Cake
  • Log In
  • Sign Up
    • A lot of people who had no idea there was a 'movement' called FI/RE (Financial Independence/ Retire Early) were made aware of it over the last few weeks as Suze Orman pitched in her two cents.

      The American dream of accumulating $1,000,000 and retiring was her target, millenials were the bullseye. She claimed that now people should look towards $5,000,000 or $10,000,000 in savings before considering to retire...so basically never for probably 99% of people listening to her and believing her.

      Suze Orman talks on Yahoo Finance

      I have been part of this movement before I even knew it was a movement, to me it was called 'common sense', using the basic premise 'spend less than you earn, invest the difference to try to create passive income', but be aware that returning to work is a possibility.

      i think the most import thing is to be aware what compound interest is, and understand it, or let Albert Einstein tell you about it - "Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it. Compound interest is the most powerful force in the universe."

      To me it’s less about retiring early and more about having the freedom to pursue your dreams and ambitions...that was my goal, I semi-retired when I was 40 (worked a little part time) and fully retired when i was 44...and before you jump in and presume I had a very high paying job, I NEVER earned six figures EVER.

      So are you in? What are your thoughts about it? Success stories?

    • too funny, I have a friend who has a place in NW AZ for sale and he's trying to sell it, via a friend who works in Microsofts head office, he put in a helicopter pad as an enticement...if it sells your firend will be golden.

    • Paul, you know I am in. May be too late but still, I ain't giving up teaching this old horse new tricks as long as it's got a pulse. Do tell more about that compound interest and ways to practically use it please.

    • I added an image to help you understand - it is a very basic principal, invest your sum 'A' for more than one year and the interest that gains is added to the principal so the following year the pricipal and the interest now gain interest.

      There's are dozens of calculators for this on the internet, they may even be one on your phone, find one you like and add some figures.

      So for example a $100,000 investment with 8% over a 5 year period would gain you a grand total $140,000 but add in compunded interest and that total jumps to $146,932.81

      What the FI/RE movement is, is just basic math and is ridiculously simple: spend less than you earn and save the difference in low-fee investments like index funds (or other investments)

      The problem is a lot of investments do not reinvest the monthly, quaterly, annual interest made, they have to be told to do so, and in some cases the amount when stating maybe so small it might not seem worth it, and if you missed the opportunity by not enrolling in reinvestment it might initially cost more to invest that money than you actually recieved.

      So if you have money invested in funds, stock, bonds, mutal funds etc. make sure you have that box checkedand that all it usually takes...checking a box!

      The other suggestions are again simple, making positive cash flow like rental properties and passive income streams, are a big part of achieving financial independence, too. And so is frugality. The less money you need to live, the less money you need to save in order to fund the rest of your years.

      If you have a rental property and it makes a postive cash flow, put that money back into that property if you have a mortgage. Seach online and find an amortization caluclator for multi- year mortgages, like this one https://www.vertex42.com/Files/download2/themed.php?file=loan-amortization-schedule.xlsx

      Adjust the figures to what you can relate to, maybe a $100,000 mortgage over 30 years, make a note of the TOTAL amount paid. Now imagine this was a rental proerty that you made $100 positive cash flow a month or a quater and then add that in and see how much the principal plus interest drops and also the length of the loan.

      These are all things to learn and are all very basic and simple, lets say you had that property and it had solid tenants but it made you $0 in positive cash flow so it would take 30 years to pay off. But you decided to cut back on something yourself, instead of that $5 Starbucks five days a week on the way to work you paid that amount to your mortgage instead???

      So like Einstein (reputably) said, He who understands it, earns it ... he who doesn't ... pays it.

      Its a long hard slog but better to start ASAP and find multiple different ways to make compound interest work for you, not just one.

    • The way you reply, I guess you're playing devils advocate, makes you sound like you are 'glass half empty type guy, where I'm a glass half full type guy', reading other things you have posted on Cake, it seems like you value possessions a lot, if thats your bag then it'll be a lot harder to leave...for me I know life is not perfect, things happen, I deal with them as they happen not wonder if they will and regret all the things I never did when I had the chance.

    • Thanks Paul. In reply to the OP, I may be too old school but don't believe in "movements" of any kind. Never did. However the advice to invest could benefit anyone; to me most sensitive is managing risk & return which is related directly to one's age, status, and expectations. So this is where everyone differs. I hate when financiers or others so called advisors like to play with words such as "risk tolerance", when I hear that to me it sounds like they have no clue and should not even be consulting or advising anyone!

    • 'Leaving' is a general coverall in the FI/RE movement

      leaving - job

      leaving - possessions

      leaving - security

      leaving - home etc...

      The point 'they' make is to accumulate money and save it to gain freedom, most do or dream about a different life and a lot of the time, travel comes into the picture, sometimes full time travel. Being a digital nomad is an option a lot take when they are nearly there to cover their expenses to leave earlier, remember this is mainly a millenial movement so more millenials are in the digital field

      FI/RE and minimalism are closely tied, Minimalism is not lack of something but the perfect amount of everything...both look to the same goal, 'freedom' and not to be tied down to possessions or a life 'they' cannot control. It does not always mean retired early and never work again, more on the lines of enjoy life early while you can enjoy more things.

      You made a strange comment, on this point "only to land in older age unable to do more than ride cruise lines." I guess you didn't know that on a cruise ship a person has a higher doctor/ patient ratio than on land, generally better food and a lower cost of living than on land...this is why there is a massive increase in older people going on so many cruises or even living full time on a cruise ship. This is just logic and common sense in some peoples eyes of creating a cheaper cost of living and at the same time having a higher standard of living

      You may have a job/ family/ possessions you cannot do without, I just posted this in here as a conversation starter (that's what Cake is, conversations) for people to understand the very basics and maybe make them think and go and do a little research

    You've been invited!