After about a month and a half of reading the exchanges and commentary on this board, I feel as if I have come to know some
of you regular contributors as friends :-). That's why I want to ask your opinions on a subject that is uppermost in my mind
these days. I read here so much about the "buy and hold" philosophy that I am nervous about selling my holdings. I have 10 shares
of BRKa currently, and apparently unlike anyone else here, I have the dream of quitting my 7 to 5, stressful, and generally
unfulfilling job of 12.5 years and living comfortably not extravagantly-with Berkshire as my primary source of living money. I am single
and childless and plan to stay childless at least. What I hope to get from you people is a sense of whether I am completely mad,
and don't have the resources to work from or if I just might have a plan that will work. I only want to sell a little bit at a
time just enough to live off of- (Does it cost $ to convert shares to B's?) letting the rest stay right where it is earning
interest (if "interest" is the right word). If BRKa can increase an average of 8% per year I expect that I could scrape by for 40+
years. Should I keep all my "eggs" in the same basket? Should I realistically expect and count on 8% at least? It seems like a big
step but one I really want to make.... any comments or warnings?
I understand your scenario, as I feel the same way about my job. I have been in system programming and design for over 25
years now and am also getting burned out. One thing you might consider at this point, is to take "some" of your money from the
sale of a small part of stock and invest into the bond market. There are some that pay a "decent" amount of intrest/dividend. My
financial planner has told me that when I am ready to retire, that I should do that with some of mine at that time. However, I have a
few more years left. At least you will continue to earn some money (albeit not as good as leaving it in BRK), but better than no
earnings at all. Best of luck in your decision!!!
Why hang on to your stressful and unfulfilling job? Quit now while you can think. Take off a few years until you are ready to tackle the field that you love and enjoy.
Head to Florida, Fort Walton Beach particularly, if you like the sun and white sand. No state income tax and very inexpensive cost of living. Just sign a short-term lease for a water-front studio. Gulf Breeze is about 25-30 miles west if you like UFO sightings (seriouly).
Please don't forget to rollover your 401k distribution, if any, to a self-directed IRA. Put all of it in BRK.B and let Mr. Buffett manage it for you.
Convert all of the As to Bs and cash it in as needed. Several good people on this board already mentioned the conversion procedure.
Take care and stay positive. Good luck, kelli.
My wife and I were already "B" owners and when my company downsized in Feb and let me go it was the greatest day of my career. My lump sum retirement and 401-k money allowed us to buy the stake in Berkshire that we had always dreamed of. I didn't realize how unhappy I was in that corporate rat race. There are no 100% safe investments, but I figure Berk is as close as you can get. Every day is Sunday for us now.
Robert you can't get away with just telling everyone on this board what you own. (Otherwise we'd have 15,000 messages with little substance.)
At least share your story as to how someone our age could be so fortunate as to have amassed such wealth. What was your road to success? i.e. Give Kellster a reason to want to live happily ever after with you in her retirement village er...uh...villa.
Otherwise, let's avoid boasting about our net worths.
Life is too short not to find something that adds joy and is mentally stimulating. There are plenty of people in the United
States who have a million dollars worth of assets. (About 4 out of every 100 households). I can guarantee you that ALL of these
people have some form of irritating, stressful situations in their lives. It's universal. I think you're wise to realize it isn't
about stuff like cars or houses, but it's your relationship with other people that brings that kind of joy, fun, and satisfaction.
You can get that through a lot of avenues: work, church, friends, teaching or volunteering. But only you can define how to
achieve that for yourself.
Finally .... ask yourself this ... if I didn't own some stock, and I didn't have any money, what would I try to do with my life ?
To live from a capital fund without depleting it and allowing for future inflation you can spend 5% per year, 35K in year 1. You should have 5 years spending(175K) in liquid cash type investments(CD's, T Notes, MM funds, etc). This allows you not to sell stock when the mkt is down, you have 5 years to recover without selling stock. As the value of your portfolio rises the amount you spend can go up. This is a conservative approach but your money should last a long time. Hope this idea helps.
