Where can I get this return reliably at "low risk"?
... or not. Your situation may call for something else. Any specific suggestions people give you will likely sound unnecessarily specific and perhaps arbitrary, unless you have spent a lot of time learning about the modern investing landscape -- you really need to do that for yourself.
And how to do that? Especially for those of us in Europe?
That's one thing I can't get my head around. The ecosystem seems filled with scammers and financial advise salesmen, and my "scam alert" is running on constant overdrive whenever trying to look for any current and actionable educational material.
It really depends on your goals and starting point. Avoiding management fees is one of my priorities as well as direct visibility of my accounts and numbers (all offered via Vanguard directly). There are a lot of great, free information sources. Some are directed at people who are paycheck t paycheck and need to start setting like $100/month aside while digging out of debt. Others focus on middle class style employer retirement plan+personal savings like for a down payment on a house. Others focus on those willing to toss thousands on what becomes a bet on the market and YOLO it (not recommended).
I started by just looking at Vanguard funds and using open/free tools to understand terminology and get a grasp of the history or background like lessons learned.
- https://www.bogleheads.org/wiki/Getting_started_for_non-US_i...
- (book) The Simple Path to Wealth by J. L. Collins
- (Podcast) ChooseFI
>> an average appreciation of 13% last year, which is not sustainable for this area but still indicative of the overall trend.
not sustainable but indicative of the overall trend? What does that even mean?
I don't recall anyone saying anything about participation @ $100 / week, so don't be flippant. The comment was made about low risk at 10-15%. If you had $100/week to spend, I'd put it in a drip and buy pharma stocks because there are many paying a sizable dividend, but I'm not your broker so get your own advice.
Per your website, you live in Washington state. Rocky Mountains and west are generally very desireable areas to live in, and WA has no income tax.
But you can look all the way from Maine to the Dakotas, down to Oklahoma, and then of course the poor gulf coast states and easily see that real estate is a terrible investment in those areas outside of a few urban areas. Especially in the heavily debt laden rust belt states with undesirable weather and shrinking economic prospects.
The challenge I have is remembering to actually care about it and do the trades, life gets too busy and before I realize it a month has gone by.
But whenever I'm on top of it, 1% gains have been very easy over the past decade, I'm rarely in the market for more than a few hours. But I risk having a pile of cash to trade with I suppose, the dollar could crash.
If you do +1% per month you're already +12%/yr, I consider 12%/yr the minimum acceptable yield for any kind of investment given how easy it seems to be to DIY.
2. Market returns vary greatly from decade to decade, so we shouldn't necessarily expect this 14% rate of return to continue. (Most obviously, there were no recessions in the past decade, which is unusual.)
Secondly, pretty much any reputable ETF (or combination of ETF's) can quite easily achieve this over 30 years.
Vanguard's predictions of 3-4% over the next decade mean that if you do a straight dollar calculation you'd be closer to ~7%, because that 3-4% number includes inflation, once again.
Vangaurd is predicting low growth of 3-4% over the next decade.
I'm sure there's SOME ETF that managed to do 15% returns over a 30 yr period, but that's just selection bias after the fact. It doesn't mean that ETF would do well this year, or next.
Be advised that they are not designed to be held over more than a day, although with the current bull market, they have not actually been hit by the decay factor inherent to all leveraged ETFs.
Other higher-risk ETFs would be things like solar/wind sector ETFs (e.g. TAN, FAN, PBW, IQCLN, QCLN, etc.) or bleeding-edge biotech (e.g. SBIO).
Everyone should get the chance to experience it.
If you're fully remote then you need to behave that way even when you're in an office environment. Sure, have in-person meetings when you can, but make sure remote folks are 100% present and enabled, otherwise those that choose to work from home will be less present - even in a healthy WFH culture.
As for loneliness - a couple things help with that. First, get together in person for a week or so every quarter to link up. Second, you don't have to work from an office when you work remote. Third, working in the office starting out to understand the culture then going remote is helpful for networking / understanding the rhythm of those in the office if you do work with full-time office folks. Being within reach can be helpful but not required. I'm close enough to the office that I can go in for big meetings or in-person things without too much heads-up, but I'm not expected to be there, and I'm probably there once a month, max.
