I’ve been thinking about the incredible 2024. In most parts of the country, the S&P 500 has gained 23%, Bitcoin soaring and residential real estate climbing, and personal finance enthusiasts have had an amazing year. The return on investment almost feels like free money, who doesn’t like to get something for free? As the volatility returns, we must practice gratitude.
If you read Financial Samurai and subscribe to my free weekly newsletter, there is a good chance you are a personal finance enthusiast. Rather than spending eight hours watching sports on weekends, you might find it much more entertaining to review net asset allocations and optimize investments. What a unique and lucky one.
Back in March 2020, when the pandemic lockdown began, if someone told me that the stock market was up ~85%, real estate was up ~30%, and bitcoin was up 1,000% or more after five years, it would be hard for me to believe it. Of course, I was bullish on asset prices at the time and wrote posts like this How to predict the bottom of the stock market. But I’m not That Bullish.
However, we are here, so rich! By focusing on your personal finance, your net worth is high and your net worth is close or highest in history. As investment returns far exceed the historical average, our performance has greatly surpassed the masses who are not personal financial enthusiasts.
How personal finance enthusiasts build their own luck
Here are five key reasons why I believe those who devoutly sneak into personal finance books, websites and podcasts why they create more luck and better lives than those who don’t. Of course, we don’t always get things right. But our million-dollar mindset separates us from the crowd.
Million Dollar Mindset #1: More Optimistic, Less Worry = Better mental health
As personal finance enthusiasts, we looked at the history of bulls and bear markets. The bear market averages 20% or more in major stock indexes (such as the S&P 500) every 4 to 6 years. When they do happen, the last time averages 9.6 months. Knowing that neither of these situations will always make us measure in the worst and best times.
We are also not prone to FOMO, which can derail knowledgeable investors. We understand how to properly allocate assets based on our risk tolerance. We generally avoid taking unnecessary concentrated risks or leverage that could blow up our portfolio.
In real estate, we negotiate smarter deals and follow voice procurement guidelines to maximize joy while minimizing financial stress. It’s second nature to write a real estate love letter to make connections and learn how to proficiently negotiate terms.
When it comes to retirement plans, we have clear net worth goals by age to keep us on track. We like to perform withdrawal rate simulations to ensure long-term financial independence. By preparing for the “if” scenario and learning from the success stories of others, we treat the uncertainty of life with confidence. For example, creating plans for a downturn in the market allowed us to stay calm while others panic at the bottom.
This level of understanding allows us to better handle external shocks such as pandemics and personal challenges, such as job losses or unexpected medical expenses.
Million Dollar Mindset#2: Find solutions to economic challenges = more beliefs
We recognize that inflation is both an opponent and an ally. By investing heavily in inflation hedging assets (such as stocks), we not only eliminate their negative effects, but also gain benefits from them.
Take mortgage interest rates as an example. When the 2020 10-year bond yield fell to 0.51%, homeowners refinanced at record rates, with a fixed rate average of only 2.7%. Some of us have taken advantage of this opportunity to buy a home since the end of 2020.
Now that the bond yields are about 4.5%, we are getting meaningful risk-free cash returns. For those with lower mortgage rates, it feels like we are paying to live at home!
We can also further diversify our portfolio by deploying some capital in alternative assets such as venture capital. Some of these private AI companies have grown to make any inflation clear from the water. Personally, I’m investing in Anduril, Databricks, Openai, Anthropic, Canva, etc. Fundraising.
As personal finance enthusiasts, the knowledge we gain allows us to address economic challenges through balance. Whether it’s renegotiating supplier contracts in a business, rebalancing portfolios, or simply adjusting the household budget, we are always proactive rather than reactive.
Million Dollar Mindset#3: Find ways to create job flexibility = more freedom
By saving and investing more than average people, we have purchased incredible options. When your investment generates more income than you do, work becomes an option, not a requirement.
Imagine that there is no longer the need to chase promotions or work overtime to justify a raise. You can say goodbye to the 6 a.m. call or a Sunday trip to attend a Monday morning meeting and still enjoy financial security. How wonderful it feels more free.
If you achieve at least 25 times the annual living expenses you need in your investable assets, you can even retire early without stress. Even better, as a savvy finance enthusiast, you know how to negotiate severance and unemployment benefits while transitioning to the next stage. Most people simply do not resign because of fear and lack of understanding.
Selectivity also extends to your career. Personal finance enthusiasts are often more willing to take the risk of calculations, such as starting a business or turning to a completely new industry. Knowing that you have financial security can give you the courage to explore paths that align with your interests and values. Financial security also makes you your true self.
If you end up getting married and marrying a personal finance enthusiast, you may not have to work for a long time at all!
Million Dollar Mindset#4: Diligently plan the future of our children = more hope
Parents are always worried about their children, but personal finance enthusiasts are less worried because we plan more.
We have locked in affordable life insurance policies, set up death files, super funded 529 plans, and created revocable living trusts. My wife and I found a huge mindset after ensuring a 20-year life insurance policy during the pandemic. Policy Genice.
Apart from that, we prepare for the rising costs by exploring financial aid options and funding custodial investment accounts and Roth IRAs for our children. By teaching our children to contribute income to these accounts, we develop strong work ethics and financial literacy.
Some of us provide career insurance to our children by building a portfolio of rental properties or accompanying businesses. If they don’t have a job offer, they will have a safety net, and maybe even a family business job.
Million Dollar Mindset#5: Try to live a healthy lifestyle = Higher quality of life
Once you have enough wealth, the goal will enjoy it as long as possible. The longer you live, the more you win. Personal finance enthusiasts will often prioritize healthier food options, better exercise routines and stress relief.
During my 13 years in finance, I suffered from chronic lower back pain, TMJ and sciatica. Within six months of retirement, all my pain went away and my hair stopped greying. At that time, I finally realized that constant discomfort should not be normal.
In addition to physical financial freedom, we can also focus on mental health. We can afford treatments, healthy resorts, massages, and even simple joys like daily walks without a strict schedule. We have developed hobbies that promote longevity, such as hiking, gardening or yoga with friends. It’s easier to live a healthier lifestyle when you don’t have to emphasize money.
The health benefits of early retirement are priceless! In the second half of your life, you’d better appreciate the true level of life. With the right financial situation, we not only have greater potential to be healthier, but also extend our life expectancy.
More people who are shocked are not personal financial enthusiasts
Given the huge benefits, I’m really surprised that more people don’t accept personal finance. Yes, the theme may not be as exciting as your latest reality TV series. Yes, recessions and disasters will happen, but with our knowledge and experience, we always have hope and tools to put ourselves in trouble.
Once you have your financial situation, you will not only be more confident and safe, but also less envious of the success of others. You may find yourself more kind and generous because financial stress no longer frustrates you.
Perhaps the obstacle lies in perception. Some people think personal finance is dry or daunting. But, as those in our community know, it’s not boring. Personal finance is a gateway to freedom, adventure and life full of choice.
So here is my hope: more and more people discover the joy of personal finance. Luck doesn’t have to be accidental. By controlling our money, we can control our lives, which is the greatest gift of all.
Reader, why do you think there are no more personal finance enthusiasts? Given that so much information can be obtained online for free or at low cost, why aren’t more people obsessed with their financial situation to build more wealth and get more freedom as soon as possible? What other types of million-dollar thinking can you think of?
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