I know that many guys on the forum are interested in building wealth. Part of your success will depend on setting goals, looking at the big picture, and knowing when you have reached your lifestyle goals.

This is a good article about knowing when you have reached your goal and then cashing in your chips -- and how to win the money game when you reach a point of happiness, rather than playing the loser's game of simply chasing wealth forever.

Quote:Quote:

The Secret To Being Wealthy—Know Your Number
Jan. 18, 2018
Belize City, Belize

On the plane flying from Paris to Panama last weekend, I read an article about a librarian who made the decision to take all of her money out of the stock market.

It's not that she was worried about the stock market crashing. It's that she reached her number.

As the woman explained, she's accumulated the amount of money she feels she needs to live a comfortable life through her retirement.

And it's not that she thinks she couldn't make more money in the stock market. She recognizes that, probably, she could. But she doesn't want to have to think about it anymore.

Now that she's cashed out, the stock market can go up, down, or sideways, she figures, and she doesn't have to care. She has her nut.

This woman has reached the stage that few people ever will. She's truly wealthy.

Most people think that acquiring and holding ever-bigger assets and building ever-greater amounts of net worth makes them wealthy.

Having riches does not equate to being wealthy.

Here's the definition of wealth that makes sense to me...

Being wealthy means having enough passive income to cover your living expenses... whatever you want your living expenses to be.

That could mean you have US$100k in a REIT throwing off US$10,000 a year and you're living off that US$10k...

Or it could mean you have a billion dollar net worth and you're spending tens of millions of dollars a year maintaining your lifestyle.

Though even having a billion dollars doesn't necessarily mean you're wealthy. Even with that level of “wealth,” you could be struggling to make ends meet.

Okay, maybe that's hard to imagine... but certainly many millionaires are living paycheck to paycheck because their lifestyle outstrips their income.

On the other side of this coin is a friend who has been retired for more than 30 years (since he was 35). I'd describe this friend (we'll call him Mark) as wealthy even though his net worth when he retired was probably not enough to buy a house in a high-end U.S. suburb at the time.

However, the assets he held at the time of his retirement have proven to be enough to generate income enough to support the lifestyle Mark and his wife have wanted to live these past three decades. They have been able to live off the income from their portfolio as the value of the portfolio has continued to grow.

Unlike the librarian I read about last weekend, Mark didn't walk away from the investment markets. He knew that his nut wouldn't carry him and his wife through the 50 to 60 years of living they hoped they had ahead of them when they decided to “retire.” He hadn't yet made his ultimate nut, and he was ok to continue managing his investments during his very early retirement.

He made a leap of faith in his ability to continue growing the value of his portfolio at a rate to keep up with what he presumed would be an increasing cost of living the lifestyle he and his wife wanted to live. And that bet on himself has paid off big time. The couple has lived a fulfilling life of perpetual travel and adventure ever since.

Part of the reason Mark and his wife have been able to live off the passive income their portfolio has generated is because they are living what today's Millennials might call an “asset-light” lifestyle.

Before it was trendy not to own your house or even to own a car, my friend didn't own those things.

Mark and his wife have rented for most of their retirement, and the couple hasn't owned a car even since before moving into this stage. Houses and cars require maintenance and repairs. Those kind of sometimes unforeseen expenses could have hit my friend's budget hard... so he eliminated the risk by not owning.

Not owning (anything, really, other than the clothes in his carry-on and his computer) has also provided Mark with the flexibility to move around the world at will. He and his wife have charted their perpetual traveler course in response to the fluctuating value of the U.S. dollar. They go where their dollars buy them the best possible lifestyle in places where they want to spend time.

The dollar strengthens against the Argentine peso... Mark and his wife go to Buenos Aires for a spell. The euro weakens... they take off for a season in Europe.

Unlike my friend and the librarian I've told you about, most of us fall into the category of always wanting more. Even when we've reached the stage of having “enough,” we're hungry for more... and then for more after that.

So the question you have to ask yourself is: What is your number?

What amount of “riches” will allow you to live the lifestyle you want to live in the place where you want to be?

