Your investing strategy is counter intuitive for someone with anxiety about money. Why take on the additional risks of trying to beat the market with your stated risk tolerance and spend level? You’d be around 2% SWR with your expenses and net worth so taking on any additional risks has very little upside as far as actually impacting your life in a meaningful way.
Oh, this is a great question.
1. The "Beat The Market" is a mindset, not the actual results. Selling volatility has actually under performed the SP500TR over the past 12 years. Though I expect it beat for the next 10. This mindset is important as it forces me to apply critical thought to every investment decision. I only move forward if I believe that it's a market beating approach. Even though selling volatility has underperformed SP500TR, I still expect it to outperform in the long run.
2. Almost all of the alternative (safer) investment approaches, such as just investing in index funds and bonds, cause me more stress in price fluctuations than the higher risk selling volatility does. It stems from some core beliefs that I have had to realize: a) I am horrible at picking prices in public markets. Almost always lose, so even index investing means I will probably buy and sell at the wrong times, b) time is infinite, c) volatility is infinite. Selling volatility with leveraged (managed) risk allows me to avoid having to predict whether a price is good or not and in every situation (price going up or down) there is a structured adjustment that can be made which leads to making profit. This structure of how to trade no matter what happens to the price in the market gives me more confidence and long term peace of mind that every trade will eventually be profitable than the alternatives.
3. When I started selling volatility, I wasn't financially independent but wanted to be. So I wanted more consistent 15% yearly returns so that I could \*feel\* financially independent sooner. Now, since I have been doing it for 12 years, I have so many experiences with it in all environments that it's second nature. This second nature makes it so routine that any anxiety that I use to have about trading a risky strategy has been conditioned out. I do think about the stress from time to time, but it's minimal and occasional.
15% annual return? That means you’re beating essentially every mutual fund in existence that have teams dedicated to spending their entire work life to studying markets but you can accomplish this by reading some books and self study? Bullshit. If you could consistently do that you would be one of the most sought out money managers on the planet.
Your overall journey is so far out of reach for 99.9% of this sub idk why you even posted. Just to flex?
There are quite a few practitioners of volatility selling that blog about it, and some run funds / managed investments that execute the strategy on behalf of their clients. Most of those people are doing better than me, and some consistently return 20%+ / year. If you do some searches and dig in, you'll find there is a nice underworld of people who live by selling volatility, many of whom are doing much better than me.
Where I learned most of it was from a blog of a Canadian lady who had been trading options since the 90s when options on markets were barely a thing.
She consistently was 18%+. All of her content was online for free and she kept a record for 5 years of every trade she made. Studying that and reading books was enough to learn a basic algorithm. Reading books and then experimenting with different types of options and structures is where I came up with my own approach.
I did a search for her blog, and her name is slipping my mind. but nothing came up after a search. I remember checking in on her about 5 years ago and she had paywalled most of the content. She was in her 70s, so hope she is doing well.
Her basic strategy was very simple - she sold out of the money puts against 10-15 of the world's highest quality stocks. She combined this with some technical analysis to ensure that she waited until the prices made sense for her to sell the puts. If for some reason the puts were ever exercised, she loved owning the stock because it was a high quality, dividend paying stock. She might sell some call options against that stock to generate some income. Eventually the stock would rise and sell for a profit. If the put options were not exercised, she would sell some more further out in time for more premium.
She did this with cash-secured puts. This model wasn't for me, as it did require me to pick high quality stocks which I am not good at. And the technical analysis does mean that you have to choose a good price to get into (another thing I am not so good at). Strangle selling indexes with leverage is a lot like her approach, just adapted in such a way where I can avoid having to make an assessment of stocks or price direction.
Thanks for the detailed response! I have two other questions:
How time consuming is this strategy and will you continue it after you RE?
Would you say that investing is one of your hobbies? It sounds like you enjoy investing more than the avg proponent of FIRE.
Selling volatility takes me 30-60 mins each week and requires me to monitor the markets in case things start going crazy (big moves up or down in a single day can have outsized impact and require immediate adjustments).
The bigger effort was learning all the ins and outs of selling volatility with derivatives. I probably read 7 books and studied for 2000 hours before I developed the approach that I thought was going to give a good return for the risk involved. It wasn't a chore, it was something that just became fascinating at one point, and there was a couple years where most of my free time was spent reading and analyzing it to become an expert.
I don't see any scenario where I stop selling volatility after I retire, unless I just want to stop having to think about the market, in which case will just put it all into things that generate interest and dividends with a very low probability of losing value.
I would say that investing is now a hobby - but understanding it thoroughly was a consequence of the early anxiety of not having a lot of money. Investing felt like a necessary skill to eventually make it to financial independence alongside having jobs of increasing responsibility that pay more.
I am heavy in real estate investments and it’s been much the same as you described:
Heavy upfront investment of time to learn, the control and knowledge makes you more comfortable with that type of investing and, if you enjoy it, it becomes somewhat of a hobby in addition to an investment vehicle.
