Passionate about effective giving and financial literacy. Early retiree (a la the FIRE movement). Member of Giving What We Can. Board Member for Effective Altruism Salt Lake City. Ex-commercial real estate cities researcher and economist. Outdoor enthusiast. Creator of Yield & Spread. We teach working adults how to manage and invest their money. All profits after operating costs go tot effective charities. Learn more at yieldandspread.org
First, I want to be clear I'm not an investment advisor.
But with that out of the way, I almost always lean towards the 3-fund portfolio. It's easy, low-cost, transparent, and leads to the least amount of speculation. My personal strategy is "set it and forget it". I rarely look at fund performance, I'm just playing the long game and investing in as many types of assets as possible that require minimal-to-zero effort on my part. With that said, I do tailor my 3-fund strategy to my specific financial situation - it's minimal tailoring, but I focus on my allocations (stocks vs. bonds broadly speaking) and the types of accounts I'm investing in (e.g. 401k vs. regular investment account).
If I am to question this strategy, it's in one of the legs of the 3-fund stool. I have no major qualms with investing in the index funds that represent the stock market (maybe some moral ones but generally speaking not really). Where I pause is with Bond Funds. Stocks are meant to support growth in your portfolio (and maybe dividend payouts). Bonds? Well what are they for? To perform well when stocks are down? To provide consistent cash payments? To stabilize your portfolio? Provide inflation protection? Total Bond funds like BND try to do all of this and as a result kind of do none of this.
So TLDR: I think it's worth considering a more tailored bond strategy that is specific to your financial situation, where as you probably don't need to be doing this with stocks.
With all that said, the more you tailor the more you speculate!
Thanks for posting this, @Dave Cortright 🔸 —and appreciate the Yield & Spread shoutout too! It’s been five years since I reached FI, and it’s given me such a solid foundation to shape a life that feels meaningful (or at least, I hope so!). So i'm glad to see when others find value in talking about it. If you're not thinking about FI, I think it's worthwhile. Here are some of it's superpowers.
@Lorenzo Buonanno🔸 you might like the work of Frank Vasquez from Risk Parity Radio. Don't let the lack of design aesthetic deter you :) He's made a lot of waves in the FI community pushing for alternative approaches to the 3-fund portfolio.
Hi Antonio - Just seeing your question now. You can check out a number of free and low-cost resources we have at yieldandspread.org. It's an EA-aligned nonprofit that teaches the ins and outs of financial independence and caters to people who want to give back. We have a Learn to Invest course (all proceeds go to high-impact charities) and a number of free resources that will help you make your plans for FI.
Since you're in Portugal, you'll have to adapt the concepts to your local country. When I did a search for FIRE bloggers in Portugal, it got bogged down by early retiree FIRE expats moving there (like Our Rich Journey and Delyanne the Money Coach). I found one person who early retired and is from Portugal - could be worth trying to connect and see what you get. Also consider exploring/posting here: https://www.reddit.com/r/EuropeFIRE/
Hey Jeremy - Thanks for commenting. Some of the simplicity comes from the fact that the user will have likely used a traditional FI calculator first. So there is a little learning bump if you have not! Else, there are descriptions of each input if you hover over their names. Here's some further explanation to your questions:
"Traditional retirement age" depends on where you live. In the US it's 65-67. This input is there to help with the calculations for Coast FI and to understand your wealth if you kept working until this age. It is not meant to be your retirement age goal if that's different than what's the traditional one.
"Passive Cashflow" is separate than your income - it's for things like additional income sources like collecting rent from an investment property or a side hustle you have,
Retirement savings should definitely be included in your portfolio value.
Re: Social Security - There is a lot of back and forth in the FI community if this should be counted. Many say yes, some say no. To be conservative it's usually not included in this type of calculator, but I think it's well worth getting those estimates and knowing what they are. Typical FI calcs don't include this just because it's hard to build in!
"Years to FI" will output a text statement if you are FI already (years would be 0 to FI) OR if you have no chance of hitting FI with the financials you put in (years to FI would be n/a). Else it does output a number of years to FI if you are on the right path. It may just be the inputs you used? I'll double check that just in case.
Else - great catch on that error. I thought i caught it in a previous round of edits. Huge help, gonna double check everything.
Thank you!
Having a baby and becoming a parent has had an incredible impact on me. Now more than ever, I feel more connected and concerned about the wellbeing of others. I feel as though my heart has literally grown. I wanted to share this as I expect there are many others who are questioning whether to have children -- perhaps due to concerns about it limiting their positive impact, among many others. But I'm just here to say it's been beautiful, and amazing, and I look forward to the day I get to talk with my son about giving back in a meaningful way.
One of the misconceptions I had about the GWWC pledge has to do with the use of a donor-advised fund (DAF). It was always my thought that the pledge was designed to help people give meaningful sums of money sooner rather than later (e.g. donate 10% per year vs. just waiting till you die to make a large lump sum donation). I've now met a few people that have taken the pledge but have contributed most or all of their charitable giving to a Donor-Advised Fund as part of their pledge. And furthermore, they have yet to make any grants from their DAFs as they believe in the the prospect of Investing to Give. I haven't quite fully formed my personal opinion of this yet, but I wonder how GWWC views these scenarios? Contributing to a DAF, of course, is a commitment in that those contributions are irrevocable and must ultimately go to charity. But with that said, in the unlikely scenario all pledge takers were contributing money to a DAF and not granting any funds in the near future, then this to me feels counterintuitive to the pledge itself. Any thoughts?
Hi Soraya - I find this interesting. As someone who donates from my regular brokerage account via manual form each month, I'd love to streamline this. I think this would be especially appealing to someone who (A) wants to donate appreciated stock with some degree of automation (B) has a number of charities they donate to regularly. For example, being able to create "rules" -- e.g. donate X shares of Y stock each month, draw from lowest cost basis". Perhaps you can receive a reminder of the action before it's completed so you can review.
Question to clarify - is donating a percentage of profit based on actual sales? Curious how you envision this being beneficial to users.