Financial Independence Through Investing, Minimalism & Mindfulness
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Personal, Blog.
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This past year has been much different than any other. This was my first full year of FIRE since leaving my job at the end of 2018. In other words, I didn’t work at a job for a single day this year.
The one constant has been waking up every day and figuring out what I want to focus on for that day. Some days I’m more productive while (many more) are relaxing.
[Read more…] about My 2019 Year in Review
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Personal, Financial Independence, Blog, Minafi, Canonical.
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Whew, it’s hard to believe it’s been an entire year (to the day) since I left my job at 36 years old. December 14, 2018, was my last day before retiring early and beginning to figure out what a day looks like without 8 hours at a desk.
The transition from coding, meetings (most of which I was running), constant Slack & email and relying on a todo list to now having near-complete flexibility was a massive shift.
I wrote about some of my initial reactions after three months of early retirement and again after six months. During the last six months, I’ve attempted to slow down more, spend more time enjoying life, play more video games, spend more time with friends.
A big part of that is trying to deprogram myself from the idea that I need to constantly be working on things that are productive. After a lifetime of that belief, it’ll take some time to change my mindset! I still want to do productive things, take up new and fun projects, and challenge myself – but it’s OK not to work on them like they’re due at the end of the quarter (*shiver, that word*).
With that in mind, here’s a look back at a few things from this year that have worked well, not-so-well, and what I’d do differently (or will try to do differently going forward).
Know, or define, what you’re retiring to. One of the most common gripes against early retirement is the question “what will you do with all your time?”. I haven’t counted the number of times I’ve been asked this question, but it’s absolutely been over 100 in just the first year. My answer is usually the same:
Since I left my job I’ve been doing the same things I did at night and on weekends – only slower.
My answer to the question “What do you do all day?”
I had so many things I was working on at night and on weekends that it’s been easy to let those fill all available time. It’s meant not needing to make tradeoffs like “should I go to the gym after work or make dinner”. Now I have time for both!
Having a bunch of hobbies, goals, and interests is helpful. For me, that’s involved programming projects, working on Minafi, catching up on TV shows and movies, hiking, skiing, CrossFit, learning how to create and edit videos, learning Japanese, learning more recipes – and quite a few other things.
I didn’t start doing these when I left my job either – I was doing them all before that. Now I just get to plan my day around them!
Limit commitments. After leaving I didn’t have anything specifically lined up to take up my time. If I had committed to too much right out of the gate that would have put off unwinding after a career. For example, I’m glad I didn’t commit to writing a book, attempting to grow this blog into something that makes money (it loses money every month), or seek out other activities that would eat up all my time.
Focus on one thing. The times this year when I was the happiest and most productive, was when I picked a single thing and focused on it. At the beginning of the year, I decided I wanted to focus on my physical and mental health and used that to influence what projects I worked on. Picking a focus has the added bonus of being able to look back at the year and see where my time went:
One activity I love is setting a focus for each month right before it starts. That focus can be simple: running, drawing, hiking, cooking – something you want to keep in mind throughout the month.
Having that focus helps make those small decisions that add up over time. “Do I work on training for a marathon or write a blog post” can be easily answered if your primary focus is “Train for a Marathon”. You can still write that blog post but do your training first.
Make time for friends! We’ve been fortunate to find a number of friends here in Salt Lake City since we moved to Utah two years ago. Between a constantly active group WhatsApp message, watch parties for Game of Thrones/Watchman and a bunch of board games, we’ve seen friends more this year than any other.
In the past, I’ve skipped out on a lot of outings because I was too tired, or drained from the week. That still occasionally happens, but it happens a LOT less than it used to.
Have a creative outlet, an educational outlet, and a physical outlet. In other words, don’t pit your interests against each other. If you want to learn how to program, learn a new language and learn a new instrument you’re gonna to have a bad time. The same problem happens when you buy 10 video games and can only play them one by one. Don’t pit your interests against each other.
