Vladimir_Nesov comments on Post ridiculous munchkin ideas! - Less Wrong

55 Post author: D_Malik 15 May 2013 10:27PM

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Comment author: RolfAndreassen 10 May 2013 06:59:46PM 31 points [-]

Obvious idea is obvious: Save and invest a very large percentage of your income - I'm at 25%, but I'm not very ambitious. At 75% you can retire for three years for every year you work, even without assuming any gains from investment income or any other sources of income. If you are 30 and reasonably established in your career, this means you can work for ten years and then retire.

Comment author: Vladimir_Nesov 11 May 2013 02:30:52PM *  5 points [-]

Following the rule of thumb that one can spend about 4% of investment a year for it to remain sustainable, it's sufficient to accumulate about 25 times more than you spend in a year, which at 80% saving rate can be achieved in 6 years (more to reduce risk and/or accommodate possible future increase in spending (above inflation)).

Comment author: Wei_Dai 17 May 2013 07:52:40AM 1 point [-]

There happens to be an article in the New York Times today about the 4% rule, based on a new paper titled The 4 Percent Rule is Not Safe in a Low-Yield World. It also seems worth noting that the 4% rule assumes a payout period of 30 years, so it's not entirely applicable for the purposes of this thread.

Comment author: Vladimir_Nesov 17 May 2013 10:27:45AM *  0 points [-]

I wasn't suggesting that it was safe ("more to reduce risk"). For example in Russia, there is additionally the issue of high inflation (in USD) while the prices catch up with US/UK levels, so even a 3% rule should only apply to cost of living that's about 2 times higher (adjusted for US inflation) than at present, which turns it into a 1.5% rule, or up to 15 years at 80% saving rate. Of course, if optimizing primarily for smaller working time, one should earn at a high-costs place, like Silicon Valley, and then move to a low-cost place, with possibly moving again if that place catches up.