Has the FIRE Formula Changed? Why 100% Index Funds Isn’t the Answer

59 snips

Feb 14, 2025

The discussion dives into whether relying solely on index funds is still a viable strategy for financial independence. As prices soar and market conditions shift, one host shares his bold choice to sell a significant portion of his index funds in favor of real estate. The contrasting views highlight the risks of 100% index fund investments and the diminishing certainty of FIRE assuredness. They also weigh the benefits of real estate, including cash flow stability and taxing strategies, as they navigate this evolving financial landscape.

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ANECDOTE

Scott's Portfolio Shift

Scott Trench sold 40% of his index fund portfolio.
He reallocated it to a rental property Mindy Jensen is helping him buy.

INSIGHT

Life Stage Investing

Mindy Jensen and Scott Trench have different investment strategies due to their different life stages.
Jensen, nearing retirement, maintains a stock-heavy portfolio, while Trench prioritizes de-risking.

INSIGHT

Market Concerns

Trench's decision is influenced by high market pricing (P/E ratio of 29).
He's concerned about a potential market crash's impact on his FIRE plans.

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