I usually don't give advice unless it's advice I would take myself. So here it is: keep your eggs in one basket but don't
rely on it solely for the next 40 years or so. Live the first couple of years as conservatively as possible and sort of "feel it
out" for a little while. Figure out what types of things are necessary and what you can live without. Then you can probably start
to indulge in some luxuries. Your freedom from a suffocating workplace is probably enough of a luxury where you'll live quite a
satisfactory lifestyle without having to dip into the stock too much.
The buy and hold philosophy is for people who don't have an immediate need for money and who want to see their "nest egg" grow for their children and spouses. Some people would rather work very hard until they are much older and enjoy their profits much later. This philosophy does not apply to you since you just wish to have enough to "get by".
Personally, I too would start using my small fortune and write that novel I've always wanted to write...Unfortunately, this is not in the cards for me just yet...
Good luck to you.
A person is not mad for wanting to pursue their dream/s. It is the lack of planning that can lead to regrets, disaster, etc.
One needs to determine their cost of living, what if scenarios (margin of safety - couldn't resist) such as if BRK were to go down and stay down in price for awhile (not likely based on history, but one never knows), what if there is illness (medical expenses), and so on.
You might want to look at retirement not as retirement instead as a chance to pursue other hobbies, opportunities, etc. Therefore what is the cost associated with your new found freedom from work.
I went through a similar exercise in the last year in pursuit of my dream. And it took the year to put all the pieces in place.
Conversion of BRKa to BRKb's is covered off on the last page of the BRK owner's manual.
Wish you luck!
As long as you don't spend too much, you'll be fine.
Why toil at an unfullfilling job, if you have better things to do
with your time? And, if Berkshire doesn't continue to prosper (seems highly unlikely to me) you can always go back to work. Perhaps in a few years you'll stumble upon some
more enjoyable way to earn money, or less expensive
way to live happily.
Congratulations to you for owning 10 BRK.As at your age. However, we now live for a longgggggggggggggg time and such a sum may not be adequate for your entire retirement.
Please go to the follow URLs to calculate and explore your early retirement possibilities.
You can find detailed conversion information on page 72 of the 1997 Berkshire manual. Basically for shares held in your name, you need to call Bank Boston at (781)575-3100 to obtain a "form of conversion notice". If held in street name, contact your broker.
Very best of luck to you.
I hope to see you all at the party on May 2 in Omaha. Only 15000
of Warren Buffet's most intimate friends are expected to show up.
All you need is one share of BRK.B--cheap at 2400!
Tony Nicely should be there--he runs GEICO and is doing a great
job! GEICO is now growing at close to 25% a year and profits are
growing faster. Of course my long lost uncle will be Master of
My family first started buying BRK.A at $28.
Dont forget the Injun Injun who runs the big cat business, he should be there too. And maybe even Roger Lowenstein, late of the WSJ will be there.
You can't miss me at seven feet and from Charleston. My mother is originally from Linwood Nebr, graduated from Nebr and went to the Rosebowl with the BIG RED in '42 and stayed in California to raise giant geniuses--rich too!!
Next year I bring my nephew, he is 8 years old and 5' 2"!
BRKA is a keeper==I am looking for 200,000 in 2000!
I would leave your "eggs" in the same basket.
You don't have to pay anything to convert your shares a to b that I am aware of. This would permit you to extract a B-share periodically to live off of; granted you would have to pay capital gains on the sale (depends upon your cost basis - what you paid for the a-class share/30), plus you would have to pay a broker's fee for the sale, e.g. $5 at Brown &Co, my broker.
You would however need to live in an area with a reasonable cost of living, and you would have to be disciplined in your spending. $700K-1M sounds like a lot of money, but I could burn through that quite quickly between myself, my wife and my baby's diaper bill. (give or take 15 years). If you don't plan to supplement the money with anything your nest egg will disappear quickly.
suppose you have $700,000 and you need $70,000 to live off per year, even if you can earn 8% on the remaining principal, you run out of money between years 21 and 22, you will be a ripe old age of 59...and dead broke. If you can live off of less, then you will live longer...try some what ifs...
put 700000 in the principal and -70000 for additional amounts per year, at 8%, then try inserting some years 21 and 22 for example and see how your balance becomes negative.
With BRK you might be able to come nearer to 15%,which would be much more likely to allow you to live much longer (but don't forget, your 70,000 per year gets tougher and tougher to live off of in the future!!)