When it comes to getting professional financial advice, many people believe that you simply can’t go wrong with hiring a financial advisor. However, many people don’t know that you may not need a financial advisor at all! By following a few simple tips, you may be able to manage your finances perfectly well without anyone else’s help.
This post may contain affiliate links; please see our disclaimer for details.
You’ll get charged no matter if you make money or not
It’s no secret that financial advisors often charge hefty fees for their services. These fees are typically determined by the amount of money you invest. They are not based on the profits they generate.
In other words, you will still be charged for their services even if they misuse the funds you entrust them with.
This system increases your investment strategy’s unneeded risk and costs. It also provides little incentive for a financial advisor to provide results.
Even if they will get paid more if they can increase your wealth, they still receive compensation in the end. As a result, it’s important to carefully consider whether or not working with a financial advisor is right for you.
Investing wisely in the long-term is better
While there’s no doubt that financial advisors have access to a wealth of information and resources, the truth is that you can do just as well – if not better – by investing in low cost index funds for the long haul.
You could invest in individual companies, but you must take the time to do your own research and invest long-term. You can find out which companies will likely succeed in the future and invest in them accordingly.
We personally love investing in the Total Market Index Fund and the S&P 500. They which have a proven track record over the long term.
What’s more, by investing by yourself, you’ll avoid the fees charged by financial advisors. This will allow you to keep more of the profits you generate, giving you a greater return on investment.
M1 Finance is a great investment opportunity with its robust yet simple app. There are ZERO commissions or account management fees.
Deposits $1,000 or more into your M1 Invest account within two weeks of signing up and get a cash bonus of $30-$500 to that account.
It is not just a trading stock brokerage account but also offers an IRA option that allows you to invest in your retirement.
We highly recommend using M1 Finance to open a brokerage or retirement account! M1 Finance can undoubtedly help you on your financial independence journey.
You might not get the personalized attention you need
If you’re working with a large financial institution, it’s essential to remember that you’re likely just one of many clients they’re managing.
As a result, you may not receive the personalized attention you need to make the best decisions for your financial future.
On the other hand, if you’re working with a smaller firm or an independent financial advisor, you’re more likely to get the one-on-one attention you deserve.
This way, you can be sure that your investment strategy is tailored to your unique needs and goals.
A financial advisor rarely outperforms the market
One of the financial advisors’ biggest selling points is that they can outperform the market. However, this claim is often exaggerated.
In reality, it’s very difficult – if not impossible – to consistently beat the market, even for experienced professionals.
What’s more, even if a financial advisor does manage to outperform the market in a given year, there’s no guarantee that they’ll be able to do so again in the future. As such, it’s essential to be realistic about the capabilities of financial advisors.
Hopefully, you’re sitting down for this one because it may come as a shock: most financial advisors are actually learning as they go.
That’s right – even though they may have years of experience, many financial advisors are still trying to figure out the best way to manage their clients’ money.
With this in mind, it’s important to remember that you may be able to get just as good – if not better – results by managing your own finances.
After all, if your financial advisor is still learning, why not learn alongside them?
The amount of attention they give you depends on how much you invest
The more money you have to invest, the more attention you’re likely to receive from a financial advisor. That’s because financial advisors typically earn more commissions when they manage larger sums of money.
As a result, if you have a small amount of money to invest, you may find that your financial advisor is less attentive than you’d like.
If you’re considering working with a financial advisor, this is something to keep in mind.
You may be able to get the same services for less
Many financial institutions offer their clients various services, including investment management, retirement planning, and tax preparation. However, these services often come at a premium price.
Fortunately, there are several ways to get the same services for less. For example, you can use online tools and resources to manage your finances or work with an independent financial advisor who charges lower fees.
When do you actually need a financial advisor?
You might need a financial advisor if you have more assets than the average person or your situation involves complicated tax issues.
Other times when you might need an advisor include if you’re going through a major life event like getting married, having a baby, or buying a house.
If you’re not sure whether or not you need a financial advisor, the best thing to do is ask yourself whether you have the time, knowledge, and interest to manage your finances on your own. If not, then working with a financial advisor may be your best option.
The Bottom line
Working with a financial advisor can be beneficial in some situations, but it’s essential to understand the limitations of these professionals. In many cases, you may be better off managing your finances on your own.
The average person doesn’t need a financial advisor. You probably don’t have so much money that you can’t keep track of it yourself, and you’re probably not in a complicated enough financial situation to warrant the help of a professional.