The financial experts say that the answer to that question is a nest egg that will allow you to withdraw 3% to 4% a year over your expected remaining years.

The “experts” factor inflation, historic investment returns, and estimated longevity into their equation to come up with the draw-down amount that should allow you to maintain your standard of living throughout your retirement as inflation erodes your buying power and you erode the balance in your brokerage account.

This expert says that that is the kind of thinking that keeps you working longer than you need to.

I wouldn't wait until you've accumulated assets enough to support that math.

The longer you continue working, the more the cost of your lifestyle expands. More working years means more time to acquire more assets to support—cars, boats, second homes, jewelry for your wife (and your mistress)...

It's a difficult treadmill to jump off.

Difficult but not impossible. My friend Mark and the librarian did it.

As did another friend who took early retirement from a corporate job more than 15 years ago. At first, he was worried he wouldn't be able to survive on the reduced pension he agreed to as part of his early-retirement package... and he wouldn't be eligible for Social Security for more than a decade.

However, once he sold the ATVs, boat, extra cars, and other extraneous playthings he'd accumulated by that stage of his life, he realized he could in fact live the lifestyle he wanted to live on his pension... if he moved outside the United States.

And he was right. This friend has lived a full life all these years since. He has even managed to continue to accumulate assets during this retirement stage.

He and his wife have enjoyed a fuller, richer, better retirement lifestyle than they imagined possible when they decided to retire early a decade-and-a-half ago.

Expanding and diversifying your life offshore can translate to many benefits... from adventure and new friends to investment upside and a chance to retire decades before conventional retirement age.

It can afford you many options for living better at any age.

And it can be the secret to being truly wealthy.

http://letters.offshorelivingletter.com/...qr73bs3vk0

All of us who are invested in cryptos should take time and reflect on our own number.

Remember to cash out and let the house money roll.

Quote: (01-23-2018 07:18 AM)DrugAdvisor Wrote:  

All of us who are invested in cryptos should take time and reflect on our own number.

Remember to cash out and let the house money roll.

Was thinking the same, my number hasn't deviated, it is within reach so I have been moving slowly towards liquidation options and post retirement hobbies that would also generate me a passive income.

The rent situation is interesting though in that blurb, I still wrestle with the idea of buying vs renting for the rest of my life. But we live in a confusing time right now in regards to valuations, so I still feel property is worth getting into, so you will always have a roof over your head so to speak (as well as the option of renting it out for passive income and *hopefully* not much maintenance).

No matter how big, you'll always be small.

monaco or bust

Just curious for anyone who doesn't mind sharing what your number is. We hear guys like Dave Ramsey say things like you can't comfortably retire with a million, even 2 or 3 million you'll be scraping by. I think for the vast majority of people that's a pretty steep number, especially when we hear things like the average 30 year old doesn't have $1,000 in savings.

For me personally, I'm a pretty simple dude, I'm naturally frugal, don't really get into cars or fashion much, enjoy to travel and enjoy good food and a good bag of weed but those are my only real vices. I could live pretty comfortably on 30k per year, 40k would be comfortable not really thinking about expenses at all.

I guess my number would be 1 Million, 40K per year times 25 years which most people seem to recommend and that puts my number at a million. One thing that kind of changes my number or strategy is I have a lot of passive forms of income comming in ie affiliate marketing, digital products, book royalties, etc. I feel like I could make 30k per year in my sleep pretty passively so my savings I don't even really need to dip into to live comfortably. My retirement so to speak would be still working but doing more passion projects and writing. Keeping that in mind I feel like 500K outside of retirement account and I'd be cool to check out of the system so to speak. I would say I'm about 60% there.

Does that sound reasonable? Also curious other peoples numbers just to see kind of how I stack up.

I know a lot of guys on here are into cars, fashion, love to travel so I see some people throwing really big numbers around in terms of income and savings but I can't help but feel like I really don't need that much. Like the article kind of points out, figure out what you want and what kind of lifestyle you want to live and base it off that, not what some financial guru says.

It boils down to like the article said, they say you can't retire comfortably off a million dollars these days, but only if you're lifestyle has some luxury tied into it. I live quite minimally, most of the cost would increase as a result of having a family, and I would supplement my retirement "number" with some form of passive income and as you put passion projects.

