Tag Archives: Saving

Diversification [does NOT equal] Bankroll Management!

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Even though guys like Tom Dwan (a.k.a. Durrrr) can run up a $200 starting bankroll to over $10 million in 3 or 4 years playing poker online, I don’t recommend this as a serious ‘investment’ strategy!

Nor, do I recommend simply dumping your entire portfolio (401k included) into just one stock pick, as Josh has done ….

… even though both Tom and Josh are both ‘big winners’ … so far 😉

That’s why I recommended – for those amongst my readers who insist on traversing the high-wire of their financial life (there ARE rich prizes at the other side, IF they make it, so who am I to say “don’t!”???) – a simple three-part strategy to protecting their finances, by taking:

1/3 of any ‘windfall gains’ for spending (presuming that the speculation activity is their primary source of income);

1/3 of any ‘windfall gains’ to fuel a parallel ‘passive income’ investment strategy; and,

1/3 of any ‘windfall gains’ for their trading activity (this could be trading stocks/options; developing or flipping real-estate with little money down; etc.; etc).

If the person has another (reliable) source of income, then any ‘windfall gains’ can simply be split 50/50 between ‘speculation’ and ‘passive investments’.

Of course, this will slow down growth, which is why Josh still wants to:

Go 100% 401k and 200% brokerage … [because] sometimes the opportunity is so obvious and risk so low

Spoken like a true Most Probably Will Go Broke Someday Trader!

This strategy is just there to protect the Josh’s of this world in the unlikely event that they should miscalculate ever so slightly 😉

Look, I’m not going to attempt to teach anybody anything about trading, but it’s always good to remember: it takes just ONE bad piece of news on a ‘volatile stock’ (bad ceo, drug that doesn’t get FDA approval or shows unexpected adverse side-effects, law suit) to override the fundamentals.

It’s the equivalent to a ‘bad beat‘ in poker (a.k.a. ‘variance’) … they are inevitable in poker – and, I would argue, also in trading – and you survive them by good bankroll management …

… after all, there are still Enrons out there that people are trading up every day 🙂

On the other hand, Jeff throws a curve ball:

Looks like you have changed your stance a little on diversification. [http://7million7years.com/2008/12/19/the-allure-of-diversification/, where you don’t recommend diversification due loss specialized knowledge and consigning yourself to average returns]

I’m interested why you made the shift…

As I said to Jeff, this may appear to be a shift, but it’s not …

Diversification ≠Bankroll Management!

… for example:

– if Josh said that he was going to invest 100% in buy/hold cashflow-positive real-estate, I would say “go for it”

– if Josh said that he was going to invest 100% in an existing profitable business, I would say “go for it”

– if Josh said he was going to invest 100% in 4 or 5 stocks that he felt were undervalued and was prepared to hold for the long-term, I would say “go for it”

… but, I would say that if the future income stream is in any doubt (e.g. if it is a royalty, or speculation, or short-term investment) to divert some of the cashflow produced from profits (capital gains and/or operating profits i.e. one of the ‘thirds’ that I mention above) and use those to start creating your own Perpetual Money Machine: that’s VERY different from the standard type of diversification that most financial advisers talk about.

When you need a taxi …

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It’s interesting, one of the major obstacles apparently standing between many people that I talk to and a few million dollars is the want of a ‘killer business idea’ … or, even ANY reasonable business idea.

But, that problem magically disappears when you wake up one day to find a spare few million in your bank account … people-with-ideas seem to just spring out of the woodwork.

You know how you can never seem to find a cab when you need one? 😉

Well, it’s been nearly a year since I’ve found myself with both a lot of spare change and nothing of substance to occupy me during the daylight hours …

… a little less than one year and I have:

– Three blogs,

– Three Web 2.0 internet businesses under various stages of development

– A Fourth one under negotiation to buy into

– And, just yesterday a new business opportunity was presented to me.

This last one is interesting because it is a ‘bricks and mortar’ business (with an internet sales site as an adjunct):

It’s interesting because a friend of mine is the finance director and has spent the last two years of our time together complaining about the excesses of his boss, the entrepreneur/owner/founder …

… without giving away too much, the guy developed a business around an innovative niche product with a strong brand name that was even featured on Oprah (as one of her ‘favorite products’), resulting in a business generating $2 million to $3 million profit per year in the USA and overseas.

