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{ in·deed·a·bly }

adverb: to competently express interest, surprise, disbelief, or contempt

Metrics

What financial measure or metric most influences your behaviours?

Banks would say it is your account balances. They are prominently displayed right there on the home screen when you access internet banking. Which makes sense from the bank’s point of view, they profit from your continued usage of the financial products they sold to you.

Brokers would say it is your current portfolio valuation. It is the first thing you see after logging into their dealing portal or app. A logical choice from the broker’s perspective, their revenue derives from the activity and ongoing holdings in your accounts.

Those metrics favour the interests of the institutions. Which metrics best serve your interests?

William Bengen, the rocket scientist turned financial advisor famed for coining the 4% “safe” withdrawal rate rule of thumb, based his analysis on tax-deferred investment portfolio balances.

Think about that for a second.

Not your bank balance.

Not your net worth.

Not your house.

His research focused on ensuring decumulation phase investors would not outlive their money. He wasn’t interested in fees, taxes, or whether those “safe” withdrawal amounts could support the investor’s cost of living.

Jacob Lund Fisker, another space scientist turned financial imagineer, figured out that the lower your household expenditures, the lower the initial portfolio balance that would be required to sustain your lifestyle costs without exceeding Bengen’s “safe” withdrawal rate.

Which meant Early Retirement Extreme focussed on expenditure. Frugality. Minimalism.

Not your salary.

Not your state pension.

Not your stock picking or lottery number selecting abilities.

His writings covered his journey toward the point where time investment decisions became independent of finance. Early retirement in this context meant retiring from having to earn a salary, as opposed to retiring from all forms of paid work.

Pete Adeney built upon the ideas of Fisker and Bengen. Observing that it wasn’t what you earned that mattered, but what you kept. Saving 10% of your income may see you successfully accumulate within 50 years the required portfolio balance to sustain your lifestyle within Bengen’s “safe” withdrawal rate. The same person saving 70% of their income could potentially get there in less than 10 years.

Where Early Retirement Extreme focussed on expenditure, for Mr Money Moustache the most useful metric was savings rate.

Not pension lifetime allowances or superannuation general balance caps.

Not 10-year CAPE ratios nor 18-year property cycles.

Not the value of a potential future inheritance.

Mr Money Moustache’s approach concentrated on two financial levers, rather than just one. Maximising earnings while minimising expenditure to achieve the desired outcome sooner.

Each of Bengen, Fisker, and Adeney attracted large followings, who eagerly bought into their financial philosophies.

Each used different measures to help them conquer a specific financial hurdle.

It is worth noting that each approach helped its author solve a specific financial problem.

Once achieved, all three authors moved on and lived their lives. Adeney sporadically continues to write about money. Bengen and Fisker stopped altogether, as money no longer influenced their decision-making nor dominated their thinking. They were independent of finance.

At the time of writing, Bengen was happily retired. Seeking certainty and peace of mind in his elder years, he chose not to apply the 4% “safe” withdrawal rule to sustainably fund his own retirement.

After achieving financial independence, Fisker and Adeney have each spent subsequent years working in roles chosen because they wanted to, rather than they had to. Builder. Co-working space operator. Quantitative analyst. Watchmaker.

Balancing work they found meaningful with play. Bikes. Boats. Children. Jump rope. Skates. Swords. Weights.

The financial metrics or measures relevant to their journey toward the milestone of financial independence have likely been replaced by a different set of measures that are more relevant to the next stage of the journey. An evolutionary process of tailoring approach to circumstance.

Metrics

Now that you’ve had time to think about it,  I’ll ask again: what financial measure or metric most influences your behaviours?

Net worth?

A single number that represents what you own less what you owe.

An interesting figure, but what do you do with it?

Chart progress over time. An analysis meaningful only if adjusted for changes in purchasing power.

Brag when it increases. Moan when it falls. Reactions that make sense early in our financial journeys, when the movement is solely determined by our individual actions, saving or spending.  Reactions that become irrational once the movement is driven by market movements or rising house prices.

