“Sound investing is not complicated.” - location: 204 ^ref-4205
This book was recommended to me multiple times on the DutchFIRE Reddit. I finally got round to reading it.
Key takeaways
- Save half your income
- After building an emergency fund, invest your savings
- Invest everything in broadly spread index funds
- The market always goes up (in the long run)
- The market is going to crash, you need to prepare to ride it out
- It’s not about retiring early, it’s about F-you money
Thoughts
From my research I had already thought out a pretty similar investment strategy of maximizing savings and putting it all in index funds. I don’t have a very entrepreneurial or business oriented mind. I don’t have the interest to dive deep into financial reports and analyzing company earnings. So as an average guy I’ll just invest it into index funds. Keep adding as much as I can to them for 20 years, let the market and compounding interest do the work, and then I should be financially independent.
What is financial independence? This book frames it as F-you money:
“For me, the pursuit of financial independence has never been about retirement. I like working and I’ve enjoyed my career. It’s been about having options. It’s been about being able to say “no.” It’s been about having F-You Money and the freedom it provides.” - location: 228 ^ref-34594
I love this idea, because I’m not necessarily interested in retiring very early. I love my work and I’m lucky to work in a field that is under continuous development. It’s already hard to keep up, so the thought of working 30 years from now is actually rather exciting. I think it’s good to have something to do, it’s not healthy to just travel around when you’re 35 and I think it will become a very empty and unfulfilling life pretty quickly.
I’d much rather have the freedom to take a few months off here and there. Mini retirements. Go travelling for 6 months and start an exciting new position somewhere, or continue working on the things you left off.
Quotes
“Since money is the single most powerful tool we have for navigating this complex world we’ve created, understanding it is critical. If you choose to master it, money becomes a wonderful servant. If you don’t, it will surely master you.” - location: 183 ^ref-59928
“The beauty of a high savings rate is twofold: You learn to live on less even as you have more to invest.” - location: 207 ^ref-14488
“The other thing I quickly figured out is that financial independence is at least as much about being able to live modestly as it is about cash, as our opening parable describes.” - location: 242 ^ref-10147
“If you decide to pursue financial freedom you are going to have to choose to spend your money on investments. Somehow in our culture this has come to be seen by most people as deprivation. That has never made much sense to me. Personally, there is nothing I’d rather buy or own than F-You Money.” - location: 2897 ^ref-10616
“It’s not hard. Stop thinking about what your money can buy. Start thinking about what your money can earn. And then think about what the money it earns can earn. Once you begin to do this, you’ll start to see that when you spend money, not only is that money gone forever, the money it might have earned is gone as well. And so on.” - location: 595 ^ref-24245
“The market always goes up. Always. Bet no one’s told you that before. But it’s true. Understand this is not to say it is a smooth ride. It’s not. It is most often a wild and rocky road. But it always, and I mean always, goes up. Not every year. Not every month. Not every week and certainly not every day. But take a moment and look again at the chart of the stock market in the last chapter. The trend is relentlessly, through disaster after disaster, up.” - location: 822 ^ref-50566
“This is why you have to toughen up, learn to ignore the noise and ride out the storm; adding still more money to your investments as you go. 7. To be strong enough to stay the course you need to know these bad things are coming—not only intellectually but on an emotional level as well. You need to know this deep in your gut. They will happen. They will hurt. But like blizzards in winter they should never be a surprise. And, unless you panic, they won’t matter.” - location: 830 ^ref-55872
“We believe we can pick individual stocks. You can’t pick winning stocks. Don’t feel bad. I can’t either. Nor can the overwhelming majority of professionals in the business. The fact that this ability is so rare is the key reason why the very few who apparently can are so famous.” - location: 935 ^ref-53690
“To consider buying a house, if you are so inclined. But don’t be in a hurry. Houses are not investments, they are expensive indulgences. Buy one only when you can easily afford it and if it provides the lifestyle change you want.” - location: 2836 ^ref-13073
Links:
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