In our episode titled “Stock Market on FIRE: What We’re Doing in a Downturn”, Jason mentioned a spreadsheet that he uses to track his asset allocation and to model rebalancing. So many of you have asked for a copy of this, that we decided to up the ante – we’ve created an improved standalone calculator that we’re making available for free to our Two Sides of FI viewers. This calculator provides a convenient mechanism to enter and track your asset allocation, flag when any assets exceed your allocation targets, and model any rebalancing that may be needed. It’s really easy to use as you’ll see in our introductory video:
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You can find information on the tools we mention in each episode along with additional information in the Resources section of this site. To navigate to this material at any time, just click the menu button at the top of any page on the site.
Here’s what we learned by hiring a financial advisor for a fixed fee of $1,000. Rather than pay a costly ongoing assets under management (AUM) fee, we wanted to test out this increasingly popular fee-for-service advisement model. We each hired the same fee-only, advice-only advisor to evaluate our portfolios and answer our questions. We share how we found this advisor, what the process was like, the specific questions + answers we had, and who we think could benefit from such a service.
Is this the right option for you?
Maybe.
Note:This content does not constitute investment advice and is being presented for informational and educational purposes only.
How do you find advice-only planners? Below you’ll find two resources. Please note that Two Sides of FI has no relationship nor do we receive any compensation from either.
1) XY Planning Networkwas mentioned in this episode. As described on the site, their member advisors ascribe to fiduciary and CFP standards, earn no commissions, and require no minimum assets. They have convenient filters to allow searching by advisor specialities, including those with FIRE experience. Many work under multiple fee models, including advice-only, which can be a good source for one-time consults without any
2) Cody Garrett, CFP and advice-only planner from Measure Twice Financial, recently shared this list on Twitter. As he described it, “these 11 advisors provide comprehensive financial planning without any expectation, obligation, or even the option to manage client investments. Options for project-based, hourly, or ongoing.” You’ll note there is overlap between these resources, which makes sense. But this is the list Cody shares with prospective clients, so one can presume there’s been some personal vetting.
As we discussed in the episode, the advisor recommended some actions that we elected not to follow. Note that this doesn’t mean it was bad guidance, we just determined it didn’t fit our plans at this time.
Our lists:
Eric:
Increase emergency fund to 3 months living expenses.
Consider a more conservative stock/bond mix given retirement timeline of 24 months.
Increase umbrella insurance coverage to cover entire net worth (complicated to procure given two teenage drivers in Eric’s household).
Purchase disability insurance (Eric considers them to be self-insured).
Contribute to a medical flexible spending account. (Not actually that ‘flexible’ as unspent balance disappears annually which requires knowing your medical expenditures in advance).
Consider a SPIA (single premium immediate annuity), or a rising equity glide path to cover sequence risk early in retirement. (Still evaluating).
Consider a HELOC (pre 62) or, HECM (at age 62) to access home equity as a buffer asset. (Possible point of leverage in the future).
Consider a Cash Balance Plan for Eric’s business (Eric researched, chose not to proceed given costs to set up + unpredictable nature of annual revenues).
Jason:
Increase umbrella insurance coverage to cover entire net worth.
Evaluate needs for long-term disability insurance. (self-insured)
Re-evaluate your need for long-term care at age 50 or sooner. (self-insured)
Pay off the mortgage (Jason researched and elected not to proceed).
Consider flood and earthquake insurance (former doesn’t apply, have evaluated latter previously and elected not to proceed).
Consider utilizing additional risk management strategies (SPIA or rising equity glidepath, and HECM once you qualify at age 62).
Re-evaluate partial Roth conversions as Affordable Care Act(ACA) subsidy rules change, and/or once you become eligible for Medicare at age 65 (or earlier) (deferred for now)
You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.
You’re on a FIRE path and the markets keep falling – what do you do? In this episode, Jason + Eric revisit the topic of market downturn, and candidly discuss their pre- and post-FI moods in this turbulent time. Join us to learn what they’re doing and thinking about right now as Jason nears the two-year post-FI mark and Eric contemplates pushing his 2024 FI date back. Topics discussed include rebalancing, how to monitor portfolio performance, moves we are making now, and feeling down about FIRE.
Note:This content does not constitute investment advice and is being presented for informational and educational purposes only.
Show Notes
Essential Background:
Did you see our earlier episode called “Our FIRE Portfolios Are Down 20%, What Now?” As we were earlier in the downturn when that episode posted, it’s good background for today’s conversation.
Two studies on rebalancing were discussed in this episode, both of which we’d recommend. Here’s a link to the Vanguard article as well as the one by Michael Kitces.
Personal Capitalis a commonly used free tool for tracking your various investment accounts, understanding your asset allocation + rebalancing opportunities, and monitoring your net worth. PC has simple to use account linking to make it a more automated experience. Give it a try risk-free!
Our Asset Allocation + Rebalancing Calculator provides a convenient and easy mechanism to enter and track your asset allocation, flag when any assets exceed your allocation targets, and model any rebalancing that may be needed. Jason mentioned a spreadsheet he uses in this episode, and this tool is an improved version of that which we’ve now released for all Two Sides of FI viewers to use.
Never pay taxes again? In this episode we referenced this article from Go Curry Cracker, in which they discuss how with $100K of income they are paying very little in taxes. Much of this comes from the 0% capital gains limit, but there are other considerations as well.
Tax Loss Harvesting is a concept we’ve discussed on the show before, but haven’t dug into deeply. This Investopedia article is a good summary. In brief, TLH is an approach by which investors can sell an asset at a loss, reducing the total amount of capital gains taxes due from the sale of profitable investments. You can then use the sale proceeds to purchase a similar asset or security, maintaining your asset allocation.
The Wash-Sale Rule is critical to keep in mind, particularly when looking at opportunities for tax loss harvesting. This article from Investopedia provides good background on the topic along with supplying several examples. It’s important to know about this rule and ensure you understand the implications of buying and selling (whether intentionally or automatically via dividend reinvesting).
Passive income through option writing is part of Karsten Jeske’s (i.e. “Big ERN”) passive income generation strategy post-FIRE. This link will take you to the first article in the Early Retirement Now series, which also has a directory of everything he’s written on this topic across a series of articles.
You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.
