1/

Get a cup of coffee.

In this thread, I'll help you work out how much money you need to retire.

2/

The goal is simple.

You want to accumulate a *large* portfolio of assets.

How large?

Well, you should be able to quit your job. And you and your family should be able to live comfortably for decades -- just off of the income generated by this portfolio.

3/

This is the crux of the "FIRE" movement.

FIRE stands for "Financially Independent, Retired Early".

The basic philosophy is: keep your spending needs low. Save a large portion of your income. Invest these savings. With luck, you'll be able to retire early.

4/

FIRE advocates have a rule they love to cite: the 4% rule.

The 4% rule says: your annual expenses in retirement should not exceed 4% of your portfolio.

You can use this rule to calculate how large a portfolio you need to accumulate before you can quit your job and retire.

5/

For example, suppose you and your family need $40K/year to live comfortably in retirement.

Then you need to accumulate a portfolio that's at least $1M.

Another way to say this is: your portfolio should be at least 25 times your annual expenses in retirement.

A children's book explanation of what's happening:

1. If you are "smart money" you are allowed to take your $1 and leverage it up to $15+

2. You can now buy $15 of stock AND if you promise to short companies, you can short $15 of stock as well

3. In finance language, this means that you are $30 "gross" ($15 of longs + $15 of shorts) but $0 net (+$15 of longs -$15 of shorts). This makes everyone feel good because it feels like you are taking zero risk...but in reality, your $1 is exposed to $30 of risk.

4. Now you go around and tell your friends about both your longs and your shorts and when you do it at a restaurant vs on Reddit, its called an "ideas dinner".

5. You also publish your longs on a quarterly lag via an SEC rule. You don't have to tell anyone about your shorts.

6. Now the less cool people who weren't invited to the ideas dinners, start copying your longs based on your report.

7. You realize that publicizing your shorts is also a good idea so instead of only selling stocks, you also BUY options (puts) which has to be reported.

8. Now everyone can see both your longs and your shorts and if you have a hot hand, you can likely predict that the cool people from the dinner as well as the less cool people monitoring your filings will copy you.

9. But then an outsider notices that the math is way off!

Does increase in Inflation & hence interest rates lead to a fall in equity? While theoretically yes, practically the last 20 years of data shows otherwise

Please ‘re-tweet’ 🧵& help us educate more retail investors

#Investing

Lets start with basic, y does inflation ⬆️?
Most feel bcoz of higher demand & lower supply but that’s nt the only factor. Imagine there is a shortage of laptops wrt the demand, but there is no liquidity in the market (people don’t have monies) will the price of laptop ⬆️? No

So, Inflation takes place because the demand supply situation is accompanied by high liquidity, people have the monies to spend and hence the price goes up. Inflation does not take place only because of the demand supply gap (3/n)

Its RBI’s job to keep inflation under check. What role does RBI play? RBI is comfortable keeping Inflation between 2-6% currently. So if Inflation is increasing, how can RBI control it? Can RBI do anything to demand & supply? Nothing (4/n)

So the only tool available with RBI to control inflation is controlling liquidity. If RBI is able to reduce liquidity in the market, less money will chase the goods and hence Inflation can be expected to stabilize. (5/n)