Yet, through excess (taking all the profits out of the business), divorce, and mismanagement this company is now barely breaking even in the face of declining sales. From what I can see, even though the product is no longer unique, the reason for the sales drop is the management of the company rather than product or market issues.

So, I have an indication that the owner of the business will sell for:

– $400k up front cash, plus

– $350k to pay off a personal loan, plus

– $150k to $200k per year for the next four year (sort of a ‘deferred payment’).

By my reckoning, this is $1.55 million …

Now, here is where it gets interesting:

– The business has an excess of money owed to it (accounts receivable) LESS amount owed by it (accounts payable) of about $200k, and

– Inventory worth $800k+

Provided that the receivables can be collected (my friend, the CFO assures me that it can) and that the inventory can be sold close to book value (he assures me it can), I am essentially buying the ‘goodwill’ of the brand-name + suppliers in place + distribution network in place + staff in place for a globally recognized niche brand for a little over $500,000.00

So, there’s two ways to look at this:

– A brand in decline, so the owner is selling out while he can still salvage some value, or

– A ‘vulture’ opportunity to buy a no-worse-than-break-even business + established international brand (endorsed by Oprah, no less!) for only $500k.

What to do? What to do? Hmmmmm ….

I’d love to hear your ideas!

Work backwards to move forwards …

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work backwardsIn Monday’s post, I took a look how Scott – a young family man and doctor – could use his Number/Date to help him evaluate whether to buy his business partner out now or simply wait 30 months, when his partner retires from their medical practice.

Without the ‘filter’ of his Number/Date, this would be a very difficult decision, with so many risk/reward variables … 

… but, it’s actually a very simple decision: 

Which is the most comfortable (i.e. lowest risk, ‘feel right’) alternative that seems most likely to ‘guarantee’ that your Number/Date – this most critical of life goals – can be achieved? 

This is such an important concept that I want to share another example, this time from Trey and Juliana a young couple just starting out on their financial journey together: 

Two nights ago I got Trey to work on a life’s purpose. Last night we brainstormed money making ideas: Trey really wants to open a thrift store and we know a perfect location right near the college. Kind of like a Buffalo Exchange, that offers cool music, buying and selling jeans and ultra cool clothing items, shoes , hats and such as well as art and records.

 Then we thought of our life purpose and though about making it a Non Profit and helping abused children in some way.

 The thought occurred that perhaps as a nonprofit it might be possible to get lower rent, tax breaks, donations and other benefits while helping children. Perhaps we could choose a local children’s or battered woman’s shelter to benefit from our thrift store. There is a lot of research and we will need cash up front.

 [Trey is also an artist and has developed] a whole line of B**** B*** Gang which he came up with, (Little cartoon boys) … I think he should license them and sell them. He though of making a comic strip online or illustrating kids books.

 I think this would be a better idea than the thrift store because a store ties one down to one spot. However, Trey is really into the thrift store idea.

 Another idea is blogging for cash. Perhaps starting 3 separate blogs about separate things such as economical recipes, the battle of the bulge ( weight loss) and one about saving money. I know it would take a while to get subscribers however it does not tie one down the way a store does. I know that this will be time consuming and I will need to do much research as to how one gets paid.

 Trey might open a thrift store and I might start a blog or three. It is all about multiple streams of income. I bet I could write children’s books. What if I wrote books and a portion of the proceeds went to fund parenting classes.

For some people, the well of ideas runs dry, but for other – like Juliana [AJC: and me !] – the ideas flow so thick and fast it’s hard to decide where to start …

 … so, we often put the shutters up and don’t start at all!

 If this is you, I want to share a novel concept: It’s always a good idea to work BACKWARDS …

 … here are the steps, as they might apply to Trey and Juliana:

 Step 1. Find your Life’s Purpose – They’ve already done this. Check!

 Step 2. Choose your Lifestyle – I showed Trey and Julian where to find some great ‘sample lifestyles’ here (click on the links inside that post to see some sample lifestyles at different $$$$ levels).

 The idea here is to choose the type of lifestyle that they hope their business/es to fund one day … this will help them immensely (as we’ll see shortly) in choosing the right business!

 Step 3. Account for Inflation – This is actually quite easy! Simply double your chosen ‘lifestyle’ amount for every 20 years before you intend to ‘retire’ (i.e. to start living it). If you only intend to wait 10 years, then just add 50% to your annual lifestyle amount.

