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$10,000 U.S. Treasury 30-year bond

The ur-text for the FIRE movement (Financial Independence Retire Early) is Your Money or Your Life by Joe Dominguez and Vicki Robin. I wrote a review of the book back in my Wise Bread days, so I won’t repeat that here. Rather, I want to take a look at the book’s investment strategy. Because many things investment-related changed rather dramatically between 1992 when the book was originally published, and 2018 when they brought out a revised edition, and now things have changed again.

The book began as a series of in-person seminars, that turned into a workbook with a set of audio tapes, back in the 1980s. Their investment strategy reflected those times. See my post on how my own investment strategy grew out of exactly that period.

At its most bare-bones, the original investment strategy was quite simple:

  • Live very frugally
  • Invest your surplus in long-term Treasury bonds
  • Track your spending and your investment income
  • When your investment income exceeds your spending: Congrats! You’re done.

This investment strategy made a lot more sense when long-term Treasury bonds paid 14% than they did when rates dropped down under 3%.

The result was a lot of criticism. But a lot of that criticism was misguided. The point of the FIRE investment strategy was not maximum return on your investment portfolio. The point was to generate a reliable stream of income that matched your spending.

If I remember the numbers correctly, Joe Dominguez got his spending down into the $6000-a-year range. If you could live on that, and could earn 14% on your investments, you probably didn’t even need $100,000 invested in T-bonds to cover all your spending and have enough of a surplus to reinvest against inflation.

Still, between the great financial crisis (call it 2007) and the end of the pandemic (call it 2022), the strategy didn’t work at all. For much of that period, the real yield on long-term Treasury securities was below 2%. It was often below 1%. So the revision published in 2018 advocated for a much more traditional strategy of investing in a blend of stocks and bonds. I haven’t checked the numbers, but I’m sure that strategy did much better than the “only long-term T-bonds strategy” would have.

I wanted to write just a little here, advocating for that old investment strategy, now that interest rates are getting high enough to make it somewhat more tenable, because the blended-stock-and-bond strategy loses something: It loses the absoluteness of having a stream of income that covers your expenses.

Think of it this way. It would be pretty easy to come up with an investment portfolio that beats T-bonds 85% of the time. But if 15% of the time it fails to produce a stream of income that covers your expenses? Well, then you’re not financially independent, and you’re not ready to retire early.

That’s what the T-bond strategy offered, and I’m glad that interest rates are getting high enough to make it seem a little more reasonable once again.

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An agility ladder drawn on a patio with sidewalk chawk

I’ve long thought some agility ladder training would help with my sword fighting. But never having trained with one, I hesitated to buy one. (Not so much for the expense—they’re cheap enough—as for having yet another thing to find space for, store, and keep track of.)

Instead I bought some sidewalk chalk and drew one. These squares are 18 inches each way which seemed kind of average. But a bonus of the chalk version is I can change it every time, if I want to.

Of course, as soon as I drew it, the dog wanted to participate.

A dog lying in the sun, next to an agility ladder drawn in sidewalk chalk

Another bonus: although we have several nice days coming up, I know I need to start using it immediately, because it will get worn away or washed away soon enough.

Now I’m studying agility-ladder stepping patterns.

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An "I voted" sticker on the front of my hoodie

I’ve written before about my own take on verifying citizenship for voters (at registration time, not at voting time) and on how the right to vote should be treated like other rights (not abridged without due process).

Critics fear that states could use the system to purge large numbers of valid voters from their rolls ahead of the midterm elections.

Source: Supreme Court Allows Use of Trump Administration’s Expansive Database for Voter Screening – NYT

I was briefly worrying about this, but then I remembered that I have already voted. Phew.

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We took poor Ashley to the vet yesterday for her annual check-up. She got six vaccinations, including her next 3-year rabies shot and her 3-year distemper shot, along with all the other routine vaccinations that she needs to be able to be boarded when we go on trips. Neither the exam nor the shots seemed like a big deal, but the aftereffects of the vaccinations seem to be making Ashley feel terrible. She was so achy this morning, she couldn’t come down the stairs!

I gave her an aspirin (in some peanut butter), and that seemed to help. Then I took her out for very short versions of her usual two morning walks.

Unlike other dogs I’ve known, who seem to want to be left along when they don’t feel well, poor Ashley seems to want to be comforted. Despite my demonstrated inability to fix the weather, Ashley seems to have considerable confidence that I can fix it when she’s feeling poorly.

A black dog looking at the camera

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After a gap during which I quit following numerous friends, acquaintances, fellow writers, etc. due to a collapse of my RSS feed reader, I have gotten set up with a new feed reader, and am beginning to catch up with some of those feeds. By pure good fortune, one of the first posts by Marissa Lingen after I got back to her feed was the announcement of her new novella A Dubious Clamor.

What a glorious book! It is dense with charm, whimsy, fantasy, song, excitement, danger, and more modest amounts of intrigue and sword fighting.

Our heroine Jules, mostly recovered after breaking a terrible curse, is helping an old friend with a problem: a “cursed murderous saber in the umbrella stand.”

