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Thread: The concept of critical mass

  1. #11
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    Re: The concept of critical mass

    I guess critical mass for me was when it became clear that the incremental savings I was adding to the pile were largely besides the point.
    +1. To me, it was that point at which it seemed that the "pot's" self-generated growth was much more significant than the growth due to additions. More important from a psychological perspective than a real one, since its very dependent on market performance if there are lot of equities in the portfolio.


  2. #12
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    Re: The concept of critical mass

    When I was the accumulation phase I considered having reached critical mass when the growth in my investments for the year (excluding contributions) exceeded my annual income.


  3. Re: The concept of critical mass

    For me I guess critical mass was when FIRECALC, Fidelity RIP and Financial Engines all gave >95% probability of not running out of money with an initial 3% WR on a planned retirement date. This takes into account future pensions and SS, not just a sum of invested money.


  4. Re: The concept of critical mass

    Should we not worry about crossing the "critical mass" mark in the other direction, meaning when the market tanks and our WR suddendly increases way beyond the 3.5% mark, that there's a real risk of the portfolio "imploding"? The incredible shrinking portfolio?

    Hey, I do not think I have ever been accused of being an optimist.


  5. #15
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    Re: The concept of critical mass

    I've always used "critical mass" as a reference to the size of your FIRE portfolio when it and your other financial resources allow you to be FI.

    Say at some pre-retirement age you can accurately estimate your future SS and pension. You have a FIRE portfolio to supplement those sources. When that portfolio has reached a size where your chosen WR, in addition to future income sources such as SS and pension, will support your budget for the rest of your life, you've reached critical mass.

    When Mega Corp sent my sorry *** skidding across the parking lot (big security guard that didn't know his own strength) back in 2006, I went home and spent a week figuring out whether I was at critical mass or whether I needed to find another job. I was at critical mass so "fired" became "FIRE'd."


  6. #16
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    Re: The concept of critical mass

    To me, critical mass means having enough such that you can live comfortably off of your financial assets such that you do not have to work if you don't want to.

    I think this is generally in the spirit of the Bob Brinker definition, though articulated a little more simply.


  7. #17
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    Re: The concept of critical mass

    Critical Mass: Critical mass is the amount of fissile material needed to sustain nuclear fission. More generally, "critical mass" is similar to the tipping point concept.

    Tipping Point: A tipping point is an example of hysteresis in which the point at which an object is displaced from a state of stable equilibrium into a new equilibrium state qualitatively dissimilar from the first.

    Hysteresis: Hysteresis is the dependence of the output of a system not only on its current input, but also on its history of past inputs. The dependence arises because the history affects the value of an internal state. To predict its future outputs, either its internal state or its history must be known.

    Hysteresis is the dependence of the output of a system not only on its current input, but also on its history of past inputs. The dependence arises because the history affects the value of an internal state. To predict its future outputs, either its internal state or its history must be known.

    This sounds very much like a FI portfolio to me.

    Man, do I love Wikipedia!


  8. #18
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    Re: The concept of critical mass

    To me, critical mass means having enough such that you can live comfortably off of your financial assets such that you do not have to work if you don't want to.

    I think this is generally in the spirit of the Bob Brinker definition, though articulated a little more simply.
    +1. Sounds good to me!


  9. #19
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    Re: The concept of critical mass

    I remember listening to Bob Brinker's radio show many years ago. He'd talk about this concept called critical mass and to the best of my knowledge, it was having enough of money where you could live off it for the rest of your life. But I never remember him really quantifiably defining it. To me, it is similar to being FI. I never liked the term critical mass and prefer financially independent. But I do give him credit because listening to him did get me to start thinking about how could I achieve "critical mass" so I could stop working. This was long before the "early retirement" forum was around. So the seed was planted long ago.


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