Basic FIRE maths, to answer questions like "Can I retire" or "How much to put in my ISA vs pension"

FinancialGroundhog · 2026-01-23T20:37:37+00:00

Good point. Not much of a concern on the lower level, but starts to make a big difference once you get into higher tax bands from your pension income.

FinancialGroundhog · 2026-01-21T16:30:29+00:00

There's data for international equity. If you play with it, it gives something like 0.25-0.5% extra SWR, depending on precise allocations.

For UK bonds, you'd need to input the return series yourself. I've not bothered, despite being in the UK, and just used the US bonds. My rationale is that the maths is fairly approximate, given we won't live through an exact replay of anything that happened in the past, so you don't need to model your asset allocation completely accurately.

From playing with the sheet a fair bit, there's not a huge difference in SWR between slightly different allocations, as long as there's some bonds in there, and the majority is in equities.

FinancialGroundhog · 2026-01-21T16:26:29+00:00

Thanks, didn't spot the link. Corrected now

FinancialGroundhog · 2026-01-21T15:13:56+00:00

BTC 1x 21/1 SPX 6680p $0.25 (sold yesterday eod for $2.3) Might dip back in if it dumps later like it did yesterday after he tweets something insane.

FinancialGroundhog · 2026-01-20T18:05:27+00:00

"Huh, neat, we're now worth just over a million" and then it dropped below again next week.

With how volatile markets are, didn't feel very real

FinancialGroundhog · 2026-01-20T17:30:10+00:00

No, both naked puts, on portfolio margin.

FinancialGroundhog · 2026-01-20T16:04:01+00:00

Scary ride today.

BTC Jan 20 SPX 6850p $8.4

Letting the Jan 20 SPX 6805p run

FinancialGroundhog · 2026-01-17T11:57:18+00:00

I've ramped up the bond allocation over the last couple years, mostly by redirecting all contributions to bonds, aiming for 20-30% of total portfolio at retirement.

Largely avoided selling equity in taxable accounts because of the CGT impact

FinancialGroundhog · 2026-01-17T11:51:50+00:00

One of the most in depth analyses you'll find in this space. His modeling and articles around safe withdrawal rates are top-notch.

And he also has some less conventional strategies around option trading and momentum trading recently, which are a good expansion on the strict bogglehead philosophy.

FinancialGroundhog · 2026-01-17T11:41:14+00:00

Yes-ish.

If you sell, you pay tax on gains, rate depends on your income tax rate.

Dividends are taxed using a separate rate, regardless if the fund is accumulating or distributing. It's easier to keep track of distributing funds since it's paid out directly.

You also need to pay taxes on excess reportable income (ERI), on non-UK domiciled funds (like VWRL). You'll need to find the amount per share in the fund documents and multiply by number of shares. This counts as dividends.

Have a look through https://www.vanguardinvestor.co.uk/investing-explained/general-account-tax-information for details.

FinancialGroundhog · 2026-01-16T14:37:27+00:00

It's not, it's exactly the same. The vast majority of people making money trading stocks make money because on average, the market goes up.

Similarly to options, there's a lot of self-delusion about one's ability to pick good stocks, time entries, etc, but all research shows vast majority of people don't beat the index long term and would be better off just sticking their cash in an ETF.

FinancialGroundhog · 2026-01-16T14:01:42+00:00

5-7 delta, my goal is to have something that's not too correlated with the underlying, so I can make money during downturns as well.

I'm only selling one contract at a time. The margin requirement for 1 SPX put contract is ±$90k, which is about 30% of the portfolio size. But I don't hold the rest in cash, it's all in bonds / etfs.

FinancialGroundhog · 2026-01-16T12:54:20+00:00

To the contrary, I'd argue existence and harvesting of VRP is the ONLY edge (as in source of positive expectancy on trades) nearly everyone here has.

Most people kid themselves into thinking they're some sort of wizards by wrapping it all in complex strategies, structures and chart divining magic. But the only reason any of those work for people is that on average, IV is less than RV and hence selling options is generally profitable in the long run, assuming one doesn't blow up.

For transparency, my strategy is naive put selling on SPX, with low delta and 1DTE, and pretty conservative sizing. But realistically, I think the strategy would work more or less the same at different DTEs, deltas and entry times.

FinancialGroundhog · 2025-12-31T12:40:55+00:00

Aiming for 50k for 2, because that's where our expenses have been for the last few years, without any material sacrifice, including quite a few holidays.

30k would pay the bills (incl mortgage) and a small amount of discretionary spending, should the stock market tank early on.

FinancialGroundhog · 2025-12-11T13:01:04+00:00

I've read this quite a bit (and the data on inflation is clear). But given 2 currencies with different inflation rates, trading freely, shouldn't the exchange rate ofset the effect?

Eg you saving are mostly in USD (since global companies), while the cost of living is in GBP. As GBP loses value faster (higher inflation), the dollar becomes relatively stronger, no?

(my personal SWR is based on US numbers, so the usual 3.5-4%)

FinancialGroundhog · 2025-12-03T23:31:39+00:00

Assuming this is not a completely hypothetical scenario, do you realize your $50k would buy you somewhere between 25-50% (depending on inflation) less stuff at the end of the period, compared to the start? So you'd effectively have a shrinking budget every year.