DIYing your finances can be a great way to save money and better understand your financial situation. So, unless you have a complicated financial situation or more money than you know what to do with, you’re probably better off without a financial advisor. 🙂
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
It’s no secret that Utah is a great place to invest in real estate. In fact, for many years now, it has been consistently ranked as one of the top states in the nation for rental property returns. So if you’re considering investing in Utah real estate, rentals are the way to go! Let’s jump into 11 reasons why.
This post may contain affiliate links; please see our disclaimer for details.
Salt Lake City During the Winter
1. There’s a high demand for rentals in Utah
The number one reason to invest in Utah rentals is their high demand.
The state’s population is growing rapidly, and there’s not enough housing to meet the new residents’ needs.
This is especially true in Salt Lake City, where the population has grown by leaps and bounds in recent years.
As a result, there’s a very high demand for rental properties in Utah, which means you can charge top dollar for your units.
2. Rental properties in Utah appreciate at a rapid rate
Another great reason to invest in Utah rental properties is that they appreciate them at a very rapid rate. This is due to the state’s strong economy and growing population.
Utah has been one of the top-performing states in terms of real estate appreciation for several years.
As a result, your rental property will likely increase in value rapidly, providing you with a nice return on your investment.
3. Utah has very favorable tax laws for investors
Taxes are always a consideration when it comes to investing in rental properties, and Utah has some of the most favorable tax laws for investors in the country.
If you structure your investment properly, you can pay very little taxes on your Utah rental property. This is another reason why rentals are an excellent investment in the state.
4. Rental properties provide consistent monthly income
One of the best things about investing in rental properties is that they provide a consistent monthly income. This is money you can count on coming in every month, which can help cover the mortgage on your property and provide you with a nice profit.
Many people get into the rental business because of the monthly payments, but it’s important to remember that other expenses come along with being a landlord.
These include repairs, upkeep, and vacancy rates. Despite these expenses, rentals can still be a very profitable investment.
5. You can leverage your investment with borrowed money
Leveraging your investment can be a great way to increase your return without putting any more money down.
When you borrow money to purchase a rental property, you’re essentially using other people’s money to finance your investment. This can help you to buy more rental properties and grow your portfolio at a much faster pace.
6. Outsource the management of your rental properties
If you don’t want to deal with the day-to-day management of your rental properties, you can always outsource that task to a property management company.
These companies will cover all the details for you, from finding tenants and collecting rent to dealing with repairs and maintenance.
This frees your time to focus on other aspects of your investment portfolio.
7. You can buy property in a wide variety of price ranges
Investing in rental properties doesn’t have to break the bank. You can find properties in various price ranges, from small condos to large single-family homes.
This means that you can find a property within your budget that will give you a good investment return.
Although many years back, our first property was a 1970 townhome and cost $100,000. Of course, the market has gone up, but there are still good deals.
Our First Rental Property
8. Potential for growth in the Utah rental market
The Utah rental market is still in its early stages, meaning there’s a lot of growth potential. As the state’s population grows, so will the demand for rental properties.
This means that your investment is likely to appreciate at a very rapid pace.
9. It’s easy to find quality tenants in Utah
Many of the renters in Utah are Mormons, which means that they’re generally very reliable tenants. They’re also less likely to cause damage to your property or fail to pay rent on time.
This makes it easier to find quality tenants, which can help to minimize vacancy rates and maximize your profits.
10. Utah is a great place to raise a family
It’s hard to deny that Utah is a great place to raise a family. The state has a low cost of living, great schools, and plenty of outdoor activities to keep everyone busy. This makes it an attractive place for families, which can help drive up demand for rental properties.
Many people go to Utah to start a family; they’ll need to rent a place to live before they can buy a house. This provides a great opportunity for investors looking to cash in on the state’s strong rental market.
11. It’s a great place to retire
Utah is quickly becoming a popular retirement destination, and those retirees need a place to live. This creates an excellent opportunity for investors to purchase rental properties that can be leased to these retirees.
So not only will you be providing them with a place to live, but you’ll also be able to collect a nice monthly rental income.
Conclusion – Consider Utah for your Rentals
Investing in rentals in Utah is a no-brainer when you get to it. If this is the business you’re considering getting into, you’ll find plenty of reasons to do so.
With a strong rental market, great potential for growth, and plenty of quality tenants, you’ll be in a great position to make some serious profits.
