(Part 3) Top products from r/financialindependence

Qualifications: grew up in a very modest (i.e. lower) part of town, parents worked in blue-collar professions, and started buying a rental property in the 1960's, then dad passed away (with four kids). Now definitely intergenerational wealth, all kids went to college in STEM, parents in their 90's (step-dad helped build up RE holdings to 36 units) with holdings in the 8-figures. No I haven't inherited any of it (yet) but well into middle age myself, make very good money (and will leave it at that), and have a few RE holdings.

> I'll have manager experience. I'm also reading a book called "real estate investing for dummies" and I just finished "rich Dad poor Dad"

Good for you, I didn't start reading books on anything finance related until well into my 20's, and then I read a lot of very good books. I don't think much of Kiyosaki, frankly, but as Brian Tracy said 'to earn more you must learn more'. So don't stop, keep on reading, and especially books over blog posts and short pieces. Why? Books will have more complex ideas and more research to back it up.

Regarding your game plan: you did not indicate what you are interested in doing, and what you do well, and what people will pay you to do, and what the world needs. Take a look at this ikigai graphic. Not sure if you know that welding or sales is this for you, and of course there are other things you may grow into. But hey if you have a good idea that this is the path you want to take, good for you!

I came here to say about sales, few salespeople are on Reddit, they are very busy making lots of money to talk about it. In my own (technical) sales field base runs from $65K up to $120K with another 40% commission, but you need to have the right background (STEM college degree, experience as a customer, and aptitude for outside sales) so barriers to entry are high. So yes, six figures in your late 20's is achievable, and it does take a lot of hard work, no doubt!

Of course owning your own business as a contractor, or becoming a top welder, or tons of other things you could do, I know of plenty of people who do very well.

Regarding the end goal, admirable, and I say your thinking is in the right place. The road to FI is varied - real estate is a very good method (the way my parents went, they bought low and held onto their properties in a HCOL area), investing into index funds another good method (again read books like Boglehead's Guide to Investing, or another favorite of mine on the sidebar called The Richest Man in Babylon) The amount these books can make you over five or ten years is a lot. Over 15 or 25 years is huge.

> Even if I don't get to enjoy it

I see many piling on here saying 'you should enjoy it' but I didn't interpret this comment in that way. You realize it's a road not many take (too many live way beyond their means, and don't have savings / passive income / true wealth to show for it). Yes there's sacrifice, and it takes a long time to build up $1,500 in monthly passive income much less $15,000, but people do this and often you cannot tell. (For example, look up the book The Millionaire Next Door.)

Are you on the right path? Definitely YES. The path to financial independence starts with a mindset, and the fact you are asking the question puts you out in front of all the peers of yours who are thinking about lots of other things, which you know all too well.

Will you make mistakes along the way? Of course, we are all human. The important thing is mindset, and the great thing of being younger is that you have time to make other choices, and learn along the way.

> Is it also not possible that the guy that has lived relatively frugally

It is possible, but he has objectively not done this, unless you're talking relative to other billionaires, even then there are far more frugal billionaires with 1/100th the public image he sells to
try to distance himself & his fund from the typical fund image (John Cauldwell, Azim Premji, a lot of the european dynastic old money as a few examples. For first generation, look at almost any of the Danish/Skandi billionaires)

If you have multiple private jets for the exclusive use of you & your family and own multiple properties, each worth millions of dollars - you're not frugal.

> is donating 99.9% of his fortune to charity when he dies

Is donating the massively tax deferred portion of his net worth to a privately run organisation that his family will be involved in running for decades to come, after already having set up all of his direct descendants as billionaires.

> calls out tax laws that are b.s. but personally benefit him is just that simple guy?

"don't hate the player, hate the game" with regard to tax law when you're the 3rd richest person on the planet, best mates with the 2nd richest person on the planet & literally have the money & power to CHANGE the game is not a valid argument. He talks a big game about tax reform, but does not work to actually do anything about it. Hell, his donations swing heavily toward republicans who are AGAINST tax reform. He's done very well thanks to them too:
https://www.vox.com/policy-and-politics/2018/2/24/17048378/warren-buffett-berkshire-hathaway-tax-cuts


A big chunk of Berkshire Hathaway's success is built on not paying tax, they've got $86,000,000,000+ in deferred taxes thanks to exploiting a loop hole where they don't have to pay tax while working on acquiring a company... So they just make sure they are always acquiring.

Imagine if you could defer paying tax forever with the argument that you're still busy buying shares or ETFs.. Given what subreddit we're on, it would be pretty appealing.