Be OK iterating your schedule. Once you know what to focus on, it all comes down to execution! If what you’re doing isn’t making progress then be OK switching things up. For example, I was having trouble working out at the end of the day so I moved that up from 4 PM to 12 PM – which has been great so far. Knowing that I always work out just before eating lunch creates a cornerstone to plan some of my day around.
Before I left my job, I tried creating a “perfect week“. After a few months of not working, I compared my actual schedule to that idealized week. The results were clear: I slept a lot more, I had less focused time and a lot more “flexible time” to do whatever felt right.
The same iteration helped when I tried a month-long digital declutter without social media. I love having the option to just try out new days and new schedules and see how it feels. Whether it works or not you’ll know if it makes you happier, healthier or more productive!
Create strict rules when you need them. One of the most important things you can do is keep promises to yourself. If you develop a habit of keeping your agreements – no matter what – builds grit, character, and confidence. The times in my life with the most personal growth have been when I made a lot of agreements to myself and then kept them. I set out a few personal rules when I left my job that has been extremely helpful:
I’ve had other goals for sure, but these ones are non-negotiable. By practicing these daily they become clear habits where I don’t even need to think about doing these actions – they’re just part of my days. As I grow older I’ll likely add to this list, but only when I can do something (or need to do something) every single time, no matter what.
As part of this, I workout MWF without question – sometimes TR as well. I’m playing with the idea that I’ll set MWF as “productive” days too. The idea is that on these days I’d force myself into action – writing, programming, housework – whatever needs to be done. Then other days are flexible to do whatever I’m feeling.
That unproductive feeling. This isn’t new to FIRE. Whenever I have a project I want to work on – whether that’s a coding project, a creative one, a fitness one, or something else – I feel unproductive when I’m not making progress on it. Having more available time in the day only amplifies this feeling for me, as I have far fewer reasons for not progressing.
Doing too much. Even though I didn’t commit myself to too many things, I still quickly overloaded myself with projects, hobbies, fitness activities, books, things I wanted to learn and more. While all of these were fun things I loved doing, when it came to making a notable change it didn’t happen until I cleared my plate and focused on one thing.
Volunteer work hasn’t magically appeared. I have a confession: I haven’t done much volunteer work in my life. I wasn’t raised doing it, and I’ve struggled to find ways to help that I enjoy and feel like I’m honestly helping out. I didn’t go out of my way to find somewhere to volunteer, so it’s no surprise that I didn’t find something. This is something I want to figure out in 2020. Do you have any recommendations here? Either a way of finding a place to volunteer, or things you’ve done and enjoyed?
Flow has become more difficult. Do you ever have those days when you’re deep in the work on something and time flies by? That happens most when you’re working on exactly one thing and you’re able to put 100% of your attention into it.
Since having more flexible time, I’ve struggled to force myself to work on one thing at a time. I’ll program while watching TV (I’m currently rewatching Lost), I’ll cook new recipes while listening to audiobooks, or I’ll write a blog post while listening to impeachment hearings. In all of these cases, I’m getting things done, but I’m not getting that euphoric feeling of flow that comes with rapid progress.
One of the best uses of my time this year has been learning how to cook some of my favorite recipes. Learning how to cook one of the best returns on investments. The amount of money saved by eating home-made meals using ingredients from Costco is just insane. I see why there are so many frugal blogs that embrace this idea.
What’s valuable to you that you could recreate? It could be something fun like cocktails or homebrew beer. Something functional like furniture or dishware. Something fun like art or photography. Evaluate your spending and find out if there’s something you’re spending money on that you could replace by making it yourself.
Not every attempt at this is going to be a winner. I made Char Siu Bao this year (BBQ pork buns) and it was entirely too much work to be worth it. I’ll stick with the $1 frozen ones and save myself the time.
