What Do You Believe?
Money is a mental construct. I have always known that money would have limited use for me.
Money is odd. The less you need it, the more it grows. Weird. Honestly.
If you can picture a life without much need for money, you will be set free.
What Does Not Take Much Money?
- Good health. We are already blessed with clean air, water and relatively safe environments.
- Good relationships.
- Education. I used the educational system to train in a profession. My real learning was all free from libraries and the internet.
- Hobbies. Think about walks, running, reading, writing.
- Transportation with walking, bikes and public transit.
Stop Buying Liabilities
- Houses you can’t afford easily.
- Cars you can not afford easily.
- Travels you can not afford easily. No, you really do not deserve it.
- Expensive meals you can not afford easily. Eat simpler.
- It takes very little to have a wonderful life. Try not to forget that.
Want To Retire Early?
If someone wants to retire early, they probably have to build perpetual wealth. Basically live on 2-3% of their portfolio. And keep enough of their investments in equities to keep pace with inflation.
Want to retire without using real estate or another uncorrelated asset? Simply save a lot more money. Make sure you at least have a paid off home. And generally live frugally. There is always a trade off with anything financial related.
Are you concerned about the buy, hold and pray passive investing? Do what Rich Dad Poor Dad advocates suggest. Buy 10% of your investable assets in gold and silver. Make sure to build businesses and then invest in positive cash flow real estate.
The only issue with that is it takes skill. And they do not advocate small businesses, the goal is to build larger businesses with over 500 employees.
Those are the two camps I have read about. The issues arise when paper based passive investors think that there is a guarantee. I do not believe there is. The oft quoted line is “past performance does not guarantee future performance”. So no guarantee with that one.
That is why the truth likely sides with one needs to be Uber frugal. And I don’t believe frugality is something one can force themselves to do. Not for the long term anyhow. So for those who are spendy, it’s unlikely that a pure passive paper approach would be enough.
That is unless one spends less than 2% of their investable assets. Then those investors can do paper solely. In fact that is what happened to us. We certainly have no issue owning rental real estate. However I soon realized that we have quite a low spending ratio.
That is the advice I give my children. Save a lot and spend only some of it. You can control what you spend. Make sure to get the housing sorted out. It has to be sustainable. Spend happily and consciously. Some types of spending are more valuable during one’s youth. Waiting to spend money only when one is old is also a source of failure.
If they ventured into investment real estate stay with multiplexes. Apartment buildings require a lot of skills and good networks. One likely needs to be a quarterback of sorts.
And if they started a business be a solopreneur. It is possible in this day and age.
I Just Don’t Care
I do not care about picking the perfect ETF.
No one else knows. All the folks who have all this “knowledge” can not promise you anything. They will get caught in the downdraft no different than a DIYer.
Just like medicine. Many know lots of regurgitative information but it doesn’t really help anyone. I find that useless and I have always been able to block that noise out.
Paper Investing Has Been Solved
- Be broadly diversified.
- Keep costs low.
- Invest for the long-term, like maybe forever.
- Automate as much as you can.
- Allow the magic of compounding to work.
- I just use asset allocation funds because I really don’t care. And it won’t matter how much I care. I will get the same result.
Keeping abreast of financial information is very easy nowadays. Most of it does not apply to me. It has become similar to studying in the past. I could take large amounts of information and condense it to a single page before the finals.
Just be clear on what you want. Then all the noise in the world won’t matter much to you.