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I'll add some unnecessary fluff: Don't invest in real estate. If it was a free lunch, someone else would eat it first. VTSAX is way less work. All that matter

I'll add some unnecessary fluff: Don't invest in real estate. If it was a free lunch, someone else would eat it first. VTSAX is way less work. All that matters is the savings ratio. Everything else cancels out. I promise. https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si... So a penny saved is actually worth more than a penny earned, because it means you need less invested to retire.

monero-xmr 2y ago
Owning rental property is a small business. You can earn far more, reliably, without the whims of a number going up and down, than you can by passively investing it. In general I have always found the passive investment "standard smart advice" to be wrong, but I'm a contrarian by nature. I actively manage everything because I like to know what's going on.
- Naritai 2y ago
  Numbers go up and down for rental businesses all the time – up slowly as you collect rent, down quickly as you need to perform maintenance.
  - monero-xmr 2y ago
    Right, no one should ever do anything! One calamity and you go bust. That's why no one ever can handle managing rental property, it's so dangerous /s
    - orwin 2y ago
      It's good, but it's work. I have a friend, really good swift/iPhone dev who charge 350 to 500€ an hour (so 200-350 after taxes). If after taxes and expenses (loan repayment) he can earn 2-3.5k for less than 10h of work per year that can be a good investment. But that's not taking into account the principal he invested, the fact that the job would bore him, the fact that he can't improve his skills. It might be an okay investment for me (I'm a salary man, can't be bothered with freelance work), but for him I'd bet it's a money loosing proposition [edit] the 500€/hour is an outlier, he wanted out of a project and kept increasing his rates, which were accepted up to that point.
- citizen_friend 2y ago
  I believe you can do well with rentals, but not without labor and knowledge. The danger is people thinking they will just hire a manager. I would also rather be an engineer than fix apartments.
  - monero-xmr 2y ago
    It's crazy, I just call a contractor I trust and they fix it, and then charge enough rent to make sure it covers anticipated maintenance, and then have a business insurance policy to protect against big disasters. Wow, I'm a genius!
    - deleted 2y ago
      [deleted]
    - citizen_friend 2y ago
      In other words: - you previously spent time building relationships with contractors. You didn’t just type in property management in Google - a significant overhead goes to insurance and management. Your comfortable putting money as needed into the venture. You have knowledge of legal pitfalls of being a landlord. - you regularly spend time managing these contracts
    - paulryanrogers 2y ago
      Charging enough without leaving the property empty can be a challenge. As is finding tenants who won't trash the place so often you lose money on all the repairs and turn over. Depending on the market that may be so easy you'll think everyone else is stupid. Or it may be so hard you wonder if you are doing something wrong.
    - matwood 2y ago
      Sure, but you're managing the property. And that's great! Many get into RE thinking it's a set it and forget it type thing. That's not the case. But the work is pretty well understood and it can be done as a side gig, making it great for someone who wants to add to their income. I know a number of people who have done very well with RE, but they all actively manage their properties.
FredPret 2y ago
If VTSAX was a free lunch, someone would’ve / is currently eating that too
- diab0lic 2y ago
  VTSAX isn’t a free lunch, but you pay in risk rather than time spent managing real estate. It’s passive assuming you can handle drawdowns whereas real estate is passive assuming you think running a rental business is passive.
  - red-iron-pine 2y ago
    Truth -- running real rental businesses ain't easy. Renting out your former condo or something, a one-off, may not be hard, but it rapidly gets messy. e.g. VTSAX doesn't have tenants who strip the copper out of the house and leave water running to spite you as you evict them. VTSAX doesn't have surprise 15k roofing costs. VTSAX doesn't for you to pay tenants triple if you don't follow / screw up rental laws. VTSAX has a fairly small fee compared to what property managers charge.
- kaiken1987 2y ago
  Saturday Morning Breakfast Cereal recently did a joke about this kinda. https://www.smbc-comics.com/comic/conscience https://www.smbc-comics.com/comic/conscience
  - FredPret 2y ago
    I don’t believe in efficient markets. I’m saying that there’s a lot of people sending their money to the SP500 on autopilot. The value-add of investors are a) provide capital b) re-allocate capital from less efficient to more efficient co’s. The autopilot style of investing is good as far as it goes, but it risks inflating the SP500 far beyond what is logical, while starving smaller but still great companies of capital.
    - hiq 2y ago
      VTSAX is broader than the SP500 though: https://investor.vanguard.com/investment-products/mutual-funds/profile/vtsax#overview https://investor.vanguard.com/investment-products/mutual-fun...
quonn 2y ago
This is incorrect, if the real estate is your primary home. If it is not your primary home, it may be correct, but not necessarily. And only saving is not enough, because inflation can eat it all.
- mewpmewp2 2y ago
  All of it depends on circumstances. The blanket advice is fairly useless.
- seanmcdirmid 2y ago
