We have been living off our portfolio since late 2012 (9+ years.)
Our lifestyle (and budget) has undergone some pretty drastic changes in that time, but for the most part the portfolio resembles its younger (much smaller) self.
Let’s explore what is different, and why. (Cuz there are some BIG changes.)
GCC Asset Allocation
As of early May 2022, according to Personal Capital our portfolio looks like this:
Assets and Allocation
The portfolio continues to be heavy on equities and light on bonds and cash.
Here is the breakdown:
US Stocks: 77% -> mostly VTI with some S&P500 and Small-cap trusts in my old 401k
International Stocks: 17% -> 100% VXUS
Bonds: 1% -> intermediate term Treasuries (IEI) (plus some I-bonds that PC doesn’t include in this chart not shown in the chart, about 2% of portfolio)
Alternatives: 4% -> 100% VNQ (a REIT) and REIT holdings as part of VTI (e.g. equities)
Cash: 1%
Some interesting ratios:
Stock / Bonds-Cash: ~ 98 / 2 (trending away from 100% equities)
US / International equities: ~ 80 / 20
Taxable / Pre / Post-tax: ~ 63 / 29 / 8 (Roth is trending up – was 0% 9 years ago)
Data from previous years: 2016, 2018, 2019, 2020, 2021.
Changes over time (and BIG changes this year)
The portfolio snapshot from Personal Capital shown above is super helpful. The allocation percentages and ratios are also nice.
But best of all I think is being able to look back over time and see how the portfolio has shifted and evolved.
Here is a nice chart of allocation percentages on our liquid net worth over our 9 full years of early retirement. From the beginning we were about 90/10 stock/bonds. This shifted around a bit as we parked short-term funds for cash flow management but for the most part was consistent. In the early days of the covid pandemic we sold bonds and bought more stock and now the portfolio is the most stock heavy it has ever been (much to the relief of some readers, I’m sure. Context: The Path to 100% Equities)
This is in part because we bought a house for cash and I liquidated 99% of our bonds as part of that purchase. I (right or wrong) think of our imputed rent and future social security as our fixed income allocation.
Another way to look at this same data is in actual dollars.
Some important things to notice:
- We currently own more US stock than our entire portfolio was worth when we retired
- Our portfolio is worth about the same as it was 2 years ago… because we took out all of the gains during the covid pandemic to buy a house
- those gains were boosted because we sold bonds to buy stock near the bottom
- So… we got a house for free?
- For the 1st time our net worth (green line) is less than the portfolio value, because I took out a mortgage and used some of that to buy stock (currently down about 10% -sad face-.)
- Why? Because debt is sweet.
- House isn’t included in portfolio / liquid net worth since I can’t count on it for 4% rule
Reward Points
While not a traditional asset class, we have continued to build a healthy amount of airline, hotel, and travel rewards points through credit card signup bonuses.
One example of point usage: Free flights and hotel in Hawaii (including a $3,000/night suite.)
Alaska Airlines: 144,700 miles
Amex: 0
Capital One: 0
Delta Airlines: 16,591
Hilton: 27,051
IHG: 119,616
Marriott/SPG: 249,247
Ultimate Rewards: 214,684
United Airlines: 12,429
Total value: $9,906+
Not included in the above – 2 free night certificates with IHG and 3 with Marriott (5 nights total.)
Free night certificates with the Marriott Bonvoy Boundless credit card are a sweet deal.
We are already planning our next trip to Hawaii and a visit to Taiwan (covid restrictions permitting.)
For ideas on how to accumulate or redeem award points, check out our Award Travel Series!
Crypto
I almost forgot to mention – aside from our $1.03 trillion worth of Go Curry Cracker Coin, we also got $5 worth of Bitcoin free from PayPal for some promotion (now worth $3.15.)
Between these 2 we should be set for life.
Summary
We have been living off our investment portfolio for 9+ years now.
Last year we sold a bunch of stock and all of our bonds to buy a house. The way it worked out, that house was basically free – our liquid portfolio is worth about the same as it was 2 years ago and we have a house to boot.