A few years ago I tried my hand at gardening for a season to grow some of my favorite veggies. We had tomatoes, carrots, jalapenos, cayenne peppers, watermelon, cilantro and more. Talk about a lot of work! I was out there every morning watering the plants, picking off bugs and making sure they were healthy. In the end, the total haul from our 48 sqft of garden could have been picked up at a farmers market for under $50. I wouldn’t do it again, but I left with an all-new appreciation for farming.
The times I’ve been happiest this year were when I set big goals and worked towards them over weeks or months. Redesigning Minafi, running a half marathon, launching a series of courses – all took months of work. I loved seeing these progress!
There were other times when I perhaps should have set more ambitious goals. When I was learning to ski, some of the best advice was to go AS MANY TIMES AS POSSIBLE. I only went weekly and I didn’t make as much progress as I could have. Setting an ambitious goal would’ve helped progress even more.
This goes back to having a solid list of what you want to know, have, do or be. With a clear list, it becomes obvious why you’re putting in the work to get there.
Take a look at your goals and check if they’re ambitious enough. If you accomplish them would you continue working on them, or would that be enough?
Oh right, this is a financial blog. To be honest I haven’t thought much about money this year. I’ve continued to track our spending in my custom spreadsheet and do quarterly write-ups here on Minafi, but beyond that it hasn’t been on my mind much.
My investment approach continues to focus on long-term buy and hold investing, which has meant I haven’t needed to do much of anything. During the year I did sell about $500,000 in company stock (more about that in my investment reports) which resulted in some of that in cash but most of it reinvested in the stock market.
Our spending for 2019 has stayed roughly the same as 2018 – around $7,000 a month for the two of us. That always seems like I lot when I say it. It’s more than many bloggers state. For us that looks something like this:
Side note: this doesn’t include Minafi’s expenses. I exclude those from our budget and think about it more like an investment that may pay off someday.
Is there room to cut? Yes! Obviously. Looking back 10 years ago we were spending about $2,000/yr on travel – now we’re dropping that on a single trip. What we are doing is spending in accordance with our values. We’re spending more on things that when we look back at our budget we say “Man, that was so worth it!”.
In doing that we eliminated other expenses that we didn’t enjoy: spending time and money to keep our house in shape (which is why we love renting), paying for landscaping, having two cars sitting in a garage, reducing the need for new clothes. Those cuts to our budget are just as joyful as the money we spent.
This has been an amazing first year. Having the time to explore hobbies and interests has been just as fulfilling as I imagined it. It hasn’t been all roses though. There are days, or even weeks, when I just want to stay in bed rather than go for a run. Times I want to binge-watch TV rather than program something envisioned. There are times when I feel incredibly unproductive and other times I’ve celebrated success.
It’s an incredible privilege to be able to retire early and set your own course in life. Fewer than 1% of people retire before age 50, with most people working into their 60s.
Have you retired? How was your first year? What went well and what didn’t?
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Investing, Blog, Minafi, Canonical.
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The first time I ever traded stocks was in the sixth grade. We scoured newspapers and invested fake money into real companies that we thought would grow in value. We tracked their progress over the coming months and learned if our investments gained or lost value.
This is the introduction many kids get to the stock market – if they have any introduction at all. It’s about picking companies with limited information and hoping that it pays off. Even this activity helped to understand how investing works, albeit with some gaping problems. Unfortunately, this isn’t the way that most people should invest!
Fast forward a few years and I have started to earn a little bit of money while in my last year of college. It was only a few hundred dollars, but it was something! I thoroughly researched investment platforms and found out that I might have to pay $12 just to invest $100! If I wanted to diversify my position and invest in 2 things, that jumps to $24. That’s 24% of my investment lost to fees.
Eventually, I went with a (now closed) site called Sharebuilder that allowed me to make 10 automated, not-executed immediately trades a month for $12 or so (I can’t remember the exact details) if you choose from their available ETFs. It ended up being way cheaper than anything else and that drew me in.
Today I know most of these sites have absolutely crazy fees – Sharebuilder being one of the better ones for the time. For those like me that learned “investing in the stock market” meant “buying individual stocks”, we were unknowingly set up to fail at investing.
