The last time I posted something to this site was December of 2011. That’s a long time for a webpage to sit and languish. When I first started my website and blog, I was hoping I could find a way to turn it into a source of income for myself. That hasn’t happened so far, and will probably never happen for this site. I think there’s money to be made on the internet, and if I can find a way to do it some day, I will.
But for the purposes of this website, since it has my name on it, I’m going to start using this as just a personal blog. I have things I want to say, so I’m going to use this vehicle to say them, rather than only on Facebook or Twitter.
Now for the topic of this post. Money. Before I got my job at Cerner back in the beginning of 2011, I was down to just $178 in the bank. That’s what happens when you just bum around for 5 months without really having a plan. It was fun (sort of) at the time, but I much prefer having a plan, having things to do, and having an income.
I’m grateful for my income, and I try to save and invest wisely. I’m finally to the point in life, as of the last couple years, where I’m able to own a house, set some dough aside, and generally start playing the long game financially.
At some point, I realized that despite the fact I have a finance degree, I know way less about investing than I need to. I’m trying to change that. That’s my advice to you as well, start getting your money running right.
But once you know you want to save and invest responsibly, the question becomes how to do that. I’m still looking for those answers. I’m not an investment advisor, so I’m just telling you want my thought process is, and what my plans are going forward. You are responsible for your money, so keep that in mind when reading this. Consult your own financial advisor and do your own research. Hopefully saying this will keep me from getting sued by you.
Over a year ago, I downloaded the entire audio archive of the Harry Browne Investment Show. I’m finally making time to listen through them. If you want to listen yourself, you can find the entire archive here in a zipped file.
In the first time, he talks about the 16 Golden Rules of Financial Safety. Those rules appear in article form on his website, which you can find here. I can’t really find anything to disagree with in what he said. The thing that makes the most sense to me that he says though is rule #1, which is that your career is the primary source of your wealth. He says, “You most likely will make far more money from your business or profession than from your investments. Only very rarely does someone make a large fortune from investments.”
For the vast majority of us, this is probably true. Especially investing in large cap stocks and such. How many shares of Apple or Google stock can a 26 year old only 3 or so years into the workforce legitimately buy? Not that many. So you take your 4.5 shares of Google stock and hope it keeps going up, but even if it goes up $20/share, that’s really not that much in percentage terms. Probably not going to get rich quick.
Harry Browne also talks about having two separate portfolios: the Permanent Portfolio and the Variable Portfolio. I’m still reading up on the concept of the Permanent Portfolio, but essentially you put 25% into US Stocks, 25% in long-term US T-bonds, 25% in cash, and 25% in gold or other precious metals. More information is available in Browne’s book “Fail Safe Investing” which I just got through Amazon the other day. The Variable Portfolio contains money you use for speculation, money you can afford to lose.
Another site I’ve been reading that has been influencing my thinking lately is Mr. Money Mustache. The site appears to be down while I’m typing this. Hopefully it comes back online so you can check it out. This guy is big on early retirement, and his advice for getting there makes a lot of sense to me: control your expenses. Don’t waste all your income on ridiculous car payments, super high mortgages, Ivy League pre-school (his term), and eating out all the time. He has great articles on safety margin and withdrawal rates.
Essentially, if you can save up 25 times what your annual expenses are, you’re ready to retire. If you keep your expenses under control, that amount is something you can accumulate a lot faster than you might realize. I was convinced I need $2 million before I can retire. That’s a nice figure to shoot for, but if I maintain my current lifestyle, or only let it inflate just a bit, the figure you need to retire assuming a 4% withdrawal rate isn’t that far out of reach.
Hopefully this article wasn’t too incoherent. I’m a bit rusty since I haven’t written anything in over 2 years. What do you do for saving and investing? Leave me a comment below.