Therefore my number is probably between 1 and 3 million, where 1 million is me retiring and 3 million is pulling out of crypto trading.

∞ - This is the correct number to aim at.

Money is a tremendous indicator of success and status. More of it means more doors and more interesting opportunities will open to you. More people will benefit from your advice and seek out your wisdom. When you get really rich and just keep going, everyone you know and love wins. Your life, and the lives of everyone you care about have the potential to be more interesting the richer you get.

I've been exposed to a lot of different types of investors and mentors over the 6 years I've built and run my own businesses. Many who've made a lot of money (100s of millions) by 40-50 who just stopped and invested, and who do charity and potter around at home. One or two have made a lot of money (again 100s of millions+) and who've just kept going, and they are two different animals. The latter group are dynamos, and honestly the lives they are living are just incomparable. These guys are intimidating, because on the rare occasion you actually get to see what a guy looks like when he has spent 60 years just maximising his talents in all directions it's terrifying - because it shows you how many of your own gifts you're squandering, and where you might actually be in 40 years time if you started to really apply yourself hard every day to making the most of your life.

For the guys who say a million is not enough to retire it depends on your lifestyle and location. A million dollars is nothing for a guy with a wife and two kids living in Australia or U.S.A. But it’s plenty of money (if invested wisely) for a single/unmarried 30 year old with no kids who is retired in Ecuador or Thailand. I think guys like Dave Ramsey are catering to an audience of the first kind of guy as opposed to the second type.

Quote: (01-23-2018 12:08 PM)H1N1 Wrote:  

∞ - This is the correct number to aim at.

Money is a tremendous indicator of success and status. More of it means more doors and more interesting opportunities will open to you. More people will benefit from your advice and seek out your wisdom. When you get really rich and just keep going, everyone you know and love wins. Your life, and the lives of everyone you care about have the potential to be more interesting the richer you get.

I've been exposed to a lot of different types of investors and mentors over the 6 years I've built and run my own businesses. Many who've made a lot of money (100s of millions) by 40-50 who just stopped and invested, and who do charity and potter around at home. One or two have made a lot of money (again 100s of millions+) and who've just kept going, and they are two different animals. The latter group are dynamos, and honestly the lives they are living are just incomparable. These guys are intimidating, because on the rare occasion you actually get to see what a guy looks like when he has spent 60 years just maximising his talents in all directions it's terrifying - because it shows you how many of your own gifts you're squandering, and where you might actually be in 40 years time if you started to really apply yourself hard every day to making the most of your life.

I have always thought having a special number was more of a hindrance.

The idea that if I need a certain amount of money will push my thinking towards a specific goal of making that amount of money. In other words, I may be missing out on opportunities for bigger pay days.

For instance, I wouldn't start a business to make $2 million dollars so I can retire. Even though I may feel safe and secure with having a minimum of $2 million, I wouldn't start a business that didn't have a much larger potential than that $2 million.

No matter what you do, whether it being businesses, stocks, crypto, or whatever... you will be needing to put the time and effort into learning and managing your assets.

What is the best use of a limited resource such as time? The way I look at it, if there isn't a big upside I wouldn't be interested in wasting my time. Only put the effort into things with big potential that would blow away your magical number. You may find you made 10x - 100x more than the amount of money that you feel you need.

I love what I do so I would never retire. I do understand wanting to feel safe and most of us have a amount of money that would allow it. Just don't allow that safety amount to limit your potential.

I was expecting the article would tell me how to calculate my number, but it didn't.

However, there are good insights, namely: 1) you don't need as much as you think you do; and, 2) getting out of the rat race and not owning anything is very liberating.

Quote: (01-24-2018 05:26 AM)Australia Sucks Wrote:  

For the guys who say a million is not enough to retire it depends on your lifestyle and location. A million dollars is nothing for a guy with a wife and two kids living in Australia or U.S.A. But it’s plenty of money (if invested wisely) for a single/unmarried 30 year old with no kids who is retired in Ecuador or Thailand. I think guys like Dave Ramsey are catering to an audience of the first kind of guy as opposed to the second type.