Then as previously mentioned in that linked article, the party you donate to comes along & cuts the tax rate, so now you owe billions less than you previously did - woohoo!

> His image may marginally help him

Buffett is selling what is essentially the antithesis of this subreddit. High fee managed funds that exploit tax rules for massive profitability to become personally one of the richest people on the planet. He's the anti-Bogle, yet this subreddit & a lot of FI/RE types love him, because of that image & brand.

Buffett is Berkshire, the reason why so many people & institutional funds are happy to pour money into Berkshire stock is because of the image. It hasn't helped him a little bit, it's helped him immensely.

> To me he seems to genuinely want what's best for the country/world.

To me he seems like another John D. Rockerfeller. A titan of industry who wants to be the richest so he can control where the money ends up. Win the game, then give most of it away. If you haven't read it yet, grab yourself a copy of https://www.amazon.com/Titan-Life-John-Rockefeller-Sr/dp/1400077303

The similarities are incredible.

> How can I become FI?


Figure out how much you need per year to live on, then save up roughly 25x that amount. You will then be fiscally independent. You save more money by spending less and earning more. It's going to take awhile, so invest your savings with a view to the long term, not the short term.


> Should I max out 401k?


Does your company have an employee match for 401k contributions? If they do, then you should contribute enough money each month to get the maximum benefit from the match. That match is like an "automatic" return - say they match you dollar for dollar up to 4%, well, then, if you save 4% you "automatically" make an instant 100% return when you match it. If they don't match it, it gets a little more complicated, so let's keep going and return to this later.


> How much should I put toward loans each month?


This depends a lot on the interest rates of the loans. If you have subsidized federal student loans at some crazy low interest rate like 4% or 5%, it's probably in your best interest to make the minimum payment each month so you can save more. Think of the interest rate on your loans as a "guaranteed return" - if you pay off a loan that has a 4% interest rate, you are getting a "guaranteed return" of 4% on the money you use to pay off the loan. In the long run, you can safely expect to make 7% or 8% on your savings, though, so why would you pay off a 4% loan? If the loans have 9% interest rates or more, though, you should laser focus on paying those debts off fast, because a 9% guaranteed return is way better than any investment you could make (EXCEPT for the employer match on your 401k, if there is one - if they're offering a 50% match, that's an automatic 50% return, so you obviously want to get that first, THEN use what's left to pay off the 9% loans). Where the line is depends a lot on your investment acumen. As a N00B, I would say any loans 7% or higher should be paid off before you start investing (with the exception of the 401k match!). You say you have a particularly strong desire to pay off your loans (I can relate!) so maybe draw the line at 6%. But paying off a 4% loan early is just really bad arithmetic - don't do it.


> What percent should I save to each account? Checking?


Your checking account is for predictable expenses on a 1-2 month type timeframe. You should have enough money in your checking account that it's not hitting zero constantly. You'll need to practice a little to figure out how much that is. Get an account with Mint.com to track your spending habits and set budgets. (I am assuming you don't write paper checks - if you do, you need a "buffer" in your checking account, in addition to the 1-2 month's living expenses, so you don't bounce checks. Bouncing checks is very bad for your credit - don't do it. If possible, avoid paper checks. If you are going to need to write them, CapitalOne's 360 checking accounts have helpful tools for dealing with that. Similarly, if you are going to need to withdraw large amounts of cash from your checking account, you need a bank with physical branches, as ATMs will only give you a couple hundred dollars at a time, so CapitalOne may be the way to go).


One note on checking accounts: since you will be travelling frequently, you're going to need to use random ATM's at gas stations etc, which charge convenience fees of $1-$5 per transaction. If you get a checking account through Ally Bank, they cover those fees, so that's probably a great option for you.


> High Interest savings?


OK, so once you have 1-2 months in your checking account, and you are getting the maximum benefit from your employer match on your 401k, and you are making the MINNIMUM payment on your loans, the next step is to establish an "emergency account" in a low fee, high yield, FDIC insured savings account. Once again I think Ally Bank is the way to go, because they offer 1% a year APR savings accounts with no fees, and no minimum. CapitalOne also has very good online savings accounts. The purpose of the emergency account is to put away enough cash to deal with "emergencies" - spending that happens less frequently then every couple of months. This would include fixing your car or your teeth or getting through a few months of unemployment. The rule of thumb is 6 months of income saved in your savings account BEFORE you start investing (with the exception of 401k savings that come with an employer match). That is a tried and tested rule that many millions of people have found reliable, so violate it at your peril. Once your income gets into the 6 figure range, and/or once you have total savings of at least 3-5 times your annual income, perhaps you can relax it to 3 months of income, but that's years from now. At your stage you really want 6 months, because here's the thing: your teeth ARE going to get fucked up, your car IS going to breakdown, and you WILL end up unemployed for a few months. These might seem like "emergencies" but we know right now they are going to happen so it would be dumb to construct a personal finance plan that isn't robust enough to handle them. Otherwise, when the first "emergency" inevitably comes along, your whole plan is going to fall to shit. The emergency plan is like the "cheat meals" people build into successful diets: we know the fuck up is coming, so we forestall disaster by building it into the plan.


