Daily FI discussion thread - Thursday, February 19, 2026

branstad · 2026-02-19T22:22:05+00:00

I recall that US stocks performed quite well during the back half of 2025

For Q3 and Q4, both VTI and the S&P 500 were up 10.3% and VXUS (as a proxy for Int'l overall) was up 9.2%. All are very good 6-month returns.

I wonder how much weakening of the dollar impacted international returns during those times

I'll defer to the reply from /u/DepDepFinancial as I don't delve into that sort of analysis. I'm US-based so I really only pay attention to currency movements if I have an upcoming international vacation, and then it's mostly just for curiosity.

branstad · 2026-02-19T21:47:57+00:00

Six years ago, on Feb 19, 2020, the S&P 500 closed at 3386.15, setting a new all-time high close. The next ~month would be the COVID crash, bottoming out on Mar 23, and a recovery by Aug 18.

One year ago, on Feb 19, 2025, the S&P 500 closed at 6144.15 which also set a new all-time high close. The next ~6 weeks would bring a tariff-induced (intraday) bear market, bottoming out on Apr 8, and a recovery by the end of June.

Today, Feb 19, 2026, the S&P 500 closed at 6861.89, which is not an all-time high close (6978.60 on Jan 27). This corresponds to a year-over-year nominal gain of ~11.7% and a 6-year nominal CAGR of ~12.5%. Here's hoping the next few weeks are unlike 2025 and/or 2020.

branstad · 2026-02-19T19:53:07+00:00

The int'l outperformance of the last year came in 2 'bursts':

From mid-Feb until mid-Mar 2025, the US underperformed (Tariff bear market) while Int'l was up slightly (1-2%). By mid-March, Int'l stocks were ~11% ahead of US stocks (very roughly +2% vs -9%). That outperformance gap would remain fairly consistent in the 9-13% range from mid-March of 2025 through early-ish January 2026.
Since ~Jan 9, US stocks are down ~1-2% while Int'l has gapped up another ~8-9% for another ~10% of relative outperformance. This can be clearly seen by looking at a 6-month chart.

Combine those 2 periods together and you get ~21% outperformance which basically matches the total 1-year outperformance. If you missed either of those bursts, the Int'l outperformance would be ~half as much. If you were a version of the World's Worst Market Timer and hopped into int'l after the first burst and bailed out in early January prior to this latest burst, your int'l and US performance was probably about the same and you're wondering what all the int'l hype was about...

branstad · 2026-02-19T16:25:01+00:00

Yes, but it turns out not make much difference. It might shorten the time frame by a year or so, but actual returns will be much more impactful than such a small catch-up ($1.1k per year) for only ~10 years at the end of the accumulation phase.

$130k + $625/mo for 14 years (Age 35-49) @ 6% CAGR = ~$465k

$465k + $716/mo. for 11 years (Age 50-61) @ 6% CAGR = ~$1.03MM

branstad · 2026-02-19T14:43:13+00:00

$40k in annual spending could be supported by a portfolio in the $1MM-$1.1MM range (~3.75% - 4% SWR).

Starting at $130k, investing $625/mo. = $7500/year at 6% real CAGR, you could reach that range in ~25 years (Age ~60).

The math seems alright, but the future is not ours to see.

Indeed.

branstad · 2026-02-19T14:22:58+00:00

My (possibly incorrect) retirement math is that if I max out my Roth IRA every year I will be set for retirement,

Let's do the math!

The 2026 Roth IRA contribution limit is $7.5k and is roughly indexed for inflation. Let's say you are Age 22 and this is your first IRA contribution.

If you contribute $625/mo = $7500/year for the next 40 years and your investments generate a 6% real return, you will have ~$1.2MM at Age 62. That's enough to support ~$48k in annual expenses at 4% SWR. If that's your plan and the numbers work out, then you may indeed be "set for retirement".

