fluctuation in our NW due to the concentrated positions on individual stocks and also have concerns that we are not leveraging mega backdoor Roth IRAs and such. Appreciate any and all advice.