Sadly, that is nearly all I can say about the events of the book without spoilers. The curse, the sword, the old friend—to say much of anything about any of them would be to reveal too much.

I can say that magic in this universe is complex (as it should be). There is text, there are runes, there is song, and there is talent. Reading between the lines as best I can, I gather that someone can do magic without needing each one of these things, which means that people of small talent but much knowledge can be effective, as can people of great talent but less knowledge. There is no indication that there are going to be more stories written in this universe, but the book certainly leaves the door wide open for that, and I would certainly enjoy seeing an exploration of the diverse range of works that can be done by people with diverse mixes of knowledge, talent, musical ability, and other abilities that clearly provide an avenue for magical works, such as smithing.

Rather than try to talk yet more around possible spoilers, let me just say this is a wonderful, wonderful book, and if you like fantasy adventure stories about diverse people trying to do the important work of protecting us all, you will undoubtedly like it.

Oh, and I wanted to give a shout-out to Tempered Mettle Historical Fencing, my own local HEMA group. With plenty of gay, trans, and non-binary folk, along with allies, my experiences there meant I could just read Marissa’s book without stumbling over things like they/them pronouns. (I also know more about sword fighting than Jules, although none of my swords are magic as far as I know.)

A Dubious Clamor, by Marissa Lingen. Highly recommended.

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Walls of an old castle

I worked in computer security for most of my career. I worked on Unix security, then phone operating system security, then Bluetooth security. It was largely thankless work.

The issue was that no one wanted to work on a secure computer. Every security feature was a small obstacle to the user getting work done. Security features tended to get turned off or worked around. Certainly nobody was willing to pay more to buy a more secure operating system.

The secure Unix system I worked on was pretty secure. It had great security features that made it easy for users to do their work with considerable confidence that neither outsiders nor other users on their computer could hack their way in.

The federal government required that all computers purchased by anyone for any government office be evaluated to the level of security that our system offered. Over a period of years, our system was the only evaluated system available.

Guess how many we sold?

Zero.

Every government office that was buying computers asked for and got an exception to the requirement that they buy a system like ours.

That’s how much people hate security features in their computers. They slow you down. They make it harder for you to get your work done. They make your system different from other systems, so you have to learn new stuff.

It is from that perspective that I’m dismissive of AI hacking tools. Yes, they can hack computer systems, but that’s because people have preferred computer systems that are hackable. It will take a bit of time to go back and redesign and rebuild those systems with security in mind, but not long. How to do computer security is a solved problem. The knowledge is broadly distributed. It’s just a willingness to put up some minor inconveniences that’s been the obstacle to having broadly unhackable computer systems. Maybe with AI hacking tools quickly hacking into every insecure system out there (which is virtually all of them), people will finally be willing to accept the cost and inconvenience of secure systems.

At any rate, it’s no reason to regulate AI. Just a reason to enforce our regular laws.

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In 1981—the last year I was in college and the first year I was working at a real job, long-term interest rates got very high. I thought this was great. (I wasn’t in the market to take out a mortgage, but rather was starting to save money.)

Graph of 3-month and 30-year interest rates from 1977 to 1983

I actually spent a lot of time calculating how much money I’d need to save and invest in long-term treasury bonds, in order to support myself without needing a regular job. I can remember when long rates got up around 14%, thinking that, since I could live on around $20,000 a year, I’d need a base amount of about $143,000 invested, plus enough extra to cover taxes, and to reinvest against inflation, totaling perhaps $300,000.

I was ahead of FIRE (Financial Independence Retire Early), and I rather missed out on the “reduce spending” half of the idea, so I didn’t make much progress toward my $300,000 goal for the first several years. It wouldn’t be until the early 1990s that I figured that part out, and by then interest rates were a lot lower. Worse, they were falling pretty fast, making the whole thing a lot harder.

Graph of 3-month and 30-year treasury interest rates from 1992 to 2026

Rates kept moving against my goals pretty steadily, right through the great financial crisis in 2007, and then again during and after the pandemic in 2020. Of course inflation was falling until after the pandemic, making it seem a bit less difficult to invest enough that the return would support me even after allowing for inflation. (And, as a bonus, the Treasury started issuing TIPS, which adjusted their value to keep even with inflation, and paid their interest rate on the adjusted value. You still had to invest enough to cover inflation, but a lot of the risk and guess-work was removed.)

Now, finally, rates are moving in the right direction again. The 30-year TIPS is now paying an inflation-adjusted 3%.

The inflation calculator at the BLS says that $20,000 in 1982 is equivalent to $71,046 today. At 3% you’d need to invest $2,368,186 in TIPS to bring in that much cash. (But you wouldn’t have to worry about inflation.) Weirdly, the same BLS calculator says that the 1982 equivalent would have been $666,666. So just over double the $300,000 that I imagined would have sufficed back in the day. Which is perfectly reasonable, considering that back in the day I could have gotten 14% on my money.

Anyway, after a long period during which it was impossible to invest for a real return on a safe asset—what you want to do, if you’re doing the FIRE thing—we are finally back to having that option. It’ll be good for people like me. I think it’s good for the economy as well, even if it sucks if you want to take out a big mortgage so you can afford to buy a bigger house than you need.