Your Investment Road To FI

[siamamerican]

The road was short for me, starting in 2003, at age 34, and ending in January this year. I had always been able to save, but only to spend all of money on multi year global trotting. I had incredible experiences and little savings. At 34 and newly married, my goals changed or more accurately stated, I finally set goals. Initially the goal was simple save as much cash as possible and retire in the next 15 years.


As the saving increased, more and more investment and professional opportunities presented themselves. Everybody is going to have a different path to FI. Too many variables ( personality, intelligence, LUCK...). My advice is to first build a cash cushion to take advantage of opportunities. Then make the financial choices that “YOU” determine prudent.


What works for someone else, most likely won't be what works for you. If you enjoy holidays with friends and family and only save 10% of your salary a year, you might die a happier than the person that saved 50% and retired 15 years earlier.

 

[audreyh1]

Another way to FI is to take outsized risk - put most of your eggs in one basket and hope it pays off. If you take these risks young enough, you have time to recover if it all blows up in your face as long as you don't take on debt.

Audrey

 

[ziggy29]

Another way to FI is to take outsized risk - put most of your eggs in one basket and hope it pays off. If you take these risks young enough, you have time to recover if it all blows up in your face as long as you don't take on debt.

True, and it's not just with investments. Many people who are wildly successful in business today had several prior failed businesses, but they never gave up. To paraphrase a quote from Mary Pickford, "failure isn't in falling down, but in staying down."

 

[dizzy]

True, and it's not just with investments. Many people who are wildly successful in business today had several prior failed businesses, but they never gave up. To paraphrase a quote from Mary Pickford, "failure isn't in falling down, but in staying down."

... and also take some risk with your career. Position yourself in companies and industries that have large upside potential. (like biotech with stock options). You get the relative stability of good salary, but also get some chance at the big payout. Hang in there long enough to learn new stuff, build a reputation as a "doer", network like hell, follow the lead of people you respect to new opportunities. Rinse, lather, repeat. Even if you don't hit the jackpot, you will have a hell of a lot more fun!

 

[jimnjana]

Don't obsessively monitor your portfolio. Once you arrive at an appropriate investment allocation based on sound investment principles, let it ride. Review performance annually to rebalance if needed.

Jim

 

[Spanky]

Just interested in knowing some of the investment roads others took to get to FI. Was it investing in stocks: buy and hold, day trading ; mutual funds, individual stocks. Real Estate. Very good paying jobs with good 401k investments over a long period ? And last but not least: Luck ??

All of above + savings (less spending).

What would be your advice to others starting in their 30's as a prudent investment roadmap, knowing what you know now.

Pick an asset allocation that you feel comfortable and stay the course. Save! Save! Save!

 

[cardude]

Went to college and got business degree.

Graduated in 1988 and couldn't get a real job. I begged a commercial real estate firm to hire me. They would not pay me a salary-- only a draw against future commissions. Worked for them for a year and only sold a couple of small apartment buildings-- barely enough to break even on the $1000/month draw.

My dad called me and said he was ready to get out of the car business. I got a job selling cars in HoustonTX to get some experience and made $4500 the first month in late 1999 selling Oldsmobiles. I did this for a year.

Worked for my dad and his partner for two years and learned all facets of the business, then bought my dad's 1/2 interest out. Business started really rolling and I made lots of money and bought my dad's partner out two years later. Made even more money and lived cheap and we saved about 75% of what I made. I plowed all this savings into the stock market in individual stocks. Got really lucky and made some money on Microsoft, Cisco and Intel in the tech boom and sold before the bubble exploded. Pure dumb luck. Put the rest into more conservative stocks (that still fell 50%!), but I think they will come back.

Had plenty to retire 2 years ago but procrastinated. Business failed this year and I lost damn near 50% of my portfolio recently but I retired anyway. So far so good.

Obviously I got lucky having a dad in a business that I could buy into. I have always said owning a good business was the best way to get rich, but I think it will be harder for years to come due to over regulation, higher taxes and struggling consumers.

 

[73ss454]

CD, did you close the doors yet?

 

[FinanceDude]

CD, did you close the doors yet?

Inquiring minds want to know.......

 

[tryan]

The younger you want to retire, the more risk you need to take. Think: open a business, lots of investment property, join a start-up, or trade penny stocks.

Else, LBYM will do a nice job if you persist for a couple decades (minimal).

 

[cardude]

CD, did you close the doors yet?

Inquiring minds want to know.......

I closed it. March 15th was the last formal day for employees, but I am renting the shop and equipment to my service manager and a couple of really good techs. Hope they make it. It was pretty slow back there last time I looked.

Working on [-]fine tuning[/-] slashing the budget as we speak. Wife got a teaching job, got a little rent coming in, got a little money in the bank. It doesn't look too bad, other than trying to sell the house. Four others went up for sale on our street the very day we listed ours. Arrrrrg. Also, I'm not having any luck on the refi now that I have no earned income. That is a sore subject and worth a whole new thread. Wells Fargo put so many demands and conditions on the refi I couldn't do it, and they were going by tax returns from the last two years when I was making money. I think they saw car dealer on the tax return and started making up reasons to not give me the loan. I'm an 802 beacon with enough cash to pay the house off if I want to and have other liquid assets, but they still would't do it. What's up with that. I'm working on some other banks now........

I'm open to ideas on this refi deal. If we sell the house it's not an issue, but if I can't sell it I really need to refi to get the payment lower (longer term and lower rate).

