[pyoung]

Vangaurd low cost index funds. Supposedly, you can count on 8-10% annual return. I also did/do some occasional stock picking which has gotten good results (but I wouldn't count on that being sustainable). I probably spend about 20k a year, and have savings in the low 6 digits.

I waited until I had 5-10x my annual expenses, but obviously you can do it with less. My main recommendation would to be have at least an extra 6 months of living expenses beyond what you need (so if you are taking a year off, have at least 1.5 yrs of living expenses) in case it takes a while to find work again. The main advantage of saving more than that is you can use the returns from your investments to offset some of your costs a bit.

[resu]

You can also count on index funds to lose 50% of their value in two years in an upcoming crisis. The roaring 90s and mid 2000s isn't a pattern that will continue to repeat itself. The fed can't keep printing the S&P500 up forever.

I think made a great decision, but you ought to diversify your nest egg.

[pyoung]

I agree that there is some risk, but I am not sure how I would be able to diversify any more than I already have. I have my money split into about 6 different index funds, primarily diversified globally, although I have a few industry/sector specific funds. And then I have about 30% of my savings in stocks that I picked, most of which are pretty stable companies with fairly long term future/outlook (so they would, in theory, come out of a recession in good shape, even if they took a few hits).

If there is some other asset class I am missing, let me know. In the meantime, I think I will take my chances with the market. Worst case, if things get bad, I can just go back to work (left my old company, in a fairly recession proof industry, on good terms)