  You can invest savings in the market, but that ups your risk. Investing in a primary home is fine because you would pay rent otherwise, but look at rent to sell ratios for sure, you won’t always win owning a home if you are in a frothy market where rents are cheap and buying is expensive. Really, just look for opportunities. Something undervalued, or something you are in a special position or have the skills to leverage (eg you are great with people and like DIY, go ahead and do rentals). That isn’t very easy though, and definitely doesn’t fit into a book.
  - znpy 2y ago
    I've seen many videos by finance youtubers going over the classic "buy a home vs invest the savings" and the dumb mistake that all of them make is assuming that the rent price will stay the same across the entire time frame considered. It's just not happening. I did buy a home (a flat, really) rather than investing and my mortgage payment is pretty much the same amount I was paying in 2014 for a single room as a student (same city, high cost of living). Housing usually is the primary and largest expense every month, so it makes much sense to get that sorted out and stabilized. This of course assumes that you plan on staying in that city (I've been in the same city for the last 11-12 years). If you're not sure you'll be in the same city in 3-5 years then sure, go ahead and rent.
    - ac29 2y ago
      > I've seen many videos by finance youtubers going over the classic "buy a home vs invest the savings" and the dumb mistake that all of them make is assuming that the rent price will stay the same across the entire time frame considered. > It's just not happening. Buy versus rent is pretty complicated, and specific to each market and timeframe. You are right that rents will increase over time, but so will the value of invested assets. While I cant speak to your youtube videos, it is not crazy to assume that the value of invested assets will increase at least as fast as rents. Also, even if your mortgage payment is flat, that doesnt means housing expenses are flat. Taxes, insurance, and maintenance should be expected to regularly increase on property you own.
bequanna 2y ago
If you're comparing passively investing in VTSAX vs some REIT, I might agree with you. But generally, the fewer people between you and your capital being deployed, the higher the return. Real Estate is the one investment that most people can own, manage, improve as individuals without a ton of special skills/knowledge. Additionally, you can choose the amount of leverage you want to apply and there are considerable tax benefits. If you have the time, a little knowledge, and enter at a decent time in the market with not TOO much leverage, Real Estate is an excellent long term investment.
- bombcar 2y ago
  It actually isn't - if you factor out the leverage. The returns in real estate ONLY look amazing because of the leverage. However, your own HOME being leveraged can make the returns astronomically insanely good.
  - matwood 2y ago
    RE is one of the only ways the 'average' person can get that sort of leverage and favorable tax treatment.
  - LunaSea 2y ago
    Could you explain your point in more details? Sorry, I'm not super knowledgable about this topic.
    - bombcar 2y ago
      Calculate appreciation in a hot market area over time, and the returns aren't terribly exciting. Short periods of wild appreciation and decades of nothing. I picked a random house in Southern California, it is up 42% in the last 10 years, sounds great, right? But that is only an annual rate of return of 3.572%. Nothing at all exciting. Where it becomes exciting is where you bought that $500k house ten years ago with $50k down, and sell today for $800k - ignoring everything else like taxes, etc, you made $300k on a $50k investment (leveraged) - which is an 18% a year return. THAT is something to take notice of! Of course, you have to factor out all the associated costs, but the leverage is the be-all and end-all of your "investment". If you could leverage against stocks the way you can against single-family houses, you could go nuts. The advantage to leveraging real estate that you live in is that you basically have a heads I win, tails you lose scenario; if the house crashes you walk away (at least in non-recourse states like California, and practically almost everywhere).
deleted 2y ago
[deleted]
bombcar 2y ago
That's the real takeaway from everything. If you live on 100% of your income, you are doomed, you can't save anything. If you live on 90% of your income (ignoring market returns for simplicity) you "earn" one year every 9 years or so. If you live on 50% of your income, you earn a year every year. And if you somehow got down to 10% of your income, each year you worked would be nine years you wouldn't have to. This math works with 0% return (or a return matching inflation only).
- kamaal 2y ago
  Delaying gratification or in simple terms, delaying fun is easier said than done. What it takes to retire early or at least be in a situation where a job loss, or other difficult life situations wouldn't effect you all that much is known for ages. Acting on it is just a totally different thing altogether. And this is not just restricted to money. Nearly everything is like this. You could have a habit to read everyday, do push ups and eat healthy. You just have to do a little of this everyday. But most people struggle to keep up. Success is doing boring things. Unfortunately since being boring is unattractive, some people actively avoid succeeding.
  - bombcar 2y ago
    Yep, and it's why all the "tricks" to do it are basically how to build good habits (things like -track what you spend, spend 2% less each month). And it's also why everything seems to coincide; those who can maintain physical fitness often have the wherewithal to maintain financial fitness, etc.
  - disqard 2y ago
    Morgan Housel hits this nail on the head in "The Psychology of Money", by talking about these "touchy-feely" aspects of money (which are routinely tossed aside in quantitative analyses... because they're not quantifiable). It really does come down to "we know what we have to do, but it's too f**ing hard and/or tedious".
  - red-iron-pine 2y ago
