Instead of tapping away on my keyboard, I have been enjoying some reading on the internet recently.
The Escape Artist is a Brit who managed to escape his prison camp about two years ago when he was in his early 40s. In my humble opinion, the quality of his writing and experience is up there with Mr Money Mustache, Early Retirement Extreme and LivingaFI. Just that instead of an American perspective, we get a British one.
And of course, not forgetting his wicked sense of humour. I have always enjoyed British humour ever since watching “Mind Your Language” (Singaporeans should be able to get most of the jokes) and I found myself chuckling through posts like this, this and this.
But more importantly, I learnt alot from some of the key messages The Escape Artist (TEA) was trying to get across:
- Many paths lead to Rome. Besides the mortgage, the indulgence in restaurants and the occasional , I think the Mrs and I are still spending somewhat like students (Path 1). But in order to achieve our $42,000 spending target, we probably need to work harder on lifestyle disinflation (Path 3). If we can learn to shop in an environment like Jerry the mouse and be able to aggregate all our marginal gains, the path to FI will be smoother and faster.
- Investing is like pouring ketchup from a bottle. Progress in our investments is never linear. TEA with an annualised 12% return probably only saw the effects of compounding from Year 10. For us, in the first few years (2010 to 2014), it was difficult to observe any progress as we continually allocated tens of thousands of dollars to investments. Hopefully, we are near the tipping point (with close to $250,000 invested) and abundance will be achieved soon.
- Simplicity works best for the beginning investor. If you’re 21 and thinking of learning to invest, the best way to put you off is pushing you jargons like “Dupont ROE”, “WALE” and then asking you to read through tons of annual reports to find out the gross profitability of the firm (you are thinking of investing) and then compare it against its competitors. Even though both TEA and I do invest in specific counters, I am with TEA in advocating for ETFs and index funds. Both of us use these instruments and are unequivocal in recommending it to investors starting out.
- The 4% withdrawal rate is reasonable. I know I might potentially get whacked by a few other bloggers about how a 4% withdrawal rate could go wrong through sequence of returns, lower future returns or a zombie apocalypse… That’s alot of fear to overcome. Of course, I can’t deny a 2% withdrawal rate will be safer but no one can guarantee that that will be 100% safe in the future too! Moreover, if our expenses are $40,000, the amount we need to accumulate would double from $1m to $2m based on a 2% withdrawal rate. This could mean that instead of achieving FI at 40, we have to delay it to 60. I find myself agreeing with TEA that 4% is a good reasonable middle ground for 90% of the population to aim for.
- It’s not all about the money. For most, the main benefit of FI is freeing up time spent at work. And wouldn’t it be great if we are healthy and full of energy with lots of free time on our hands? Of course, we would need a mountain to climb after quitting our jobs but getting our diet and exercise spot on are worthy goals that will contribute to our happiness.
I am about halfway through the archives and I hope you get as much joy and useful knowledge as I have reading through the links.