> Retirement?

OK so we now have your priorities established: (1) make the minimum payment on your student loans, (2) get the 401k match, if any, (3) get a couple months of cash in a checking account so you're not hitting zero all the time, (4) establish an emergency account ASAP - say, $500 a month until you have 6 months in there, (5) pay off any student loans with an interest rate 6% or higher.

The NEXT step is explicitly starting to save for retirement. It will probably take you a year before this makes sense to do. Over the course of this year, you are getting your fiscal house in order: figuring out how much you need to spend every month to be a happy healthy person, establishing a bulwark against "emergencies," getting that free money 401k match, and starting to dent at your debt burden. Once all that's set, then you can start tackling retirement directly. If you skip those steps, you will take one step forward, then two steps back: you'll hit overdraft your checking account and have to pay a $35 fee, or your car will break down and you'll have to put the repair bill on a credit card with a stupid high interest rate, or you'll default on student loans and ruin your credit. Etc. That shit will totally hamstring you so deal with it first.


A year from now, you start saving per se for retirement. How much? Well, I say . . . fucking, all of it. I want out of this rat race as soon as possible. Keep your "nut" (monthly expenses) as low as you can, do 1-5, and then put the rest in a low fee broker account where you practice a sensible investment policy. I am a big believer in value investing and the Magic Formula, so if you want my advice, read that book, take it in, and learn to invest. You'll also do fine if you just invest in the S&P 500. DON'T TRADE A LOT, you will shoot yourself in the foot with taxes and fees. Interactive Brokers is an exceptionally low fee and versatile online brokerage account I highly recommend, but it is not user friendly, so be forewarned - you need to RTFM with that site.


I hope that's helpful for you. In case your interested, here's my story with this stuff. I am now 29 and have approximately one year of my current income in savings, which is approximately 4 times what I spend in a year (so I consider it 4 years of savings). When I got out of college, at 22 I made about 1/3 of what I do now, and I spent it ALL. I was lucky enough not to have student debt (rich uncle!) and to have the sense to get my full employee match (100%, up to 4%, so I was effectively saving 8% a year) but beyond that I just enjoyed myself. I am a good worker and got big raises each year, so I was making about 50% more three years later . . . But still basically spending it all. I then somehow got a hold of David Ramsey's book, The Total Money Makeover, which I highly recommend (though it's not the gospel - refinements are ok), and decided to get my shit together. I found that I could cut my spending in half without being any less happy or healthy. I live in a city and ride a bicycle everywhere and workout in a city rec center that costs me $150 a year, I have two sturdy suits 5 pairs of pants and 5 shirts for work and a pair of levis and some button downs for life, a netflix subscription, an $25 aerial on my tv for watching live sports, and a library card. I cook most of my own meals which I enjoy and am getting very good at. I give myself $150 a month for alcohol and bars which is plenty for 3-4 big bar tabs with friends and that's all you friggin' should drink anyway. I get a new phone every 3 years and use the minimum plan. Travel is important to me so I spend $3-4k a year on it - pick your battles. Still, by my estimations, if I make the same amount I do now, I'll be ready to retire before 40, but my goal is to be done with offices by 35 through solid investing and continuing to work my ass off and get raises at work. Incidentally, no, they don't all hate me at work, and none of my friends think I'm cheap, because I'm not - I can buy someone a drink without blowing up my budget. But I am personally content to live frugally and work hard and get out of this fucking rat race ASAP.

First off. Congrats on where you are. You and your wife have already done such a great job.

No debt? Awesome.

I started my whole experience about early FI with a simple question, "when do I want to retire?" This helped me crystalized a number of variables like how much money is enough per year to live on? How much do I need to have in the Bank to make this happen? How much do I needed to save to get from point A to B?

