Sounds like a get rich quick scam, right? It’s not, it took a lot of work, sweat, patience and time before I got here, but I’m doing it nonetheless. I retired two and half years ago, haven’t worked for a single penny and today I have more money than I had the day I retired. It’s like magic (but it’s not).
I lied, I’ve been doing something, I’ve been enjoying early retirement. I’ve found something I’m passionate about and it keeps be busy most day. What I’m not doing, and haven’t done for two and a half years, is working for money.
It’s all about, not working for money but letting money do the work for you. No, I haven’t done anything to make money (guess what, this blog is not making me thousands every month). Something else is making money for me: my portfolio. The Money I once worked for is now working for me.
How did I get here?
For those of you following this blog, you know. I created a 10 year plan, stuck to it and built a million dollar portfolio. It took everything from, saving where we could, living below our means, paying ourselves first, investing it all, you know….. All the FI truths that at its core are real simple. Oh, and along the way compounding did its bit. After completing the plan, it (compounding) took me from millionaire to early retirement, which takes a bit more than “just” a million (for us).
I’m not kidding when I say the principals of Financial Independence are simply. I’ve boiled it down to my 5 Keys to Building Wealth:
- Start early
- Set a goal and create a plan
- Live below your means
- Invest wisely
- Be patient and stay the course
Those keys led me to the wealth that is now working for me. I no longer have to work to build wealth, the wealth is there and it’s maintaining itself. It all came together. I joined the FIRE club (Financial Independence, Retiring(ed) Early).
How much did I make?
Brace yourself, today I have (drum-roll…) $174.00 more than the end-of-year total, the year I retired. Wow, 2 years and you made less than $200.00 LOL!!!! I actually had to wait for the latest market rally today to make this article possible, who knows where are tomorrow.
That is not the $200,000 I promised on top. All joking aside, the net difference between the end-of-year I retired and today truly is that little, but let’s expand: The year I retired saw a similar rally to this year’s so the difference between the DAY I retired and today is actually $17,150.43 (already looking a bit better). BTW, these numbers only include my financial invest-able assets (bank, stock, 401k, IRA, …). It does not include any appreciation/growth of our equity in our home (and other stuff). It does include my investment property (waterfront lot) but since it has not been re-appraised I’ve kept it at the value I purchased it at ($68,000.00). According to recent sales of lots on the same water, it should have quadrupled by now.
All I’ve talked about thus far is the net amount of money made. What I haven’t included is our living expenses. For the last two and half year I haven’t made any money but I’ve certainly been spending it. Our annual budget sits at $65,000.00 and although we’re sticking to it closely, we’ve dealt with some financial emergencies (mostly medical). Our spending from the day I retired to today has been $170,000.00 (give or take $80).
Indeed, there you have it, I haven’t worked for a single penny since retirement and yet we’ve spent $170,000 and managed to come out $17,150.43 on top. My portfolio has generated over $187,000.00 in income in the last two and a half years. Not too shabby, doing nothing.
Is it enough?
I can already hear the teeth grinding. “You’re spending way more than the 4% rule when in retirement”. “The market won’t always go up, what about the next crash?”. I hear you and point well taken but here’s my rebuttal: I retired at 43, have not had to work for the last two and a half years. So what if I’m wrong? I will have had a 3 year vacation and still come out better than most.
All of this is indeed not sound advice; any financial adviser will tell you this. I’m living on the edge of financial soundness (you might call it insanity). This is all on the risky side but here is how I think I can get away with it (and this applies to my situation and mine alone, can’t speak for yours): I’m now 46, should this fall apart then “boohoo, I’ll go back to work”. There are worse things in life than having to work at 50.
As of today, my portfolio has managed to sustain us and come next year this time I’ll re-evaluate and see what is next. Aside from some balance problems between my pre-tax and after tax account there seems to be enough for now.
Should you be doing this?
Probably not, talk to a financial adviser and I’m pretty sure he’ll tell you not to. This article isn’t about my lifestyle though. It’s about how I made close to $200,000.00 by doing absolutely nothing. The fact that I’m retired while doing so doesn’t matter.
The point is, plan your life and finances right and you no longer have to work for money, the money will do the work for you. Allowing you, to do absolutely nothing.
Good luck reaching your financial goals and Happy Holidays!!