The reason that I posted this article was to try to get forum members to think outside the box. It is all about perception. I agree with Australia Sucks that you can obtain much greater value by moving from your high expense home country to Latin America, SEA, or Eastern Europe. That is one way to think outside the box (i.e., lowering your expenses to provide more value) and to change your perceptions. For example, this is common knowledge in this forum because we share a common perception about the world at large, but that same idea is a real anathema to most of the general public.

I respectfully disagree with H1N1, at least as a general rule, that all people should aim for an infinite amount of wealth or that "Money is [necessarily] a tremendous indicator of success and status." I think that most people, or at least those who are truly wise, would choose a state of serene happiness over $100 million -- and, if they accomplished such a feat, would be highly successful and have an enviable status. There are plenty of miserable wealthy people, who will never attain happiness regardless of their level of wealth. Then again, some people may truly flourish while building a great empire of wealth.

Moreover, who is more successful? The guy who saves $100k and learns how to earn a safe 30% annual yield on his money -- or someone who saves a million dollars, who then squanders it during the next stock market crash (or, on the opposite end of the spectrum, has it earning only 2% in a money market account). In other words, the guy with $100k can produce a $30k yearly yield, while the guy with $1 million sitting in a money market account is earning only $20K yearly. Plenty of people know how to earn money, but do not know have to properly -- and safely -- invest it. Moreover, if the guy earning the $30k annual yield is living in Eastern Europe while the guy earning the $20k is living in France, then he is truly killing it (by maximizing his annual yield and minimizing his yearly expenses). So, real (versus nominal) success is also a matter of perception -- and outside the box thinking.

So, I would urge you to exercise your brain, change your perceptions, and try to think outside the box not only in financial matters -- but in all life matters. Best of luck.

How does one earn a "safe" 30% annual yield on his money?

Quote: (01-26-2018 01:19 AM)CleanSlate Wrote:  

How does one earn a "safe" 30% annual yield on his money?

It takes a great deal of work. If it was easy, everyone would do it. You can get some ideas by reading this thread:

thread-33145...pid1656129

Just to cite one example, there is an incredible need for investment capital for organic fruits and vegetables. There are companies that sell their entire yearly production years in advance. But you need to be very careful, do your boots-on-the-ground due diligence, and separate the wheat from the chaff.

Some of these investments, although illiquid and hard to find, are so safe that they are unlikely to fail unless the nation itself fails. This article will make you wonder what opportunities you may have discovered if you simply took the time to visit the stock exchange at every country you ever visited.

thread-33145...pid1671399

All these investments demand outside the box thinking, hard work, and boots on the ground due diligence. Most people would rather invest in the stock market out of laziness and place their hard earned money at the mercy of insolvent financial systems, when they could earn even higher yields and have a greater margin of safety by investing in commodities that people will always need to survive (e.g., food, housing, vital infrastructure systems, etc.).

Why is everyone obsessed with retiring and living off investment income at a young age? I'm not saying join the rat race but working can actually be fun if you like what you are doing.

The secret to happiness is going to work to get something out of it, instead of going to work to get your paycheck.

A lot of athletes go into depression when they retire, they resort to drugs. Maradona is a great example of this. Living at home doing coke everyday and fuckin 10 bitches at the same time gets boring after awhile. Thats why many athletes become coaches after they retire, you think Zidane is coaching Real Madrid to make money?

Quote: (01-26-2018 11:17 AM)Blancpain Wrote:  

Why is everyone obsessed with retiring and living off investment income at a young age? I'm not saying join the rat race but working can actually be fun if you like what you are doing.

The secret to happiness is going to work to get something out of it, instead of going to work to get your paycheck.

A lot of athletes go into depression when they retire, they resort to drugs. Maradona is a great example of this. Living at home doing coke everyday and fuckin 10 bitches at the same time gets boring after awhile. Thats why many athletes become coaches after they retire, you think Zidane is coaching Real Madrid to make money?

