This article briefly describes the most important of the new money ideas developed during the first six years of discussions held at the various Financial Freedom Community discussion boards.
The first of our new money ideas is our showing that it should be the rule rather than the exception to win financial freedom early in life.
Most money advice argues that it is hard to save 10 percent of income and that it is hard to save enough to provide for a retirement beginning at age 65. Our community is full of middle-class workers who save far higher percentages of their income and who retire at far earlier ages.
It clearly is so that not many following the conventional money management advice are able to retire early. But it also clearly is so that the opportunity is there for many, if they are willing to learn the secrets from those who have traveled the path to early financial freedom before them.
It would be overstating things to say that we have shown that it is easy to win financial freedom early in life. But we have shown that lots and lots of normal everyday people have done it. I see no good reason why lots of others should not be giving it a try.
The second of our new money ideas is our showing that interest in winning financial freedom early in life is broad and deep.
There are today only a limited number of web sites and books that offer advice on how to retire early or on how to win financial freedom early in life. But our board experience shows that this topic is not a niche topic. It appears that there are hundreds of thousands of middle-class workers interested in our topic. It could be that we will find in time that the number is really in the millions.
The Motley Fool board was during its Golden Age the most successful board in the history of that site. And the Early Retirement forum attracts new posters on a daily basis. The Retire Early topic is a topic that a lot of people want to know more about.
I believe that a lot of people who visit our boards don’t have a strong interest in the particular goal of retiring early. I think that many people see that the best source to go to for new money ideas is people who have tried out new strategies and have had success with them. What group of people is better qualified to offer money management insights than the group that has figured out how to save so effectively that they are able to leave their jobs in their 50s or 40s?
The Financial Freedom Community doesn’t just discuss new money ideas. We put them into practice. We test them and see that they work before we offer them for the consideration of the Big Bad World outside the friendly confines of our ten discussion boards.
The third of our new money ideas is our showing that those who save effectively are not misers.
Rarely do we hear a story on our boards of an effective saver who feels that he or she had to experience significant deprivation to attain his or her financial freedom goals. The idea that significant deprivation is a necessary part of the saving experience is a myth.
I have gone so far as to argue that it is often easier to save 20 percent of income than it is to save 10 percent, and that in some circumstances it is even easier to save 30 percent.
How so?
When you save only 10 percent of income, the progress you make on your financial freedom quest is so slow that the saving experience can be a painfully prolonged one. When you save more, you begin to see benefits soon enough to be able to enjoy each step of the saving process.
The fourth of our new money ideas is our showing that a willingness to engage in planning is the distinguishing mark of the effective saver.
I don’t see much evidence in our Post Archives that it is necessary to experience deprivation to gain financial freedom early in life. I do see a good bit of evidence that good things happen to those who plan for them.
Community members offer a variety of perspectives on all sorts of Retire Early topics. But just about all of us are planners. That is the glue that holds our movement together. Financial freedom doesn’t just happen. It happens to those who plan for it.
There are some who argue that planning is so important to the financial freedom quest that it is only personality types drawn to planning who can succeed in the Retire Early quest. I question this. I believe that we will find that different personality types bring different strong and weak points to the financial freedom project and that those who are not naturally drawn to planning can make up for this negative with positives that those who naturally enjoy planning often lack.
I do agree, however, that early financial freedom is available only to those who possess at least a willingness to engage in a good bit of planning.
The fifth of our new money ideas is our showing that early retirement is not just a Yuppie fad.
I have read a number of articles arguing that the increased interest we have seen in early retirement in recent years is the result of a faddish interest in the subject on the part of Yuppies, perhaps the result of the bull market of the 80s and 90s. Our Post Archives do not support this claim, in my assessment.
There have been a number of people who have posted to our boards who cannot fairly be described as Yuppies. We have not had as many moderate-income workers join in on the discussions as I would like to see join in on the discussions, but we have seen a good number of them all the same. And we have seen all sorts of views expressed on stocks. Some of us are madly in love with stocks, some of us are a little bit in love with stocks and a little bit in love with other investment classes, and some of us are not in love with stocks at all.
The Financial Freedom Community is too diverse a group for the intense interest we have seen in the subject of how to put together a successful early retirement plan to be the result of a faddish pursuit.
The sixth of our new money ideas is our showing that the conventional methodology for calculating safe withdrawal rates is analytically invalid.
There are an increasing number of investing experts today speaking out against the absurdly inflated safe withdrawal rate claims of an earlier day. That’s a good thing. We need to see word get out on this one before millions suffer serious losses in portfolio value as a result of the analytical flaws of the conventional methodology studies.
The discovery of the flaws of the conventional studies is not a new one for the Financial Freedom Community. We have been studying this question in depth for close to four years now. We were first with this one.
That is why we have been able to take the insights we developed from learning what the historical stock-return data really says about how to invest for the long-term to places that no other investing analysts have yet taken them. Enter the phrases “Valuation-Informed Indexing” or “The New Buy-and-Hold” into a search engine and most of the results generated will be to web sites or discussion boards that are a part of the Financial Freedom Community.
The seventh of our new money ideas is our showing that there is a widespread concern among middle-class workers over changes taking place in the rules that govern how the modern-day workplace is run.
There are lots of different viewpoints expressed in our community re this one. But most seem to agree that it is an important issue.
Some conventional money advisors might not even categorize concerns over the rules that govern the modern-day workplace to be money management concerns. But these are money management concerns. Many Financial Freedom Community members became motivated to save effectively because of concerns they experienced over the direction in which their work lives were headed. One of our most important new money ideas is that it is only possible to make sense out of a good number of money management questions when those questions are examined in connection with work questions and when the connections between these two types of questions are given consideration.
The eighth of our new money ideas is our showing that a desire to avoid deferred gratification is not the primary problem holding back most middle-class workers from saving effectively.
Financial Freedom Community members experience deferral of gratification. It generally takes a good number of years to bring a Retire Early plan to fruition. But how often do you hear fellow community members complain of how long it takes to get from where they are to where they want to be?
The reality is that it is not just early retirement that is fun. Questing for early retirement is fun too. Putting together a financial freedom plan is fun. Effective saving does not require cutting back on one’s desire to have fun.
The ninth of our new money ideas is our showing that the biggest problems in seeking early financial freedom are problems outside the control of the worker seeking it.
One of our biggest fears is that Social Security will not be there for us. Another is that the expense of health insurance will continue to skyrocket.
There is good cause for these concerns. These are matters that must be considered in putting together a long-term financial plan and these are matters that are to a large extent outside the control of the individual putting together a plan.
The tenth of our new money ideas is our showing that the quest for financial freedom is as much a Life Planning Project as it is a Financial Planning Project.
In our early days,. we talked mostly about safe withdrawal rates and substantially equal periodic payments. It was all about SWRs and SEPPs — Weren’t those the days, my friend?
In the years since we have discussed having children, getting married, where to live, what sort of house to buy, divorce, religion, life purpose, what to tell the neighbors, what to tell the boss, and on and on and on. Our boards are Financial Planning boards. But at times they seem to be Life Planning boards.
Or are those just two different phrases used to refer to what is pretty much the same thing?