A decade ago if you wanted to invest in a single stock you’d either have to pay a trade fee of $4 – $12 or have enough money in an account that an online broker allowed you trade for less.
Even at Vanguard if you invest in an online stock you’ll pay up to $7 per stock trade. (note: If you have over $1m at Vanguard you get 25 free trades a month!).
A few years ago, Robin Hood launched with a key difference from all other stock trading platforms – you paid $0 per trade with a $0 minimum account balance. For people new in investing, this was huge! You could put in as little money as you wanted and immediately invest it for free. This was suddenly cheaper than any other platform out there and let a whole new group of people make their very first investments.
The other online brokerages have taken notice. Over the course of the last year, we’ve seen one after another cave and start offering free trades just to be competitive. This follows the trend of a few decades ago when you needed to pay just to have a checking account. We’re still in the middle of this migration, but many online brokers have always adjusted their business models to support free trades.
| Trade Fee | Account Minimum | Trade Fee mutual funds) | |
| Ally Invest | $0 | $0 | NA |
| Ameritrade | $0 | $0 | NA |
| Charles Schwab | $0 | $0 | $0 |
| E-Trade | $0 | $0 | NA |
| Fidelity | $0 | $0 | $0 |
| Interactive Brokers | $0 | $0 | NA |
| Robin Hood | $0 | $0 | NA |
| Vanguard | $7 ($0 for $1m+) | $0 | $0 |
Every week more and more platforms are moving towards a “free” model for trades. If all I knew about investing was this chart, there’s no way in hell I’d choose Vanguard (more on this later).
There’s a lot more to investing than just these fees! For one, these are stock trade fees, not mutual fund trade fees.
What I didn’t know when I started investing, and what many many people who use the above platforms don’t know is that it’s always been free to buy mutual funds from the company that sells them! At Fidelity, Vanguard, Charles Schwab and many others you can buy mutual funds from that company for $0, and you always have been able to. The only downside is that there’s often a minimum account balance needed – $3,000 in Vanguards case.
So, how do you know if you should invest in stocks, ETFs or mutual funds? For one, ETFs and Mutual Funds are basically the same. The only reason I see to invest in ETFs over Mutual funds is if you don’t have enough to reach the minimum account balance need for a mutual fund. Once you reach it, you could switch to mutual funds at that point.
For mutual funds vs stocks though, I have a strong opinion on this one:
The vast majority of people should only invest in mutual funds (or ETFs if their 401k account only supports those).
My investing style discussed in The Minimal Investor
Yes, that probably means you too. I wouldn’t even think about investing in individual stocks until you have at least $100,000 saved up and invested in ETFs/Mutual Funds. At that point, you could try dipping your toe in stock market investing with a small amount – say 5% of your total portfolio.
Even with over $2m saved up, I still limit how much I invest in individual stocks to 5% of my total portfolio! This is the riskiest and most volatile part of everything I invest in. It’s also a small enough amount that if it went to zero it wouldn’t bankrupt me.
I hope that by now you’re strongly reconsidering investing in stocks. If not, here are a few more reasons why ETFs/Mutual Funds are the way to go.
You shouldn’t trade more just because it’s free. Attempting to time the market is a loser’s game. You have to be right twice for it to work – once when you buy and again when you sell. Having the ability to buy and sell at any time may cause you to feel like you’re in control of the situation – but you’re not! You can’t control the market, and you can’t reliably anticipate whether your timing is right. You may make some good trades, but it’s impossible to make a good trade every time. Even if you’re Warren Buffett, you’re going to pick some losers. Just make sure those mistakes are with a small enough portion of your investments to not cause trouble.
