You're a Good Investor, Right?

I spent the last two weeks in Costa Rica scoring insane warm water, turquoise blue waves with family friends. 

I was invited on the trip 5 days before leaving by my childhood neighbor, Greg, who taught me how to surf. After checking the forecast and seeing that the waves were going to be cranking I looked started looking up flights. It was going to be $800 for the ticket, and that seemed too much to pay for just the flight. 

But! Then I remembered, missing out doesn't happen when you're following the hidden green. You simply live the GOOD LIFE with less cost.

And with that, I remembered I had 80,000 airline points saved up from two credit cards I safely hacked over the last few months. It was time to put one of those to work! After using 55,000 points I knocked my flight cost down to $300 round trip, and said Hello Costa, baby. 

After spending 6 hours in the water for nearly 10 days, I found out one of my best friend's parents were staying at their vacation house right across the bay from where I was staying.

There were two more swells on the forecast, and after connecting over email they invited me to stay with them. I was honored at the invite, and had to take them up on it. (This benefit comes from being out going, genuine and kind to others -- otherwise known as building a community for yourself. A community is a staple in the financial freedom and happiness space. So let your true, vulnerable self shine to other's around you!) So it goes I moved on in with them for the next two swells.

Before I arrived, my good friend ended up telling his parents that I was a "good investor." Both of his parents, who are absolute wonderful people, are also incredible real estate investors themselves. So a day or so into our time together they asked me, "Ryland, we heard you were a good investor?"

I kind of gawked when I heard that statement. "Am I good investor?" I thought. I didn't really know what to say, so I just started explaining the concept of long term, low fee index fund investing, and how I'm taking a different approach then the masses by boosting my savings rate to +50% of my income.

As I stumbled around my answer, I was reminded I'm truly not a 'good investor.' But if I was to give myself credit for something it'd be the last part, the hardcore stashing. And that's happened solely because I've cut the fat off my spending and have aligned my spending completely to my values, and not spending a penny more.

The thing about doing this -- cutting your wasteful spending and hardcore stashing the surplus -- is you have a much bigger safety margin to 'look' like a good investor.

Let's do a quick comparison. 

Vanguard's S&P 500 index fund, VTI, is pretty much the only fund you ever need, so let's just play it out with that strategy. Read Jim Collins, Stock Series if you want to learn why. For this example, I'll use a $50,000 post tax salary. 

A normal working drone, squirrels away 10% of their paycheck every month. That means they spend $45,000 each year and stash only $5,000. They slop that measly wet noodle of their stash into VTI and in 30 years they have $610,000. Using the 4% rule as our mark, they still have another 20 years of work left till their investments support their $45,000/yr lifestyle.

While on the other side our mean lean greener stashes 60% of their paycheck every month. They spend $20,000/yr and swoosh $30,000 each year into VTI. Our all-star here is able to live off their investment portfolio in just 12 years! At that point they will have the same $610,000 that took the normal working drone 30 years to build, and it will continue to pump out $24,000/yr forever!  

The point here: The mean lean greener isn't a better investor, they're just a kick-ass saver.

They may even be a worse investor! The greener's portfolio is less dependent on compounding and market growth over lots of years and is more dependent on something they have control over, "how much money they pump in."

When you control your spending, you own your future. When you throw your spending away to things that don't bring you long term happiness, so goes your time making that money back.

Another neat point here is when you're stashing massively you are less tempted to try to pick the next diamond stock -- your savings rate is what's growing your portfolio, you're not depending on your investment income to grow your portfolio (at least for the first few years!). In part there's less worries, finger crossing and hoping that you are picking the next Google or Facebook.

But back to it, do I think I'm a good investor? Hell no.

I'm good at aligning my every day with doing things that bring me true happiness. This wonderful life ends up costing me way less then the norm and gives me a massive portion of my take home pay to invest. 

So align your life and spending with your true happiness and you'll find the 'good investor' part comes naturally after that.


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