    > Delaying gratification or in simple terms, delaying fun is easier said than done. And arguably not worth doing. Tomorrow may never come -- you could get hit by a bus driving home today. Studies show that a lot of poor people spend money immediately because their lives are often crazy uncertain and trying to balance and pay debts -- which they may never pay off -- doesn't get them anywhere. Blow the money on a new xbox now, because even if they pay the rent today they probably won't be able to stop eviction next quarter.... but at least they have an xbox, and can take that with them to the next flophouse.
Nemi 2y ago
I agree with much of this, but I do think that there is a flaw in his logic - he operates on the notion that saving more of your income has a two-fold impact on your ability to retire. First, and most obvious, it increases how much savings you have. But secondly, he states that you permanently decrease your expenses, making that magical 4% withdrawal rate of your savings easier to attain. And yes, while that is true on the surface, the underlying message is - if you just don’t have cable tv (streaming in today’s world) and other things like cars and basic vacations, then you are almost there! And yes, if you want to live as a monk then this could be considered by some as a noble thing. But some want to live reasonably comfortably (new-ish car, trips to places like disney world with the kids while staying in a nice hotel vs biking and camping). I only bring this up because even mister money mustache has admitted that he is unusually monk-ish in his lifestyle choices. Don’t get me wrong, I actually retired 7 years ago partly on reading his blog, so I get it. But we have to be realistic on what his message is and what others are liable to achieve. I guess what I take most umbrage with is, he says that it is easier and more effective to cut expenses than raise earnings. And just like a business, this strategy quickly runs into diminishing returns. Raising the top line while keeping expenses reasonable is always the best strategy to an early retirement (or a successful business).
- mint2 2y ago
  “ trips to places like disney world with the kids while staying in a nice hotel vs biking and camping” Woahhh there, thinking camping is an inferior trip is wrong. Being cheaper isn’t inferior.
  - deleted 2y ago
    [deleted]
  - orwin 2y ago
    That's so true. I have hundreds, maybe thousand of memories linked to hiking and camping with my parents (we went on 'kayak hike', and everytime I sail or just visit around gersais/guenersay, the emerald coast, corsica or southern France I make a trip down memory lane.
  - 2y ago
tim333 2y ago
I'd say in the UK the majority of rich people are so through owning real estate. It's kind of a time honoured thing. Not sure it's a good thing - probably it's one of the reasons for slow economic growth here that people sit on property rather than making stuff.
- gizajob 2y ago
  Also the monied class totally lost its appetite for manufacturing anything due to the unions that went with it, and the solution to the problem of socialism was to destroy the idea of society, as per Thatcherism.
- nextweek2 2y ago
  There’s also a survivor bias in real estate. I know people that invested in property and they either didn’t consider the risks they are taking (not servicing boilers) or the time managing tenants. If you end up with a court case, you are going to shorten your life through stress. I get it that mortgage money is cheap leverage, but I think the good times on that have run out.
  - tim333 2y ago
    Yeah it has good times and bad times depending on the property market and the government laws of the day and also on the individual. Still over the long term there tends to be a transfer of wealth from the young and hard working to property owners as a class.
QuantumGood 2y ago
VTSAX: Vanguard Total Stock Market Index Fund Admiral Shares
alecco 2y ago
If most people blindly invest in index funds the whole market ends up overvalued. And they kill competition as companies only aim to just stay in the index. It should be adjusted by current and expected returns. Else, it becomes an asset bubble with insane multipliers of real returns (like today). You are just counting on someone else to buy the stocks when you sell in the future.
thunky 2y ago
> All that matters is the savings ratio. Everything else cancels out. I promise This is an oversimplification. It reminds me of those retirement calculators that estimate retirement based on a percentage of current salary, without considering that income and expenses change over time. We don't aim to live on ramen noodles for our whole lives.
- 01HNNWZ0MV43FF 2y ago
  No, it's correct. If you're currently not living on ramen noodles, then your SR will be lower. So ramen noodles are factored in
  - thunky 2y ago
    It's too simple because it's a point in time snapshot. From your link: If you save a reasonable percentage of your take-home pay, like 50%, and live on the remaining 50%, you’ll be Ready to Rock (aka “financially independent”) in a reasonable number of years – about 16 according to this chart and a more detailed spreadsheet Example numbers: Take home: 50k Spending: 25k Ok sure we can say that if nothing changes and historical returns approximate themselves then this person can retire in 16 years. But that's not going to happen. Things are going to change. Say on year 5 after career advancement + kids it changes to this: Take home: 100k Spending: 75k Now the numbers point to a different retirement date (even though the annual saving amount is the same). Which means that the original 16 year estimate is already out the window. Then on year 6: Take home: 40k (lost job, looking for a new one) Spending: 60k (still got to pay the bills - from savings) Now the numbers from year 1 and year 5 are even more further off. And the simple snapshot says they'll never retire now due to a negative savings rate.

