~~Towards Barista FIRE~~

This will be a relatively short post, just to update on the transactions for the month. For the month of July, volatility continues to be the main theme in the world markets.  The persistently high inflation and FED's action seems to have a fading effect on markets as after the announcement of rate hike by yet another 75 basis points in July, the markets actually rallied (DJIA up 1.37%, S&P 500 up 2.62% and NASDAQ up 4.06%).  The main factor that drives the markets is the 2nd quarter earnings of the major companies.  This time round, it seems like investors are pricing in possible looming recession, as share prices of companies which missed expectations slightly did not undergo any major sell-off.  Any bright spots reported will instead see a slight jump in their share price!  For the month, the S&P 500, DJIA and NASDAQ were actually up by an astonishing 9.0%, 6.5% and 12.3% respectively, making July 2022 one of the best month! Closer to home, the Sing...

Vacay FIRE is something that I have been thinking about recently.  It may not be suitable for anyone or everyone out there, as it is a new type of FIRE that I conceptualize based on my personal lifestyle and experience (or treat it as I have nothing better to do, haha).  Personally, I categorize Vacay FIRE as a hybrid between Barista FIRE and Coast FIRE (continue to read on, feel free to share your views to agree or disagree).  So, what exactly is Vacay FIRE and how does it work? Vacay FIRE requires one to work and save up relatively hard in their twenties to thirties to pursue Coast FIRE.  During this period, individuals will build up a portfolio with a minimum size of SGD 400K (the more the merrier), that can be left to compound at an average rate of 4.5% annually for 25 years till full-retirement at 65 years old.  Meanwhile, in the forties and fifties, individuals can pursue Barista FIRE, where the part time job/ less stressful full time job will pay suffic...

The 4% Withdrawal Rule originated from the US, in a paper written and published by William Bengen in 1994.  He studied the returns on US portfolios (consisting of different compositions of stocks and bonds) beginning from 1928, to analyse if there was any withdrawal rule that would have ensured sufficient funds for retirees from their portfolios lasting beyond 25 years.  From his study, it concluded that the 4% withdrawal rule met the above criteria, provided 50% to 75% of the portfolio was invested in stocks, remainder being in bonds. In today's context, the 4% withdrawal rule involves accumulating an asset portfolio that is the size of 25 times the annual expenses during active years, and withdrawing 4% of the value of the accumulated assets yearly upon onset of retirement (adjusting for inflation yearly thereafter).  Even without other sources of income, the retirement funds will not be outlived. While the 4% rule is a reasonable place to start, it may not suit every ...

As we enter the month of July, the FED continues to be hawkish towards the raising of interest rates.  I am also adversely affected as closer to home, the mortgage rates in Singapore has risen with no ceiling in sight for the past year.  Since August 2021, 3-month sibor rates has increased more than 4.4 times from 0.43% to 1.91% in July 2022, while just within the past one month, we saw the steepest increase from 1.34% to 1.91%, an alarming 40% jump.  With this increase, one can't help but wonder when is the peak going to be? The whole situation is definitely aggravated by the newly released June CPI numbers in US, where inflation comes in at a red hot 9.1%!  This probably pushes the FED further into the corner, and I am no longer surprise if they intend to raise interest rates in July by 0.75%, or even by 1.0%!  When all seems doom and  gloom, one thing to note is the fact that this CPI data is backward looking.  The current ray of hope presents itse...

As mentioned above, market is back in turmoil.  US markets are looking directionless recently.  Three days up, two days down, especially with the earnings season for 2nd quarter and the FED's July decision for the interest rate back in the spotlight.  It is estimated that the results for most companies will not look good, especially Apple and Tesla.  Being the largest component in S&P 500, if Apple's results fail to meet expectations, it is definitely going to drag down the whole market.  Of course, how it really pans out remains to be seen.  Cryptocurrencies are crashing once again, causing many crypto-related companies to go under, such as Voyager Digital, which just filed for bankruptcy this morning.  Nearer to home, Banks and REITs are also fluctuating in a directionless manner.  Early in the week, their prices are redder by the day, but by the second half of the week, they have returned back to the green.  This just once again reinfo...