We also have some debt in the form of a mortgage. Most of those funds were reinvested into the stock market.
Travel over the next year or so should be completely covered by travel hacking (~$10k worth of points on the books.)
Early retirement, so far so good.
If you like the charts in this post, check out Personal Capital (affiliate link)
Congrats! As the retirement life is successful.
As your portfolio mostly in ETF, that means you will need to sell stock/bond for living expenses?
I am thinking how to prepare for retirement too, main issue is how to generate “cash flow”. Because if I want to live on dividends, then I have to find high yield stocks those may not have much growth potential.
There is zero difference to your portfolio value between a company paying you a dividend and you creating your own dividend by selling appreciated shares.
There is an advantage to the latter as only a portion of the sale is taxed.
How Do I Live Off Just Dividends?
Cash Flow Management in Early Retirement
Congratulations! I’ve been following your journey now for about 7 years. Glad to see everything is going well!
I personally decided to FIRE myself about 6 months ago. The market is down ~20% since then and I’ve spent more on healthcare that I thought. However, a healthy cash buffer and an asset allocation I’m comfortable with, life has been pretty good so far! I credit your blog with giving me the tips and tricks to be financially independent and sharing your experiences has given me the confidence to do this!
Thanks!
Nice, congrats!
Those buffers are key, and sleeping well at night is important.
Glad you’re doing well, and owning real estate is it’s own diversification. I don’t think I would use debt to buy stock though.
What is the difference between:
a) get a mortgage, buy house
b) sell stock, buy house, get mortgage, use mortgage to repurchase stock
I think David was pointing out that you sold stock, bought the house, and could have stopped there. Instead, you then took on mortgage debt and bought stock. Option A is what most people are stuck with – get a low fixed rate mortgage and slowly pay it back with ongoing earnings, which is a really good deal in times of high inflation!
>get a low fixed rate mortgage and slowly pay it back with ongoing earnings, which is a really good deal in times of high inflation!
Yes, this is why I did it. Now I have 30 years to pay it back at 2.75%. I can’t (won’t) leave it in cash the whole time.
You start by saying you have been living off your portfolio for 9 years but I wonder what your spending has been compared to your income from blogging etc ( everything except your portfolio ) either in total or year by year.
Spending > blog income + dividends
GCC Business Review 2020
Blogging income helps a bit with cash flow. Somewhere on this site I had a chart that shows our net worth with and without blog income. Afair the delta was small.
How much did your net worth grow since retiring and up to just before you bought the house?
Like 2x or 3x?
2x-ish
https://www.gocurrycracker.com/double-double/
Is there a particular reason you did not go VT? Just better historical gain with VTI + VXUS. Apologies if this has been asked a million times.
VT has something like a 60/40 US/International split (whatever Vanguard has decided most recently.)
I prefer a different allocation:
US vs International Investing
Can you share how to get the bar graphs in Personal Capital? Thanks!
sorry those I made in excel. The first graph showing current asset allocation is from PC. As far as I know there is no way to see how your asset allocation has changed over time.
Does anyone if the travel hacking is open for non US citizens?
All the travel hacking we discuss on this site is for US residents only.
Bummer :(
I was wondering if one of your international readers knows how to make this travel hacking available for non US residents.
Are you a US citizen?
Nope
I’m not aware of any options for you then, sorry.
Is there any reason you wouldn’t put more in US stocks (i.e. 90% vs 77% now), and 10% or less in international? Reason I ask is because international stocks have underperformed for a long while; I do agree that it is a nice portfolio hedge though, similar to a REIT. Thanks!
And I did enjoy your article here –
https://www.gocurrycracker.com/us-vs-international-investing/
to account for a long enough time horizon (i.e. 1970 – 2018). I wonder what that chart looks like now for 1970-2022?
Reason: Taking money out of underperforming assets and putting them into overperforming assets is the opposite of how portfolio balancing is supposed to work.
Thanks for sharing GCC! Great post!