https://www.mrmoneymustache.com/ (the older stuff is better, he's making bank through the blog so caveat emptor)
Take from that what you will.
Please provide proof of this. He's never mentioned it anywhere on his blog.
> currently works full time talking about living frugally.
This he has talked about: http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-...
The tl;dr for others is basically, what's someone who is hardworking and driven enough to retire at age 31 actually supposed to do with the rest of their life? Sit in front of the TV? Of course he's going to do some things he enjoys (writing, working on houses, hiking, skiing), and maybe some of those activities will make him money - but he doesn't need the money to maintain his current lifestyle.
Their own yearly reports put the second part to a lie - they would have to cut back significantly on their spending if they lost this income. It's possible for them to do without going homeless, but it would be non-trivial.
His last reported year, his base costs (food, clothing, electricity, etc) were $30,000 - within the range. But as he himself notes right below that total, they spent around $90,000 on health insurance and a vehicle, which he pretends doesn't belong in the previous category because "the job pays for it".
Not holding that job suddenly puts him on the hook for that $90,000, or puts him at risk of not having health insurance and reliable transportation.
He doesn't need a car that expensive and he can move back to Canada if health insurance gets to be too much.
He's inflated his lifestyle with his increased earnings (falling short of practicing what he preaches, though in fairness he says he's bought an electric car to support the industry but that's a way to justify the purchase), and would probably dial it back down if the blog stopped throwing off that much cash.
It provided 5-6 years of rental revenue and a $400,000 final payday.
Keep an emergency fund of 2-4 months in cash or equivalents, and invest everything else that you can when young. Don’t buy the flashy new car, the rounds of $15 drinks, don’t carry a credit card balance, etc. When the inevitable market gyrations come, do not take the money out. Don’t try to time the market.
If you don’t have much money to get started, consider real estate as a second job. The leveraged nature of that bet is one of the few ways to start from relatively little money and build a nest egg. It’s a second job, though. If you pay a PM to manage it, the PM makes more current income than you do in most cases.
In addition to jacquesm’s advice to read MMM, I also recommend the jlcollins stock series: http://jlcollinsnh.com/stock-series/
My wife and I (early 30s) have been getting her school debt settled but with little retirement outside of a small 401k, we've started looking at aggressive retirement plans.
At the moment we're just treating everything as the most yield (compounded or not). So her high interest debt is the most yield, however once half of those are out, a lot of investments will yield higher than her debt, so we'll likely shift priorities towards those.
When considering yield, always consider after-tax yield. Having a 6% non-tax-advantaged debt is better to pay off than a taxable 7% investment.
Here's a good "order of operations" guideline: https://forum.mrmoneymustache.com/investor-alley/investment-...
First, no matter what you do, construct an asset mix (even if it's wrong) to start, then do research on what is most appropriate for you, stick to it, and just keep investing to each of those buckets.
I think I sit generally along the lines of:
- 60% real estate property - 10% retirement investments (401k, IRA, etc) - 10% Vanguard Index funds (diversified across 5 indices, large cap, SP500, small cap, REIT, etc) - 5% direct stock investments (moderate risk, high reward) - 8% high risk, high reward investments (e.g. seed investments) - ~2% cash (mix of checking account and HYS account @ 1.7% APY)
- 20% of my overall portfolio is basically liquid in case of an emergency
NOTE - do not strictly follow this asset mix, it's just illustrative based on what my wife and I have decided to do.
Recognize who is giving you boring advice(index funds), look at the risk levels in their life, and then disregard them if they don't take chances on anything.
At a young age your risky investment % should be at it's highest. The exact amount will depend on your appetite.
I guess there's real estate but I don't know if that qualifies as 'high risk'...
And cryptocurrencies, but I'd call that 'gambling' not 'investment' :)
"Boring advice" works to make multi-millionaires in a predictable, boring fashion, especially when the available timeline is 40-50 years.
There's some basic math around compound interest that comes into play that young people should consider. While growing up my state required a "financial literacy" course for everyone, I assume that's expanded across the country so most people should be able to do the math if they're so inclined, but I also think charts like these are useful and good enough to get the point across: http://www.businessinsider.com/amazing-power-of-compound-int... Generally speaking, start-time for getting the investment nest egg rolling dominates.
