Building financial independence beyond the stock market

Today's blog post is based upon a podcast from The Art of Manliness:

Financial independence is a goal for a lot of folks. But what does it take to get there? My guest today explores that question on his website, Financial Samurai. His name is Sam Dogen, and before writing about money online, he worked in finance. We begin our conversation discussing how his career in equities shaped his personal finance philosophy and made him leery of putting too much wealth in the stock market. Sam shares why he recommends putting a lower percentage of your money in stocks than is often recommended in mainstream finance advice, how that percentage should shift as you get older, and alternative ways to invest, build your wealth, and create multiple streams of income that will give you more control over your fortunes. Sam then shares what it means to be financially independent and some of the blindspots he thinks exist in the FIRE, or Financial Independence/Retire Early, movement. We end our conversation talking about how to plan your financial life for the future, especially concerning what the changing world will be like for your kids.

I think many of us have heard the conventional wisdom that says you should invest an amount in stocks that's equal to 100 minus your age...so that you have more money in the stock market when you're young and less as you get older. And recently I heard that the amount you invest in stocks should be a U-shape, that you should have the least amount of money invested in stocks when you retire and that it should go back up again as you get older. However, in the podcast they state that maybe only 20-30% in stocks, about 40-50% in real estate and the rest in bonds, etc. But also, to have a business of your own to generate income.

He also talked about being short, neutral and long in real estate. You're short if you're renting (which I am at the moment), neutral if you own your own home and long if you own investment property.

It sounds like an interesting topic...I've glanced at his website but I haven't really checked it out yet.

Show Highlights

• How Sam’s net worth was affected by the ’09 crash 
• Why Sam diversified away from the stock market
• How Sam’s philosophy towards money differs from many financial experts out there 
• Forecasting your future — and the worst-case scenario — when it comes to your money
• How Sam’s fairly conservative approach has helped him in the long run 
• Why your investments should have some utility 
• Investing in real estate without being a landlord 
• The wisdom of stability — in both your career and your locale 
• Changing your investment strategy as you age 
• Why Sam advocates starting a business as an investment strategy 
• The FSDAIR framework for paying off debt 
• The FIRE (Financial Independence, Retire Early) movement 
• How to calculate how much you need to retire early
• Blind spots people have when it comes to financial independence
• How do you plan for your kids’ future?

Interesting days

Today - Radio Day, Get A Different Name Day, Employee Legal Awareness Day, Madly In Love With Me Day and Tortellini Day

Tomorrow - Valentine's Day, Ferris Wheel Day, Donor Day, Pet Theft Awareness Day, International Book Giving Day and Cream-Filled Chocolates Day

Next Wednesday - Love Your Pet Day, Cherry Pie Day and Handcuff Day

March 13 - Ken Day, Earmuffs Day, No Smoking Day, Open An Umbrella Indoors Day, Coconut Torte Day, Smart & Sexy Day and Jewel Day

Mar 10 - 16: Groundwater Awareness Week, Sleep Awareness Week and Universal Women’s Week