What's a typical and practical way for a software engineer to move towards financial Independency? - How many years and how? Note: for instance let's say: - the target savings would be 2M USD. - cost of living "excluding" housing of 60k / year. Please think practical about career progression, possible investments, housing (buying vs renting), 401 etc. Only consider "base salary" in your figure/plan. Not TC.
I don’t get why people want to waste their youth saving like this. Why not just spend everything you earn to have fun and then kill yourself when you’re old?
Because soon you will realize that you will like to live and not to kill yourself.
What if I realized the opposote?
I'd say striking a balance between reaching this goal and also enjoying the present is key.. At first I was saving up everything I had made, but I soon realized its not what I wanted, even if I get to that financial independance quite quickly.. I won't be wasting money on shit like new expensive cars, but I do go out once a week, go on vacation 2 or 3 times a year and enjoy myself.
If your at FAANG I think you can do it by yourself within 10-15 years depending on hard you push and skill level. If you have a partner that's a high earner, you can do it faster. If only considering base, you're ignoring over 50% of the actual income... I'm curious why you added this constraint
I added the base salary only constraints because I presume that outside the base salary, it would either be stock options or RSU which together make the whole TC. Knowing that stocks are very unpredictable and we're talking about a long-term holdings...then they may turn out to be of no value at a very later time in the future hence the reason to just look at base salary and go with that. Am I right or am I totally off please advise.
Stock options are very different in risk than rsus. For options, I totally agree. You need to wait an indefinite amount of time before you can sell and liquidate that amount (if even). Rsus, particularly for a public company, will be vesting in monthly/quarterly chunks. You have the option to sell relatively immediately. This allows the employee to use the RSUs value to reinvest in broader, less riskier assets. You do not have to hold on to that stock long term.
You will find many of us at Reddits r/financialindependence, easy to do, start young and be done in 10-15 years if you want. I have 200k net worth and only 2 years into full time work
Great thanks So what would be the strategy if someone is in his mid 30s then?
It shouldn't matter when you start, it matters how long you do it for. So if you're at 0 assets now, for example's sake, you could potentially FIRE in mid 40s. If anything, you'll generally have higher income because of experience and dual income. Kids cost a lot, but two income >> one.
Figure out the target number you want, divide by the number of years to get there, then save that much per year. We’ve always tried to live off of one income and save the other.