The original post was about a librarian in her 60's who took all her money out of the stock market, rather than continuing to place it at risk. So, I am not sure that anyone here is obsessed with retiring and living off investment income at a young age. The idea behind this thread is knowing when to walk away with your assets, rather than placing them at continued risk.

For every Madonna or athlete past his prime, there are literally millions of others who woke up one day to find out that they were old -- and had less than $1,000 in the bank. As succinctly stated by Benjamin Franklin: "Failing to plan is planning to fail."

Most people who win the lottery end up broke. I suspect that the same thing will happen with many Bitcoin millionaires. Instead, take some money off the table by investing some of it in real tangible things, rather than in a corrupt financial system or keeping all of it in an unproven system.

Quote: (01-26-2018 11:17 AM)Blancpain Wrote:  

Why is everyone obsessed with retiring and living off investment income at a young age? I'm not saying join the rat race but working can actually be fun if you like what you are doing.

The secret to happiness is going to work to get something out of it, instead of going to work to get your paycheck.

A lot of athletes go into depression when they retire, they resort to drugs. Maradona is a great example of this. Living at home doing coke everyday and fuckin 10 bitches at the same time gets boring after awhile. Thats why many athletes become coaches after they retire, you think Zidane is coaching Real Madrid to make money?

Simply because as I stated in another thread, most jobs that need to be done are incredibly boring, repetitive, dangerous et al. I enjoy working on engines, and building things with my hands. But there is a world of difference between building your own home, and framing walls for 10 hours a day with no discernible end point for other people. At the end of the day, you need to eat. And unfortunately one of the most efficient ways to do that is to do something you're good at that other people generally don't want to do, which very often you don't want to do either. While loving your work is a lofty ideal to shoot for, the fact is the vast, vast majority don't, as evidenced by the fact that the vast majority of people eventually stop when they can afford it.

Quote: (01-23-2018 12:08 PM)H1N1 Wrote:  

∞ - This is the correct number to aim at.

Money is a tremendous indicator of success and status. More of it means more doors and more interesting opportunities will open to you. More people will benefit from your advice and seek out your wisdom. When you get really rich and just keep going, everyone you know and love wins. Your life, and the lives of everyone you care about have the potential to be more interesting the richer you get.

I've been exposed to a lot of different types of investors and mentors over the 6 years I've built and run my own businesses. Many who've made a lot of money (100s of millions) by 40-50 who just stopped and invested, and who do charity and potter around at home. One or two have made a lot of money (again 100s of millions+) and who've just kept going, and they are two different animals. The latter group are dynamos, and honestly the lives they are living are just incomparable. These guys are intimidating, because on the rare occasion you actually get to see what a guy looks like when he has spent 60 years just maximising his talents in all directions it's terrifying - because it shows you how many of your own gifts you're squandering, and where you might actually be in 40 years time if you started to really apply yourself hard every day to making the most of your life.

I disagree whole-heartedly. Is this money a means to an end or are you for simply accumulating as much as possible by working 100 hour weeks, to the abandonment of all else, subsisting on nothing so that your money bin can grow Scrooge McDuck style. If you even don't work 1 hour you could have, then you are essentially giving up potential money for something else and our infinite money goal falls apart. What is that something else? And at what point do you draw that line?

One problem in every facet of life, is people confuse outcome with the process. I think what you talk about "infinite money", it's more the resultant symptom that comes from infinite personal development, never stop learning or trying to master your craft. To that extent I may agree, then *as a consequence* which is the key difference, you'd be presumably earning and accumulating more money, but that was a result of person growth initiative, not an end in itself.

An acquaintance was big in a tech company and left to pursue a quantum computing venture. Almost assuredly he could make more money staying in a reasonably safe established tech industry as a big shot. Regardless however, his material needs are met. He's doing this because he's genuinely interested in it, and if it pays off, great, but given that materially, success or failure result in outcome for him, what is his motivation?

Call it a passion hobby if you want, but what are the greatest achievements in history if not hobbies brought mainstream? Bill Gates programming at his moms workplace which had a big computer at 3am, Steve Jobs fiddling with computers in the garage until he realized "hey, someone else might actually pay me for this." For the want of the latter part which allows one to eat and be sheltered, the first part seems to all be forgotten.