Now is the perfect time to get started in the Utah rental market, so don’t wait any longer.
Start looking for properties that fit your budget and reap the rewards of being a landlord in this great state.
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
This post may contain affiliate links; please see our disclaimer for details.
Many people are making money renting their Utah vacation homes through Airbnb. People turn to Airbnb for an authentic experience and to save money on travel accommodations.
Airbnb offers travelers a unique way to stay in someone’s home while on vacation. This is a more intimate and personal way to travel as people experience the daily lives of people who live in the area they visit.
In this article, I share the top reasons why Utah is a great place for your next AIRBNB vacation home.
Utah State Sign
1. You can purchase an excellent home for a great price
You don’t have to invest much to start your AIRBNB vacation rental business in Utah. Many reasonably priced homes on the market would make great vacation rentals.
How much will you have to invest in getting started? You can easily get started by investing just a few hundred thousand dollars.
If you compare the price of buying a vacation home in states such as California or Colorado, you’ll find that Utah is a much more affordable option. Something else to consider is that the houses in Utah tend to be newer than in other states.
2. The people are incredibly friendly and welcoming
The residents of Utah are some of the friendliest and most welcoming people you’ll ever meet. They will go out of their way to make you feel at home and help you enjoy your time in the state.
This kind of hospitality will make your guests feel at home and want to return for more. That’s important because it will help you build a strong reputation as an AIRBNB vacation rental host.
You must provide great customer service if you want to be successful in this business. The good news is that it’s easy to do in Utah because the people are so friendly.
3. There is so much to do in Utah!
Utah is an outdoor lover’s paradise. There are so many activities to keep your guests entertained, no matter what time of year.
In the winter, your guests can enjoy skiing and snowboarding at one of the many world-class ski resorts. In the summer, they can take advantage of hiking, biking, and camping in the beautiful mountains.
There are also five national parks located in Utah. This includes Zion National Park, Bryce Canyon National Park, Capitol Reef National Park, Arches National Park, and Canyonlands National Park.
Your guests will never be bored while staying at your Utah vacation rental. They’ll always have something to do and new things to see.
4. The Sundance Film Festival brings in a lot of customers
Park City, Utah
You won’t have any problems renting out your Utah vacation rental during the Sundance Film Festival. This is one of the most popular times of year to visit Utah.
Many people come to Utah for the Sundance Film Festival, held in Park City, each year. This is an excellent opportunity to make extra money by renting your vacation home.
The Sundance Film Festival is held in January, so it’s a great time to take advantage of the winter sports available in Utah. Your guests can enjoy skiing and snowboarding while in town for the festival.
5. The scenery in Utah is stunning, no matter where you go
The state of Utah is home to some of the most beautiful scenery in the country. No matter where you go, you’ll be surrounded by majestic mountains, pristine lakes, and other natural wonders.
This is the kind of scenery that people dream about when they think of taking a vacation. It’s the perfect backdrop for your Utah vacation rental.
Your guests will be able to enjoy the stunning scenery while they’re staying at your rental. They can go for hikes, take scenic drives, or relax and enjoy the view.
6. People from all over the world come to Utah to vacation
Utah is a popular vacation destination for people from all over the United States. This is because there’s so much to see and do in the state.
People come to Utah to enjoy the great outdoors, the friendly people, and the stunning scenery. If you can provide a comfortable and convenient vacation rental for them, you’ll surely attract a lot of business.
7. Utah is the heart of the Mormon religion
Salt Lake City, Utah
Mormons flock to Utah from all over the world. This is because Utah is the headquarters of the Mormon church.
If you have a vacation rental in Utah, you’ll be able to attract Mormon guests worldwide. They will come to Utah to visit the Mormon temple and other religious sites.
It doesn’t matter if you’re Mormon or not. You can still take advantage of this market by catering to Mormon guests. Mormons are known for living a very conservative lifestyle, so you don’t have to worry about them destroying your rental property.
If you own a vacation rental in Utah, you’ll be able to take advantage of the state’s many tax benefits.
This is because Utah has very favorable tax laws compared to other states. You can deduct a portion of your mortgage interest, property taxes, and other expenses from your taxes.
This can save you a lot of money, especially if you have a high-priced property. Every dollar adds up, and when you don’t have to pay the taxman, it’s more money in your pocket.