 Step 4. Find your Number – Multiply your final ‘inflated’ lifestyle number by 20: THAT’S your Number!

I left Trey and Juliana some further guidelines on their Life’s Purpose post at the Share Your Number community site.

 Step 5. Work Backwards – Now’s the time to decide which opportunities can be sold by their Date for at least the amount of their Number.

 Let’s assume their Number is large (right now, it’s $50 Million, but my suspicion is that they will revise this well-downward once they complete the above steps against the filter of their Life’s Purpose).

 If it remains a large Number, a blog is unlikely – on its own – to get them there, unless their name is John Chow whose blogs generate about $1,000,000 a year (then again, he does own Technorati.com!).

 So, I would advise Trey and Juliana to look at ideas that can expand exponentially, with relatively low capital requirements … here’s a couple of ideas:

 Trey’s idea of licensing a cartoon series might have great potential: he could generate interest by starting online (here’s where Juliana’a blog idea CAN help), then hope to get picked up by one of the traditional avenues (e.g. syndication in the news and/or become the next ‘South Park’ cartoon series) supported by product sales and licensing … and, a LOT of luck!

 Alternatively, as Debbie suggested, if they can:

 a)    Successfully create their first Thrift Store and operate it profitably, and

b)    Find a unique angle, so that it stands out from similar businesses (not just in this location), and

c)     Document all of their operating procedures, such that any ‘dummy’ could run the business just as successfully as they can

 … then, they may just have a business that can be franchised.

 By working backwards, Trey and Juliana – with a little help of a pencil/paper/calculator or spreadsheet – can decide which of these opportunities is really worth pursuing!

After all, if it can’t help you to reach your Number/Date, why bother? 😉

Nasty Mr Inflation – Part II

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Nasty_ManLast time, we looked at dealing with inflation before we retire (a.k.a. Life After Work), to see that $40k a year of current needs means that you need to be able to generate somewhere between $100k and $125k per year, IF you want to retire in 30 years.

Even if we manage to build up the $2.8 million nest egg that Pinyo talks about (or the $1.8 million one that the following reader talks about), we have a problem, illustrated by the comment by Elaine on Pinyo’s post:

I don’t see interest included in the calculations here. Even at 4%, *just the annual interest* on 1.8 million will cover your annual needs. Not that that’s a bad thing, you’ll still have 1.8 mil left when you die. If you plan to use up all your money in retirement the necessary amount would be quite a bit lower.

Elaine has ‘forgotten’ about inflation; this doesn’t stop just because you retire!

You earn 4% on your money and before you get to spend any of it, Mr Inflation ’spends’ 3.5% for you … I asked Elaine if she can live off just 0.5% of $1.8 Million?

When you retire, if you have your money just sitting in the bank, inflation will simply kill you, financially-speaking.

On the other hand, if Elaine buys a $1.8 mill. rental property (paying 100% cash, forgetting closing costs) the property will increase in value WITH inflation, as will the rents … an inflation-proof retirement (or, she can buy TIPS, inflation-protected government bonds … etc., etc.)

Finally Revealed! The MOST important Making Money 101 lesson of them all …

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old lightI was just rereading last week’s post where I said that I believed delayed gratification to be the most important Making Money 101 tool of them all.

And, as I said, I truly believed this to be the secret of my financial success …

… until this very morning!

Let me backtrack a little: we delayed gratification (MM101), built up our business income (MM201) and socked money away in passive investments (to prepare for MM301) and we finally made it.

We then started to really live our ‘new life’ as multi-millionaires: we acquired the houses, the cars, the paintings, the vacations, the technology …

[AJC: feel sorry for us, yet? 😉 ]

… but, today we did something just as important (since we are stripping and renovating entirely the new house, which is actually an old house, built in the 1940’s and last renovated some 20 years ago):

We sold some second hand light-fittings for almost $200!