Look at Mr Money Mustache. Money likely wasn't even on his radar when he started writing his blog. He just liked his efficient thrifty lifestyle, and wanted to share it with others, much the same way some people can't help telling others when they find a screaming deal. A little personal victory that you want to share. Low and behold however, the advice and his writings were valuable. No different than a doctor's opinion is valuable. His goal was sharing knowledge and writing, however money was the result.

Quote: (01-26-2018 01:15 PM)Seadog Wrote:  

Look at Mr Money Mustache. Money likely wasn't even on his radar when he started writing his blog. He just liked his efficient thrifty lifestyle, and wanted to share it with others, much the same way some people can't help telling others when they find a screaming deal. A little personal victory that you want to share. Low and behold however, the advice and his writings were valuable. No different than a doctor's opinion is valuable. His goal was sharing knowledge and writing, however money was the result.

I still wonder why people follow normal conventions for retirement.

They say to live below their means. They say save, save, save. People put time into research and managing their investments. They do that year after year after year to retire with maybe a million or two.

They do all of that instead of putting time into making more money whether it be with more lucrative skills for higher salaries or side businesses.

Do I really need to spend a ton of time maximizing the return on my investments if I have a lot of cashflow coming in where a percentage point or two wouldn't really matter?

All I know about this Money Mustache is what I read on this forum. It sounds like he retired doing the conventional way but is also making far more money doing his blog than he did saving up year after year. It sounds like he is preaching the wrong stuff if you look at what he is doing instead of what he is saying.

That Money Mustache guy actually backs up H1N1's point.

Quote: (01-26-2018 01:39 PM)worldwidetraveler Wrote:  

I still wonder why people follow normal conventions for retirement.

They say to live below their means. They say save, save, save. People put time into research and managing their investments. They do that year after year after year to retire with maybe a million or two.

They do all of that instead of putting time into making more money whether it be with more lucrative skills for higher salaries or side businesses.

Do I really need to spend a ton of time maximizing the return on my investments if I have a lot of cashflow coming in where a percentage point or two wouldn't really matter?

All I know about this Money Mustache is what I read on this forum. It sounds like he retired doing the conventional way but is also making far more money doing his blog than he did saving up year after year. It sounds like he is preaching the wrong stuff if you look at what he is doing instead of what he is saying.

That Money Mustache guy actually backs up H1N1's point.

Not at all. The difference lay in the motivation. The point is he's doing what he wants, enjoys it on its own merit, and if it made nothing, he'd still be doing it. "Start a blog and make $500k/yr" is hardly actionable advice, and borderline foolhardy when you have kids to feed. H1N1s point is accumulate more and more and more money because you should be working towards an infinite amount of money. By this logic, if the blog didn't generate money he should be doing something else, or in the early stages when it wasn't, go back to engineering, or hell even now since the blog seems like a part time gig, still hold down a professional level job on top. Given that he raises a family on like 30k/yr, despite making an order of magnitude more, and has given several hundred k to charity, why should money even come into the picture? Being able to follow your passion and have bills paid is a wonderful luxury to have, because there are a thousands of arts grads who took that advice hook line and sinker but still can't make rent.

I have a friend who likes to do diving photography. Has had some success, published photos, but not enough to live off of. He enjoys it though, enjoys progressing and developing his skill set. Could he do this if he had to worry about how his rent and food bill would be paid?

The fact is that mere survival costs money and generally jobs you don't want to do pay a lot better than jobs that people love doing. The value of knowing, and getting to your number is that once there you are financially independent, and can go down whatever esoteric paths you want. They may make money - they may not. But the main reason to get to your number is to free up the most valuable resource you have, which is your time.

If you inherited a billion dollars tomorrow, would you be doing everything the same? Still developing your skills in whatever field, still doing those side hustles? If you can say yes, and that as a consequence of that, those skills alone would generate enough money to sufficiently cover your material needs and desires then you are truly fortunate. But I think those people are in the true minority

Quote: (01-26-2018 01:39 PM)worldwidetraveler Wrote:  

I still wonder why people follow normal conventions for retirement.

