Stella is working toward FIRE and wants to know: how can she create passive income in her retirement years? Is a portfolio with stocks and bonds enough, or should she invest in real estate?
Travis and his wife are also on the FIRE path, and are comparing their investment options. Travis is concerned about the inefficiency of reinvesting returns in real estate. How can you factor this into your decision when buying a property?
Stephanie and her husband are also interested in FIRE (hooray!) and they have $20,000 to invest. How can they best use this money to help them FIRE sooner?
Cade, a 24-year-old listener, wants to FIRE by age 30 (we’re on a roll!). He’s saving $4,000/month and wants to know how to invest these savings.
Anonymous and their partner are taking a mini-retirement and have questions surrounding the logistics of healthcare. What options should they consider?
On a different note, Amanda works in academia. After listening to Episode 12, she’s looking for tips on managing long-term, complex collaborative projects now that she’s in a leadership position.
Steve’s question brings us to the topic of building an online business and social media following. Should he have one brand for all of his interests, or divide these interests into separate channels?
I tackle these questions in today’s episode of the show. Enjoy!
Stella asks (at 1:51):
I’m 37 years old and I’ve saved around $400,000 between my retirement accounts, personal savings, and brokerage accounts. I’m striving to reach FIRE in the next seven years. The only debt I have is a mortgage, with a balance of $110,000.
How can I generate passive income during my retirement years? Can I retire with my stocks and bond market portfolio, or should I invest in real estate to ensure a solid income coming from those resources? My current real estate investment is limited to my house and a few REITs. I’d love to hear your thoughts.
Travis asks (at 8:58):
My wife and I are fairly early on our path to FIRE. We have a few hundred thousand dollars in low-cost index funds and we also max out our retirement accounts. I’m interested in buy-and-hold rental investing because of the ability to increase my rate of return by applying hard work and knowledge.
One factor that I haven’t heard talked about is the loss of efficiency in compounding from reinvesting your returns. In an index fund, the growth is constantly compounding with no additional work. In rental investing, the growth doesn’t compound unless you take action to reinvest it.
How do you factor this into your overall strategy when running the numbers on a potential rental unit and the returns it provides?
Stephanie asks (at 17:36):
My husband and I are in our mid-30s, live in Vermont, and we want to be FIRE as soon as possible so that we can focus on our homestead. We have no debt besides our mortgage of $265,000 and we pay an extra $1,000/month towards principal.
We also have a HELOC that is used for emergencies only, but I’m considering using it to pay off the mortgage quicker. We’re able to save $2,000/month and have around $20,000 cash to invest.
I’m wondering how best to use this money to become financially independent. I’m very risk averse and don’t want to go into stocks, although we both pay 6 percent to our 401k to get the match.
I’m open to the idea of rental properties, and we have an opportunity to purchase my mother-in-law’s North Carolina investment property below market value. It’s worth $125,000 and she’s willing to sell it for $80,000. It already has a tenant who is paying $825/month, but we could get rent of at least $1,000.
We would take out a loan, but since we will have built-in equity, do we still need to put down a downpayment? What would the tax consequences be for my husband and I, as well as my mother-in-law? Would gift taxes apply? How can we structure the deal so our mother-in-law has no closing costs? Should we contact a CPA or real estate attorney, and should they be located in Vermont (where we live) or North Carolina (where the property is)?
Cade asks (at 25:08):
I’m 24 years old, have $30,000 in savings, and no debt. I want to achieve financial independence by age 30. I’m saving $4,000/month. What else can I do in the meantime to ensure that I reach financial independence?
Anonymous asks (at 34:36):
My partner and I are taking the leap and stepping away from work within the next 18-24 months. While we may not actually retire, we don’t plan to work for the first few years. Our dream is to travel outside the U.S. between six to nine months a year. We want to take advantage of geographic arbitrage to decrease our expenses and manage our sequence of returns risk.
However, I’m nervous about healthcare options. Our current medical, dental, vision, life and disability insurance are taken out of our W2 employer paychecks pre-tax. Here are my questions:
- What resources would you recommend to educate ourselves on our healthcare options?
- Can we turn U.S. healthcare on and off while we’re traveling?
- Should we bother getting life or disability insurance post-employment, or consider ourselves self-insured with our portfolio?
- Should we keep timing in mind on when to quit? For example, should we wait until the end of the year?
Steve asks (at 53:34):
If someone is starting a social media brand on different platforms like YouTube and Instagram, should they combine different ideas into one channel to attract more followers? Or begin a new channel to target more specific people?
My YouTube channel is starting to get some traction, and it focuses on myself and music covers. I also have some videos on fitness and personal finance, since those are my other interests. Should I keep these all under one channel, or separate them?
Any other tips on turning a social media brand into a business?
Amanda asks (at 44:55):
In Episode 12 of the podcast, you talked about workflow and organization when hiring your personal assistant. It sounded like you used specific tools and organizational strategies to facilitate collaborative, long-term projects, and have a clear vision of how this all aligns with your broader vision of your career/business.
I work in academia, and the bulk of the work that we do is similar, as we focus on long-term, complex collaborative projects that require multiple people to pick up work. Past supervisors don’t have clear pathways and visions of the tasks that need to be done and how it aligns with the long-term research for the project or the mission for the lab. This often leads to people having to re-do things multiple times because it isn’t what the supervisor is looking for.
It’s frustrating to work in this type of environment, and now I’m moving into a supervisor role myself. What are some tips you can share in how to make the workflow go smoother and feel more cohesive?
Resources Mentioned:
- Stephanie’s Question: Gift Tax Exemption 2019 – NerdWallet
- Anonymous’ Question:
- Books —
- Insider’s Guide to Quality, Affordable Healthcare, by Lawrence Lazarus, MD & Jeffrey Foster, MD
- Financial Planning for Global Living, by Jennifer Patterson & Kevin Breeding
- Blog posts about individual health insurance for FIRE and/or travel —
- When Your Shitty Health Insurance Doubles in Price – Mr. Money Mustache
- 10 Common Travel Insurance Questions and Misconceptions Answered – Nomadic Matt
- Investment Workshop 49: Expat Insurance – Millennial Revolution
- Books —
- Steve’s Question:
- YouTube – The Magic of Finance
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