Safe withdrawal rate of 4.5% means it’s a bit too early. You’d need to reach 900k or live on 32k per year.
The inheritance doesn’t change things as it may occur at the very end of a ~30 years period, which is the timeframe on which the safe withdrawal rate is calculated. Too risky for my taste.
What is the origin of the 2k/month passive income? If it’s reliable and not from the portfolio, I would say go for it. If it’s dividends and interests, then it doesn’t change things and I would wait a bit.
You are in a good situation to pivot professionally, though. Is there something you enjoy doing that would bring in some money?
I wouldn’t retire, but I would find something meaningful to do as a job that I enjoy. You potentially have another 30 years of ‘working life’ to do something meaningful.
So if you have 2k/month passive income and 36k/year expenses, you’d only need to sell 12k of your portfolio each year, which is easily doable with a 800k portfolio. You could live off 1.5% dividend yield alone, without having to sell any shares.
You could ask your relatives if they could give you a small part of the 1.5M in advance (“Erbvorbezug”), even 100k would make a huge difference if invested for 30 years. But, again, with how little money you actually need, it wouldn’t be necessary.
what many people that apply geo arbitrage to FIRE early, what many don’t realize. As Emerging Markets develop towards more mature markets, they not only experience “normal” consumer price inflation as such, but as well a price uplift as the economy matures.
Meaning… even if we take currency out of the equation and assume it was all in USD. When “developped” world economy had a CPI Inflation of 2%, you will very likely in such country still have a CPI Inflation of 5%+. This given the country overall becomes more expensive. You can’t avoid that inflation as its not a matter of better product specification or quality, but simply as the entire economy matures.
Thanks, Wolverine! The 2k is long-term passive income not coming from my portfolio. It’s from automations from my previous work and requires about 2–3 hours of maintenance per month. It’s reliable and will likely grow.
I’ll think about doing something I enjoy that isn’t profit-driven.
Yes Patirou, I could easily cut my expenses in half. I’ve just been traveling a lot and not paying much attention. 3k per month is really the upper limit.
In Bolivia you can retire for sure. But then youbare locked in essentially, and can‘t ever com back. As you then don‘t have enough money.
If you ever plan to go back to central europe. You likely need more.
Maybe in old age, you want to go back to your home for example (health care related etc)
E: Scratch that, skipped the 1.5m inheritance…
Yea doesnt matter, you can basically do what ever you want, as long as your withdrawal rate is not crazy.
Onlybone comcern: where is that 1.5m cominz from? Is it current cash and stays in cash? Then by age 65 maybe a bout of hyperinflation (however unlikely) could erode all the value. So make sure it‘s imvested reasonably now.
Negative. He can only retire IF Bolivia does not develop more/faster than „the World“. Otherwise, he will need to swallow local development related CPI that was not compensated for by the global equity premium. Meaning: he would be squeezed out of the country too.
The risk is low over a 30 years period, but many things can happen over 50-60 years.
There are ways of hedging against this risk, but that requires more money.
There’s a corollary to what you’re saying which will make him a bundle
Bolivian development with above-average CPI increases will come with above-average growth rates for certain parts of real estate, e.g. in dumps that become gentrifying areas (or, gentrifying areas that become pristine). Add leverage and you’ll outpace inflation.
Of course, that’s probably not what @magicien plans on doing with his funds when he talks about “retiring” (from whatever)
Money is trivial but it also takes entrepreneurial bent which I’m not sure op has, and then it takes good connections on site otherwise he WILL be fleeced.
That’s 24k per year. If you can keep it going (beware of loosing business over time) and barring high inflation (as the whole expenses would be subject to it), the 800k portfolio should easily cover a 1.5% withdrawal rate. Then you’d have the inheritance on top.
I’d make sure not working wouldn’t alienate the relative who stands to leave me that inheritance (and reassess if there is a risk of such). Other than that, I’d feel free to do whatever I want (you don’t really need the inheritance either so you may feel free to make the best decision for yourself).
I only partly agree. A country is not homogeneous. Take Colombia. If I live in a nice area like Usaquén in Bogotá, it’s true that costs could rise a lot over 10–15 years as Colombia develops (an it will). I can get beaten by hyperinflation.
But development also improves other areas. Places that were less attractive before can become livable in terms of safety, infrastructure, and services.
Geo-arbitrage is not static. You can move. What used to be a second-tier area or city can become similar to what the best areas were 15 years ago. For example, you might move to an other area of Bogota or a city like Pereira and still enjoy a similar lifestyle, with prices that mostly follow normal inflation.
Nah with 800K you have a lot of leeway. You can retire in all of eastern europe and some southern states with that already. I dont see Bolivia making that heroic of a leap in OPs lifetime.
@magicien thanks for sharing your story. Very interesting. My wife is from Bolivia and I spent two years living in Colombia (In Roldanillo and Jardin so more rural) and regularly visit Bolivia for the family. I feel that the inflation is very high in Bolivia specifically for items in the supermarket (like IC Norte, Hypermaxi and Fidalgo) but specifically also for Real estate. When I first came to the country in 2008 everyone was offering me land plots for no money (but I did also not had any money back in the day ) now prices have skyrocketed and it’s hard to get a decent deal even for a department only. I’m looking since a long time to get something in either Cochabamba or Santa Cruz.
That sad I think you can make a good living but not a fatFIRE with your numbers. However, there is nothing that speaks against it to try it out for some time. You can always come back and look for a job back in .
I’m curious though why you chose Bolivia instead of Colombia? I personally think that Colombia has way more to offer than Bolivia.
I absolutely would retire if I were in your shoes and had plenty of passions to fill my time. You can always earn some money with your passions to compensate for the 12K you don’t earn from your passive income. And in Bolivia there’s probably room to scale down expenses if it becomes absolutely necessary.
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) now prices have skyrocketed and it’s hard to get a decent deal even for a department only. I’m looking since a long time to get something in either Cochabamba or Santa Cruz.
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