monero-xmr 2y ago

Owning rental property is a small business. You can earn far more, reliably, without the whims of a number going up and down, than you can by passively investing it. In general I have always found the passive investment "standard smart advice" to be wrong, but I'm a contrarian by nature. I actively manage everything because I like to know what's going on.

Naritai 2y ago
Numbers go up and down for rental businesses all the time – up slowly as you collect rent, down quickly as you need to perform maintenance.
- monero-xmr 2y ago
  Right, no one should ever do anything! One calamity and you go bust. That's why no one ever can handle managing rental property, it's so dangerous /s
  - orwin 2y ago
    It's good, but it's work. I have a friend, really good swift/iPhone dev who charge 350 to 500€ an hour (so 200-350 after taxes). If after taxes and expenses (loan repayment) he can earn 2-3.5k for less than 10h of work per year that can be a good investment. But that's not taking into account the principal he invested, the fact that the job would bore him, the fact that he can't improve his skills. It might be an okay investment for me (I'm a salary man, can't be bothered with freelance work), but for him I'd bet it's a money loosing proposition [edit] the 500€/hour is an outlier, he wanted out of a project and kept increasing his rates, which were accepted up to that point.
citizen_friend 2y ago
I believe you can do well with rentals, but not without labor and knowledge. The danger is people thinking they will just hire a manager. I would also rather be an engineer than fix apartments.
- monero-xmr 2y ago
  It's crazy, I just call a contractor I trust and they fix it, and then charge enough rent to make sure it covers anticipated maintenance, and then have a business insurance policy to protect against big disasters. Wow, I'm a genius!
  - deleted 2y ago
    [deleted]
  - citizen_friend 2y ago
    In other words: - you previously spent time building relationships with contractors. You didn’t just type in property management in Google - a significant overhead goes to insurance and management. Your comfortable putting money as needed into the venture. You have knowledge of legal pitfalls of being a landlord. - you regularly spend time managing these contracts
  - paulryanrogers 2y ago
    Charging enough without leaving the property empty can be a challenge. As is finding tenants who won't trash the place so often you lose money on all the repairs and turn over. Depending on the market that may be so easy you'll think everyone else is stupid. Or it may be so hard you wonder if you are doing something wrong.
  - matwood 2y ago
    Sure, but you're managing the property. And that's great! Many get into RE thinking it's a set it and forget it type thing. That's not the case. But the work is pretty well understood and it can be done as a side gig, making it great for someone who wants to add to their income. I know a number of people who have done very well with RE, but they all actively manage their properties.

