Fountain of Prosperity : Personal Finance and Investing for Longevity

I get questions from people often about personal finance, early retirement and financial independence.  This is my answer in its most distilled form. Enjoy!


The original Windsor Castle was build in 16 years and was constructed entirely of timber.  Timber is easily destroyed and burnt.  Henry the 2nd upgraded the castle to stone and that took 60 years.  View your finances as a castle and your job is to fortify it and change from timber to stone.  It will take a long time and effort but when your finished, your legacy will stand for generations just as Windsor Castle has.  It isn't always about yourself, it's about those who come after.  It isn't always about yourself, it's about those who come after.  I want to send people to school, build wells, feed the hungry and provide those less fortunate with opportunity.


Simplicity Is King
As with many things in life, the simplest answer is often the best answer.  When it comes to finances this is especially true.  Finance, in my humble opinion, can be split into three categories :
  1. Personal
  2. Investing
  3. Mind
While these following lists will seem simplistic, they follow the inch wide - mile deep philosophy.  Each one of these items don't need to be but can be delved into, forever.

Personal
  1. Establish a Budget.
    1. I can always help with this, it's very simple when you break it down.
  2. Establish 1 months of expenses for emergencies.
  3. Pay down debt.
  4. Establish 3 to 6 months of expenses for emergencies.
  5. Think of any large purchases you may want to make in less than five years.
    1. House
    2. Car
    3. Etc
  6. Put enough money away where you can sleep well, knowing whatever happens you can continue to live the life you need.
Investing (Done after the Above)
  1. Utilize 401k Match if Available.
    1. Invest in the cheapest and globally diversified portfolio you can.  This will most likely be some sort of Target Retirement Fund.
  2. Open Roth IRA through Vanguard
    1. Buy a Cheap Passive Globally Weighted Equity Index Fund.  My preference is VTWAX from Vanguard.
  3. Contribute Max to Roth IRA
    1. This will be difficult for many.
  4. Contribute Max to 401k
    1. This will be impossible for many.
  5. Open Brokerage/Taxable Account
    1. Buy a Cheap Passive Globally Weighted Equity Index Fund.  My preference is VTWAX from Vanguard.
  6. Contribute what you can every paycheck.
  7. Never Sell and Stay the Course.
Mind
  1. Delay Gratification
  2. Maintain a Stoic Mind
  3. Don't compare yourself to others
Closing Remarks
Repeat Until Wealthy.

 

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