Money, from basics to financial independence
A starting point for financial independence and investing for beginners, told through books and clips. Topics include the idea of fuck you money, Bill Perkins' Die With Zero, and a four-number money map for each payday. One explainer orders investing terms so each builds on the last. 10 picks from the Bez Tytułu newsletter, in reading order.
The picks
Fuck You Money: How Much You Need to Quit Work
Read · money.com · Issue #34
Ethan Wolff-Mann's 2016 Money.com article explains "fuck you money", slang for wealth large enough to quit your job without cutting your lifestyle. The basic formula multiplies annual spending by expected years of life, so $60,000 a year over 50 years is $3 million. Accounting for inflation and returns, the article cites about $2.1 million for $60,000 a year, using a Vanguard calculator.
Die With Zero: Ten Lessons on Money and Time
Read · untetheredmind.co · 58 min · Issue #194
Alex Mathers' Untethered Mind post summarizes Bill Perkins' book Die With Zero, which argues against hoarding wealth for a distant future. Its ten ideas include spending on experiences earlier in life, treating time as scarcer than money, and working out your "enough" number. Mathers also recommends taking bold risks while young and investing in health early.
Memorable moments keep paying returns
Short · tiktok.com · Issue #171
Memorable moments keep paying returns in memory, so the truly wealthy finish life with abundant memories.
The speaker recommends the book Die With Zero by Bill Perkins. The book argues that creating memorable moments pays off each time you recall them, so the more memorable experiences you have, the wealthier you become. The speaker describes the truly wealthy as having an abundant source of memories that keep paying dividends.
Key points- Bill Perkins' book Die With Zero argues beautiful moments return value when recalled
- The more memorable moments you create, the wealthier you become by life's end
- The speaker says the truly wealthy have memories that keep paying dividends
Naval Ravikant on Our Most Common Mistake
Watch · youtube.com · 2 min · Issue #38
Naval Ravikant, co-founder of AngelList and author of The Almanack of Naval Ravikant: A Guide to Wealth and Happiness, discusses what he considers the most common mistake people make.
Split your take-home pay into buckets
Short · tiktok.com · Issue #214
Split your take-home pay into core needs, choice spending and what remains, starting from a money map of four numbers.
The speaker, who says they reached financial freedom in their 20s, suggests a money map built on four numbers. Take-home pay is the starting capital, core needs such as rent, groceries and utilities should take about 60 percent, and choice spending such as streaming subscriptions about 20 percent. At least 20 percent should go to compound savings such as investments, an emergency fund and education.
Key points- Core needs such as rent, groceries and utilities get about 60% of take-home pay
- Choice buckets such as streaming services get about 20%
- Start by identifying your capital, which is your take-home pay
Investing terms build in a logical order
Short · tiktok.com · Issue #207
Investing terms make sense in order: capital, then stock, then the IPO and the market where stock trades.
A speaker with 15 years in finance explains investing terms in order. Capital is anything of value, and a stock is a small piece of a company that shares its profits and losses. A company sells shares in an IPO to raise cash, and shares then trade between investors. Market capitalization is shares outstanding times price, and an index such as the S&P 500 tracks a group of stocks.
Key points- Capital is anything of value, such as cash, cars or houses
- A stock is a small piece of a company, sharing its profits or losses
- An IPO gives ownership to the public and is the only time the company gets cash
William Ackman on the Basics of Finance and Investing
Watch · youtube.com · Issue #34
William Ackman explains the basics of finance and investing in about 45 minutes, using a lemonade stand as the running example.
Liquidity is how easily assets become cash
Short · youtu.be · Issue #226
The speaker says liquidity is how easily an asset becomes cash, and even liquid assets can freeze in a crisis like 2008.
The speaker explains liquidity as how easily an asset can be turned into cash. A bank account is highly liquid, a house is not even though it may be most people's most valuable asset, and a brokerage account sits in between. During the 2008 financial crisis, many sellers and few buyers froze markets, but the most liquid assets usually stayed liquid.
Key points- A bank account is highly liquid, a house is not, and brokerage accounts sit between
- During 2008 sellers outnumbered buyers, so markets felt frozen
- The most liquid assets usually stay liquid, even in a deep freeze
The very rich earn mainly from business interest
Short · tiktok.com · Issue #158
Wealth groups show that the very rich get their money mainly from business interest, not from investing.
The speaker shows a chart of asset mixes by wealth group. For people with around 10,000 in net worth, most is personal belongings. In the 100,000 and early-millionaire groups, most comes from home equity and retirement. For the ten-million, hundred-million, and billionaire groups, business interest dominates, with small retirement holdings and less real estate. The speaker concludes that reaching the top usually requires building a valuable business.
Key points- A 10K net worth is mostly personal belongings, per the chart
- The 100K to early millionaire groups hold mostly home equity and retirement savings
- Ten million and up groups have small retirements and most wealth from business interest
Ignore small expenses, raise investing by 1 percent
Short · tiktok.com · Issue #173
Skip agonizing over small expenses; one yearly rule to raise your investment rate by 1% is worth far more.
The speaker argues that small expenses like coffee matter less than a few big financial decisions. They suggest couples talk about their savings and investment rates, starting at 5 to 10% of net income. Their rule is to raise the investment rate by 1% every December, which the speaker says could be worth hundreds of thousands of dollars.
Key points- Start by investing 5 to 10% of net income, the speaker recommends
- Raise that rate by 1% every December, and it adds up to hundreds of thousands
- Most people who stop buying coffee don't know where the saved money went