FINANCIAL INDEPENDENCE
Early 40s, FIRE Planning & Portfolio Strategy
Hi everyone, this is my first question. Thanks for creating such an awesome community! Quick background - Couple in early 40s, PPOR paid off. - Super on track to cover expenses from age 60. - Recently stopped salary sacrificing into super to focus on building investments outside of super. - Currently have $300k invested in VGS, aiming to grow this to $900k over the next six years, then FIRE and spend it down until preservation age. Questions - Our risk mitigation for market downturns (besides a 2-year emergency fund) is to continue or return to work if needed. This is why we're all in VGS. Is this a wise strategy, or should we consider adding bonds? - If we add bonds, should we build up the allocation gradually or rebalance closer to FIRE? - Is there merit in adding VAS? My partner believes it’s good for diversification, but I argue we’re already exposed to Australia through our PPOR, jobs, and super allocation. - Once we stop working entirely, what’s a good portfolio allocation? Would 60% bonds and 40% stocks be appropriate? Thanks in advance for your advice!
Elena Papadopoulos.
15 December 2024
2 Comments
26 days ago
Hey Elena – awesome situation to be in, credit to you for the hard work in getting yourselves where you are.
— Strategy: Cash is basically like bonds, so I personally wouldn’t bother. Your willingness to work part time is an enormous strength that not many people consider.
— Increasing allocation doesn’t make a lot of sense in my mind, since super is already enough to cover expenses. If you wanted to be conservative then sure, but you likely won’t spend down all your shares by then, so it’ll likely be overkill.
— As for Aussie shares, your jobs will disappear on purpose, your home is in AUD but isn’t an investment to live off, so I wouldn’t really count those, but yes your super may have a decent allocation. Up to you whether to add – it would give you an alternative fund to draw on in this 10 year period of early retirement before super, so he’s right that it would add some diversification in that sense.
— Portfolio allocation is massively personal and depends on risk appetite, so can’t really comment there. 60% bonds is unbelievably conservative, given your retirement is likely to be from say 50-odd to 90? That’s a long timefame to opt for a huge portion of your portfolio in low returns investments.
Hope that helps.
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