The composition of that net worth figure matters, as not all wealth is of equal value.

Age-restricted pension valuations are a mirage until we reach eligibility age. Tantalising, but untouchable.

Accumulated home equity may be inaccessible should we wish to continue living in that home.

Regulatory risks aside, the state pension has a financial value similar to an annuity. How many of us incorporate that annuity value in our net worth figures?

Future capital gains tax liabilities may be constantly accruing as our portfolio values increase. Yet who amongst us carries a provision for taxes that may one day be owed in their net worth figure? That’s fine for those who never intend to sell, but problematic for those planning to finance their lifestyle by decumulation.

Cash flow is another interesting metric. Income less expenditure equals saving.

This measure has a more immediate impact on our financial well-being. We may be a millionaire on paper, but may not feel like one if we struggle to pay for groceries or heating. Asset rich, but cash poor is an uncomfortable position to find ourselves in.

When correctly calculated, net worth measures how rich we are. Cash flow measures how rich we feel.

It is those feelings that are our lived experiences. Influencing behaviours. Controlling decision-making.

Breaking down the constituent elements of that cash flow metric can tell a fascinating story.

Income earned from selling time, versus passive or unearned income that investments generate. Financial independence is attained once that passive category covers lifestyle costs.

But wait! Passive income usually only covers dividends, interest, rent, and royalties. What about the sale of investments, as called for by the 4% “safe” withdrawal rule of thumb?

Sale proceeds represent a cash inflow. After accounting for fees, the remainder is income, upon which taxes may be owed.

How about a metric of total returns?

If those savings over and above what is required to meet our immediate needs are invested, then we should monitor and compare their performance against various benchmarks or other asset classes to ensure we are not doing it wrong.

Some investments generously make distributions in the form of dividends or rental income.

Others choose to retain and reinvest profits. In many jurisdictions, government policy currently taxes capital gains more favourably than other forms of investment income. Influencing behaviours.

Therefore, to be valid, any evaluation of investment returns should include both capital growth plus any distributions received. In other words, total returns.

If we are contributing additional capital to our investments, such as regular employer matched pension contributions, then it can be easy to deceive ourselves that our performance is better than it really is. Additional capital contributions potentially offset or disguise falls in investment value.

To account for this, any comparison needs to be done on a unitised basis. This ensures it is actual investment performance that is monitored, rather than the value of our current position.

Unitised total returns allows investments held in cash or premium bonds to be compared to those in antique cars, art, cryptocurrencies, direct business ownership, horses, options, property, shares, trading cards, or wine.

Perhaps some form of coverage ratio is more your thing? What multiple of your annual household expenditure does your net worth represent?

Depending on the result, such a measure provides motivation or comfort about the state of the observer’s financial position. Perhaps allowing them to loosen the purse strings or telling them to tighten their belt.

What about a time utilisation metric? The number of working days/weeks/months per year that your current portfolio balance is capable of sustainably providing funding for, buying back control of your time.

This allows the observer to either work less for the same money, or switch to a potentially more enjoyable yet lesser remunerated vocation. Increasing the marginal happy factor of each hour invested in work. Over the long term, that has a powerful compounding effect indeed!

Which financial metric makes the biggest difference to your own behaviours?

The wisdom of children

I was talking to one of my elder son’s friends earlier this week. A kid blessed with a big brain, cursed with an even bigger mouth, and enduring a tough home life. Constantly drawing fire from his teachers for showing them up. Achieving high grades while coasting his way through high school, the kid could be virtually anything he wanted to be in life.

I asked him what professions he was thinking about joining after university?

He wanted to be a nuclear engineer, or failing that a computer “engineer”. Not because he had any particular interests or talents in either field, but rather because they ranked amongst the top remunerated professions.

Why was the remuneration a material factor, I asked? His response simultaneously impressed and dismayed me.

So that he could save up enough to retire by the time he was 40. Then his life could start. Free from the financial pressures and influences that drove his parents’ behaviours, destroyed their marriage, and dominated their decision-making.