FredPret 2y ago

If VTSAX was a free lunch, someone would’ve / is currently eating that too

diab0lic 2y ago
VTSAX isn’t a free lunch, but you pay in risk rather than time spent managing real estate. It’s passive assuming you can handle drawdowns whereas real estate is passive assuming you think running a rental business is passive.
- red-iron-pine 2y ago
  Truth -- running real rental businesses ain't easy. Renting out your former condo or something, a one-off, may not be hard, but it rapidly gets messy. e.g. VTSAX doesn't have tenants who strip the copper out of the house and leave water running to spite you as you evict them. VTSAX doesn't have surprise 15k roofing costs. VTSAX doesn't for you to pay tenants triple if you don't follow / screw up rental laws. VTSAX has a fairly small fee compared to what property managers charge.
kaiken1987 2y ago
Saturday Morning Breakfast Cereal recently did a joke about this kinda. https://www.smbc-comics.com/comic/conscience https://www.smbc-comics.com/comic/conscience
- FredPret 2y ago
  I don’t believe in efficient markets. I’m saying that there’s a lot of people sending their money to the SP500 on autopilot. The value-add of investors are a) provide capital b) re-allocate capital from less efficient to more efficient co’s. The autopilot style of investing is good as far as it goes, but it risks inflating the SP500 far beyond what is logical, while starving smaller but still great companies of capital.
  - hiq 2y ago
    VTSAX is broader than the SP500 though: https://investor.vanguard.com/investment-products/mutual-funds/profile/vtsax#overview https://investor.vanguard.com/investment-products/mutual-fun...

quonn 2y ago

This is incorrect, if the real estate is your primary home. If it is not your primary home, it may be correct, but not necessarily. And only saving is not enough, because inflation can eat it all.

mewpmewp2 2y ago
All of it depends on circumstances. The blanket advice is fairly useless.
seanmcdirmid 2y ago
You can invest savings in the market, but that ups your risk. Investing in a primary home is fine because you would pay rent otherwise, but look at rent to sell ratios for sure, you won’t always win owning a home if you are in a frothy market where rents are cheap and buying is expensive. Really, just look for opportunities. Something undervalued, or something you are in a special position or have the skills to leverage (eg you are great with people and like DIY, go ahead and do rentals). That isn’t very easy though, and definitely doesn’t fit into a book.
- znpy 2y ago
  I've seen many videos by finance youtubers going over the classic "buy a home vs invest the savings" and the dumb mistake that all of them make is assuming that the rent price will stay the same across the entire time frame considered. It's just not happening. I did buy a home (a flat, really) rather than investing and my mortgage payment is pretty much the same amount I was paying in 2014 for a single room as a student (same city, high cost of living). Housing usually is the primary and largest expense every month, so it makes much sense to get that sorted out and stabilized. This of course assumes that you plan on staying in that city (I've been in the same city for the last 11-12 years). If you're not sure you'll be in the same city in 3-5 years then sure, go ahead and rent.
  - ac29 2y ago
    > I've seen many videos by finance youtubers going over the classic "buy a home vs invest the savings" and the dumb mistake that all of them make is assuming that the rent price will stay the same across the entire time frame considered. > It's just not happening. Buy versus rent is pretty complicated, and specific to each market and timeframe. You are right that rents will increase over time, but so will the value of invested assets. While I cant speak to your youtube videos, it is not crazy to assume that the value of invested assets will increase at least as fast as rents. Also, even if your mortgage payment is flat, that doesnt means housing expenses are flat. Taxes, insurance, and maintenance should be expected to regularly increase on property you own.