No, you didn’t misread: the new multi-millionaires didn’t just say to the builders “it’s a soon-to-be $6 mill house, so throw the junk away … or, take what you want” … they sold some stuff for $200 😛

Just in case you still don’t see the irony, here was the process:

1. We went to the house and decided what we wanted to sell: a few light fittings; some old built-in shelving (total hoped-for sales price circa $700)

2. We photographed everything that we wanted to sell

3. My wife and son listed each item on eBay (about 5 or 6 separate auctions)

4. My wife dealt with the two ‘winners’ (only two of the items actually sold first time around: both were light fittings)

5. I met the winners separately at the house and helped them remove the light fittings

6. I ‘upsold’ both: one with a heated-towel rail and extra light fitting for an additional $9, and the other for an additional $50 of lights

7. My wife and son are busy relisting the shelving and unsold lights as I am writing this … Round 2. Ding!

So, I spent a whole morning – plus all of the lead-up work – ‘earning’ exactly $140 …

… in some circles (millionaire circles, that is) that would be regarded as sick 😉

But, that’s when it hit me: it was not delayed gratification that set the grounds for our later financial success …

… that’s a result, not a cause.

And, it wasn’t saving 15% – 50% of our income, or putting money into a 401k, and so on … they are all results, not causes.

It was the respect that we had and still have for money as a tool to help us live our Life’s Purpose that caused us to do all of these things …

… read that again, carefully: I didn’t say ‘love’ or ‘need’ or ‘desire’ or ‘greed’ … I said respect.

If we want the money to live our Life’s Purpose, we have to respect money as one of the tools (just one, not even the most important) to help us achieve that. Just as a hunting nomad would respect his hunting weapons, a farmer his plot of land, a charter pilot his aircraft, and so on: we respect the money that feeds us and fuels our needs.

This means that we don’t squander it needlessly, we save it when necessary, and we spend it when it doesn’t make sense not to … that’s Making Money 101, and it just hit me like a sledgehammer between the eyes: delayed gratification is the tool, but gaining a healthy respect for money is the lesson that we all need to learn.

I won’t forget this lesson … will you?

That old chestnut …

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7 Millionaires … In Training! featured on iReport.com … click here to read more!

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My Money Blog gives me the excuse to revisit that old chestnut – a favorite of mine, since it is so emotive and is bound to piss off Ramseyphiles, saying:

I’ve been thinking more about whether I should commit some additional funds to pay down the principal on my mortgage and reduce my interest paid.

I like this opening sentence, because it clearly provides the financial motivation to pay off your mortgage early: to reduce your interest paid.

Since interest doesn’t gain you anything, why not pay it off as early as possible?

Simple: because you still need to decide what to do with the mortgage payments that you USED to make, once you stop making them?

If you want to get rich(er) quick(er) you’ll probably put them into some sort of investment that earns you at least an 8.5% long-term return … and, if you REALLY want to get rich(er) quick(er) you might even borrow money so that you buy an even higher performing investment (e.g. ‘start a business’ funds, investment property, margin loan on stocks, etc.) …

… you’re being smart!

But, if you are going to do that later, why not start earlier, when you have more time to:

a) allow compounding to really ‘kick in’, and

b) recover if things should go awry?

Your answer, of course, will be: “because I have a mortgage to pay” …

… when it should be: “you’re right, otherwise I won’t have a retirement”!

We would normally leave things there, but My Money Blog finished his article with a nice suggested strategy when deciding if to pay your mortgage early:

My idea is to simply look at the current yield of a comparable U.S. Treasury bond and compare it to my mortgage interest rate. If my mortgage interest rate is a lot higher than the bond rate, then I should pay extra towards the mortgage. Otherwise, if the Treasury rate is higher, then I should invest in bonds or bank accounts directly instead. If it’s close, stick with liquidity.

My Money Blog seems to have the right idea: compare the AFTER TAX mortgage savings with what you can earn elsewhere, but comparing to the cash / bond rate is too conservative for most people.

Look, you’re in this for the long-term (eg do you have 20+ years left before you plan to retire?), so put your money where you can get the best 20+ year return; this is the order:

Businesses

Real-Estate

Individual Stocks

Index Funds

Bonds

CD’s

Cash

Start as close to the top as you feel comfortable handling eg

You may have no interest/aptitude in either real-estate, businesses, or even learning about how to value companies/stocks, so you may simply buy a low cost Index Fund and wait 20+ years for your return …

… but, no matter which you pick (unless, you are wading down at the Bonds, Cd, Cash end) – and, you have 20+ years to ‘play with’ – it’s really no contest 😉

What makes you wealthy may not KEEP you wealthy …

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It may be OK to choose an activity that some would consider ‘gambling’ to make your money: trading stocks and options; trading options; flipping real-estate …

… or, in this case, it’s Phil Ivey who many consider to be the ‘Tiger Woods of Poker’ a.k.a. The World’s Greatest Poker Player.