They say to live below their means. They say save, save, save. People put time into research and managing their investments. They do that year after year after year to retire with maybe a million or two.

They do all of that instead of putting time into making more money whether it be with more lucrative skills for higher salaries or side businesses.

Do I really need to spend a ton of time maximizing the return on my investments if I have a lot of cashflow coming in where a percentage point or two wouldn't really matter?

For a small percentage of the population, you may be right. For the vast majority of people, putting your savings to work is far more important. Albert Einstein once said “Compound interest is the eighth wonder of the world.” See the example I cited above regarding someone who can live better making 30% annually on a $100k investment versus someone who makes only 2% in a money market account on a $2 million investment. For another example, see this article ("spooze" = S&P 500):

Quote:Quote:

Take Warren Buffet who has managed to compound capital systematically and consistently for 52 years.

Here's a guy with a simple strategy whose company's stock has delivered about 155 times the total return of the S&P500 — and that includes dividends generated by the stocks in the S&P.

Here's the dirty details...

The "spooz" has enjoyed annualised returns averaging 9.7% including dividends since 1965 when Buffet took the reigns of Berkshire Hathaway.

Uncle Warren, for his part, has generated 20.8% per year. But it's the consistency really that allows for compounding to work its magic. For example, 10 grand invested in the "spooz" each year saw you come away with US$10,970, on average, after one year. On the other hand, Berkshire would have grown to US$12,080. That's only a thousand bucks. Big deal!

The big deal is, of course, compounding because that same 10 grand in the "spooz" is today worth roughly US$1.3million. And yet the same 10 grand invested into Berkshire is worth nearly US$200million. That's somewhere between "Oh, quite a bit more" and "Holy shit, is it that much?"

https://capitalistexploits.at/2018/01/wi...mpatience/

Quote: (01-26-2018 03:45 PM)Seadog Wrote:  

Not at all. The difference lay in the motivation. The point is he's doing what he wants, enjoys it on its own merit, and if it made nothing, he'd still be doing it. "Start a blog and make $500k/yr" is hardly actionable advice, and borderline foolhardy when you have kids to feed. H1N1s point is accumulate more and more and more money because you should be working towards an infinite amount of money. By this logic, if the blog didn't generate money he should be doing something else, or in the early stages when it wasn't, go back to engineering, or hell even now since the blog seems like a part time gig, still hold down a professional level job on top. Given that he raises a family on like 30k/yr, despite making an order of magnitude more, and has given several hundred k to charity, why should money even come into the picture? Being able to follow your passion and have bills paid is a wonderful luxury to have, because there are a thousands of arts grads who took that advice hook line and sinker but still can't make rent.

I suspect if the blog wasn't doing well he wouldn't be doing the blog.

There is something that everyone can find that can both enjoy and make money. It may not be photography like your friend, but it could be something else.

Luckily, we typically enjoy doing a wide array of things.

Quote:Quote:

They may make money - they may not. But the main reason to get to your number is to free up the most valuable resource you have, which is your time.

People are wasting decades trying to get to their number. If they instead put that time and resources into bringing in more cashflow they will be way ahead of the curve.

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If you inherited a billion dollars tomorrow, would you be doing everything the same? Still developing your skills in whatever field, still doing those side hustles? If you can say yes, and that as a consequence of that, those skills alone would generate enough money to sufficiently cover your material needs and desires then you are truly fortunate. But I think those people are in the true minority

Yes, I would be doing the same thing. I may be in the minority but only because people follow the regurgitated logic of saving for decades instead of using their time to acquire more skills that can generate more money.

Having a "number" is the sort of thinking that feeds unhappiness, imo. "I just need to stick this out a little longer until I get $x,xxx,xxx saved up and then I will be free."

Quote: (01-26-2018 04:10 PM)Tail Gunner Wrote:  

For a small percentage of the population, you may be right. For the vast majority of people, putting your savings to work is far more important. Albert Einstein once said “Compound interest is the eighth wonder of the world.” See the example I cited above regarding someone who can live better making 30% annually on a $100k investment versus someone who makes only 2% in a money market account on a $2 million investment.