bequanna 2y ago

If you're comparing passively investing in VTSAX vs some REIT, I might agree with you. But generally, the fewer people between you and your capital being deployed, the higher the return. Real Estate is the one investment that most people can own, manage, improve as individuals without a ton of special skills/knowledge. Additionally, you can choose the amount of leverage you want to apply and there are considerable tax benefits. If you have the time, a little knowledge, and enter at a decent time in the market with not TOO much leverage, Real Estate is an excellent long term investment.

bombcar 2y ago
It actually isn't - if you factor out the leverage. The returns in real estate ONLY look amazing because of the leverage. However, your own HOME being leveraged can make the returns astronomically insanely good.
- matwood 2y ago
  RE is one of the only ways the 'average' person can get that sort of leverage and favorable tax treatment.
- LunaSea 2y ago
  Could you explain your point in more details? Sorry, I'm not super knowledgable about this topic.
  - bombcar 2y ago
    Calculate appreciation in a hot market area over time, and the returns aren't terribly exciting. Short periods of wild appreciation and decades of nothing. I picked a random house in Southern California, it is up 42% in the last 10 years, sounds great, right? But that is only an annual rate of return of 3.572%. Nothing at all exciting. Where it becomes exciting is where you bought that $500k house ten years ago with $50k down, and sell today for $800k - ignoring everything else like taxes, etc, you made $300k on a $50k investment (leveraged) - which is an 18% a year return. THAT is something to take notice of! Of course, you have to factor out all the associated costs, but the leverage is the be-all and end-all of your "investment". If you could leverage against stocks the way you can against single-family houses, you could go nuts. The advantage to leveraging real estate that you live in is that you basically have a heads I win, tails you lose scenario; if the house crashes you walk away (at least in non-recourse states like California, and practically almost everywhere).

deleted 2y ago

[deleted]

bombcar 2y ago

That's the real takeaway from everything. If you live on 100% of your income, you are doomed, you can't save anything. If you live on 90% of your income (ignoring market returns for simplicity) you "earn" one year every 9 years or so. If you live on 50% of your income, you earn a year every year. And if you somehow got down to 10% of your income, each year you worked would be nine years you wouldn't have to. This math works with 0% return (or a return matching inflation only).

kamaal 2y ago
Delaying gratification or in simple terms, delaying fun is easier said than done. What it takes to retire early or at least be in a situation where a job loss, or other difficult life situations wouldn't effect you all that much is known for ages. Acting on it is just a totally different thing altogether. And this is not just restricted to money. Nearly everything is like this. You could have a habit to read everyday, do push ups and eat healthy. You just have to do a little of this everyday. But most people struggle to keep up. Success is doing boring things. Unfortunately since being boring is unattractive, some people actively avoid succeeding.
- bombcar 2y ago
  Yep, and it's why all the "tricks" to do it are basically how to build good habits (things like -track what you spend, spend 2% less each month). And it's also why everything seems to coincide; those who can maintain physical fitness often have the wherewithal to maintain financial fitness, etc.
- disqard 2y ago
  Morgan Housel hits this nail on the head in "The Psychology of Money", by talking about these "touchy-feely" aspects of money (which are routinely tossed aside in quantitative analyses... because they're not quantifiable). It really does come down to "we know what we have to do, but it's too f**ing hard and/or tedious".
- red-iron-pine 2y ago
  > Delaying gratification or in simple terms, delaying fun is easier said than done. And arguably not worth doing. Tomorrow may never come -- you could get hit by a bus driving home today. Studies show that a lot of poor people spend money immediately because their lives are often crazy uncertain and trying to balance and pay debts -- which they may never pay off -- doesn't get them anywhere. Blow the money on a new xbox now, because even if they pay the rent today they probably won't be able to stop eviction next quarter.... but at least they have an xbox, and can take that with them to the next flophouse.

