❤🏡 A total shift on how much we really need 💰💰💰

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I am fascinated with the financial independence movement. This idea that we can choose what we pursue because we WANT to rather than because we NEED to in order to pay the bills. This idea that society's truths don't need to be our truths. This idea that money serves me, rather than me serving money.

One of the bedrocks of the FI movement is the 4% rule, so named as it argues that if you can live off of 4% of whatever you have saved, then you can retire in perpetuity (excellent run down on the 4% rule here for those interested).

So if your life costs $40,000 per year, you can retire once you hit $1,000,000.

Of course, the world has changed. Interest rates are rock bottom, there's very little inflation.

Which is why some people are saying that the 4% rule is now the 5% rule. This felt counter-intuitive to me, I would've thought that as interest rates are lower, we might need a larger nest egg. However, this particular expert feels that inflation is a far more important.

So the low inflation (and the reduced draining of your nest egg) outweighs the low interest rates.

This means that the person whose life costs $40,000 per year now only needs to save to $800,000.

That means they'd hit financial independence YEARS earlier... 😲😲

What would you do with a few extra years of your life?

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Paul Karvanis1 Comment