I've recently introduced myself and realised it was heavily focused on finance and education which does make sense, however I thought a bit of background may help me be more relatable and connect with others here.
I'm 23 from the U.K. I'm currently on holiday before I start my first full-time job in software engineering in 3 weeks. I've recently graduated from university. A bit about my hobbies, I love to play ultimate frisbee and enjoy reading a mix of books including fantasy and self-help. I'm currently re-reading ERE, book 7 of Wheel of Time and Surprised by Joy. I'm thinking about reading Millionaire's Mind next. I've recently finished YMOYL which I found insightful, I may reread it as suggested by the author or at least go through the steps.
Why am I here?
I initially heard about Jacob and his book from the RPF review and interviews. I then read quite a lot of the blog and explored other financial bloggers like GRS and MMM. What he mentioned struck a chord with me, why do people work until their late sixties and then spend all their money to catch up on life's experiences? Surely it makes more sense to retire earlier than that and leave the "cave". Investing makes increasingly more sense too, why keep your money in the bank with tiny interest rates that are lower than inflation when you could, albeit with risk, invest it to beat inflation and make your money work for you so to speak.
I figured writing a journal was a great way to get started on this journey to ER and FI, keeping track of my goals and progress as I go along. Also a great way to connect with others on the same path and perhaps gain a bit of wisdom from those further ahead than me. I'd say I'm pretty early on this journey as I'm yet to earn more than I spend, but I feel like I'm very willing to work towards it and open to educating myself.
I've made a bit of a start, investing most of my savings into funds last year but that was mostly off advice from a friend who works in that industry. One of my aims to be able to make informed investment decisions with relative success in order to be able to complete that step in early retirement where one lives off their returns on their investments.
Numbers:
Monthly income after tax - £1,712.65 (5% in pension)
Savings - £1,300.65
Investments - £14,983.67
Rent - £200 (living with parent)
Student Loans Debt - £45,376.53 (interest on initial £41,896.00), payback starts next year
Weight - 94kg (207 lbs) (Goal:80kg)
Moving forwards, here are some aims:
- clear out the house to make downsizing more of a reality (2 of us in a 4 bed house)
- find a passion project or 2 to spend time on until work starts
- save 80% of my salary once I start work
- continue to lose weight and live a healthier lifestyle
Next steps:
- Complete Step 1 of YMOYL
- Finish ERE
- Read Millionaire's Mind
- Work out a hypothetical retirement age
A few open questions to those who read, how did you get started with investing? I remember Jacob posting a few resources to educate yourself, but haven't managed to get my hands on that economics book yet. How did you start applying ERE to your life? I guess that's one of main next steps, changing my philosophy and then figuring out what living with that looks like. Also is anyone else from the UK in a similar boat? I'm curious how you approach student loans and how you factor that into your ER plan.
I hope this first post was all right to read, I plan to update once a week initially and then change accordingly. I haven't written in a public space for a while so hopefully my writing will improve as a result.
Steve's Journal
Re: Steve's Journal
Sounds like you're getting an early start, that's great! Looking forward to following along.
My investing is more bogleheadish than it is ere. "VTWAX and chill" basically. May change over time as I learn.
My investing is more bogleheadish than it is ere. "VTWAX and chill" basically. May change over time as I learn.
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supersteve
- Posts: 4
- Joined: Mon Mar 29, 2021 9:06 pm
Re: Steve's Journal
Thanks! How has the bogleheadish investing worked for you? I've heard lots about that book and considered reading it. I'd most likely start out with safer, less maintenance forms of investing and try new ones as I learn.
Re: Steve's Journal
I started my journal in a similar position to yours and also tackled investing first. In my mind there are three parts to investing: dealing with the market (what securities to buy, managing risk, portfolio composition and more), dealing with the government (taxes, retirement accounts, how your wealth affects your interaction with various social insurance schemes) and finally dealing with yourself (your psychology, personal risk tolerance, biases and fears). They’re all important, but I feel that you need to be balanced in your development of them. If you make great returns, but tax most of it away and live in perpetual anxiety, you won’t enjoy your edge much. Taxes really do influence you a lot. My current strategy works well since our tax laws offer an account where you pay a constant percentage on the assets in the account, making it agnostic to how often you buy and sell and to any capital gains. In many other tax regimes, my strategy would be borderline moronic.
My recommendation would be to find a introductory book relevant to the UK that covers the basics (in this era it’ll likely recommend buy and hold index funds, it should also explain your tax environment). I’d then read a few books about different investment styles (say dividend growth, value investing, real estate, various asset allocation varieties, trend following, technical analysis). This is basically what I did, though some information came in the form of blogs/forum. I’d recommend books for a general overview though, as you’ll get more return for every hour spent. For keeping up with individual investments, the internet/social media is obviously more appropriate as you need up to date information. For the mental part, nothing compares to putting actual money on the line, but there’s also a lot of value in books like Thinking Fast and Slow, making you aware of various biases. I can’t give you any UK-specific advice but I know that monevator is a big site/blog.
jacob makes a point of needing a foundation in finance/economics if you are to live on your capital. I think he’s right as usual but it might be too daunting to start out with that for a lot of people, so I’d recommend my approach above as a first step. Sooner or later you’ll need a more complete framework, and you’ll need to attack the economics textbooks, though.
I’d also caution against being too focused on the financial side. You seem to acknowledge this but it’s worth repeating. There’s a lot more to do than increasing net worth - building skills, forming relationships and managing people in various situations, improving your health, improving your mental processes, increasing your knowledge of other fields like ecology and philosophy et cetera. Because money quantifies easily and is so prominent in our culture, it’s easy to sacrifice other parts of your life for it, even with high aspirations like FI in place of mindless consumerism. And it’s always easy to revert to conditional living (“once FI I’ll live” is really no different in kind from living for your golden years, simply closer in time).
My recommendation would be to find a introductory book relevant to the UK that covers the basics (in this era it’ll likely recommend buy and hold index funds, it should also explain your tax environment). I’d then read a few books about different investment styles (say dividend growth, value investing, real estate, various asset allocation varieties, trend following, technical analysis). This is basically what I did, though some information came in the form of blogs/forum. I’d recommend books for a general overview though, as you’ll get more return for every hour spent. For keeping up with individual investments, the internet/social media is obviously more appropriate as you need up to date information. For the mental part, nothing compares to putting actual money on the line, but there’s also a lot of value in books like Thinking Fast and Slow, making you aware of various biases. I can’t give you any UK-specific advice but I know that monevator is a big site/blog.
jacob makes a point of needing a foundation in finance/economics if you are to live on your capital. I think he’s right as usual but it might be too daunting to start out with that for a lot of people, so I’d recommend my approach above as a first step. Sooner or later you’ll need a more complete framework, and you’ll need to attack the economics textbooks, though.
I’d also caution against being too focused on the financial side. You seem to acknowledge this but it’s worth repeating. There’s a lot more to do than increasing net worth - building skills, forming relationships and managing people in various situations, improving your health, improving your mental processes, increasing your knowledge of other fields like ecology and philosophy et cetera. Because money quantifies easily and is so prominent in our culture, it’s easy to sacrifice other parts of your life for it, even with high aspirations like FI in place of mindless consumerism. And it’s always easy to revert to conditional living (“once FI I’ll live” is really no different in kind from living for your golden years, simply closer in time).