9. Great property management company options
It’s not hard to find a good property management company in Utah. There are plenty of companies that specialize in managing vacation rentals.
They can take care of everything for you, so you must collect the rent. This is a great way to take the hassle out of owning a vacation rental.
A good property management company will enable you to rent out your AIRBNB vacation home in Utah, whether living in a different state or halfway around the world.
Conclusion – Utah IS an Excellent AIRBNB Location
As you can see, there are many reasons why Utah is a great place to own an AIRBNB vacation rental. The state offers a lot, from friendly people to stunning scenery.
Not to mention, the tax benefits and the availability of property management companies make owning a vacation rental in Utah a desirable proposition.
Utah should be at the top of your list if you consider getting into the vacation rental business. Every year, more and more people are discovering what a great place Utah is to vacation.
By owning a vacation rental in Utah, you can be a part of this growth and make significant profits. So there’s no better time than now to start the vacation rental business. And Utah is the perfect place to do it.
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
The Psychology of Money is a fascinating book that explores how people think about money.
The book comprises a series of short stories, each containing an insightful lesson about money and human psychology. The stories are based on real-life events and offer valuable insights into how people think about money.
In addition to being enjoyable to read, The Psychology of Money is also packed with helpful information about managing your finances and making smart money decisions.
Let’s jump into the main few lessons you can learn by reading the Psychology of Money that can be applied to both life and business:
The Psychology of Money
Lessons from Warren Buffet
Comparing yourself to others is an easy trap to fall into. Whether you’re scrolling through social media or flipping through a magazine, it’s all too easy to fixate on what other people have and what you don’t. This applies to both life and business.
However, it’s important to remember that everyone is on their journey and comparisons are seldom truly accurate.
One trap that many people fall into is constantly chasing after the next thing. Whether it’s a new car, a bigger house, or a higher salary, there will always be something else to strive for.
Doing so can often lead to dissatisfaction and a feeling of never being good enough. Instead of constantly chasing after the next thing, it’s essential to take a step back and appreciate what you already have.
Of course, there’s nothing wrong with wanting more out of life. However, it’s essential to be mindful of your motivations.
If you constantly compare yourself to others or chase after things you don’t need, it might be time to reassess your priorities.
Remember, your journey is unique, and you deserve to enjoy every step of the way.
Getting money vs. keeping money
While some risks are inherent in making money, it is possible to offset them by being smart about managing your money.
For example, investing in stocks can diversify your portfolio to reduce the overall risk. Also, if you’re self-employed, you can save money in an emergency fund to cover unexpected expenses.
Risk-taking must be balanced with caution to maintain your wealth.
Past success is no guarantee of future earnings, so saving and investing are important for the long term. Additionally, it’s essential to resist spending lavishly or taking on excessive debt.
By remaining disciplined and mindful of the potential for loss, you can help ensure that your financial success is sustainable.
The author, Morgan Housel, explains a fundamental lesson on how tails are drivers of success. For example, a company may sell many products without much profit return. Then as if out of the blue, one or a few of the products sell exceptionally well and end up making up for most of the profit.
Those amazing products are the tails that drive success. The same is true with our money decisions and investing. Many times it is the tails that drive success, and there will be many trials or failures along the way. So remember never to give up if something goes wrong; keep learning and improving.
Being wealthy vs. being rich
Being rich and being wealthy are two different things. A rich person has a high current income, but a wealthy person has money they haven’t spent.
Wealthy people have the option to buy or do something at a future time. Being rich offers short-term opportunities, but wealth provides more items you want in the future, like freedom, time, and possessions. Therefore, it’s better to be wealthy than rich.
Embrace failure as an essential step toward success
It’s often said that the true test of a person’s character is how they handle adversity. Life is full of challenges, and those who can persevere in the face of difficulties usually come out ahead.
This is because they have what it takes to endure the tough times and keep going until they reach their goals.
One of the key ingredients to success is having a strong tolerance for risk. Often, the only way to achieve something great is to take some risks along the way.
Those afraid to take risks usually don’t accomplish much in life because they’re too worried about failing.
However, it’s important to remember that failure is a part of life and everyone experiences it at some point. It’s how you deal with failure that determines your ultimate success.
Those who can take risks and handle failure are usually the ones who achieve great things in life.
So if you want to be a success, don’t be afraid to take some risks and embrace your failures along the way. They might be the key to your ultimate success. It’s also important to not be too extreme – not taking too much risk to ruin everything if gone badly or not being too conservative.
