In the last few months, I was contemplating my ideas on how to actually evaluate my portfolio for FIRE readiness. I know my numbers (my expense tracking trial of 2 years is coming to an end in December), I know how to diversify my portfolio, but I am still not sure if everything is at the right place.

Luckily, I knew just the person to talk to, so earlier in August, I contacted Karsten Jeske, the author of the Earlyretirementnow blog. He was happy to take my case and we scheduled a call for late September. By then, I actually managed to set up a daily portfolio valuation tracker (now available on the homepage), so I knew a bit more about how I performed since September last year.

Anyway, I had this call with Karsten, who went through my asset allocations, showed me his ETF comparison tool (it tracks over 190 ETFs for correlation, 10+ year performance in the past, etc.). He concluded that if I stick to a 24-26k EUR/month budget, I should be safe even in a 50-year time horizon. His main bits of advice were the following:

  1. Consider adding a 7-10 year treasury bond into the bond part of the portfolio. His argument was that if long-term inflation ticks around 2.4%, then the 4.1% nominal interest is actually 1.7% of real return. It is good enough for bonds, and it should help with my bond glide path too — meaning that I start with more bonds now and gradually shift towards more equities in the next 5 years.
  2. Related to the bond side, he also emphasised that while going for a 70-30 portfolio is good, a 60-40 could be even safer with the current valuation levels. Again, I may only get 1-2% real return from the stock market in the next few years, so I may as well get that from bonds.
  3. Finally, he gave me some ideas on the currency risk — since 80% of my spending is in forint — he suggested I buy some local bonds. Luckily, ÁKK just released a new set of bonds paying 7% nominal interest, so I will probably buy some of those to have a bit of forint liquidity as well.

At the end of the conversation, he said that “Adam, you seem to be ready to FIRE, so just hang on tight and then enjoy your early retirement”.

Thanks, Karsten, I will just do that.


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