 

[73ss454]

CD, sorry you had to close and I wish you good luck.

If you're going to sell the house anyway, why not pay cash and avoid all the expenses of a mortgage. Once you sell the house you'll be whole again and you can save that expense.

 

[FinanceDude]

I closed it. March 15th was the last formal day for employees, but I am renting the shop and equipment to my service manager and a couple of really good techs. Hope they make it. It was pretty slow back there last time I looked.

Working on [-]fine tuning[/-] slashing the budget as we speak. Wife got a teaching job, got a little rent coming in, got a little money in the bank. It doesn't look too bad, other than trying to sell the house. Four others went up for sale on our street the very day we listed ours. Arrrrrg. Also, I'm not having any luck on the refi now that I have no earned income. That is a sore subject and worth a whole new thread. Wells Fargo put so many demands and conditions on the refi I couldn't do it, and they were going by tax returns from the last two years when I was making money. I think they saw car dealer on the tax return and started making up reasons to not give me the loan. I'm an 802 beacon with enough cash to pay the house off if I want to and have other liquid assets, but they still would't do it. What's up with that. I'm working on some other banks now........

I'm open to ideas on this refi deal. If we sell the house it's not an issue, but if I can't sell it I really need to refi to get the payment lower (longer term and lower rate).

Screw WFC. Got to a local credit union.......

 

[FUEGO]

Sucks for cardude, but it looks like fiscal discipline has returned to mortgage underwriting. The pendulum swings the other way...

 

[Lsbcal]

There are many years of wisdom in these responses.

I would add: know yourself. Assess your personality, don't try to change your stripes to meet another person's success formula. Be brutally honest with yourself when assessing investment risk.

Also, read a lot. See the Bogleheads site for recommended reading lists.

 

[BunsGettingFirm]

I got to FI by not investing... I never contributed to 401K's because I wanted to stockpile cash to keep my options open. Then I saw an idea for a business, started it part-time, and after about 7 years it was doing well enough to get my first big contract, which I financed with my cash stockpile. Then I spent all the subsequent income on hiring people and was able to leverage my way up. It was all self-financed and credit-card financed except for a $20K loan from my father. Made several million.

You did invest. It was just in one stock in your company.

I'm trying to dabble a bit in that world. It's unreal how much due diligence is required. There are no analyst reports and certainly no CNBC (maybe that's a good thing), so I have do all of my own analysis. Thank goodness Dory showed me a few good tips and tricks.

 

[Zubini]

I've always been interested in real estate so bought the only foreclosed house in a very upscale neighborhood, remodeled it then sold it for almost triple in 5 years. Bought another house and did the same. Started with 7k and turned it into + $1mil. At the same time I put all available capital into my business and built it up slowly into a small but very successful company. Am now just starting to really invest in equities but that's been a little disappointing lately to say the least. Well thought-out calculated risks have always served me well. I live well below my means which suits me fine. I have no children so look forward to giving away a lot of money to my favorites causes.

 

[canadianteddy]

I have no children so look forward to giving away a lot of money to my favorites causes.

Can I be a favorite cause?

 

[Independent]

Work
LBYM
Save
Preservation of capital
++++++
Understand:
Maximizing income
Minimizing expenses
Budgeting
Financial projections
Cash Flow
LBYM
Preservation of capital
Goal setting
Opposing social pressures

This list works for me. (I'm assuming that "maiximizing income" refers to income from work, not from investments.)

Bogle says the biggest difference in retirement accounts comes from how much people save, not from how they invest.

I think one big variable is how you define "early". Some people think that means 59, others think it means 39. It seems to me that "39" requires that you go to some extremes on the list above, or win the lottery on some big investment.

If you have children and a mortgage, and think that "59" is a reasonable goal, remember that those expenses will (should) end some day. So you don't need to buy into the 80% rule.

 

[Alan]

I think one big variable is how you define "early". Some people think that means 59, others think it means 39. It seems to me that "39" requires that you go to some extremes on the list above, or win the lottery on some big investment.

Unfortunately you won't know if you RE'ed early until after the fact. My Dad RE'ed at 60 and is still alive and mentally alert at 84 but my mother died at 62 so he wishes he could have RE'ed earlier (couldn't 'cos of defined Pension he needed). Similar story with DW's parents.

 

[jimnjana]

Another way to FI is to take outsized risk - put most of your eggs in one basket and hope it pays off. If you take these risks young enough, you have time to recover if it all blows up in your face as long as you don't take on debt.

Audrey

I remember hearing about the guy who sold everything he had a bought several hundred thousand in lottery tickets. He contemplated suicide as he did not win millions... I'm not sure how close he came to breaking even.

Jim

 

[Koolau]

I remember hearing about the guy who sold everything he had a bought several hundred thousand in lottery tickets. He contemplated suicide as he did not win millions... I'm not sure how close he came to breaking even.

Jim

How utterly sad. My pea-sized brain would have thought more along the lines of: Sell everything, go out and spend it all having "fun", when it's all gone, THEN think about suicide!

 

[tuixiu]

That "same type spouse" one that someone brought up is huge. You're only as strong as your weakest link.

 

[BunsGettingFirm]

How utterly sad. My pea-sized brain would have thought more along the lines of: Sell everything, go out and spend it all having "fun", when it's all gone, THEN think about suicide!

Vegas, baby!