Hindsight doesn’t provide an accurate view of the past
It’s human nature to want to make sense of our world. When something happens, we ask questions immediately to understand why it happened.
And once we have a story explaining the event, we often hold onto it even if it’s inaccurate.
The problem is that these stories can give us a false sense of understanding and control. We tell ourselves that we know what caused a specific event and can use that knowledge to predict future events. However, the reality is often much more random and unpredictable.
The next time you find yourself trying to make sense of a past event, remember that the story you create might be nothing more than a work of fiction.
Instead of using it to predict the future, use it as a reminder that the world is full of surprises.
Cash isn’t always a bad thing
While it is certainly important to invest wisely, it is also essential to consider your personal risk tolerance when making decisions about your portfolio.
For some people, holding a large percentage of their net worth in cash may not be the best choice, as they may be more likely to sell during a market dip.
On the other hand, for more risk-averse people, holding a more significant percentage of their net worth in cash may help to reduce anxiety and allow them to sleep better at night.
Ultimately, the best course of action is to carefully consider your risk tolerance before deciding how to allocate your assets.
The Psychology of Money – My Conclusion
Making smart money decisions requires understanding both the psychology of money and the math of investing, but more so, the behavior and psychology of your money decisions.
By learning about the lessons in this article, you’ll be in a much better position to make sound financial decisions to help you reach your long-term goals.
The Psychology of Money is a book everyone should read regardless of investment opinions.
The book covers many topics, but a key one is that money is more than what’s in your bank account or investments. The relationship you have with your money will have a significant impact on your life and how you live it.
The Psychology of Money is a great place to start if you want to improve your financial situation.
The book contains actionable advice and exciting stories to help you better understand your relationship with money.
After reading this book, you’ll be better equipped to make sound financial decisions that will improve your life in the long run!
Already read The Psychology Of Money? Drop a comment below with your thoughts and impressions!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
This post may contain affiliate links; please see our disclaimer for details.
Some of you may have gotten your first salaried position, and now you’re on cloud nine because you’re finally making decent money.
While it’s true that a salary does give you a more stable income, it can trap you in a career that you may not like or prevent you from pursuing your dreams.
Salary with paycheck cashed out
When on salary, your pay doesn’t vary based on the number of hours you work. You may get a yearly raise, but it’s usually just a cost of living increase, not a significant amount.
This means you’re not being rewarded for working hard and putting in extra hours. You may even feel you’re being penalized because you’re not getting paid more for overtime.
In this article, I’ll share the six salary traps you want to avoid to help you find personal growth and happiness.
1) A salary creates a false sense of achievement
If you had your own business, you would constantly strive to grow and make more money. But with a salary, you’re just getting a set amount of money every month, no matter how many hours you put in.
This can lead to a false sense of achievement, where you feel like you’re doing well because you’re making a good salary. In reality, you’re not progressing because your income is capped.
It doesn’t matter if you fail to deliver one month over the other when you’re a salaried employee because you still get paid the same amount. The result is complacency which makes it easy to become lazy.
Doing enough to get by and collecting your paycheck without any real effort.
Think about that for a minute; how many people do you know that have a job they don’t like and are just “getting by”?
They’re probably making a good salary but not truly happy. They are not doing anything that adds value to the company they work for.
2) A salary makes it hard to take risks
When you have a salaried job, you tend to be more risk-averse because you don’t want to lose your steady income.
Unfortunately, this can make it hard to take chances and try new things, preventing you from growing both personally and professionally.
If you’re an entrepreneur, you’re used to taking risks. It’s part of the territory. If you’re used to a steady paycheck, it can be hard to take the plunge and start your own business.
You may also find it challenging to make significant changes in your career, like going back to school or taking a new job in a different field.
Personal growth is essential, but it can be hard to achieve when you’re stuck in a salaried job.
You may find yourself in a comfortable routine and not challenged to do anything new or different. Over time, you can become stagnant and even bored with your job.
If you want to grow, it’s crucial to challenge yourself regularly. You must push yourself out of your comfort zone and try new things.
Doing this can be hard when you’re on salary because you don’t want to rock the boat. But if you’re not growing, you’re just staying the same.
Nobody plans to end up old and regretful, wishing more risks had taken more chances when they were younger. Growth is essential, both professionally and personally. But it can be hard to achieve when you’re trapped in a salary.
