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Hi everyone 🙂Â
I’ve been studying the topic of investment in the background of my mind for a year already, but still can’t come up with a life strategy and portfolio itself. Hope you guys can help me, cause my case is quite simple, I guess. But still very important for me as it concerns my whole life savings.
The purpose of investing:
I'm 30 right now. I plan to retire in 1 year. I have 75% of the sum that I will need for my early retirement. The calculation is based on 4% FIRE rule. It is not because I have a big sum, but because I plan to have low expenses for the future life. In the next year I count to get the rest 25% by income and be ready to retire. When retired I plan to either still have an income from my business or to start something else in few years when having had a good rest. The whole idea of the early retirement for me is to travel, come back to myself, get into all my passions that were left behind during these years of gaining capital and building business. That means I want to be sure that I still be able to have an income if I never come back to earning money (let’s say I want to become a monk who still has to pay for living).
State of Residence: Eastern Europe (Non-EU).
Age: 30.
Horizon: 60 years.
Current portfolio: all in cash
Questions:
1. What asset allocation to choose for my portfolio? (Portfolio structure)
I can start investing right now with my 75% sum and go to retirement in 1 year when I have 100%. How should I allocate? How should I change stocks/bonds ratio change in the coming years? Or keep it the same for the whole period?
I would prefer to keep it simple. At this moment I like the idea of four-fund portfolio of Vanguard (Total Bond Market ETF (BND), Vanguard Total Stock Market ETF (VTI), Vanguard Total International Bond ETF (BNDX), Vanguard Total International Stock ETF (VXUS)). But, of course, I’m here for your advice.
As I am a non-US resident, I would also ask for an advice how to do it best with Irish domicile ETFs.Â
2. How do I act in current turbulent times and in the future? (Investing strategy)
I’ve spent the whole last year in theory. I haven’t started to invest, cause everyone was talking about overpriced stock market and everyone was waiting for another collapse. And even after such a great trigger as pandemic, everything went even higher. So, at the moment there is much more reason to expect a market crash. Although I do understand that I have a long horizon, so I don’t need to care about volatility, but at the same time I start investing with my whole life capital. Which means if I experience -50% crash in the very first year, the whole idea of early retirement for me will die.
Hope to receive some good comments 
As I noted above, my case is quite standard (retire at 31, live on the income from stock market) and I think the answers are already found before by this community.
I have the Google Sheet (see Part 28) where you can model additional cash flows initially. 75% equities 25% bonds is usually a pretty good starting point.
Some questions: If you're "only" at 75% of your 25x target, how can you be so sure that you will have 100% in a year?
@earlyretirementnowcom thanks for the reply.
I did use your tool before and this is exactly what defines my future investment strategy (by now, if any advice won't change it).
I've found out 75/25 is the best ratio, yes.Â
Just wanted to ask: do I need to adjust this over the years? Some say to use a bond tent when you are retiring. Some say to use a U-shape (more bonds in the beginning and in the end). But for the beginning I'm still going to have some income from business and I'm not so afraid to drain my capital from withdrawals in the beginning, so 75/25 is good, I think. In addition, if the market crashes it will be not so painful.
In the end I probably will add more bonds, but since I have no idea when to do this - I probably will keep the same strategy over the whole period (75/25), what do you think?
Regarding getting the rest 25% of my capital in 1 year - this is the income my current business gives me, yes. I gained all my capital during last few years. This is very good result for me, but I'm already 30 and I'm afraid I will spend my best years on something I don't see as my life purpose. That's why I'm looking into leaving my business and having a good break. I'm just afraid that when you leave your business on autopilot it will most likely fade away quickly. That's why I count on passive income from investment in the worst case scenario.
Also, can you recommend the best ETFs for this purpose?
VT/BNDW or VTI+VEA+VWO / BND+BNDX?Â