Nemi 2y ago

I agree with much of this, but I do think that there is a flaw in his logic - he operates on the notion that saving more of your income has a two-fold impact on your ability to retire. First, and most obvious, it increases how much savings you have. But secondly, he states that you permanently decrease your expenses, making that magical 4% withdrawal rate of your savings easier to attain. And yes, while that is true on the surface, the underlying message is - if you just don’t have cable tv (streaming in today’s world) and other things like cars and basic vacations, then you are almost there! And yes, if you want to live as a monk then this could be considered by some as a noble thing. But some want to live reasonably comfortably (new-ish car, trips to places like disney world with the kids while staying in a nice hotel vs biking and camping). I only bring this up because even mister money mustache has admitted that he is unusually monk-ish in his lifestyle choices. Don’t get me wrong, I actually retired 7 years ago partly on reading his blog, so I get it. But we have to be realistic on what his message is and what others are liable to achieve. I guess what I take most umbrage with is, he says that it is easier and more effective to cut expenses than raise earnings. And just like a business, this strategy quickly runs into diminishing returns. Raising the top line while keeping expenses reasonable is always the best strategy to an early retirement (or a successful business).

mint2 2y ago
“ trips to places like disney world with the kids while staying in a nice hotel vs biking and camping” Woahhh there, thinking camping is an inferior trip is wrong. Being cheaper isn’t inferior.
- deleted 2y ago
  [deleted]
- orwin 2y ago
  That's so true. I have hundreds, maybe thousand of memories linked to hiking and camping with my parents (we went on 'kayak hike', and everytime I sail or just visit around gersais/guenersay, the emerald coast, corsica or southern France I make a trip down memory lane.
- 2y ago

tim333 2y ago

I'd say in the UK the majority of rich people are so through owning real estate. It's kind of a time honoured thing. Not sure it's a good thing - probably it's one of the reasons for slow economic growth here that people sit on property rather than making stuff.

gizajob 2y ago
Also the monied class totally lost its appetite for manufacturing anything due to the unions that went with it, and the solution to the problem of socialism was to destroy the idea of society, as per Thatcherism.
nextweek2 2y ago
There’s also a survivor bias in real estate. I know people that invested in property and they either didn’t consider the risks they are taking (not servicing boilers) or the time managing tenants. If you end up with a court case, you are going to shorten your life through stress. I get it that mortgage money is cheap leverage, but I think the good times on that have run out.
- tim333 2y ago
  Yeah it has good times and bad times depending on the property market and the government laws of the day and also on the individual. Still over the long term there tends to be a transfer of wealth from the young and hard working to property owners as a class.

QuantumGood 2y ago

VTSAX: Vanguard Total Stock Market Index Fund Admiral Shares

alecco 2y ago

If most people blindly invest in index funds the whole market ends up overvalued. And they kill competition as companies only aim to just stay in the index. It should be adjusted by current and expected returns. Else, it becomes an asset bubble with insane multipliers of real returns (like today). You are just counting on someone else to buy the stocks when you sell in the future.

thunky 2y ago

> All that matters is the savings ratio. Everything else cancels out. I promise This is an oversimplification. It reminds me of those retirement calculators that estimate retirement based on a percentage of current salary, without considering that income and expenses change over time. We don't aim to live on ramen noodles for our whole lives.

01HNNWZ0MV43FF 2y ago
No, it's correct. If you're currently not living on ramen noodles, then your SR will be lower. So ramen noodles are factored in
- thunky 2y ago
  It's too simple because it's a point in time snapshot. From your link: If you save a reasonable percentage of your take-home pay, like 50%, and live on the remaining 50%, you’ll be Ready to Rock (aka “financially independent”) in a reasonable number of years – about 16 according to this chart and a more detailed spreadsheet Example numbers: Take home: 50k Spending: 25k Ok sure we can say that if nothing changes and historical returns approximate themselves then this person can retire in 16 years. But that's not going to happen. Things are going to change. Say on year 5 after career advancement + kids it changes to this: Take home: 100k Spending: 75k Now the numbers point to a different retirement date (even though the annual saving amount is the same). Which means that the original 16 year estimate is already out the window. Then on year 6: Take home: 40k (lost job, looking for a new one) Spending: 60k (still got to pay the bills - from savings) Now the numbers from year 1 and year 5 are even more further off. And the simple snapshot says they'll never retire now due to a negative savings rate.