But, listen closely, in the 10 seconds from 5:00 you will hear the likely source of his eventual demise – Phil Ivey’s Financial Archilles Heel.

If this is you, seek help now … if you want to reach your Number by your Date, you may need to take a few chances to make your money, but once it’s in your hands you don’t want to risk just throwing away a penny of it!

A cruel financial joke?

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Well, after a week of up/down – but, mainly DOWN – blog time, we have our new site up and running! Please let me know what you think?!

Thanks for your patience … FINALLY, here is today’s post 🙂

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Oh, if only we earned three times more than we do today …

… then we could tithe, save, and meet our financial goals. Life would be SO much easier 😉

Rick puts it simply:

Saving half your income is far easier if you make $180,000/year than if you are making $61,000/year.

I’m not so sure: there is a cruel financial joke; it goes something like this:

– earn $50k, spend $50k?
– earn $150k, spend $150k!

The good/bad habits are made when you ARE earning $61k per year … at least, in my experience. And, in Scott’s (who is an Ultra High Income doctor) experience, as well:

Even if we brought home a third of what we do now, we would simply have a smaller mortgage, lower taxes, lower resulting insurance and lower costs in several other areas and we would be saving a large percentage of our salaries as well. This is were delayed gratification comes into play

The reason WHY Scott can save half his income, is because he started off with low expectations, and kept them in check, even as his income grew and grew and grew:

I guess people think that i’m super frugal and living a little on the miserly side, since we are saving half of our net income per month. But, the thing is, we net 15-16k per month now. If I can’t find some kind of peace and enjoyment on half of that after growing up poor, then I have serious problems!

Peace and enjoyment is found in frugal living for some, and living ‘large’ for others; what matters most, I believe, is that you live within whatever means you decide to put together 🙂

It's all about the curve – Part III

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While we all know that straight lines are passe, even compounding – the panacea to the masses offered by the financial services industry – does far less for us than cursory examination would at first seem to indicate, so let’s finish this series by taking a close look at an amazing effect … it’s called:

The J Curve

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I am, perhaps, guilty – along with Michael Masterson whom I quoted in this post – of providing the impression that, in order to make your Number, you simply need to ramp up the compounding effect … that is, a larger compounded ‘interest rate’ provides a larger / quicker outcome … all in a nice, neat geometric progression.

DrDollaz states the issue very nicely:

Sometimes I think the assumptions of 50%+ compounded growth rates over long extended periods of time is a little excessive. I own 2 fairly successful small businesses and have seen roughly 75%+ growth in my net worth over the past 5 years if I want to count “conservative” business equity and if that continues, then I’ll blow past my number ($12.5 Million in 5 Years from now will be more like $30 Million in 5 Years!). I just feel that at some point the growth rate is not “as” easily sustainable (although I’d LOVE to be wrong!!! :) )

But, Michael Masterson’s assumed 50+% compound growth rate for successful business startups is only true when planning your Making Money 201 strategies to reach your Number [AJC: assuming – as it will be for most of my readers, at least – that MM101 won’t be enough to get you there by then], however …

… in reality:

1. You PLAN your approach to your Number/Date by calculating the Required Annual Compounded Growth Rate, but then

2. You ACHIEVE your Number/Date through a series of unpredictable – and, often climatic – events.

The simplest way to explain this is to look at a recent phenomena with this very blog:

I write my blog daily and promote it enough (by leaving comments on other blogs; submitting to the occasional personal finance carnival; and so on) to have hundreds of daily readers; but, every so often, one of my articles is picked up elsewhere and … boom … readership skyrockets!

Here’s what happened to my readership when Kimberly Palmer asked me to contribute to an article that she was writing for US News:

picture-2

Now, I could not have engineered this result, yet I instigated it by ‘cold contacting’ Kimberly some months ago and contributing this ‘guest post’ … it’s almost like I positioned myself for success, but then it actually came of its own accord!

You can see on the graph the J-curve effect – not once, but twice – as the article was first published in US News … then syndicated by Yahoo! Finance.

