Comments on: Compound Interest is a Powerful Force…if You Supply it With Enough Capital

By: Zach @ Four Pillar Freedom

Zach @ Four Pillar Freedom — Sat, 16 Jun 2018 18:52:12 +0000

In reply to Kit. Hey Kit! Thanks for the heads up, you were right, the graph was incorrect. I just updated it :)

By: Zach @ Four Pillar Freedom

Zach @ Four Pillar Freedom — Sat, 16 Jun 2018 18:51:25 +0000

Exactly – once you reach a point where your investments can cover most of your lifestyle expenses, you can begin to coast 🙂

By: Lily | The Frugal Gene

Lily | The Frugal Gene — Sat, 16 Jun 2018 18:00:49 +0000

After the 30 year mark, it really takes off. It’s almost ridiculous. By then it’s enough to spend without denting the balance. It just spurs more wealth!

By: Kit

Kit — Sat, 16 Jun 2018 17:14:01 +0000

Zach,
You do such a great job of visualizing information. I did have one question on your third chart in this post. It looks like all the initial investments are starting from basically the same point. Shouldn’t they be spaced out in $100k increments as indicated by the legend (it currently looks like the bright green line starts at about $200k and ends at $2MM when it should actually start at $1MM).\?

By: anonymous

anonymous — Sat, 16 Jun 2018 15:52:20 +0000

Yup, the cool part is that if you can get your expenses down low, you will cross over a point when the yield off the growth starts to payoff your lifestyle and then you are on easy street. The secret is to start as early and contribute as much as you can so you can pull that point in time when the growth of of that yield passes that lifestyle expense as far to the left as you can – perhaps another blog post showing that visualization? If you have enough of a nut, you can simply live off dividends and yield or reduce your assumed returns by 4% and use the 4% rule (although it might have to be derated for longer retirement duration assumptions).