After I finished that part, the next is the how. First I would leverage anything special that you have access to. This would be all the military benefits. Find someone whose already tread that path. Also, I think there's a book on frugal living on a military salary, it may be this one http://www.amazon.com/gp/aw/d/1570233195?pc_redir=1405444535&robot_redir=1

Personally I like to delay as much tax as possible and figure out ways to reduce paying later. Getting the money out of a 401k for a house it's pretty straight forward.

For a portfolio a 3 yr parking spot is tough because you'll need the money so soon. This is almost bond territory. Maybe a 50/50 stock bond mix? I'm not sure with all the news stuff going on if this year or next are going to be easy years.

Good luck with the journey.

I have no real beef with anything you said, but I wanted to harp slightly on the whole idea of

> you are trading risk for returns

I'm currently reading Jack Bogle's Common Sense on Mutual Funds and the way he describes risk-adjusted returns finally made me understand it in a way that I could relate to, so I'm paraphrasing him here (and by all means, go to your local library and pick this behemoth up):

If you can achieve 10% growth with a risk level of 1.00, and 5% growth with a risk factor of 0.25, I always thought you had two choices:

1. Accept an expected 10% growth with a risk level of 1.00.
   
2. Accept an expected 5% growth with a risk level of 0.25.
   
   However, Bogle uses leverage to equate the two in different ways. We'll ignore the cost of that leverage for the sake of the example, but if you were actually implementing this, it would (of course) have to be factored in...
   
   So, if you'd like to get 10% growth, you don't just have to choose investment 1- you can instead borrow money and buy 2x the second investment option, giving you a return of (5% 2 = 10%) with only (0.25 2 = 0.50) risk. In other words, you could get the same growth out of the second investment using leverage with much less risk than by simply choosing the first option.
   
   Or, if you're comfortable with a risk level of 1, he says you'd be better off borrowing money such that you quadruple your investment in the second option, giving you a risk level of (0.25 4 = 1), and an expected return of (5% 4 = 20%).
   
   Therefore, option 2 was the better of the two because when you adjust for risk, the returns on that second investment were superior.

For a very beginner book on how to start thinking about money I would start here:
http://www.amazon.com/The-Total-Money-Makeover-Financial/dp/159555078X
Dave Ramsey is totally against debt. If he could have it his way, nobody would even take out a loan for a house. You can make your own choice on how you feel about that, but in general the book gets you thinking about the power of freeing in your income to become financially independent.
After that, u/hayekspolsives pointed out a good resource, I would also recommend Rich Dad/Poor Dad:
http://www.amazon.com/Rich-Dad-Poor-Teach-Middle/dp/1612680011/ref=sr_1_1?s=books&ie=UTF8&qid=1408981397&sr=1-1&keywords=rich+dad+poor+dad
This book is also another book that will try to get you thinking differently. The truth is, there are many ways to invest. This is why there is so much info out there. The best way is the way that interests you.

This is true, but what increases exponentially also decreases exponentially. The thing is that when you are trading capitalized assets, prices can swing wildly because things are traded on multiple basises. I made the mistake, for example, diversifying across businesses that do not exist in 2010-2011. In fact, I am famous/infamous for it in some circles I would suppose. Discount what I say accordingly.

Made a million by making roughly 20x my money across a handful of companies that exist. Lost everything early 2011. Took a year off and got started a different way. Haven't made much progress if you mark everything to market right now but I am still making more in stocks than my job, as has always been the depressing case. Meanwhile, I'm interested in some sort of income stream that pays me more along the lines of what I am worth as I have a history of making/saving millions everywhere I go.

I have a book recommendation:
http://www.amazon.com/100-stock-market-distinguished-opportunities/dp/0070497729

Anyway, with what you are doing, you can fairly easily secure your future income stream and open your life up for a lot of alternatives. I work with a few people that are in your neck of the woods, making millions but not really having the capacity to turn those millions around into income producing assets.

Losing everything has given me a perspective that I will never lose. An asset is only an asset to the extent that it pays you to take responsibility for it. I prefer assets that I do not have to monitor and I can let go.

If you want to do a hands off lazy way that will likely annualize 20%+ returns per year I recommend the mutual fund FNSAX. There's a book on that too. The guy that created it is Joel Greenblatt and he annualized 40% for 20 years. I can provide you this one as a pdf but here is the amazon link:
http://www.amazon.com/Little-Still-Market-Books-Profits/dp/0470624159/ref=sr_1_1?s=books&ie=UTF8&qid=1381436121&sr=1-1&keywords=the+little+book+that+beats+the+market

Congratulations on your success. It's not every day that you get to run into someone who has lived out your worst fear, losing everything (that's me!). Haha, well. I'd be glad to take a look at what you are doing and let you know if I think your weaknesses are, but the parting wisdom that I want to leave you with is to really assess the extent of that which you do not know. If you don't know investments, diversification is your protection. Use it. Diversify as much as possible across asset classes.

