Welcome to Save, Invest, Become Free! This is a blog for those that have a strong desire to own their own time, their own life. But before you can own your life, you need enough money to buy the lifestyle you want, for the rest of your life. Until you do so, you need to sell your time and effort to others for money and your life choices will be much more limited. The way you accomplish this Continue reading “Welcome!”
Business ownership is one of the best proven ways to gain wealth. To get super-rich, you need to actually own or start a business and be successful in profitably growing that business. Personally that seems risky to me and way too much work.
So I do the next best thing; I Continue reading “Harvesting Capital Gains instead of Tax Losses – Advantages of using Stocks for Income in Early Retirement”
Investing. Stocks. Risk. Fear. Return. Volatility. All of these terms go together. The so-called Risk vs Reward spectrum means that investors should rationally demand higher returns for riskier investments as compensation for bearing that risk. So ultra-safe US treasuries or cash accounts will have the lowest returns. Riskier investments like stocks, real estate, longer-term bonds, or various alternative investments should have higher returns (but also an increased chance of losing significant value). But the term risk is thrown about pretty loosely and is viewed differently by many people. So this article will delve into risk. Particularly risk in investing. I’ll use the stock market as an example since it is my primary vehicle for maintaining and growing my own long-term wealth and security. I believe it’s critical to understand this well for your long-term financial success, particularly in early retirement where you are likely to be dependent on investments to sustain your spending for 40-50+ years. As you understand this better, you’ll make better investing and allocation decisions and also be less likely to make poor short-term financial decisions. The vast majority of FIRE success stories involve people who understand this well. It’s worth learning.
This post will cover both our 2016 progress as well as a look at the last 10 years from a financial perspective. I started tracking data more carefully 10 years ago so this is a perfect time to do a decade in review. Our total financial journey has really been 15 years since graduating and starting work but I’ll focus on the last decade where I measured things more carefully. A key point of this post, in order to help inspire those that are early in their financial independence (FI) journey, is to show the magic of what happens near the end of a many-year journey of saving aggressively and investing. At the final stages of “accumulation” is where your net worth increases a lot each year. It’s a fun place to be and is the reward for saving a high percentage of income over time and investing it in appreciating assets. Continue reading “2016 and the Last 10 Years in Review -Money Fun During the Final Stages of the Journey to Financial Independence”
The vast majority of people inherently feel that financial independence would be awesome. And I’d have to agree. We’ve covered some of the reasons already in Why You Should Pursue Financial Independence. However, the rub is that it takes a lot of effort, focus, and time to actually achieve. Since very few people actually become financially independent, it means that Continue reading “For those that wonder if FI is really a good goal”
If you look at studies on motivation (typically around work), then you find that happy and engaged workers are more motivated. Or perhaps it’s that more motivated workers are happier with their jobs. Either way, it seems happiness and motivation go together.
However, motivation implies a desire for change. It means you are not happy with something and would like to change it. Happiness, however, implies you are content and therefore no change is needed. So happiness and motivation seem to be at odds with each other. Continue reading “Do Happiness and Motivation Conflict or Do They Go Together?”
This obviously seems counterintuitive. But I’m here to argue that adding restrictions and structure to your life can actually make you more free. Continue reading “Add Constraints to Your Life to Gain More Freedom”
Most investors are familiar with the benefit of rebalancing. Typically this is looked at using a simple portfolio of stocks and bonds. Let’s say you decide you want a 50% stocks and 50% bonds allocation. If stocks do well for some period of time, then you end up with more money in stocks and a lower relative amount in bonds, shifting your allocation. If, for example, your allocation had drifted to 60/40, then you sell stocks and purchase bonds to bring your allocation back to your 50/50 target. The data on rebalancing are clear…..it really does add some small but meaningful increase in returns over the portfolio that is not rebalanced, and it lowers risk. This is because you are forced to sell the assets that have appreciated (i.e. sell high) and buy those that have declined or lagged (i.e. buy low).
The reason that rebalancing works Continue reading “Extreme Rebalancing”