Many FIRE-seekers desperately wish to escape from the daily grind of commuting, competing for a “hot” desk, forced socialisation with acceptably incompetent colleagues they don’t care for, and humouring a pointy-headed boss. Running away from a life they had found wanting. Placing all their faith in the idea that financial independence will cure all that ails them.

It won’t, but some things we need to learn by doing.

This kid had given up on the possibility of an enjoyable or rewarding career before he had even started.

His instincts weren’t wrong exactly, but they were certainly disheartening. It is true that many jobs, and more than a few careers, are unfulfilling. Many grown-ups might go as far as attesting that becoming an adult is a trap. But I felt saddened that he and his classmates (including my son) had already seen through the game at such a young age.

I asked him with such a plan, how he saw the money side of his life playing out?

He envisaged landing a high-paying job in a high-paying city. Working hard to advance, while he was still unencumbered by dependents and competing priorities. Changing jobs often, to climb the career ladder and boost his earning power.

Living modestly throughout, because he wouldn’t have much time to enjoy life outside of work. Consequently, there was little point in accumulating trinkets and trophies.

Saving and investing the difference to build up the nest egg required to finance the next phase of life.

At the age of 40, or whenever he felt like he had a large enough financial cushion beneath him, he would quit. Climb off the career ladder. Move somewhere desirable to live, that was also cheaper than the city. The beach, countryside, or mountains.

At that point, he would buy a home.

Maybe couple off and start a family, now that he could afford to pay attention to them.

Start doing a job he felt was rewarding. Contributing to society or pursuing an interest. Teaching or academia appealed to him. So too did becoming a paramedic.

His model for paying for this life plan was simple.

The first phase was financed entirely via salary.

For the second phase, it was accessible investment income that needed to do the heavy lifting. Aside from a mortgage deposit, his ongoing housing costs could be kept to a minimum via an interest-only mortgage in a low cost of living locale.

His third phase, would be funded via pensions once he was old enough to receive them.

Initially, the workplace pension he would have contributed to during phase 1, which would hopefully have compounded to a nice big figure over the 30-40 years his contributions would have been invested by then. An initial tax-free lump sum withdrawal would pay off the mortgage.

Subsequently, his private pension income would be supplemented by the state age pension.

It was a simple financial plan. From the mind of an academically gifted 15-year-old with more experience of “life happens” events than any kid his age should have endured. He’d given the big picture plenty of thought, but the finer details needed some work.

As a thank you for sharing his thoughts, I helped him open a Junior ISA account, so that his hard-earned savings would start compounding in a tax-efficient manner. In 25 years’ time, that should make a big difference to his chances of success.

After the boys headed off to the movies, I thought about what financial metrics he would need?

His plan focused on cash flow, but would require different measures as his journey progressed.

The marketable value of his time, savings rate, and net worth to begin with.

Total returns and “safe” withdrawal rates to follow, to ensure his money worked hard and he didn’t outlive it.

Before concluding with simple cash flows.

An evolution in metrics that could apply to many of our journeys, as we advance along the financial maturity curve.

Ask the audience time: what financial measure or metric most influences your behaviours?


References

  • Adeney, P. (2012), ‘The Shockingly Simple Math Behind Early Retirement‘, Mr Money Moustache
  • Bengen, W.P. (1994), ‘Determining Withdrawal Rates Using Historical Data‘, Journal of Financial Planning, October 1994
  • Fisker, J.L. (2019), ‘Early Retirement Extreme: The ten-year update‘, GetRichSlowly
  • Networthify (2022), ‘When can I retire?
  • Templin, N. (2021), ‘The Originator of “the 4% Rule” Thinks It’s Off the Mark. He Says It Now Could Be Up to 4.5%.‘, Barrons

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21 Comments

  1. Gentleman's Family Finances 17 July 2022

    Fantastic post – the metrics of everyday life are everywhere and the fact that you avoided the maxim “if you can’t measure it you can’t manage it” (or perhaps that’s the point)is worth saying.
    What we focus our efforts on are often last years’ problems – running away instead of running towards.
    I have my own metrics as does everyone – it’s not a bad thing but you need to be flexible in your approach. Slaving away to 40 to finally be free??? I turn 40 this week and have enough money to be considered FI and a great family life – but I didn’t think that the last 25 years were purgatory, something to be endured to finally break free.
    I believe in discount life flow and a 15 year old has a lot more of value than me.
    Those are the other 2.metrics – how old you are and how many.years you have left.
    And only one features in my spreadsheets

    • {in·deed·a·bly} 17 July 2022 — Post author

      Thanks GFF.