As for addiction - clearly you gotta prioritize to make sure that stuff doesn't destroy your life. If remote work doesn't work for you, definitely don't do it. Doesn't mean it's not magic for many of us.
Full time working from home wasn't great for me -- it felt isolating and I found myself running a lot more just to see other human beings. (Of course, running was good, but the motivation for it was kind of weird.) I'm shy and naturally form relationships with people I bump into regularly, but I still have no clue to how to do it intentionally, and I also feel uncomfortable practically living at coffee shops.
I got into a bullshit mobile game, I didn't think it was a big deal to just leave it open all day while I worked.
Checking in between every email, and every commit, to make sure I was perfectly optimizing my in game economy. Eventually I became one of the top players in the world and was spending 4.5 hours a day just to keep my spot in the top 100.
If I placed in a world tournament in Smash Bros that was streamed, then I went on to bomb the next 5 tournaments, I'd probably still be trying to get that glory again
As I'm not a morning person this has been great for my mental health, and it's a good combo of "WFH" with "real work" without the addiction issues associated with the former.
Sometimes it's just "hey...you seem to pretty consistently miss the early meeting...you good?" or "you know you haven't been hitting it like you used to...but you seem to be killing it in EVE Online". But I've been through an employee where it was performance falling off->odd behavior on calls->slurring incoherently on calls->intervention->short term disability. Fortunately, recovery can work and they're back. In the office.
Most people don't get to experience a six figure job, period; the median income at peak earning agree is around $80k.
It's not only cash spend directly, it's also time spend. I was spending 2h a day in public transit, but when I tried to do it in car, it came down to less than 45 minutes a day. The parking was quite expensive so I doubted, I was paying 150$ a month for my public transit pass, but the closest available parking would be 250$ a month. Lets round it up to 1h a day and say that a month is 4 weeks, I was spending 20 hours a month. For some absurd reasons, I wasn't considering my time stuck in movement as part of my job hours. By refusing to pay for the parking, I was essentially saying that my time was worth 5$ an hour.
This is so weird that we all forget that our time lost while we go to work, is still part of our work time. Spending 2h a day in transit, that's accepting a 20% pay cut from the get go.
That said, the overall amount of time I spend is still my first priority. I don't want to spend any significant portion of my life going to and from work. I live in Chicago so public transit is 100% the way to go since it's faster and many times cheaper than using a car.
How do you do that?
For the last decade, 10-15% average annual return would have required keeping 70-90% of the funds invested in Nasdaq-100[1].
Also, Vanguard 500 Index Fund (VFIAX) currently has a 10-year average of 13.52%[2].
The general advice is not to keep more than (110 - your_age)% of your retirement portfolio in these high risk / high rewards funds.
Therefore, it's entirely possible to receive 10-15% annual returns until you turn 40, but as the period of time until retirement shorters, it becomes too risky.
In other words, what is a "medium-risk" at 35, can be a "high-risk" at 55, because one might not have enough time to recover from an economic crisis at an older age.
[1] https://www.nasdaq.com/articles/when-performance-matters%3A-...
[2] https://investor.vanguard.com/mutual-funds/profile/overview/...
The last 15 years:
2019 35.23% 2018 -3.88% 2017 28.24% 2016 7.50% 2015 5.73% 2014 13.40% 2013 38.32% 2012 15.91% 2011 -1.80% 2010 16.91% 2009 43.89% 2008 -40.54% 2007 9.81% 2006 9.52% 2005 1.37% 2004 8.59%
At no point I called it low risk. It's high risk / high return. The risk of high financial exposure to such funds can only be taken until 40, because one needs to be able to not sell during the entire economic downturn.
The person who originally mentioned those percentages and started this comment thread (and since edited it down) said low/medium risk.
Nasdaq-100 or SP-500 can be a part of a medium-risk investment portfolio as long as the exposure to them is adjusted based on the period of time left until retirement.