4) Motivation lost to push further in industry
A salaried job can keep you in your comfort zone.
You may not feel motivated to push further in your industry when you’re on salary. After all, what’s the point?
You’re already making a good income, so why bother trying to make more money or advance your career?
This is a dangerous mindset to have because it can lead to complacency. You may not keep up with the latest trends or developments in your field. Over time, this can make you less marketable and even obsolete.
Being obsolete is a threat to your long-term financial stability. Unfortunately, that’s what happened to many people in the manufacturing industry when jobs started being outsourced overseas. They became complacent and didn’t bother improving themselves, so they lost their jobs.
5) A salary may stop you from being self-reliant
Many of you reading this want to own your own business someday or become self-employed. Having a salary has the potential to hinder you from making this happen.
Taking the plunge and going out on your own when you have a steady income coming in is difficult for many people.
Many will continue to live an ordinary life with their ordinary family and slightly above-average salary.
Of course, there’s nothing wrong with having a family and living an ordinary life. Remember that if you want to achieve something extraordinary, you need to be willing to work hard and take risks.
My wife and I love investing in real estate on the side and first started as college students. This has been an excellent side hustle where we’ve received rental income and built our net worth. I wrote a specific article sharing how we made $250K in 4 Years From Real Estate As College Students.
Other excellent ways to become self-reliant are saving up an emergency fund and living below your means.
We also love investing in low-cost Index Funds. You can take control of the power of compound interest. If you’re curious about how to start, you can check out M1 Finance –
M1 Finance is a great investment opportunity with its robust yet simple app. There are ZERO commissions or account management fees.
Deposits $1,000 or more into your M1 Invest account within two weeks of signing up and get a cash bonus of $30-$500 to that account.
It is not just a trading stock brokerage account but also offers an IRA option that allows you to invest in your retirement.
We highly recommend using M1 Finance to open a brokerage or retirement account! M1 Finance can undoubtedly help you on your financial independence journey.
In the moment, you may be feeling pretty good about your salary. Be careful, however, not to let short-term success hinder your long-term future.
A salary is a trap that can prevent you from achieving your full potential.
So if you’re not happy with your current situation, don’t be afraid to make a change.
You may have to take a pay cut in the short term, but it will be worth it in the long run. Your future self will thank you for it. Make sure to follow your dreams and take the plunge to start a side business or side hustle.
In Conclusion
A salary is like a sugar high. It feels great at the moment, but eventually, it wears off, and you’re left feeling worse than before.
If you fall into the trap of thinking that a salary is a key to happiness, you’ll never be truly happy.
True happiness comes from being successful in your own right, not from someone else’s success. It comes from the freedom and flexibility to do what you want.
So don’t let a salary trap you into a life of mediocrity. Instead, pursue your passions and dreams, and don’t let anything stand in your way!
Please comment below and let us know your experiences with the salary trap.
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
If you are looking for a book to help you achieve FIRE (financial independence and retire early), then “The Simple Path to Wealth” is the perfect read for you. I read it and found its principles to be very true and applicable.
J.L. Collins wrote this book, providing a step-by-step guide on building wealth and achieving financial freedom.
In this blog post, we will discuss some of the key takeaways from this book and share our own experiences with it!
This post may contain affiliate links; please see our disclaimer for details.
Keep Things Simple
Pursuing financial freedom may seem like a daunting task. After seeing how others achieved FIRE (financial independence/retire early), it seems like one needed a complex strategy and luck.
However, “The Simple Path to Wealth” shows that FIRE is achievable for anyone willing to commit to it for the long term. The book breaks down the process of building wealth into simple steps anyone can follow.
One of the most important lessons from this book is to keep things simple. Collins advocates using a simple investment strategy that doesn’t require constant monitoring or worry.
Rather than getting caught up in researching every possible investment, he recommends keeping it simple. This approach removes the stress of making complex investment decisions and allows you to focus on other things.
When I could keep my investing process simple and automated, I could focus on my career and generate more income. With more income, I could invest at a much higher rate which ultimately led me to become financially free sooner.
I share this story with you because it feels like many people seeking FIRE try to over-optimize their investment strategy. While there’s nothing wrong with being diligent, don’t forget to keep things simple as well.
Use Tools of The Trade, AKA Index Funds
When I say trade, what I mean is index funds. It’s important to look at stocks as ownership in a company, not just a gambling vehicle.