      Fighting the last war is a common feature in personal finance. Recency bias influences our perception of “normal” and colours our judgement. Investors under about the age of 30 won’t have experienced a bear market before, nor material rates of inflation rate (now) or interest rates (to follow, as predictably as thunder follows lightning). There will be a lot handwringing and angst, as they valiantly reinvent the solutions to lessons of the past.

      But before I throw shade at them too much, it is that same ignorance that allowed them to make the most of historically low interest rates. “Normal” to them was anomalous to greybeards like you and me. They embraced it, while for a long time we were mistrustful and expecting to see an imminent reversion to the mean. Consequently, we probably failed to capitalise fully on a once in a lifetime economic opportunity, simply because our lived experiences suggested a different perspective of “normal“.

      Discount life flow, I like that concept. All years are not created equal. A year in our 20s, while we are fit and virile and immortal, is worth 5 years in our 70s when age has started to slow us down and steal our mobility. The opportunity cost of our prime earning years coinciding with our peak physical years is big enough to be considered highway robbery!

      Our age today we can quantify. Unless we’re planning to take a long walk off a short pier, our longevity is unknown. We can approximate, using life expectancy tables and family history, but at best this is a guesstimate and nobody lives the average.

      This is one of the main reasons that quantifying “enough” is so hard, a perception and judgement call rather than a mathematically certain figure in a spreadsheet, as longevity is one of the greatest variables and yet one that is unknowable except in hindsight. By then it will no longer be our problem!

  2. Experientialist 18 July 2022

    This has to be one of your best posts. I like how deep you think through the subject items. Huge fan!

  3. FI-FireFighter 19 July 2022

    I agree, one of your best and as usual got me thinking and reflecting.

    I have also been heavily influenced by my parents and their money decisions, but I am no where near as smart as that 15 year old, it took me to age 53 to reach FI and some of that was by accident not planning.

    They were/are the proverbial ‘Third Generation’ who spent all the family money!
    They are in their 80’s now, living in a house I own, on benefits and with zero savings.
    It’s not their fault, they don’t understand money or more precisely bad debt and
    they were too trusting of ‘professionals’.
    By the time I realised it was too late, but I was determined to become more financially savvy.
    So I suppose that now makes me the ‘first generation’ and the cycle begins again?

    The metrics I use? Very basic on reflection.
    Money in from pension and assets (rent) V monthly outgoings.
    I have a rough timeline where these outgoings will reduce and other incomes will start (state pension).
    I don’t have a SWR as I am still accumulating albeit small amounts.
    So that is my safety zone. I’m not lean FI but certainly not fat either, more a comfortable/relaxed FI.
    Which is probably why I don’t look too closely or bother with most of the metrics that I could be using.
    I have a tendency to research and thorough due diligence with anything money/investment related before I commit, so this is probably serving we well.

    • {in·deed·a·bly} 19 July 2022 — Post author

      Thanks for the kind words, FI-FireFighter.

      Your parents are lucky to have you, and have you in a financial position able to provide them with such generous assistance. Beats the alternative, a ten year wait for a council flat.

      For your phase of life, cash flow is indeed a sensible metric use. Thanks for sharing your approach.

  4. weenie 20 July 2022

    “Net worth?
    An interesting figure, but what do you do with it?”

    This is precisely why I’ve never focused on my NW as it doesn’t really mean anything to me – I can’t spend the money wrapped in the equity of my house.

