Many of us pursuing financial freedom early in life struggle with making the decision to stop our current jobs and make the huge transition into the unknown. This is a big life decision and it understandably makes everyone nervous. And a lot about the struggle is about the numbers. Continue reading “Golden Handcuffs and Early Retirement – The Mental Challenge of Choosing Freedom when Slavery is Lucrative”
Financial independence, especially early in life, is a very ambitious goal. The most reliable way to achieve this goal is through saving a lot of your income and investing it well. But this is not a get-rich-quick scheme. It’s a reliable get-rich-slowly approach that takes many years of consistent savings. It’s a marathon, not a sprint. Now I don’t know about you, but I don’t really enjoy running and I certainly don’t want to run a full marathon (i.e retire after 40 years of work). How can we turn our journey into a half-marathon instead? After all, doesn’t 20 years (or less!) working sound much better than 40?
Continue reading “Gamify Your Journey to Financial Independence”
Anchoring is a psychological term used to describe the tendency we humans have to anchor our thoughts to a reference point, even though that reference point often doesn’t have any meaning and shouldn’t be used to guide decisions. This is an important topic to understand in investing, particularly in volatile assets like stocks or real estate. It’s another area where knowledge of how our mind works helps us fight our natural but irrational instincts. It will help make you a better investor.
Let’s start Continue reading “Mind vs Money – Anchoring”
I thought it was time for a more light-hearted article. We’ve been covering a lot of investing topics lately so I felt like a change of pace.
This article highlights the difference between frugal and cheap with regards to clothes purchases. Many people mistakenly think frugal and cheap are the same thing but they are not. Cheap is looking for the lowest cost with little consideration for anything else. Frugal is concerned with getting the best value. In fact, many people, including myself broaden this even more and think of being frugal as trying to get the maximum happiness for our spending.
This difference between cheap and frugal leads to some interesting contrasts. Continue reading “Buying Expensive Clothes Can Be Frugal”
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.
Continue reading “Increase your Long-Term Stock Investing Success by Understanding True Risk”
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”