It's a medium-risk strategy to keep up to 80% of your retirement portfolio invested in Nasdaq-100 or SP-500 in your 20s, up to 60% in your 40s, and up to 40% in your 60s. As long as the rest of the portfolio is invested in low-risk government bonds.
There is already enough bullshit and delusion going around in investing advice so let’s not add to it.
Now we live in a lovely but much smaller house where I still have an office, but it is inside the house. We've been here for 9 months so far, and we have still not really figured out the details of how I can still "go to work" the way I used back in Philadelphia. My wife only has to speak here, somewhere in the house, and I can hear her.
This may improve when some specific physical details are addressed, but I think they won't solve the whole problem, which is a psychological/emotional/relationship one: how to be in the same "space" as someone else but also make it clear that you're not available.
We figure out the schedule of the day before I head "in", we communicate via text, and if that fails typically it's a knock at the door just like in an office. I also mention when I have big meetings or other face-time meetings so there's awareness.
That said, after all of that it was really the threshold for things that caused interruptions was what took the most adjusting.
Most of the day I wear headphones and listen to music, which is helpful - you don't feel compelled to shout answers or run down and help unless the person asks. Eventually though we found our rhythm, and it works well. And we both appreciate that when we need each other, we're right there, and that's great.
The big thing I need to improve on is simply getting outside more and going for walks during the day. A significant part of my commute was walking and now that's gone.
This is the thing I want most in work life right now. I have a separate semi-dedicated office room but it splits time as the guest room and has basically no auditory separation the rest of the house including a 3yo and a 1yo.
Edit: OP would you be willing to share pictures of your space? I love seeing how people set up separate office spaces.
Also, consider that many companies now allow employees to work from home for part of every week while still supplying hardware and office supplies. That 250/70 per month commuting cost is down to about 150/40. Just accounting for the expense of building your home office you could already be in the hole compared to people commuting only some of the time for the same job.
Also, none of this accounts for the additional considerations office's typically provide like free lunches and social/professional networking opportunities.
Personally, I'm a software developer so I can pretty much decide for myself if I want a job that allows me to work from home, and after doing the real math, I found you can basically go either way and expect roughly the same financial outcome, so the real choice is about what you actually want. I like the social aspects, so I take jobs where I can come in and expect coworkers to be present. What you want may be different, but neither option is inherently more advantageous.
A quick googling suggests that the average driving commute is 16 miles so $100/week seems like a reasonable estimate (again assuming parking is free and you value your time at $0/hr).
I want to know more about this!
Seriously, I'm in a major metro area and my commute is considered "not bad" by local standards...
Working at an office costs me at least three hours a day: - 30 minutes of "getting ready"
- 60 minutes of commute there, at rush hour
- 30 minutes of lunch (usually just grab a sandwich at home)
- 60 minute return commute at rush hour
Bonus Time Savings:
Popping on a headset and taking a walk around the neighborhood during low-participation conference calls and one-on-one discussions (I'm a manager). I can flip 30 - 60 minutes a day into "dual use" time (work + exercise)...
I absolutely loved working from my bedroom for years. It was great (despite the common down falls like the ones listed here). My family used to make fun of me at parties and seasonal celebration "OH YOU'RE NOT IN YOUR PAJAMAS TODAY", but joke was on them after a couple of years - I was making 5 to 10 times what they were per year, and I was waking up at 8:50am with no commute.
I eventually ended up investing in building my own "detached" office in the back yard - a dedicated space set up for working. This was by far the best thing I ever did. It created a visible boundary between home and work life, and I still didn't have to commute or work in any clothes other than my pajamas the majority of the time.
I couldn't image going back to a bedroom now. But even more so, I can't imagine how painful it is for people to sit in traffic every day, stressing they might be late, burning money on fuel and their car, and waking up earlier than they really should.
It's pretty reasonable to think you might spend $100 a week on a commute straight out of your own pocket. That money is gone forever. Now consider if you invest that money over 30 years in some low to medium risk areas and average 10 - 15% per year. That's a healthy addition to your retirement fund of around $1,500,000, plus a good amount of extra sleep.
EDIT: Okay 15% is maybe a bit hopeful and lucky. But still 7 - 10% will make a difference in your retirement.