    Although it’s great that youngsters are thinking about their financial futures at such a young age, it does sadden me me when I read of them wanting to retire at 40 when they haven’t even or barely begun their careers. As someone who has enjoyed the bulk of my 25+ year career, met some inspiring people (as well as a few mediocre!), been lucky with bosses I largely respected and made some life-long friends, I don’t think I’ve regretted putting in the 9-5 at all.

    Retiring at 40 in the UK, he’d have to continue topping up his NIs to get the minimum years (35) for a max state pension as he would have only worked 19 or 20 years after graduating?

    • {in·deed·a·bly} 20 July 2022 — Post author

      Thanks weenie.

      Net worth is a fascinating study in human behaviours. I’ve read of people who include everything, down to cars and clothing and furnishings that in practice would have little to no resale value. Others exclude the value of their home, yet include their mortgage principle. Include a potential state pension, yet exclude an immediate student debt. The permutations are endless.

      When people talk about apply the 4% “safe” withdrawal rate they equate the net worth worth required to 25x their current annual lifestyle costs. Which effectively tells the individual that the entirety of that net worth needs to have been accessible for divestment by the end of the ~30 year retirement period the 4% SWR was designed to cover. Which has some interesting implications when you think about it. If they are planning to continue residing in their home in 30 years, then that home shouldn’t be included in their net worth.

      I have mixed feelings about the career track. I fell into a lucrative yet unfulfilling niche, which has provided a comfortable lifestyle for myself and my family. Most of my adult friends have been met through the workplace. So there are good bits and bad bits to it, just like anything. It is largely what we choose to make of it for ourselves.

  5. Fire And Wide 20 July 2022

    Hey Indeedably.

    It probably won’t surprise you that I’m not the biggest fan of metrics in general. It may be I’m just a little jaded but having seen in my previous working life just how easily and how often different assumptions were used in calculating them, often to hugely different conclusions, it’s difficult to trust anything published.

    Now metrics that I calculate for myself – a different matter entirely! I think we all know when we’re fooling ourselves, even if we don’t want to admit it. Be it being overly optimistic to have hope of achieving our current view of “success” or being entirely too pessimistic since we’re a little afraid of having to actually go for it/change something once the data says we can…

    Metrics are so often painted as black/white, hard facts, unarguable. Whereas I see them as no different to anything else, as subject to emotion and state of mind at the time.

    My fav was always just how many project plans would stubbornly stick to the cheery “everything’s green and fine & dandy” update report when everyone on the project knows it’s glaringly red….but hey, it might yet work out, right….?!

    So what do I do? Like everyone I imagine, a mish-mash of numbers that mean something to me, so long as I use them as intended. Try and recognise when my ever-optimistic head is telling me it will all be ok, if the reality is different.

    My nieces and nephews are at a similar point to your 15 yr old. Trying to choose between what they enjoy and what may let them earn a decent wage. I think one of the most encouraging but not oft-discussed aspects of work today is how many ‘young folk’ are happy to consider working for themselves as a viable choice alongside a more traditional career approach. I think outside a few obvious exceptions, companies have a long way to go in winning back any kind of true loyalty or inspiration.

    Anyway – sorry for rambling. Interesting stuff as ever!

    • {in·deed·a·bly} 20 July 2022 — Post author

      Thanks Michelle. That made me laugh, I can just picture your nervous twitch at the thought of all those old bullshit corporate key performance indicators!

      Your “working for themselves” observation is an interesting one. These days, we are all working for ourselves, whether we hold a permanent corporate career gig or are freelancing. Nobody’s job security is any longer than their notice period, and often not even that long.

      We’re all infinitely replaceable, and more often than not by somebody smarter and harder working than us who resides in a lower cost of living locale.

      We are all also in sales, peddling our wares, value, and continuing existence regardless of job title. I just wish they taught kids that in high school in their personal, social, and health education (PSHE) catchall subject. It is much a survival skill as sex-ed and far more so than religion.

  6. The Accumulator 24 July 2022

    Incredibly impressive that a 15-year-old has sketched out a plan like that. I’m inspired not saddened!

