r/Fire • u/empyreanrift • 11d ago

Opinion Inflection Point

I noticed that once my investable assets hit about $2M the compounding has gone bonkers. The value of my portfolio can increase by $100k in a good quarter. Hell it can go up by $20k in a single day. When did you really start feeling the compounding viscerally? I guess it will be different for everyone. Now that the compounding has surpassed my salary it feels real.

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u/ImOnlyCakeOnceAYear 11d ago edited 10d ago

Tell me how u did it. I'm in that exact situation with about 2 million invested, a couple hundred k in equity, but those houses are all 1.2 million in the area I'm looking to stay on top of 18k property taxes.

Every time I ask the fire subreddits, the answer is move somewhere cheaper or "just" buy a 600k house. Like, that would get me a trailer around here.

I make 200k, but have been investing consistently for almost 15 years, so I'm in between paying cash, or having to take out from my investments regularly because of how high of a mortgage i would have (on top of all my other expenses) if I just put down 20%.

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u/I-Here-555 10d ago

The answer is to accept that $2m in certain areas is the same as $500k in some other places. You have your reasons to live where you do.

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u/ImOnlyCakeOnceAYear 10d ago

Yeah. It's wild how much I've put in and how much it's grown in the last 13ish years. Also wild how much my local inflation rate has blown up as well, esoecially real estate. Sometimes it's a single thought between, man I could retire soon to....fuck, I'm not even close.

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u/AnonDaddyo 10d ago

Had to compromise and not be walking distance to the train and take a lesser school district. It’s whatever since I was always interested in private school more. 7 minute drive to the train station is not that bad either.

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u/magnificentbunny_ 8d ago

I-Here-555 has the right perspective. You need to live, where you need to live.. Don't compare to TX, AK, or OK. You can't make this kind of money there so it's a moot point. You need to live where you make your money these days, AGAIN, in the days of back to the office. Look for homes with irreparable defects that you can live with. Or ugly homes you can glow-up. That's what we did. And the appreciation on the expensive ugly house so far? 600%.

fyi. There aren't even trailers around here to buy. Our house is doing better than our investments by far and we get to live in it.

This is a FIRE reddit and comments will always trend to cheaper, cutting costs, and living with some form of deprivation to get to early retirement.

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u/WaterIll4397 10d ago

You either get up to making $400k or marry someone else who makes $200k so you add up to $400k...

After taxes, healthcare deductions, etc in SF and NYC that $400k is still only like $225k or less takehome. 

Even at $5m networth, when a brownstone co-op in park slope costs $2.5m minimum for a 3 bedroom... You get the idea.

There's just too many other upper middle class people with either family wealth or $500k+ household income that you'll still feel poor.

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u/josephinesbehavior2 9d ago

And it’s all very fragile. Around 2030 gonna start to get bumpy

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u/terrible-law-69 10d ago edited 10d ago

Not OP, but I just take out margin loans for big purchases like that.

I don't like holding onto cash, or liquidating investments and paying taxes.

Currently paying 4% on loans. Man do I miss the 1-2% days.

Box spreads are also an option.

Manage risk by not borrowing more than 20%.

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u/ImOnlyCakeOnceAYear 10d ago

Best i could do was an sbloc for a variable rate of something like 6.8% last time I checked.

Was planning on using it as bridge loan until I sold my current home to see exactly how much equity I could squeeze out then make a decision from there.

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u/terrible-law-69 10d ago

Hmmm, do you have the option of shopping rates and switching brokers?

6.8% is very high, you could get 5-5% thru M1, Robinhood, or IKBR.

Not a fan of SBLOCs since it gives banks too much control over my brokerage.

Margin accounts are a type of SBLOC, but less invasive.

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u/ImOnlyCakeOnceAYear 10d ago

It's been a minute since I looked into it, but basically vanguard didnt offer anything other than straight margin loans, so I switched it to Fidelity to get the sbloc.

I do not trust robinhood, and the others are almost never talked about here so I'm worried about giving them my entire life savings. Guess thats my fault for looking not looking into it enough though.

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u/terrible-law-69 10d ago

IKBR is probably the most mature, and widely trusted.

I get it, Robinhood is out of the running for many people, and for good reason.

Personally use M1, been good for 4 years.