In today’s blog I interview Jorge, a software manager currently living in Ireland.
With that engineer mindset and a passion for Financial Independence Jorge has shared his Retirement Simulator.
The link to the simulator can be found on Retirement Simulator | FIRE Dave
I asked the exact same 3 key interview questions to Jorge and the full Q & A is here, enjoy..
Who are you and how did you discover fire?
I’m a software engineer turned manager who grew up before the cell phone or internet era, in a country with high inflation and recurring economic crises. Luckily, my career afforded me amazing opportunities and good income. But throughout most of my life, my idea of investing in the stock market came from Hollywood: big money, high stakes, high powered individuals barking orders over the phone to their stock brokers. Not for the average person. So my savings went to property and US dollars. I never thought too much about retirement, and had a vague plan of living off savings and rental income from the properties.
Fast forward to the last decade, to a world changed by fintech and social media. During this time I moved to Ireland. With the difference in cost of living, my vague plan fell apart. I knew that my cash was losing value due to inflation, but with my very limited financial knowledge I was weary of doing anything stupid and lose it all. So I let it sit there, thinking I might go back to my home country where my Euro savings have a lot more purchasing power, and back to the comfort of my vague retirement plan.
But my kids were growing up in Ireland and would likely stay here, and I wasn’t getting any younger, so I started thinking more seriously about the last few chapters of my life. I also became aware of the Financial Independence movement. I realized I didn’t have a proper retirement plan so I needed to do something, and do it fast.
I hired a financial advisor who came back with nice projections of my financial future and a few alternative scenarios. I wanted to be able to play around with more scenarios without having to bother him with a thousand requests or retain his services long-term, so I decided to build my own financial simulator. I shared it with a few people, got great feedback and fixed several bugs. I now want to share it more widely, both because I think it’s useful and because the more scrutiny and bug fixes the higher the confidence in its correctness.
Running the numbers on my own gave me the confidence I needed to put a plan into action. Guided by my financial advisor and by several information sources (books like “The Simple Path to Wealth”, the Finimize app, blogs like this one, etc), I learned about financial markets, online brokers, different investment vehicles and strategies, and I’m now finally on my path to financial independence.
What is the backbone of your fire strategy?
First off, I maxed out my pension contributions in late 2019 after a chat at work with a fellow expat. He opened my eyes to the fact that the Irish pension scheme is not a scam like the one in our home country.
Then I opened a brokerage account and started dollar-cost-averaging through the pandemic-fuelled volatility. My strategy is quite aggressive given how late I started: most is in an ETF that tracks the S&P 500 growth index (high returns and somewhat diversified), and the rest is in more focused tech sectors (that fall within my “circle of competency”) and China (poised to become the next dominant world power), mostly in ETFs and part in Investment Trusts that, as individual companies, carry a higher risk, but only pay 33% CGT and don’t have deemed disposal.
I know it’s a volatile bet, but more knowledgeable people taught me that the market always recovers and that trying to time the market is a losing proposition. Also, I’ve been hardened by the wild swings of my bitcoin “hodlings”, which I don’t take into account for my financial planning as it may crash all the way to zero (unlikely but not impossible). So I know I can weather a market crash without panic selling.
What do you plan to do once you reach FI?
I want to keep working as long as I’m able to because it gives me purpose and I enjoy the people I work with. After I retire I’ll keep programming, as it’s an activity I enjoy, can be done from anywhere, and may even produce some extra income. I imagine my retirement traveling for months with my wife to wherever we fancy, and regularly visiting our widely dispersed family.
About the simulator?
The easiest way to understand it is to read the guide on the last tab, make your own copy and start with a naïve scenario. Enter your yearly income and expenses, zero out the retirement contributions and investments, and run it. You’ll see that your savings will not go very far after retirement. Change some parameters, for example add a pension contribution, and see how it affects the outcome. Add life events: buy a house with a mortgage (the guide page explains how to do that), invest in ETFs or Trusts. Maybe add a rental property. Play around with parameters like return on investments and inflation, see if your plan survives unfavourable scenarios.
Thank you Jorge! I hope you enjoyed this interview.
Have fun running the different scenarios on the Retirement Simulator Tool.