Trading more means paying more taxes. If you’re investing in an after-tax account (outside of an IRA/401k), then you’ll need to pay taxes each time you sell a fund for a gain. The amount you’ll pay in taxes will be determined based on how long you’ve held that fund. If you hold it for more than a year you’ll pay taxes based on the long-term capital gains rate (shown below). If you hold the fund less than a year then you’re on the hook for paying taxes based on your ordinary-income rate. You’ll pay more in taxes on your stock trades if you make over $38k (individual) or $77k (filing jointly). In other words – taxes are likely going to be higher if you hold for less than a year.
| Rate | Filing Married | Individual Rate |
|---|---|---|
| 0% | $0 - $78,750 | $0 - $39,375 |
| 15% | $78,750 - $488,850 | $39,375 - $434,550 |
| 20% | $488,850+ | $434,550+ |
Platforms sell your trade activity to make money. When you click “buy” or “sell” on an online broker, a lot happens behind the scenes. In the ideal case, your broker will match your “buy order” with the lowest priced “sell order” out there on the open market. This guarantees that you’ll get the best price possible. Not all brokerages do this though. Some will first send your trade intention to a 3rd party, for which they get a small commission. That 3rd party can then (if their algorithm wants) buy or sell that stock before your trade executes. These brokers are giving someone else a chance to cut you in line!
This is one of the ways Robin Hood has managed to stay “free” while still making money. It also means that their customers aren’t getting the best possible deal for their trades. It may only mean a cent here or there for you, but for Robin Hood, selling this information adds up.
Platforms lock-in makes it easier for them to sell you expensive products. Have you ever heard the term “loss-leader”? The definition is simple:
Loss-Leader, noun, a product sold at a loss to attract customers.
Companies have used this strategy forever – putting items on sale, happy hour at bars, buy-one-get-one-free gimmicks, and rotisserie chickens at Costco (mmmm).
For most online brokerages, they have two loss leaders: free stock trades and a super-cheap index fund (or two). Just like the delicious chickens, these are both great deals! The problem comes when you start also buying other products from these providers. If you start using a brokerage, you’re more likely to also use them as your advisor (1% fee), buy an expensive actively managed fund (1%+ expense ratio), or start buying more complex securities (buying shorts, limit orders or other addons). Each of these puts more of your money in their hands.
In other words, brokerages offering these services are like Las Vegas hotels giving you a free night stay. Be careful what you do while you’re there.
If there’s one reason not to be excited about free stock trades it’s this one: you don’t need to invest in stocks to get rich and retire early.
This goes back to why a diversified portfolio is better than a heavily weighted one. If you invest in just one stock, then you’re hitching yourself to their wagon. They might have a great quarter, or they might get hit with some regulatory action that causes them to drop in value. They may have social media blunder or an environmental disaster. All of which are completely outside of your control.
But what if instead of investing in one stock you invest in 3,264 stocks? That’s the power of investing in an index fund like $VTSAX, which puts a small amount of your money in that many publicly traded companies. You own a small amount of Microsoft, Amazon, Apple, Google, Facebook and thousands of others. The added bonus? You can already invest in them for free without needing to pay a trade commission!
How do you do it? Wherever you’re investing there’s like a low-fee, diversified, US Index fund. If you’re investing Vanguard, Fidelity or Schwab this will likely be in the form of a mutual fund. If you’re investing elsewhere it might be an ETF (for example $VTI).
I invest over at Vanguard, but just about every investing platform or 401(k) offers a similar fund to put your money. If you’re looking to get started and learn how to invest in this way, I have a free course that shows exactly how to do it.
Investing in individual stocks can be exciting – there’s no denying that! It’s the same feeling as buying a lottery ticket or putting your money down in a casino. There’s a chance you’ll win big and get rich! Investing in index funds may not give that same adrenaline rush, but the sense of security to being diversified is hard to beat. If you long for that rush, putting 5% of your portfolio into individual stocks is a great way to balance risk with reward.
If you’re just getting started investing and have only tried investing in individual stocks, I encourage you to give index funds a shot!
At the end of every quarter, I share a snapshot of my current finances. This includes what I’m invested in, their values and the change over time. The goal of sharing this information is to show it’s possible to make money investing in super-simple ways without the need to watch the latest news.
