Journey to Financial Independence

Welcome to my website/blog. Let me get straight to the point. I’m on a journey to achieve financial independence.

We tend to think of extreme wealth as a pre-requisite for financial independence. It is not. In fact, many people who follow the financial independence, retire early (FIRE) philosophy are financially independent due to frugality, not extravagant net worth.

So, what does financial independence even mean? It certainly doesn’t mean I can buy whatever I want. For example, in 2010, a Russian billionaire purchased a private yacht for around $590 million. According to Wikipedia, the yacht has 2 helicopter pads, a submarine, and even a missile defense system. I cannot afford this as a doctor, no matter how much I save or invest. I will never be able to afford some things, and that’s okay.

Instead, financial independence means I only need enough money invested to pay for my current living expenses. In the FIRE community, there is a concept called the Safe Withdrawal Rate, or SWR, which is traditionally thought to be 4% (true SWR is probably closer to 3% or less, but we’re getting into the weeds a bit. Read my book for more details). What this means is that because investments grow over time, you can withdraw a percentage of your initial portfolio every year – indefinitely. Your portfolio will never deplete.

Here’s another way of looking at it: if you have somewhere between 25x to 33x of your annual expenses invested, your annual investment returns will be enough to pay for your annual expenses in retirement, and possibly forever. This means you can maintain your current lifestyle without any further income. Without working, without government assistance, without friend or family support. Work becomes optional. This is the true definition of financial independence.

Take a look at my time to retirement calculator for some more details on how this works, and how quickly financial independence might be a reality for you as well!

It doesn’t take a genius to realize that the frugal will have an easier time becoming financially independent than the extravagant. Not only do the frugal need less money saved, but they also get to save more. Thanks to the power of compound growth, ordinary people with average income can and do achieve financial independence every day. And if you are a physician or other high-income earner but can keep your living expenses low, you can become financially independent even faster than most.

I also plan to post annual updates on my own investments (without specific numbers, of course), if you want to follow along. The most recent one is my 2021 in review article. Prior to that you can look at my 2020 in review. That’s as far back as it goes, because this blog started in 2020!

If you’re new to investing, check out the Investing 101 series of articles, which are designed to introduce investing concepts to beginners. Also, be sure to check out my book, where I cover all of these topics and more, in much greater detail. The books page also has my recommendations for other finance and investing books which are well worth the read. Finally, the articles page has links to all articles ever published on this blog, which cover a wide variety of topics. Don’t forget to subscribe (link at bottom of page) to receive updates whenever a new article is posted. Enjoy your visit and happy investing!