The 40 Percent Rule

The 40 Percent Rule

Back in 2011, a friend spoke of these magical financial vehicles called “index funds”. What was news to me at the time sparked immediate deep research and eventual action.

Index funds have seen massive traction in the “FIRE” or Financial Independence, Retire Early community. And while there are many funds that track many indexes, the most common recommendations made tend to track the following indexes:

Whether right or wrong, the general consensus from this community is that for every $100 invested today, it will pay you back $4 every year, for at least 33 years.

This is known as the 4 percent rule, and is the “safe withdrawal rate” that finance bloggers like MMM, jlcollinsnh, Millenial Revolution and everyone else rehashing the same stuff over and over are talking about (no disrespect, there’s just very little “new” information).

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Why You Need a Freedom Fund

Why You Need a Freedom Fund

What would you do if money was not a concern? Travel the world? Start making music? Enrol in a painting class? Devote all of your energy to the side project you’ve been passionate about for the last 4 years?

If your bills were covered, would you go to work next Monday? Most people I know wouldn’t. But few of us have this option – don’t rock up on Monday and we’re told not to bother coming in on Tuesday. With rent to pay, bills outstanding and for some, a family to feed – losing that job seems disastrous.

If you haven’t already heard, the end of jobs is nigh. The world is now rewarding individuals willing to take a punt at starting a business and as painful as it is, punishing those that aren’t ready to adapt.

It’s claimed that 69% of Americans have less than $1000 in savings. We hear similar stats coming out of Australia, UK, Europe and elsewhere. Psychologically, would you be confident quitting your job and starting a business with less than a grand in the bank? I know I wouldn’t.

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