If you want to look back at past investment reports, you can view them all in one handy place or check out these links to the past few:
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Minimalism, Blog, adamfortuna.
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I’m a huge fan KonMari method. Prior to the release of the book, I’d heard it mentioned enough that I preordered and read it the day it came out back in 2015. It hits a sweet spot of being motivation while still focusing on real-world advice that is immediately useful.
If you’re not familiar with the KonMari method, it’s the premise of Marie Kondo’s book, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing. The premise and recommendations from the book are simple, but reading Kondo’s kind words drives them home better than I could:
Keep only those things that speak to your heart. Then take the plunge and discard all the rest. By doing this, you can reset your life and embark on a new lifestyle.
Marie Kondō, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing
This is where the English translation comes from: keeping only those items that “spark joy” when you hold them close or think about them. The word used in the original word “tokimeku”, which more closely translates to “makes your heart flutter”.
This feeling is so easily relatable! Keep things that make you feel something deep in your heart. Most of the takeaways from the book to me are more about my relationship with clutter/things and reframing that into something healthier.
There are many other caveats and details that are often overlooked when trying to distill the book down to a sound bite.
While I love everything about this, the last one is where I personally run into an issue when it comes to execution.
My mom passed away when I was 23 years old (back in 2005). I spent the next year driving from Orlando to St. Petersburg every weekend to clear out her house (usually alone), schedule repairs, and deal with a deadbeat tenant.
I hadn’t read much about minimalism at this point – it was still a relatively niche topic. The juxtaposition between my small apartment I shared with a friend and a 2,500 sq/ft house was stark – and made me realize just how little space I needed.
Without realizing it at the time, I somewhat did the KonMari method for everything I inherited. If you’ve ever gone through the possessions of a loved one, you can likely empathize with how emotionally draining this is. It didn’t take long before I needed to take a break (which for me at the time was binge-watching Star Trek: Enterprise – an underrated show!).
The problem I ran into was the sheer amount of stuff! It took me an entire year of weekends to sort through everything due to the sheer scope of the work involved. Pulling everything out and understanding it was only the first step – there’s still a question of what to do with everything
One major difference between the Japanese audience and the American audience is the sheer scope of the houses and clutter here in the US. Japanese homes and apartments tend to be smaller and haven’t swelled in size like the US. In the last 60 years, homes have TRIPLED in size while at the same time household size has dropped.
Going through all of your possessions in a weekend has a much different meaning if you have 700 sq/ft apartment vs a 3,000 sq/ft house with a garage and an attic.
My approach when is to take a multi-step approach instead:
The initial pairing down takes a long time at first. For me, that took an entire year for my mom’s house. Even after that, I brought home WAAY too many things, which triggered another round of pairing down.
The key for me is to let #1 take as much time as is needed to do it, and then create a healthy schedule where you consistently keep things tidy going forward. I love creating little systems that help automatically reinforce this:
Having this ongoing list helps keep my mind clear. This follows the Getting Things Done method. “GTD” focuses on not weighing down your brain with an endless todo list. This pairs well with the idea of “slow minimalism”! Keep track of what you plan to work on and chip away at it.
Here’s what my todo list looks like for this:
Paired with this is a personal practice of tackling 3 things on my todo list every day – a technique recommended in Organize Tomorrow Today.
You’re never done tidying up, but there’s a point where things are “good enough”. There’s nothing on my list that gives me stress to think about. Instead, these are all incremental improvements that will help in the future.
Whew, that’s a lot, right? It wasn’t just one mistake either. It was two mistakes, each costing me over $100,000. I made the first mistake in early 2018 and tried to learn from it. Unfortunately, I didn’t and ended up making the exact same mistake again in 2019.
The mistake? Not rebalancing my portfolio in line with my target asset allocation on a tight schedule.
[Read more…] about How A Basic Investing Mistake Cost Me $250,000 (and I Still Made it Twice)