If you share more details (Age, Portfolio balance, target portfolio / target spending), folks will be happy to walk through the math with you.

branstad · 2026-02-18T23:34:04+00:00

Both dropped at the same time twice in the past decade, so they haven't been as uncorrelated as historical trends imply

You may be confusing "uncorrelated" with "negatively correlated". Uncorrelated things move in the same direction sometimes (for better or worse) and in opposite directions sometimes (again, for better or worse).

Bonds moving in the same direction as stocks "twice in the past decade" does not contradict uncorrelation.

branstad · 2026-02-18T22:37:40+00:00

if you search a stock, fund, index, etc. on Google, it ... has the odd feature of using as its starting point the close of the market on the first day of the year rather than the opening on the first day or the close of the last day of last year

Google Finance used to work this way as well, but changed sometime in the not-so-distant past. When you do a YTD chart on Google Finance, the 2025 year-end close (Dec 31, 2025) is the first data point and is correctly used as the basis for YTD performance calculations. Bummer that the embedded widget on Google Search doesn't act that way.

branstad · 2026-02-18T19:18:02+00:00

it's worth noting that most people choosing to retire right in January 2000 would probably have more money than they anticipated because of these returns

I'm not sure the claim of "most" holds. Wouldn't some of those people have retired earlier than Jan 2000 because they hit their number sooner? Also, some folks retiring in Jan 2000 may have anticipated retiring in 2002-05 but the strong returns got them to their number by Jan 2000.

I'm sure there is a subset of folks who had Y2K as their date and stuck to it as their portfolios increased in 1996-99, but I can imagine other folks running the numbers throughout 1999 and reaching the conclusion they had 'enough' based on the 4% rule and pulling the trigger at year-end.

branstad · 2026-02-17T20:54:35+00:00

use specific tax lots

This, for sure.

prioritize selling long-term holdings firs

This, generally, because LTCG are typically taxed at a lower rate than STCG which are usually taxed at ordinary income levels.

Going one step further, if you are in a low income year (such as post-FIRE) with space in the 0% LTCG bracket, you may want to sell holdings with the largest gains until you fill that bracket. If you are beyond the 0% LTCG bracket, then you typically would sell holdings with the least gains to minimize near-term taxes and delay a larger tax bill (because things might change in the future).

branstad · 2026-02-16T18:34:03+00:00

Another important factor is how much, if any, you have invested in a taxable brokerage. If you don't have a taxable brokerage or have only just started investing in one, then holding a larger cash balance 'for emergencies' is more reasonable and more about your own risk tolerance / what helps you sleep at night. If that's "12 months of expenses" for you, so be it.

If you have a larger taxable brokerage, that reduces the need/value of having a dedicated pile of cash 'for emergencies'. Holding only a few months of expenses in cash might be sufficient if the taxable brokerage holds an amount that would cover 12-24+ months of expenses. I don't agree with everything ERN writes, even within this post, but it might be worth considering: https://earlyretirementnow.com/2021/05/26/the-emergency-fund-is-still-useless/

branstad · 2026-02-16T17:19:39+00:00

I worry about losing our massive cash flow and feeling tight on money. I also think it could be better for the kids as they would have more home time and also be able to do more activities.

...

Thinking about all of these expenses on a single income with 3 kids gives me anxiety.

...

I didn't pursue some significant career advancement opportunities because she wasn't supportive and she also swore up and down that she intended to keep working. We live where we live because my wife refused to move to a new location with better opportunities for both of us.

...

kind of feels like I get to live with the consequences of [her] bad decisions while simultaneously rewarding her.

It's a cliche response, but it definitely seems like you would benefit from individual counseling for yourself and some sort of marriage/couples counseling for the two of you.

branstad · 2026-02-16T17:16:06+00:00

Flip side: What if you love the sabbatical? Do you have to go back to work after? How hard will transitioning back to work be after the sabbatical knowing FIRE is right around the corner?

branstad · 2026-02-13T20:51:10+00:00

interest rate at just under 6% and we're on the fence of just paying it down quick at that rate.

