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by
J.L. Collins
When you can live on 4% of your investments per year, you are financially independent.
financial independence is at least as much about being able to live modestly as it is about cash,
One of my very few regrets is that I spent far too much time worrying about how things might work out.
If you intend to achieve financial freedom, you are going to have to think differently. It starts by recognizing that debt should not be considered normal.
Houses are an expensive indulgence, not an investment.
one of the more unfortunate results of spiraling college costs and debt is the way it has warped the very concept of higher education. Rather than the pursuit of learning and culture, it has become the pursuit of job training in an effort to secure employment that will justify the astounding cost and debt incurred.
We are creating a generation of indentured servants. It’s hard to see the ethics or benefits in that.
“Yes!” it is possible for every middle class wage earner to retire a millionaire.
Being independently wealthy is every bit as much about limiting needs as it is about how much money you have. It has less to do with how much you earn—high-income earners often go broke while low-income earners get there—than what you value.
Spend less than you earn—invest the surplus—avoid debt
Stop thinking about what your money can buy. Start thinking about what your money can earn.
When the share price of one of his businesses drops, what he knows on a deep emotional level is that he still owns precisely the same amount of that company.
And successful investing is by definition long term. Any investing done short term is by definition speculation.
Everybody makes money when the market is rising. But what determines whether it will make you wealthy or leave you bleeding on the side of the road is what you do during the times it is collapsing.
there are actually more mutual funds out there than stocks.
Never buy stocks on margin.
any pullback in stock prices is a gift while you are in the process of accumulating your wealth.
the more complex an investment is, the less likely it is to be profitable.
Once you begin living on the returns from your portfolio you’ll be able to spend roughly 4% of your assets per year. (We’ll explore this 4% concept in Part IV) If 1% of your money is going to management fees, that is a full 25% of your income.
“Before you decide to use kicking techniques on the street ask yourself this question: ‘Am I Bruce Lee?’ If the answer is ‘no’ keep your feet on the ground.”
As cool and effective as kicks look in the movies, tournaments and in the dojo, on the street they are very high risk.
I’d happily put in more effort for more return. More effort for less return? Not so much.
Bonds are in our portfolio to provide a deflation hedge. Deflation is one of the two big macro risks to your money. Inflation is the other and we hedge against that with our stocks.
In times of inflation prices rise and so money owed to you loses value.
When interest rates rise, bond prices fall. When interest rates fall, bond prices rise. In either case, if you hold a bond to the end of its term you will, barring default, get exactly what you paid for it.
Put all your eggs in one basket and forget about it.
there are studies that indicate holding a 10-25% position in bonds with 75-90% stocks will actually very slightly outperform a position holding 100% stocks.
Advisors are drawn not to the best investments, but to those that pay the highest commissions and management fees.
Not surprisingly, a field that provides access to people’s life savings is a magnet for con men, thieves and grifters.
“Wisdom comes from experience. Experience is often a result of lack of wisdom.” —Terry Pratchett
more fortunes have been created brokering trades than making them.
A little humility goes a long way in saving your ass and your cash.
at any given time, some expert is predicting any possible future that could conceivably happen.
You are likely to be conned in an area of your expertise. The reason is simple: Targeting and ego.
Successful con men look like the safest, most trustworthy, honest, stable, comforting people imaginable.
99% of what they say will be true. The best, most effective lies are surrounded by truth.
“Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy.” —Groucho Marx
If you absolutely, positively want a sure thing and your yearly inflation raises, keep your withdrawal rate under 4%. And hold 75% stocks/25% bonds.
Personally, there is nothing I’d rather buy or own than F-You Money.
If you have money you have risk. You don’t get to choose not to have risk, you only get to choose what kind.