Again, I don't know anything about you. But this is me: http://bit.ly/1WggNE

Just so you know, DD is a bit ambiguous in finance land and I was confused (I thought you had automated your direct deposit ala The Automatic Millionaire). I figured it out from context though.

But yes, I agree that you can get most of the benefit for little work. In MMM's example, he considers reducing expenses to be increasing his quality of life, so I read his blog from that perspective.

Personally, I enjoy thinking about optimizing. I'm an engineer and I like to see how much fluff I can cut out without negatively impacting our happiness. My wife isn't the same way, so she keeps me in check. I'm not as hardcore as MMM, but I do bike to work, do most of my own home repairs and rarely eat out, and sometimes to my wife I might as well be MMM (she grew up in a high spending, low income family, I grew up in the opposite).

Don't cut anything that will make you less happy. I think we and MMM can agree on that. =)

My opinion on a holding individual bonds, is that I would only do it if: a. I wanted to provide myself near guaranteed cash flows (via a bond ladder) or b. had significant amounts (hundreds of thousands to millions) to invest in bonds.

If you know you will need money at a certain date in the future, individual bond purchases (ie: treasury direct) or CDs could be useful. The bond fund's price will fluctuate greatly with changes in rates, so you bear some risk of the price being low when you want your cash. This is the risk/benefit to weigh. I am not concerned about this as my emergency fund at LMCU gets 3% interest and would cover about 6 month of expenses. I also hold roughly 6 months of expenses in precious metals. I view PMs as currency diversification, not as an investment. I like diversification, so I hold my emergency fund in USD and PMs. My bond allocation is entirely through VBTLX currently. Consider tax efficiency of how you hold your bonds.

Rick Ferri has a book All about asset allocation that covers the concept of reducing volatility leading to higher long-term returns. It is a little less deep/technical than Bernstein.

Bernstein has a series I really enjoyed call "Investing for Adults". Rational Expectations (Book 4) covers the volatility/return relationship. He can get a bit technical this series, but I think it is worth reading if you are going to do your own financial planning. (Note: I am also a nerd and enjoy reading about these topics). Four Pillars was also a great read.

If you enjoyed the decluttering process, I'd highly recommend the Kon Mari method (https://www.amazon.com/Life-Changing-Magic-Tidying-Decluttering-Organizing/dp/1607747308).

It's all about getting rid of the things that don't actually bring you joy anymore. I did it last year and got rid of about half of my things, and I'm really happy with the results. I got to say goodbye to 90% of the random papers I had been saving, more than half my clothing, and a bunch of other random stuff. Now, for the most part, the things I own are things I really like.

There is an emotional weight to clutter and having things you don't want/care about around you that you don't realize until you remove them from your home.

> I have a few friends (Canada) that have been bragging about how great of a return they've been getting on investing in weed corporations jumping on the green rush coming. I was so tempted to take a chunk of cash and invest it, but realistically it would have been a huge portion of our finances.

>I've read before "don't invest what you can't afford to lose," with this in mind I haven't let myself get upset over missing some investment opportunities. Even if I could be a little further ahead with some high-risk investments, I am happy that we've followed our own plan and stuck to it.

Don't give in to the temptation. At this point, "investing" in weed stocks is really just gambling. There's a lot of hype and uncertainty and the people closest to the flame are most likely to get burned. Look what happened with cryptocurrency.

Slow and steady wins the race. Keep dumping money into index funds. If weed stocks become a significant portion of the economy, you'll get a piece of the action through your funds but at the same time, you'll be insulated from most of the potential downside by being diversified.

I highly recommend that you read A Random Walk down Wall Street: The Time-tested Strategy for Successful Investing.

100% agree. Read https://www.amazon.com/Titan-Life-John-Rockefeller-Sr/dp/1400077303 and then tell me you wouldn't want that lifestyle...

The guy semi-retired in his early 50's to play golf and live a life of luxury in his various manor homes. He lived until 97, money seems to have done a great job of keeping him alive.


Medicine is bad? Chicago university wouldn't exist without him and his huge bankroll, His money was almost singlehandedly responsible for curing ringworm in destitute southerners (and curing other illnesses and maladies) too. A huuuuge amount of modern medicine is thanks to John D & his willingness to fund medical research.

