How to really start investing and hit FIRE
Aug 24, 2020
17 Comments
I'm in my mid 20s, got the good job, 401k is maxed out, automatically putting a decent amount of money into savings / investments with acorns, and steadily paying off my student loans (140k left, interest rate is ~5%), but I feel like I could be doing more.
Does anyone have any tips or links to how I could more effectively invest my money? FIRE is a hot buzzword, but I'm having trouble coming up with an effective plan. Any advice is much appreciated!
YOE: 2
TC: 195k
comments
Let's say you have 200k now, assuming 8% CAGR, to get there in 20 years you will need to invest 32K per year.
Point is, depends a lot on assumptions how you want to live, how much you can save, when, etc., so build your own spreadsheet. 8-10% is a good long term rate of return for the S&P 500, but you will want to be diversified to smooth out the effects of volatility. Most portfolios should be ~ 85% diversified equities, 10% fixed income, 5% alternatives, which would include REITs, BTC, Gold etc. The key is to rebalance, if bitcoin becomes 7% of your portfolio, every quarter or so you sell down to your target benchmark and rebalance those gains to other parts of the portfolio that are lagging. That gets you an extra percent or so return over the benchmark.
... or just get an good financial advisor like Fisher Investments, wealthfront etc. and let them manage it.
- Buy up as many shares of ETFs like VOO, QQQ that you can afford. Even if it’s like a couple shares a month. At some point start converting some ETF investment to real estate investing. This is an almost “classical approach” to building wealth, you could probably FIRE in your 40s if you commit to growing the wealth.
- Buy as much Airbnb as you can after IPO. I think it’s gonna be one of those rare FB, TSLA, etc stocks in a few years. If it isn’t, you could lose some real money and still have time to rebound with a more conservative approach in your 30s. If it is, you could get wealthy fast.