If you’re looking to build wealth, index funds are one of the best tools at your disposal. Index funds are low-cost, diversified investments that track a specific market index. They offer many benefits, including:
Low fees: When you invest in an index fund, you’re not paying a high management fee to a professional. This alone can save you thousands of dollars over time.
Diversification: Index funds expose you to hundreds or even thousands of different companies, reducing your risk.
Simplicity: Index funds are simple to understand and easy to invest in.
If you’re new to investing, index funds are a great start. They offer a simple way to build wealth over time and don’t require much maintenance. I started investing in index funds when I first started with FIRE, and they have been a crucial part of our ongoing journey to financial freedom and peace.
Income > Expenses = Invest The Rest
The author recommends keeping your expenses low so that you can invest more. This can be a real eye-opener since many feel FIRE is achievable only for those with a high income.
However, after reading “The Simple Path to Wealth,” you can realize it is possible to achieve FIRE or financial freedom without stressing about moving up the tax bracket.
As long as your income is more than your expenses and you stay consistent with investing the rest, you will eventually reach financial freedom. It might take longer if your expenses are high, but it is still achievable.
My wife and I are on the way to FIRE by keeping my expenses low and investing the rest of our combined incomes. This allowed us to save a Save 56% of Our Income and will allow us to reach financial independence sooner.
As mentioned before, this simple formula helped me focus on achieving a higher income. Cutting expenses help widen the gap between income and expenses and are key to reaching FIRE. If you want financial freedom, I recommend using this simple formula.
This might seem common sense, but the complexity and need for perfectionism often deter people from taking action.
If you can keep it simple and focus on income > expenses = invest the rest, you will be well on achieving FIRE. It’s not the most exciting process, but it’s simple and works.
Plus, when you achieve FIRE, you’ll have much more time and freedom to do what truly excites you!
Credit cards have become the norm. Mortgages, car loans, personal lines of credit, layaway, etc., have also been a part of most people’s lives.
We’ve become so used to being in debt that it seems normal. It’s not. It’s one of the biggest impediments to wealth building.
When you’re in debt, you’re paying interest on the money you’ve already spent. This is money that could be working for you and helping you build wealth. Instead, it’s being used to line the pockets of the lenders.
Imagine how much extra money you could be investing if you didn’t have a debt burden. It’s financially harmful and can also affect your mental and emotional well-being.
You must get out of debt if you’re serious about building wealth. The author explains that if the debt has an interest rate of less than 3%, it’s okay to let it ride and invest instead. If the interest rate is 3-5%, you can pay it off early or invest. If it’s 5% or above, it should be paid off as soon as possible.
Getting out of debt is one of the best things you can do for your financial future. It will free up money that you can use to invest and save.
It will also reduce your stress and give you more peace of mind. If you’re currently in debt, plan to get out as soon as possible.
Create a Plan and Stay the Course
Another important lesson from the book is the importance of creating a plan and staying the course. There will be ups and downs when you’re working towards financial freedom.
There will be times when you feel like you’re making progress and times when it feels like you’re not moving. It’s essential to have a plan and stick to it, even when things get tough.
Creating a plan is the first step. You need to know how much money you need to save and invest each month to reach your goal.
Once you have a plan, it’s essential to stick to it. Even when things get tough, remember why you’re doing this and keep moving forward. Remember, there are ways that you can enjoy your FIRE journey.
If you can stick to your plan and weather the storms, you will eventually reach your goal of financial freedom. It might take longer than you originally planned, but it will be worth it in the end.
As soon as I sat down and started to budget and wrote down how much I needed to achieve financial freedom, it became much more straightforward. I could stay the course even when there were setbacks because I had a plan and knew where I was going.
Trying to achieve FIRE without a plan is like driving to a new city without a map. You might eventually get there, but it will take longer and be more complicated than if you had a plan.
So, if you’re serious about reaching financial freedom, sit down and create a plan. Then, put it into action, and don’t give up! You’ve got this!
Conclusion
To summarize the book, it’s essential to keep things simple, get out of debt, and create a plan. These are the three main lessons I took from the book and helped me on my journey to financial freedom.
If you’re looking for a simple, straightforward guide to wealth building, I highly recommend “The Simple Path to Wealth” by JL Collins for anyone looking to achieve FIRE. It’s helped me greatly, and I’m sure it can help you too.
What are your thoughts on the book? Have you read it? What lessons did you take away from it? Let me know in the comments below.
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
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