I mean sure he couldn't play angry birds... But the guy was rich enough to have stables built in Manhattan so he could race the worlds finest horses with his brother through central park. Toward his later years he was able to afford the worlds best cars in the world and professional drivers to take him for drives. Sure, they weren't as quick as a modern sports car, but i doubt he really cared.. Reliability? He could buy 100 of them, no problem.

The impact John D and even his son, John D Jr had on areas such as medicine and the arts is mind boggling. The New York MoMA nor the Cloisters would exist without them. (Jr and his wife co-founded the MoMA, donated the land & an incredible amount of art work to it. HE DIDN'T EVEN LIKE MODERN ART, HE HATED IT.) John D Jr gave more money to medical research and charity than he gave to his own damn family.

The amount of charitable giving they did (most of it anonymous) is insane. They bought entire forests to save them, donated huge chunks of land to be national parks, etc.

The United Nations? The land the headquarters is built on in Manhattan - Jr donated that.

Versailles in France? Jr was posthumously awarded France's highest honor, the Grand-Croix de la Legion d'honneur for contributing huge sums of money (with no requirement for any recognition, public attention, etc.. If anything he worked incredibly hard to HIDE his involvement) to the repair efforts because he thought it was an important building for the French people.

These are people who on multiple occasions would pay double or triple the asking price of famous art works to the ire of their friends and colleagues who wanted to acquire them, because while others in their social circle wanted to horde them in their private collections, they wanted to buy them so they could be donated and on show for all of the public, not just the rich elite.

If I could have my life today, or be transferred to John D or John D Jr's era and have 1/10th the impact on humanity that they had, its a total no brainer. Yes, John D committed some unsavoury (monopolistic) business practices... So did everyone else in that era. He was a devout baptist who practiced philosophy and frugality (he was far, far less spendy than anyone remotely comparable) from his youth as a broke assistant bookkeeper to his dying days as a titan of industry.

I like these anecdotes that show the power of compound interest. Here is another from The Automatic Millionaire. I saw something like this in my early 20s, and being a math nerd, I've been compelled to max out my retirement contributions ever since. I'm now in my early 40s and have around $700k saved for retirement. The future is looking pretty sweet.

I'm registered at biggerpockets.com but honestly haven't looked into it much. I just sort of winged it by doing my own market research. However, I only have 3 doors (about $300/month/door cash flow), so I'm not sure you'd want to do it my way.

Good books I recommend:

• What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures - I have the slightly older version.
  
• Landlording: A Handymanual for Scrupulous Landlords and Landladies Who Do It Themselves
  
• Some version of tax/legal advice. I like the one from NOLO, but you should make it local to where your property is.

This was one of the better ones I read:

http://smile.amazon.com/Investing-Duplexes-Triplexes-Quads-Fastest/dp/1419537253/ref=sr_1_13?ie=UTF8&qid=1421721426&sr=8-13&keywords=real+estate+investing

He is very convincing as he explains why duplexes, triplexes, and quads are better money makers than single family homes. Convincing enough that I bought a duplex that was zoned for single family, duplex, or commercial. I went over rent scenarios with my realtor (who is now my property manager) and she and her colleagues agreed that I could get $2200 rent total as a duplex (1 bed and 2 bed units) but only 1500-1600 as a 3 bedroom house. So I make enough on it that I can pay manager 10% and still have a good profit, plus she does all the work.

> It's my love language, as stupid as that is.

I don't think that's stupid at all. That book is one of my favorites of all time. I've found it super useful in many of my relationships. (And as an aside, because I'm not really sure what my son's language is, I try to make sure I'm hitting them all!)

Ric Edelman's "The Truth About Money" is a great introduction.

http://www.amazon.com/The-Truth-About-Money-Edition/dp/0062006487

Some of his other books offer not-so-good advice so stick with just this one. :-)

The TL;DR of investing:

Stocks: You buy part of a company which has been sold to the public.

Bonds: You lend money to someone and they pay you interest

Mutual Funds: Someone else buys a mix of the above so you don't have to deal with the complexities of doing so, bundles them together, and sells you parts of the bundle like a stock.

Brokerage: A company where you open an account to buy and sell the above. They take your money and let you buy stocks/bonds with it. For a fee, of course. :-)

I've been reading lately about the future of economic growth, and I was wondering if any of you have had similar thoughts.

First, this episode of Freakonomics features an economist who thinks the future growth of the economy will be much slower because we've already picked the low-hanging fruit of technology.

Second, I've been reading Die Broke, where the author says fulfilling work makes most people happy. He argues you should "quit your job in your head", focus on making your personal life fulfilling, and take frequent sabbaticals instead of retiring.

