Post by Admin on Nov 23, 2018 7:26:11 GMT
This is a summary of what I think is the best advice on how to become financially independent (FI). Please leave suggestions, arguments, questions and profanities. The topic of early retirement comes up often, but the focus is on becoming FI with an option to retire. I'm obviously a fan of mymoneymustache, but I think he summarizes these points well.
Definition of financial independence (FI)
"Financial independence is a state in which an individual or household has sufficient wealth to live on without having to depend on income from some form of employment." (wiki)
Some motivation: If you can save 50% of your after tax income, you can retire in 17 years. Or 10 years at 70%. MMM
How much money do I need to be FI: ~ 25x your annual expenses. MMM
Where to put my money: low fee index fund. MMM and Buffet
OK, should I do it now, or wait? - Do it now.
Other options: P2P lending, such as ratesetter. Rates are good at ~ 9-10%, but time will tell if the business survives a recession.
# What not to do
My money is sitting in a bank account: you are actually losing ~ 2% per year.
Invest in real estate: I would say no (in Sydney at least), but in general, it depends. REITs are also a lazy option.
The stock market is expensive, so I'm going to wait until the next crash: chances are, you won't time it.
But I reckon I can beat the market: you won't
Definition of financial independence (FI)
"Financial independence is a state in which an individual or household has sufficient wealth to live on without having to depend on income from some form of employment." (wiki)
Some motivation: If you can save 50% of your after tax income, you can retire in 17 years. Or 10 years at 70%. MMM
How much money do I need to be FI: ~ 25x your annual expenses. MMM
Where to put my money: low fee index fund. MMM and Buffet
OK, should I do it now, or wait? - Do it now.
Other options: P2P lending, such as ratesetter. Rates are good at ~ 9-10%, but time will tell if the business survives a recession.
# What not to do
My money is sitting in a bank account: you are actually losing ~ 2% per year.
Invest in real estate: I would say no (in Sydney at least), but in general, it depends. REITs are also a lazy option.
The stock market is expensive, so I'm going to wait until the next crash: chances are, you won't time it.
But I reckon I can beat the market: you won't