I didn't knock the concept of compound interest. I disagree that saving is the most important thing the majority should do. I find reinvesting money into the right skills will have a much better roi.

I believe compound interest can also be applied to skills.

You mentioned that it takes a lot of work to find a 30% return on investment. I would agree which is why I ask if your time is better spent looking for a high return or developing skills that will allow you to make 30% more income every year?

Read Scott Adams book, "How to Fail at Almost Everything and Still Win Big".

I fell into this idea myself because I worked many different jobs and have massively different college degrees that has helped me build my own business. I really didn't put much thought into it until I read his book.

For those that haven't read Scott's book, the idea is you have a group of skills that work together to give you better opportunities. You don't need to be an expert in one particular skill. You can be mediocre at all the skills yet the combination of them will lead to success.

You can't get that type of success working for a company while squirreling away money hoping to retire in 30 years.

My dad worked for one of the big 3 car companies in the US. There was a time when they were getting a lot of overtime. There were guys who saved, there were guys who spent all of it and then there were guys who took that extra money and build businesses such as trucking companies.

Granted, the guys who invested their money into businesses were low in comparison. Many of them became multi-millionaires because of it. I doubt the people that saved made that multi-millionaire leap.

I honestly don't know how you guys could sleep at night with a retirement figure of 1 million. I would be uneasy at 2 million. The older you get, the more you pay in medical expenses. God forbid you move to a 3rd world country and have to pay cash for something like a stroke. It may be cheaper, but it isn't that cheap. It would take a major cut out of that roughly 30k yearly budget since you got to cough up the cash before they help you. I've seen too many aging family members to know medical expenses can be a big issue.

Warren Buffett wouldn't be where he is if he worked a normal job and saved half his income. I also don't think Buffet had a retirement number in mind when he started.

Quote: (01-26-2018 05:50 PM)worldwidetraveler Wrote:  

I honestly don't know how you guys could sleep at night with a retirement figure of 1 million.

It is easy to sleep at night if you take the time to find and invest in real assets that pay a 20% to 30% annual yield, especially when those assets are safe investments that every person on the planet needs to survive (food, housing, etc.). Then if you take just half of that money and reinvest (i.e., compound) it every year you have serious cash flow. Yes, if you are an idiot with $1 million, or just an average person who invests in the stock market, then you may develop serious problems down the road.

Quote: (01-26-2018 05:50 PM)worldwidetraveler Wrote:  

You mentioned that it takes a lot of work to find a 30% return on investment.

Again, it is all about perception. It is hard work for the average person, because reading about finance and business for 15-30 minutes per day for several years is hard work for the average person who would rather vegetate before the TV each night. If you are willing to give up 30 minutes of watching TV every day, then it is not really hard work.

Calling the stock market a scam while saying its possible to earn 30% a year safely is really contradicting.
If you seriously think becoming an organic farmer is safer than investing into blue chips then there is no need to argue with you.
We are 3 generation of farmers on my moms side, even though we own huge plots of land Farming is still a very risky business.
Hell even real estate has its risks, and the returns on real estate are very modest (5-15% annualy)

If you are smart enough to earn 30% passively in your investment every year then you you'll have way more than 100k saved up trust me, 100k will be your monthly living expense if you are that smart.

Earning 30% a year is definitely doable, but it will bring with it major risks. Maybe you are not experienced in that field to see those risks yet.

But I'll give you a glimpse of few risks assosicated with farming

1. Bad Harvest.
2. Health epidemic ( Swine flu, H1N1, new form of disease which eats your crop, health scare regarding that product)
3. Fluctuation in prices
4. Your fixed costs increasing overnight (1970 gulf oil crisis)
5. Mother nature ( Earthquake, Flood, Volcano erupting)


Not to mention the bigger your capital, the harder it becomes to generate attractive returns outside of the stock market.

Warren is worth like 70 billion right now, can he sustain 30% annual growth? If he could he would be worth 400-500 billion in no time.

If you have small sums like 10-20k, its easier to earn 30% on it. But the bigger it is, the harder it becomes.

^ A 30% a year annual return would be above Warren Buffett's average. Probably the greatest investor of all time. Just saying.