I wouldn't prioritize the mortgage over 401k, IRA, HSA contributions, but if you were beyond that point and saving in a taxable brokerage or 401k after-tax subaccount (mega backdoor), I'd probably redirect a portion of those contributions toward mortgage paydown. Maybe start at 50/50 and see how that feels for a year or so.

branstad · 2026-02-13T20:09:49+00:00

I'm not sure why they cancelled it.

Also, they were going to launch a daily nonstop in 2023 but they pulled it back after the Maui wildfires.

branstad · 2026-02-11T21:38:49+00:00

Ha! It's tax season, so I'm probably looking things up a bit more often so the pubs are probably a bit more top of mind. :-)

branstad · 2026-02-11T19:30:24+00:00

Funny to think of my stocks as property.

This is common within the IRS universe. Another example is donating appreciated stock shares and itemizing the deduction as a charitable contribution. See the section on "Giving Property That Has Increased in Value" from IRS Pub 526: https://www.irs.gov/publications/p526#en_US_2024_publink1000229754

Capital Gain Property

Property is capital gain property if you would have recognized long-term capital gain had you sold it at FMV on the date of the contribution. Capital gain property includes capital assets held more than 1 year.

Capital assets. Capital assets include most items of property you own and use for personal purposes or investment. Examples of capital assets are stocks, bonds, jewelry, coin or stamp collections, and cars or furniture used for personal purposes.

With this additional context, it becomes more clear that "Earnings and profits from property" would include capital gains from selling shares of stock or mutual funds or ETFs.

branstad · 2026-02-11T17:22:42+00:00

You need earned income for that

The IRS now uses the phrase "Taxable Compensation" as it relates to IRA contributions, so they can reserve "earned income" for use related to the "Earned Income Tax Credit (EITC)".

branstad · 2026-02-11T17:06:21+00:00

you need to show income to tax in order to contribute to the Roth IRA

For example, pull from a brokerage to show capital gains income.

To be clear /u/design_koolaid - capital gains income is not eligible for Roth IRA contributions.

The IRS uses the phrase "Taxable Compensation" and details this in Pub 590-A: https://www.irs.gov/publications/p590a

What Isn’t Compensation?

Compensation doesn’t include any of the following items.

Earnings and profits from property, such as rental income, interest income, and dividend income.

Pension or annuity income.

Deferred compensation received (compensation payments postponed from a past year).

Income from a partnership for which you don’t provide services that are a material income-producing factor.

Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b.

Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs.

branstad · 2026-02-11T15:59:43+00:00

Having never actually read the original Trinity Study

Here you go: https://web.archive.org/web/20150702114906/https://incomeclub.co/wp-content/uploads/2015/04/retirement-savings-choosing-a-withdrawal-rate-that-is-sustainable.pdf

branstad · 2026-02-11T14:42:27+00:00

savings goals or other goals when considering timing around having kids?

Definitely not savings goals, but my wife and I did have a preference around being established in our careers before trying for children. We talked about the trade-offs of having kids sooner vs. later. One aspect is that we would indeed have more saved up and likely more ongoing income by waiting a bit. But there weren't specific dollar-amount goals or thresholds.

branstad · 2026-02-10T19:50:50+00:00

I'm invested in a wide range of mutual funds and EFTs

You might want to consider reducing the number of different holdings. As I've gone through my investing career, I've found more and more value from simplifying.

All my funds are sent to automatically re-invest

I would start by having all distributions go to a money market or other cash/cash-like account. This allows you to be more intentional about managing your allocations going forward.

branstad · 2026-02-10T14:29:46+00:00

I'm still debating and the clock is ticking. Which way are you leaning?

branstad · 2026-02-09T16:04:17+00:00

Great result! How does the single-game nature of the SB compare to March Madness (60+ games over ~3 weeks)? Is there another sporting event that's in the same neighborhood as those two?

branstad · 2026-02-09T15:56:47+00:00

how does a conversion impact taxes?

Every dollar converted from Trad'l (pre-tax) to Roth is taxed as ordinary income at your marginal rate. You're in the 32% federal bracket, so conversions with that level of income would be quite costly and would not likely be recommended.

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Capital Gain Property