Stock Market on FIRE: What We’re Doing in a Downturn

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:

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 Capital is 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.