Also even if your appetite for risk is large now, you have to really ask what you want out of any risky endeavor, when you want it realized, and what you'll be satisfied with, since if you'll be satisfied with X there's little reason to pursue some high risk activity that if it works out returns Y >> X but most likely (being high risk) you won't even break even. Consider a risky endeavor that's less risky in that if it works out will give you X, but with the nature of risk the probabilities of not working out are lowered. Boring index funds are a type of this lower risk investment that can satisfy "effectively able to retire" in your 30s, but they're not going to satisfy rich startup gains leading to double-digit millionaire+ status. It's at least a path if you want that certain state of "retirement nest egg" when you're in your 30s, and by extension works if you just want it for your 60s too. On the other hand, maybe you're someone indifferent to when you want unicorn-success riches to be realized (great if tomorrow, fine if 20 years from now after you finally catch a break and haven't died first).
You can use your money to generate passive income, or you can use it to get leverage (retaining more of a percent of your startup; taking a risk on a risky but better job; etc.). In either of those paths, do it smartly.
The rest is invested in individual stocks and high-risk mutual funds. Once I am 30, I will start pumping more into ETFs (stocks and add in bonds).
I absolutely love the advice. Everyone is different but I try to be as risky as possible with at least 40-50% of my portfolio until I am 30.
Two possible changes to my strategy will be if I build a good software product/business that makes more income. I will divert the money put into risky investing and dump it into my products/business. The other change is buying a home ($100-250,000). I want to raise backyard chickens!
Most of my money is in this one: https://americas.vanguard.com/institutional/mvc/detail/mf/ov...
You might want to put some into a fund that comprises bonds, though they've performed poorly (for my investments) in recent years. If you're young (<40), I would put as much, if not all, in a fund consisting of stocks.
Also: this is a long play. Leave it there.
http://www.macrotrends.net/1319/dow-jones-100-year-historica...
Remember, the stock market does not create money, it's not a fundamental advancement for humanity. That just means that more people poured money into stocks, rather than other investments or savings.
There's absolutely, ABSOLUTELY no reason for which this growth should keep going on in the future.
- new companies go IPO, they do it because there is liquidity in the market, so they can count on someone buying their shares and cashing in.
- some blue-chip companies pay out dividends
- as much as many people hate on that, profitable companies engage in shares buy backs which is a way to return money earned by the company to its shareholders. If the company makes no profit, it has less to do buy-backs with.
- in the end a share is a piece of a company, big part of their long term valuation will always be driven by their fundamentals like a ratio between profit and revenue or how likely they are going to default on their debts, no one wants to own a piece of company that is going to disappear
in summary, there is quite some connection to the real economy, but I agree that part of the valuation is just because other people pour money in it is just not that bad.
http://www.crsp.com/resources/investments-illustrated-charts
Check out the "Big Picture 2018" pdf, especially.
Edit - there is one specific piece of advice that you can see very clearly in the chart - reinvest your dividends!!!
All those dumb poor people wasting their money on food.
What I see is that most people just appreciate the luxury today more than the savings which would enable more luxury tomorrow. I think there's nothing wrong with that. You might die any day in a traffic accident, so why bother saving all that money? Those are quite subjective decisions.
https://en.wikipedia.org/wiki/Hyperbolic_discounting
The hedonic treadmill is, in a nutshell, the reason we become complacent to newly acquired luxuries:
https://en.wikipedia.org/wiki/Hedonic_treadmill
So not only do we want fancier things now, but we don't really appreciate them when we have them! Humans are silly.
If you give them just the tiniest little benefit of the doubt, it's easy to see that they are talking about the money they had available after meeting their needs and that they probably aren't criticizing people that don't have a lot of such money.
And the point was that many people do not have money available after meeting their needs.
Consuming means using resources on things that immediately loose their value. If you for example buy a house, that's not consuming since the house has inherent value.
But if you yourself the newest gaming rig, the gaming rig is consuming the money. This is what Americans mean when they talk about consumer society.
You mean like food ? It's literally the first definition of 'to consume' on Google.
It's an overloaded term, sure, but it's clear that consumables -- i.e., things that need to be consumed to release their value, such as food -- only fall under the category of "consumption" when there's a surplus of value that becomes illiquid. For example, eating a balanced meal when you're hungry is a net gain, while eating 50 pizzas when you don't need to isn't!
You can consume food, you car consumes gas and your girlfriends expensive holiday consumes money.
When Americans say "consumer" they mean someone who spends money on things that they are not going to sell again. That can be smartphones, luxury cars, drugs or food.
You could also say a consumer is the opposite of an investor.
Consume here means non-essential needs such as always buying latest gadget (while previous one still works), changing your car early for no good reason (less than a few years), or even buying one if you don't need one, going out often at expensive activities etc...
They were talking about the people (of whom I've been one, earlier in life), who have been privileged enough to have earned a lot of money but wasted it.