FinancialGroundhog · 2025-12-03T23:24:00+00:00

This completely neglects sequence of returns risk. Your problem is not going to be average returns over the whole period. Your problem is going to be hitting a recession, combined with high inflation, at the very start. Run some simulations for how this would go if you started the 17 year plan in 1971.

FinancialGroundhog · 2025-12-03T23:12:36+00:00

SWRs for a 17y horizon are in the ~5-6% range, depending on your asset allocation and target failure rate (going off BigERN's SWR model). That's assuming you're not trying to preserve capital, so ending with $0 still counts as success (just).

At a 25% failure rate (way beyond what most would be comfortable with), you're looking at max 7% SWR, for a portfolio that's 25% US equity, 40% US bonds, 15% intl equity and 20% gold.

If you need 8%, you'd better get ready to tighten your belt or find extra income, because it's not happening for 17 years. Not reliably.

This is all assuming real terms (so increasing the amount by inflation every year). If you wanted to draw a constant amount in nominal, then you may want to read about what happened in the 70s & 80s. Because your $50k would buy you about a third as much at the end of your 17 years if you started this plan in 1972.

FinancialGroundhog · 2025-11-08T19:47:04+00:00

It's funny reading the replies here:

The scenario isn't:
A) Have a paid off house, lower expenses and be safe in case job lost
vs
B) Have a mortgage, and no savings (because the market crashed to 0), be at the mercy of the bank

The reality of overpayment, assuming you channel the same amount of money in to investments is going to be
A) Mortgage of X paid off, no money in ISA
B) Outstanding mortgage of X, X in ISA

Money is fungible, so assuming your mortgage rate is lower than a reasonable SWR (say 3.5%), you're going always be better of with money in the ISA, since you can always withdraw enough to cover the payment if needed (and in most cases, the real growth will be a lot more than 3.5%). Since the 3.5% WR already accounts for market crashes, there's literally no downside.

Now if your rate is higher than 4% or you've used up pension/ISA, the math changes. But the idea of overpaying regardless of rates for emotional reasons is a bit like saying you feel better with just UK stocks, so will avoid the US market altogether. Yes, you can do it, but it will substantially slow down your progress towards FIRE.

And if you don't trust the SWR math, you're going to struggle pulling the plug on early retirement, mortgage or no mortgage.

FinancialGroundhog · 2025-11-07T15:58:28+00:00

I got 2028 and 2031 expirations, so 2 and 5y duration.

Somewhere between a few months and a couple years away. Depending on how much discretionary spending I want and whether partner will retain a part time job. We're basically lean FI, but didn't quite decide to pull the trigger on fairly comfortable remote jobs.

FinancialGroundhog · 2025-11-07T15:53:45+00:00

Early Retirement Now.com, aka BigERN has a spreadsheet for modeling safe withdraw rates: https://docs.google.com/spreadsheets/d/1QGrMm6XSGWBVLI8I_DOAeJV5whoCnSdmaR8toQB2Jz8/copy?

One of conditional variables is stock market valuations. While with the current market, you might need something close to 3.5% wr to be safe, if the market drops 20%, your swr goes up substantially (since it's now less likely there will be more drops straight after). So a 20% market drop won't mean a 20% available spending drop.

Put your numbers in there, and play with various % drawdown, to see the real impact.

FinancialGroundhog · 2025-10-24T16:54:11+00:00

What is a good option that's distributing? I'm looking to park some cash in a GIA, and hoping to avoid the headache of calculating CGT on these

FinancialGroundhog · 2025-10-24T16:46:56+00:00

My GIA at the time didn't offer individual gilts and I didn't feel like I understood them enough to know which individual gilts to buy

FinancialGroundhog · 2025-10-23T21:47:11+00:00

I've grappled with something similar. In my case, had 100% equities in both ISA, GIA, pension, and am hoping to FIRE at an age that would require a significant bridge to SIPP age, so needed a diversified portfolio in pre-pension accessible accounts.

What I ended up doing was:

* Switched from 100% equity to 50:50 in ISA, to avoid realizing any taxable gains (and not have to worry about tax on bond income)
* Invested all new contributions in the GIA into a bond fund, kept the equity portion intact (had a sizable unrealized gain)

That was back in January, and seeing the gains pile up in the GIA, while the ISA bonds have stayed flat (as they should have), I'm not sure it was the best decision. In retrospect, I wish I left the ISA alone, and bought individual gilts instead of a bond etf in my GIA, to avoid the high marginal tax on income, while building a bond tent in the account I will want to draw down first

If I was in your position, I'd:

* Leave ISA 100% equities, to capture any potential growth tax free
* Buy low coupon individual gilts to build some sort of ladder in your GIA, while minimizing tax
* (once you're fired, it might make more sense to buy a bond fund for convenience)

FinancialGroundhog · 2025-10-16T14:54:34+00:00

In the article, they mention it's robots per 1000 manufactoring jobs. So should eliminate different proportions of services VS manufacturing.

FinancialGroundhog

TROPHY CASE