And, this is the way Making Money 201 seems to work (yes, the most powerful growth strategy – as always – belongs to MM201): a series of dramatic spikes interspersed by plateaus and sudden drops …

… it’s not a smooth ride to the top, but a hairy roller-coaster ride to (we hope) ultimate success. This is why most people aren’t rich: they can’t stomach the dramatic up’s and down’s 🙁

Looking back on my own career, I realized that my financial and business success could be traced back to three ‘explosive events’ (hence the ‘elbow’ or the ‘J’ in the curve):

– I had been trundling along with my business barely breaking even when I finally ‘hooked’ the big one; a large corporate whose client base matched the demographic of my prospect list, and whose products complemented mine (actually, mine complemented their product set); I picked up two other major clients at the same time: my sales quadrupled in just 6 months.

– Later, I signed a $20 million, 5 year contract that saw me open my business (as the 51% majority stakeholder in a Joint Venture) in the USA; this quadrupled my business again.

– Later still, I signed a series of transactions (so, I guess this was really a series of slightly smaller ‘explosions’) to sell my businesses at excellent, pre-crash, valuations.

Each J-Curve Event produced a 400+% growth spurt, generally followed by a long flat (or even slightly declining, as customers dropped off) period, leading up to the next J-Curve Event, and so on …

… the combined effect over the entire period of owning the business would have approximated a 50+% annual compound growth rate, but I never ran the actual calc’s (since I started with $0 capital, my actual $$$ return is technically infinite, anyway).

So, you need to position yourself to take advantage of all of these different types of curves if you have a Large Number by a Soon Date …

… then just sit back and wait for the explosions bomb-icon1

Nasty Mr Inflation ….

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Nasty_ManMost people that I talk to seem to misunderstand inflation and how to apply it to thinking about your retirement …

… the easiest way to deal with this is to think of inflation in TWO pieces:

1. Leading up to retirement (a.k.a. “life after work”)

2. After you have stopped working

It should be easy to see why:

In the former you are working with a stream of income (e.g. your salary) trying to build up to something big (i.e. your ‘nest egg’) …. whereas, in the latter you are working with a FIXED amount of money (i.e. your nest egg) and are trying to create an annuity stream (i.e. a pseudo-salary).

Can you see how one is almost the exact reverse of the other, yet inflation plays a HUGE – but different in effect – part in both?!

Today, we’ll deal with leading up to retirement:

Dealing with inflation in the planning towards your Number (i.e. your nest egg) is dealt with quite elegantly (for the mathematically-minded) in this post by Pinyo:

Step 1: How much do I need today?

I need $40,000 per year

Step 2: Adjust for inflation.

Now we have to adjust that $40,000 for inflation. For this example, we assume inflation rate is 3.5% per year. We accomplish this with the following formula:
Inflation Adjusted $ = Today’s $ * ((1 + inflation rate)^ Number of years to retirement)

Inflation Adjusted $ = $40,000 * (1.035 ^ 30)

Inflation Adjusted $ = $113,000 (rounded up)

I need $113,000 per year after inflation

Step 3: Multiply by 25

The formula:
Retirement Needs = Inflation Adjusted Income * 25

Retirement Needs = $2,825,000

I need to save $2.8 million to begin retirement

I can’t get the math to work, but you need to visit Pinyo’s post for the full explanations and try it for yourself …

We have some slightly different rules:

For example, I presume that inflation will be at least 4% for the next X years (economists were predicting 5+%, but who knows now, given the current economic situation?!) and I have been assuming a ‘safe retirement withdrawal rate’ of 5% (i.e. Rule of 20). Together, these come to a slightly lower ‘number’ than Pinyo, but not by much: $2.4 million. That’s why, for planning purposes, I don’t get too hung up on what numbers you decide to choose …

That’s also why I find that for us non-mathematically-minded-people [AJC: yes, I have 2nd year college math and I still can’t add in my head … let me see 1 + 3 = $7 million … good enough for me! 😉 ] that the following table is ‘good enough’ to estimate for inflation; if you earn $40,000 per year (or whatever you currently earn, or want to earn when you retire), then to estimate how much income you need to replace:

•    5 years out, add 25% to the current amount.
•    10 years out, add 50% to the current amount.
•    20 years out, double the current amount.

30 years out, we would simply multiply by 2.5 (which ‘only’ gets us to $100k, rather than Pinyo’s $113k). Again, for planning purposes, I actually think that this is close enough … but, if you are good with a calculator (or, better yet a spreadsheet), go for it!

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In the next and final part of this two-part series, we will look at how to deal with inflation after you stop work / retire …