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birb_cromble  1d ago (text post)   735 thread views

Weekly Finance Thread

Since a lot of us here have expressed interest in not starving to death in a gutter, I figured I'd start a weekly thread to discuss financial matters.

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Oh, good timing, I just crossed a very large milestone in my portfolio today. A few questions:

  • What do you think the chances are that we are currently in a large (AI related or not AI related) bubble that will pop? It seems like the money printing of the past few years has massive upward pressure on the stock market so I don't know how to unpick the two.
  • I have always been a saver and live fairly frugally. But I am itching to increase my standard of living with some of my invested money. At what number in USD would you personally be comfortable beginning to draw down, say, 4% of your portfolio a year to increase your standard of living sustainably?
  • It seems like I am outpacing the rate of inflation with my investments. For example I have doubled my money in 4 years, whereas I am not paying nearly 2 times as much for gas or groceries or restaurants compared with 2022. And it seems like inflation is much slower at the lower end of prices- for example goods at thrift stores or antique stores seem to be retaining low prices while things like houses and fine art are exploding in valuation. Do you think it's likely to stay this way in the US for a while or do you think the inflation will be coming for lower priced goods as well?
  • Do you think it's too late to buy bitcoin or is it still wise to buy it today? I have only like $2000 worth of bitcoin because I never found it very appealing or interesting but I can see its use in hedging against fiat currency debasement and many people smarter and richer than me are still interested in its success.
  • The older I get, the more I have access to but the less I want. I have already satisfied most of my needs and desires from my youth. How do I generate more desire within myself as I grow older? (I am in my mid thirties if that is relevant.)

I am 20 years older than you and would increase my standard of living by reducing current saving vs pulling from investments. Before I did that I would ask myself if we were entering a decade where I saw no increase in net worth would I still feel my investments were sufficient for my plans at the end of that decade.

If I lost my job now I would be fine for the rest of my life and likely be in a position where growth in investments exceeds my living costs. & I only need to consider another 40 years of life. I would still be cautious about increasing my living costs because once you do buy really nice yarn it can be hard to go back to the affordable stuff. But you can be perfectly happy if you never stop limiting yourself to the affordable stuff. OTOH while I also like nice tea, it's something I only indulge in on rare occasions and I am fine with the cheap stuff on the daily. If we entered a lost decade I would mourn my yarn and not think twice about my tea. (I do buy nice yarn - out of current income. I might pull from savings for a once in a lifetime experience but I would prefer to save up for it out of current income if I had the time to do so.)

So... What do you want that would require you to supplement from savings rather than current income? If you lost your job how much of a runway do you have? If your investments had no growth for a decade could/would/should you stop pulling from them during that time? If you needed to drop back to your current living standard how hard would it be? Could you do an experiment without locking yourself into a dependency? You have 60-70 years of remaining life to play with it. It's a tough balance.

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