    Much of adult life is about discovering the gap between how you thought it was going to be, and how it really is. Good and bad. No plan survives contact with reality!

    But I think it’s better for someone to be motivated and thinking ahead than to drift along without a clue. This kid sound more than capable enough to adapt as they go.

    I also submit that you can acknowledge a career is a means to an end while still enjoying it, or making the most of it, and connecting with people along the way.

    We think it’s normal that people move employers every few years – stepping stones through a career. Why isn’t it normal to think people can move through different phases of productive adult life – stepping stones through a life well lived?

    • {in·deed·a·bly} 24 July 2022 — Post author

      Thanks TA.

      We think it’s normal that people move employers every few years – stepping stones through a career. Why isn’t it normal to think people can move through different phases of productive adult life – stepping stones through a life well lived?

      I think it is normal. Indeed, it is what we all do, whether we realise it or not. The circle of life.

      We experience a childhood, where others cater to our needs.

      We study. Attempting to gain knowledge and skills to make us attractive to potential future employers, with smart kids like this one maximising the potential marketable value of their time.

      We work, a little or a lot, for a little or a lot. Quickly learning there is little relationship between price and value. Some target a vocation. Others a career. Others a provider. Each attempting to carve our some financial security for themselves.

      One day we may couple off. Buy a home with a mortgage. Have children. Care for elderly parents. Become financially responsible, both for ourselves and perhaps the needs of others.

      Perhaps we retire. From work. From those other responsibilities as over time we become orphaned, empty-nesters, mortgage free, and unemployable. Our lifestyle costs adjusting (often contracting) to what can be supported by our pension income(s) and, in the case of the fortunate few Monevator readers, saleable assets accumulated throughout our adult life. A mixture of investments and inheritance.

      Barring accident or illness, we begin the descent into our elder years. Demented. Frail. Invalid. Needing increasing amounts of help. Losing our hard won independence. Carers. Aged care homes. For some, this starts in our 60s, for most it is well under way by our 80s.

      Eventually we end up on the wrong side of the grass. The circle of life.

  7. The Accumulator 24 July 2022

    That’s right. Well put. But outside the FI community there’s a prejudice against moving on from the conventional world of work. That there could be value in ‘retiring’ from a high-earning career and turning towards vocational pursuits.

    Even within the FI community we’re hazy on this. There’s confusion about what productivity means, whether it’s allowed. Whether worth should be measured in pounds, value to one’s community, one’s family, or one’s self.

    Over and again, I see people grappling with the doubt heaped upon us by a culture that overwhelmingly judges people’s worth in pounds.

    Many people give up on youthful dreams because they know they have to make bank.

    I wonder what society would look like if, once FI was secured, people were encouraged to move on from money-making. Perhaps returning their good fortune to the community by making the most of their crystallised intelligence – teaching, mentoring etc.

    I’m full of admiration for your perspicacious young protagonist who has spotted the trade-offs so early.

    • {in·deed·a·bly} 24 July 2022 — Post author

      Well said.

      Whether worth should be measured in pounds, value to one’s community, one’s family, or one’s self.

      For mine, wealth is denominated in time. An investment banker or management consultant working 120+ hours a week is time poor, no matter how many zeros are in their pay packet. Meanwhile, a struggle-town resident living a Benefits-FI kind of life is most certainly wealthy.

      How each feels about their lot in life comes from to how well their expectations are aligned to their lived realities.

      I echo your sentiment about stepping out of the hamster wheel once we’ve achieved independence from finance. Doing something more productive that playing golf or watching unemployment television, but something more enjoyable that death by powerpoint or playing buzzword bingo in those endless meetings held by lonely middle managers.

      I’ll pass on your admiration to the young bloke, maybe he’ll become a new reader providing a fresh prospective in the comments from the Barry Blimps and regular crowd of monied greybeards.

  8. AJP 24 July 2022

    My important metric would be time. The time I have to give up to earn money in order to fund my future retirement.

