A recap of some of today's reading, listening and other things.
Financial Samurai (kind of a FIRE blogger, retired 10 years ago in his mid-30's) had a list post talking about his "fake retirement" now going on ten years.
There were a couple of points that really interested me. First, he said only you will know whether you are truly financially independent or not. I agree, it is very subjective and it doesn't matter what anyone on the outside looking in thinks. I consider my time of being financially independent as starting when I was 37. We had a little money but it was nothing in the context of thinking we were retired. What made me independent was that I set my own schedule and we had a very small monthly nut, we'd just paid off the mortgage on our old place and we had no car payments. It doesn't matter to me what anyone else thinks of my definition for myself just as it doesn't matter what anyone else thinks of your definition for yourself regardless of whether you're there yet or not.
Some paths are easier than others however. Financial Samurai places a heavy emphasis on passive income. He lives in San Francisco and believes he needs $28,000/mo in passive income to make it work. He has a spreadsheet where he lists his income sources including four rental properties. My wife and I have one and it is a lot of work, nothing "passive" about it. Yes, I understand the context. He found his groove which is great. We need much less, a small fraction of what he needs and that is about to go down a bunch after two more mortgage payments on our current place. We have our groove and it has plenty of room for error. Hopefully you find your groove if financial independence is important to you.
The last thing I will mention is he says you need to be able to be flexible with your withdrawal rate. I agree but my solution is to have multiple streams of income to address this issue. We have our rental, I will start taking Social Security when I am 70 (or 69 depending on some tweaks) and those two should cover our nut and one-off expenses. I plan/hope to always have some sort of active income. If you work in capital markets and are not fascinated by the last what, ten years, 20, that's unfortunate, I find it exhilarating and hope to always be engaged professionally. I hope you find that sort of excitement from something.
Because I think it is related, a quote I saw today attributed to Charlie Munger, "I did not intend to get rich, I wanted to get independent, I just overshot." Independence is so much more important than being rich. Having your health and owning your time doesn't have to require having a lot of money. Yeah, you're going to have to figure some stuff out but that's ok, that just leads to a better sense of self-satisfaction when you create your solution or in the context above, when you create your own groove that works for you.
Eric Crittenden, the manager of the client and personal holding Standpoint Multi-Asset Fund (BLNDX/REMIX) sat for a podcast with Jason Buck from Mutiny Funds (mentioned him several times lately). There's a lot there but I want to focus on just three things. First was a comment from Jason almost made in passing, he said he doesn't like benchmarks. If you think about the Cockroach portfolio that we dove into the other day, that sentiment makes sense. He allocates a lot to asset classes that don't look like the stock market in pursuit of smoothing out the ride (my term not his). What should matter most IMO is that you have enough money when you need it, that it does what you reasonably need it to do and that you don't have curtail spending on the basics. Yeah, 2022 might not be a great year to buy a brand new Class A RV but ideally you're not forced to make tough decisions at the grocery store. Over the course of a normal investing lifetime, there will be years you outperform and years when you underperform and there is nothing that will change that reality.
They also talked about how they sell to bring in new clients and it pretty much is identical to my approach. Don't hire me if the way I do things isn't right for you. I've got several stories from over the years of telling people, what you're describing you want is not what I believe in doing, you shouldn't hire me. There have been a couple of instances where I told my colleagues, this client won't be happy with my approach and sure enough, they weren't. I tell people that I think I am good at what I do, if it is right for you great, no problem if it isn't right for you. Trying to get any and all assets in the door no matter what is the wrong way to engage in this business.
The last thing from the podcast was a conversation about how neither of them ever wear ties anymore. The ties are a metaphor for independence. I know Eric a little bit but don't know Jason at all so I don't know in full how they define independence but it was clear they each have some amount of autonomy and my impression is they have enough that they are happy. I feel incredibly luck to have found my way to this groove back when I did.
Last up is a wake up call for self awareness. This is something.
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