August 2016 Freedom Fund Update: 6.3% in Market Gains

Welcome to our monthly financial independence update, where we report on the progress of our FI tree, aka Freedom Fund. Our mangoes are nearly ripe, and we expect to meet our target by July 2017. This means we’ll have enough investments to live on without ever having to work again to cover living expenses.

When our Freedom Fund can support our lifestyle indefinitely, we’ll consider ourselves financially independent. Our goal is to be financially independent by July of the following year. Our Freedom Fund is made up of mutual fund investments, short-term reserves, and real estate.

Freedom Fund Progress

Percentage of Freedom Fund reached in July

We reached 90% of our Freedom Fund goal in July. Yay! We’re a couple of months ahead of schedule, but given the market’s short-term volatility, we could easily fall behind. As a result, we focus on longer time frames to assess our progress.

Year to date gains

In seven months, our year-to-date progress has steadily increased from 73 percent to 90 percent. That mango tree is doing fantastically well!

Freedom Fund Portfolio 

Portfolio breakdown

The majority of our Freedom Fund assets are held in retirement accounts. To access those funds without penalty, we’ll have to wait five years after early retirement. How would we gain access to these funds before reaching the age of 59-1/2 without incurring penalties? So, we’re going to do a Roth IRA Conversion Ladder. We’re also contributing to our Roth IRAs, which we’ll be able to access at any time without penalty.

One of our current objectives is to accumulate non-retirement assets and ensure that we have enough funds to withdraw from during the first five years of early retirement.


We actually started using all of Personal Capital’s valuable free tools. I like the graphs and how you can track the overall performance of the portfolio. Last month, the market recovered nicely, with a 6.35 percent gain. That helped our tree in gaining a few branches for the month.

We’re showing these because we have the data and it’s interesting to see the progression, but we no longer base purchasing decisions on daily or even monthly swings. We determined the best asset allocation for us and invest our new funds accordingly. This removes the market timing component from our investment decisions.

Investment mix

I thought a chart showing what percentage of the balance is principal (our contributions and employer contributions) and what constitutes investment returns would be useful. Since we’re in the accumulation stage of retirement, principal makes up a larger portion of our investments. That will change over time because once we stop working, we don’t expect to add any principal other than dividends and capital gains that we may not spend.

I believe that the visuals help to paint a story where words may fail. This is where time in the market, rather than timing the market, comes into play. Even if the market dropped by 20% right now, we would still be in the black because our investment returns account for 23% of our balance.

We stay invested longer, receive investment income sooner, and don’t lose sleep over market fluctuations by continuing to invest according to our asset allocation.

What were your monthly financial objectives? Have you met them?

Risk disclosure: All investing involves risk, including the possible loss of principal. The material contained on this website is for discussion purposes only and should not be construed as financial advice.


After dedicating 13 years of his career to Vanguard, José retired from the corporate world at the young age of 44. During his tenure at Vanguard, he expertly coordinated the production of both electronic and print educational materials for 401(k) participants. Now, he relishes in his early retirement, cherishing time spent with his family, indulging in his favorite hobbies, seeking out new experiences, and savoring meals in the comfort of his own backyard.

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Mrs. GoodLife
7 years ago

Wow! This is awesome! Congrats on reaching another milestone! It’s so motivating to follow graphs of your progress, isn’t it?
I also love that you guys explained how you will convert your non-retirement assets. That was a question we struggled to find an answer to in this world of very late retirements. As a result we did what you are doing now- built up the non-retirement fund to avoid early penalties and fees, because who likes those, right?
Great work and keep it up!

7 years ago
Reply to  Mrs. GoodLife

Hi! Thank you. It sure is motivating and I like that the blog provides me with a reason to track the progress via different charts. Yes, we gotta do our best to avoid those fees!!! It’s amazing how little people know about the loop holes available. I found out about it a few years ago as well. Thanks for dropping by!

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