Quote: (03-17-2019 01:19 AM)H1N1 Wrote:
Because markets crash, and if your capital halves you're suddenly trying to live off 7-12k USD - if the company continues to pay a dividend at the same rate.
Edit: it's not such a problem if you have millions invested, e.g. going from 8% dividend on 10 million to 4% on 5 million for a year or two might involve curtailing the excesses of your lifestyle, but it won't actually change too many fundamentals, necessarily, in that with cash reserves, some caution and 200k coming in, one can continue to live in a reasonable amount of comfort.
I like this idea for a thread. I've read a bit about the topic but I don't consider myself a savvy investor and the above quote is a big reason for a lack of confidence in early retirement.
The FIRE community seems to latch on to the philosophy that markets always rise over time, and I suppose it might be true if you have a long enough horizon. I'll try to find and link an article I read recently where it was argued that going back to the early 1900s is too small a sample size to show historic market trends and the writer showed several 30 year periods (a fairly long time to be retired) where the markets fell, aka retirees without a big cushion were fucked.