I'm just starting on the road to FI/RE, so it's a lot to think about. I do agree that we'll probably see slower growth (though not apocalyptic slow growth), and I do think most people find fulfilling work rewarding. It makes me lean towards the "FI then part time approach", where you save a good nest egg, then work part time while your nest egg grows.

Like I said, I still have a very long way to go, so for now I'm just saving as much as I can, but I want to think about where I see myself with this long-term.

I suggest reading (re-reading?) Work Less, Live More. An excellent book that includes lots of great tips about making sure your life has meaning outside of work.

https://www.amazon.com/gp/product/1413307051

I got the Richest Man in Babylon! by George S. Clason out of college It was published in 1926 and is still great advice. There is also a free audio version here!. The book is written very differently than most personal finance books. The author uses parables to teach financial lessons. This makes it a great introduction for the financial newbie. The part that most stuck with me is:

"“A part of all you earn is yours to keep. It should be not less than a tenth no matter how little you earn. It can be as much more as you can afford. Pay yourself first. Do not buy from the clothes-maker and the sandal-maker more than you can pay out of the rest and still have enough for food and charity and penance to the gods."

I joined the Peace Corps after college so I didn't get around to implementing Mr. Clason's advice. For some reason, over the three year period I was out of the US, his advice changed in my memory to three-tenths. So since I got my first full-time professional job at 27, I have been aiming to save 30% of income. I haven't always met this goal but I have averaged saving at least 20% of my gross income.

This past May, I read Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence! which introduced me to FIRE. While I'm a little sad about the 6 years, I wasn't saving for FIRE, the savings I accumulated is a great start. The approach in this book has been very useful in figuring out what I am willing to give up in order to increase my SR and achieve FIRE sooner.

Edit: fixed hyperlink

Please do your research as there are many experts who make various claims.

We are just amateurs here on /r/FI and are not professional investment advisors in any sense.

Topics to explore are index funds versus actively managed funds, expense ratios and its effects on performance. I recommend this book, The Truth About Money, by Ric Edelman

https://www.amazon.com/Truth-About-Money-4th/dp/0062006487

> It's likely I'll be buying a multi-family property in the summer, too, and I'm pumped about that. I've figured out how to analyze potential deals and have found a couple in my area that would net me a helluva cash-on-cash return. If all goes well I'm hoping it will greatly accelerate my timeline to FIRE.

Ooo fun! My favorite book on this topic: https://www.amazon.com/Estate-Investor-Financial-Measures-Updated/dp/1259586189/ref=sr_1_1?ie=UTF8&qid=1484774510&sr=8-1&keywords=cashflow+what+every+real+estate

I recommend reading Bill Bernstein's The Intelligent Asset Allocator. How to Build Your Portfolio to Maximize Returns and Minimize Risk.

I highly recommend A Random Walk down Wall Street as a resource to learn about, and the best way to invest in, the stock market.

Link to the book for those interested: https://www.amazon.com/Love-Languages-Secret-that-Lasts/dp/080241270X

edit: free quiz, from author, to learn your 'language' http://www.5lovelanguages.com/profile/ . Book prob available at your local library.

In "The Intelligent Asset Allocator" by William Bernstein [1], it's explained that adding a risky asset class to your portfolio will decrease the risk. For example, although bonds may have a lower risk, an 80% bonds/20% stocks portfolio should have a lower overall risk and higher returns. There's probably quite a few articles out there besides this book, sorry I haven't got one on hand!

[1] https://www.amazon.com/Intelligent-Asset-Allocator-Portfolio-Maximize/dp/0071362363

There is an old saying that the government doesn't change things for your benefit. Just like the REDUX fiasco, be very careful about the marketing that is being used to push this. While it will help the majority of members who do not stay for the full 20, and that is a good thing, especially if you plan on 20 but don't make it for whatever reason; but there is a reason why the full pension and benefits have been decreasing and dropping historically (healthcare for life?)

The biggest costs to the government are a retired member on a pension, not their salary while they are active; and even more is all the pork that congress critters give away to further their retirements. If we ever were to cut out that part, Congress wouldn't try to screw over veterans by stealing the COLA, like they did back in 2014 that was rescinded a couple months later (but those bastards will attempt it again).

Hope you've checked out Nord's book.

