He simply has so much money (more than $1 million, I believe) relative to his annual spending (about $25k/yr) that he can afford a higher volatility portfolio compared to someone with "just enough" according to a 3-5% withdrawal rate. He's pretty non-specific but tends to advocate a stock-heavy portfolio with some bonds thrown in. Once you're withdrawing, it starts to matter more and IMHO this is where MMM is a bit deficient in his investment advice. What more could you ask for!?īut yes, the principle is that your investment returns start to matter less in the accumulation state the higher your savings rate because even very high rates of return are still dwarfed by the money you're adding. He struck it rich ethically, through hard work, cleverness, an offering real services of value to others, and now in his retirement, he teaches others to do the same and is a pillar of his local community. In my estimation, there are very few people who can judge MMM. That's adding value to society to me.Īlso, he ended his engineering career early by starting a homebuilding business and still does handyman work on the side, often for free now that he is financially independent and doesn't need the money. He's done a good thing for a lot of people just by describing his lifestyle and showing people how to do it. Note that MMM actually rents out a house, which I consider to be a business offering value to society. Now you are going to critiCize for not offering value to society? The basic point is that if your savings rate is high, you don't need to rely on savings compounding to reach FI.Īs far as "successful business," investing in eg the s&p 500 is owning a small part of many successful businesses.Ĭompare to the pp where only 1/4 is in successful business and 1/4 is in non productive assets (gold) and 1/4 is in loans to the government. Horizontal/vertical axes are OK, but what about the multiple curves? I lost the line there.ĭon't know for sure, but I bet it is annual investment return. (He is kind of too frugal for my taste in other words: why not focus instead on offering some value to society in the form of a successful business and generating a profit instead, but whatever) I received this older article from quite a few sources just nowadays.
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