    I use the amount of time I had to work in order to pay for something to think about if it’s worth it.

    Most importantly I have two kids below 5 so my decisions are whether to work less hours now in order to spend with them before they hit 11/12 but not be able to retire until a lot later or if it’s better to earn more money now, use the compounding, and then work less / retire when they hit 11/12 to spend time with them then.

    • {in·deed·a·bly} 24 July 2022 — Post author

      Thanks AJP.

      Time is a good one, the true denomination of wealth.

      However, I challenge your premise that you face and either/or decision for the next ~10 years though.

      It is true your kids will only be young once, will only think you are an infallible super hero for an all too brief time, and that before you know it they will prefer the company of friends in person or online to that of their daggy embarrassing parents.

      But it is also true that these are likely to be your prime earning years. The time where you break the back of your mortgage, contribute that core nest egg to your pension which should relentlessly compound away for the next 20-30 years to make your millionaire status an inevitability. Set yourself up financially.

      As you observe, time is key. Those compounding periods are irreplaceable, doubly so if you’re able to maximise your ISA contributions as well as keeping the tax man’s grubby hands out of your wallet via (possibly employer matched) pension contributions.

      The reality is you want both. To have your cake and eat it too.

      So you compromise. Perhaps working during the school term and taking time off during the school holidays. Perhaps freelancing, doing fully remote gigs. Perhaps adopting a semi-retired or seasonal working pattern so you get to enjoy your kids while they still want to hang around with you, but provide for your (and their) financial futures at the same time.

      The ship has sailed by the time they are teenagers. You’ll have a good relationship with them or not, based in part on the time and attention invested throughout their childhood, and in part by the vagaries of teenage hormones, adolescent existentialist angst, and the many dramas the two may conspire to bring.

      As a wise man once said, personal finance is simple. But it isn’t easy.

      Good luck with whichever path you choose.

  9. FIRE v London 1 August 2022

    Fantastic post – thank you!
    Much wisdom.
    Especially from the 15 year old. If he wants a job for the next 20 years please point him my way….
    What are your metrics these days? And how have they changed since your journey started? And what do you think they will be in 10 years’ time?

    • {in·deed·a·bly} 1 August 2022 — Post author

      Thanks FvL. I’ll let the young bloke know his financial future could be assured under your expert tutelage. He’ll want to know if your game is as sexy as nuclear engineering? He seemed to think that involves dressing up like Dr Doofenshmirtz and conducting evil cartoon bad guy experiments!

      What are your metrics these days?

      Once I reached “enough” I have tended to focus on more qualitative things. Control of time. The ability to enjoy doing things with my kids while they still want to do things with me.

      And how have they changed since your journey started?

      When I started out, I focussed on maximising the marketable value of my time. If I was going to have to work, I wanted to be as well remunerated as possible. There wasn’t enough certainty in chasing rainbows of professional sports/acting/music, so I pursued the “sensible” lucrative yet unfulfilling path.

      Once I earned enough that I no longer had to think about whether I could afford something, my focus shifted to using leverage to acquire self funding yet capital appreciating assets. Pretty quickly the price movements here superseded my earned income as the driver of how wealthy (or otherwise) I felt.

      Once I felt that I had “enough“, my focus shifted from a growth at all costs approach to reducing my leverage while focussing on fewer but better quality assets. That gradually got me over my mental accounting hurdle of having an aversion to selling things.

      And what do you think they will be in 10 years’ time?

      10 years’ time represents an interesting inflection point. Almost at traditional “early” retirement age. An age where borrowings are increasingly hard to come by. Where the benefits of simplification start to outweigh the desire for growth. It may also involve opening the local branch of the Bank of Mum and Dad!

      I suspect it’ll focus more on investment/pension cash flows and less on growth, but it’ll be fascinating to see how that theory plays out.

  10. Impersonal Finances 8 August 2022

    Maybe that kid will figure things out as he goes and come to love whatever vocation he ends up pursuing. Either way, it sounds like he has much better ideas about life than I did when I was his age!

What say you?

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