For those wondering: https://www.amazon.com/Conserving-Client-Portfolios-During-Retirement/dp/0975344838

https://www.amazon.com/gp/product/1419537253/ref=ppx_yo_dt_b_search_asin_title?ie=UTF8&psc=1

If you replace 'subreddit' with 'book':

http://www.amazon.com/The-Life-Changing-Magic-Tidying-Decluttering/dp/1607747308

William P. Bengen just did an AMA. Go check that out and then read his book. I'm reading it currently and just finished the chapter on longer-lived clients and their portfolio needs. He's got a SWR of 4.1% for a 45 year portfolio at 0% tax rate with 65% equity allocation. 4% for 50 years. With a 20% tax rate his numbers are 3.7% SWR for a 45 year portfolio with 85% equity allocation.

https://www.amazon.com/Conserving-Client-Portfolios-During-Retirement/dp/0975344838/ (I got it used for $12)

I literally don't have an age. I'm conservative and basically my plan is simply to never reduce my capital. I.e. I have enough money to theoretically live forever.

I'm not one of the Die Broke people.

Work Less Live More by Bob Clyatt.

http://www.amazon.com/Work-Less-Live-More-Semi-Retirement/dp/1413307051

> A good general rule is to pay yourself first. This means after setting aside money for whatever you have to pay each week/month (rent, phone bills, food, utilities, etc - and work out what this is going to cost each paycheque to set that aside. Eg $40 a month for phone, set aside $10 a week if your paid weekly etc) put this into your savings. Even if it's $20, do it.

Robert Kiyosaki would argue that is paying yourself last.


That being said, what you suggested is EXACTLY what my wife and I did, and it was THE turning point in our finances. We weren't making any more, and it didn't seem like we were spending less, but we had money in savings at the end of the month.

You certainly could do that -- draw down your savings slowly, investing it over time.

You might spread it out over several years instead of a single year, as the volatility, measured by standard deviation of market returns, on rolling periods drops dramatically as the length of the period increases. If I remember my Bogle correctly, the one-year standard deviation of market returns is somewhere in the neighborhood of ~20%; increasing the period to two years almost divides that in half; and the standard deviation of returns on rolling ten-year periods is closer to ~2%. That is, the stock market is a rollercoaster in the short term, but the ride smooths out the longer you stay on it.

The real point is that, even if you drop $5,000 into the stock market today, and tomorrow the market collapses by 40%, yes, you will have just lost $2 grand in one day. But the entire history of the stock market suggests that, not only will it eventually recover what it lost (as it has done after the Great Depression, and every major recession) and climb even higher, but if you keep investing regardless of what the market does tomorrow, or what you think it will do tomorrow, some of your investment will inevitably happen at the bottom, where it will have nowhere to go but up.

Anyone have any book recommendations for a 26 year old? No topic in particular, not necessarily financial/business or otherwise, just any suggestions?

I'm currently reading:
https://www.amazon.com/How-Not-Be-Wrong-Mathematical/dp/0143127535
I'm not far into it, but it's basically on how to properly apply mathematics and logic to problem-solving. It's not exactly a new strategy for life or anything, but it's probably a good idea to read if you're analytical. I got it off Bill Gates reading list.

https://www.amazon.com/How-Lie-Statistics-Darrell-Huff/dp/0393310728
Found through the reading list- This one I've finished and can't recommend enough. It's from the 50's and it's intended reader were investment bankers. The main suggestion is hide yourself from bad information because you can't eliminate the impact it'll have on your decision making, and we aren't exactly equipped to know what's good or bad if we don't have experience in that realm already. It's a lot of common stuff people use stats for to push a product service policy etc.

https://www.amazon.com/Starship-Troopers-Robert-Heinlein/dp/0441783589/
I'm really into it. I love sci-fi. I don't necessarily love philosophy, but I'm really enjoying this book. It's hard for me to read a lot of at once but I don't ever want to put it down. The mindset of the character and narration really gets me. Since reading this, I've heard or noticed many many recommendations for Heinlein, though I'm unsure. He seems to be a proponent of fascism, but I guess he could just be writing down the fantasy of the particular fascist society he created and not necessarily saying "ya know this is how we should be" I don't know. I see conflicting things.

And Equity-Indexed Annuities, got to have those.

ObPlug: Swedroe's The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly is really good.

I would try reading Larry Swedroe's book [The Only Guide to Alternative Investments You'll Ever Need] (The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly https://www.amazon.com/dp/1576603105/ref=cm_sw_r_cp_apa_PhqAzbBQRQR8Q). I do mean read, you don't want to invest in anything without understanding it, especially alts, and Swedroe is excellent. It's ten years old so no crypto discussion.

There are lies, damned lies, and statistics.

How to Lie with Statistics https://www.amazon.com/dp/0393310728/ref=cm_sw_r_cp_apa_-HZ.BbXA1BV68