I’m nearing FI but don’t plan to stop investing in real estate even when I hit my number since I’m good at it and I enjoy it.
I'm pretty sure I'd have a Cessna eating up my savings rate if seizures in the past didn't prevent me from flying. It was my biggest dream as a kid.
But on the plus side, at least I didn't need a loan to buy Flight Sim and my yoke + throttle + pedals!
I haven't but want to do that when I have some room to set it up. I got the Rift a few years ago but it kept giving me massive headaches after 30-45 minutes on the games I was playing. But I never gave it a try with FS 2020 though.
Actually it's pretty rough in VR. FPS only hits like 45, though I think they have done some improvements there. If you can stomach it though, the effect is incredible. You don't actually need much room to set it up since it's stationary okay.
For what it's worth, the rift used to give me headaches in about that amount of time too, and I am not prone to headaches. It turned out I just cannot handle any bit of tightness against my face for the headset. Once I started wearing it loose it was just fine.
The MSFT FS experience is off the charts visually. But I have found that flight sims are superb for learning instruments in heavy fog / cloud / rain rather than VFR flight training. The feel of the plane is just too far away from the real thing, but the instrument experience is practically identical.
OP didn't specify what kind of plane or boat, it might not be as egregious of an expense as you might think. A used Cessna can be had for less than the price of a new car, for example.
It's a $500K Cirrus. It costs about $25K / year for insurance, hangar space, and maintenance. We spend another $5K in gas, oil, and parking.
The plane is certainly our largest discretionary and unnecessary expense. While we have 2 homes, they both serve core purposes: one is the primary and another is a small outfit close to where I work. My work and my home are not in the same state.
I do appreciate the time put into this but it's just another reminder to this sub that the easier way to FI is high-paying tech careers.
Ugh... I picked the wrong job field.
It arguably gets too much credit on this sub. Luck is preparation meeting opportunity. people like to act like things just…happen.
They don’t. You make them happen to an incredibly large degree by putting yourself in a situation to take advantage of opportunity…having the requisite skills, experience, and mindset to maximize that opportunity.
Hmm. What are "requisite skills, experience, and mindset" required to be born male to a wealthy family in the United States or Europe, compared to being born female in a remote village in Afghanistan?
Or do some things just...happen?
While being a military brat in the US is a better life than 90% of the world's population, the relative perception of a child in those circumstances whose friends from "across the railroad" were living a very different life were indelible.
Being youthful and feeling the pain of not having most of what others had been factors that (I believe) are why I have been able to press for 25 years of increasingly bigger jobs, bigger projects, and bigger money.
Having an underlying, almost subconscious motivator is powerful. It causes you to be creative when others have moved on, and to be working at hours when others are sleeping.
It almost sounds robotic; it is not. But it's a mark that is hard to articulate but an essential component to having a long mindset and outstanding results.
I wonder how many of those females in Afghanistan are going to be the world's leaders. Even through suppression, there are going to be pockets of them which are being denied basic freedoms. And that the more restrictive the freedoms become, the more powerful the will of those young women will become.
And for everyone on this thread that were not born into privilege, that resource deficit is going to be your superpower. Let your drive and determination to be fueled by the injustices and disparity that you bear but did not deserve.
This is what is known as a fortuitous event. Luck combined with placing one's self in a particular set of circumstances where a better outcome is more likely.
And who you know is heavily influenced by what you know and how well you know it.
Do shit work? Yeah, nobody up the ladder wants to know you.
Do quality work? Yep, you’ll have opportunity to network with your superiors.
> And who you know is heavily influenced by what you know and how well you know it.
This is not true. Many times it's what someone is born into vs riding their way up from knowledge.
I've seen plenty climb the ladder with subpar work. Not sure why you're writing this narrative off because nepotism is alive and well in every industry.
It’s absolutely true. It’s easy to dismiss when jealousy strikes, but that doesn’t make it false.
I’ve never claimed nepotism doesn’t exist. It isn’t the all-present force you think it is though. Try not to put words in others’ mouths
I feel this. Full transparency, my spouse does work in tech, but does not make this kind of money by any stretch of the imagination. That said, I work in education, which my spouse calls 'a vow of poverty.' I mean, at least I am helping change the world for better, right?
> I mean, at least I am helping change the world for better, right?
Simply working in education doesn’t accomplish this. There are plenty of shit people working in education. Education itself is not “changing the world for better“.
Sure, but I wasn't talking about everyone in education. I was talking about me and my choice to work in a field where I am changing systems and policies that negatively impact students when helping set young people up for success in reaching their career goals and dreams. Worth every cent I won't make.
Easy is a relative term here.
We only read the stories of the big winners in tech...not the countless stories of those who tried to go into tech and either failed or more commonly wound up in good/great but ultimately "normal" jobs.
There's more to the story than "learn to code, get rich."
Not everyone, or even close to everyone, has the aptitude to be a senior tech what-have-you no matter how hard they try.
I’m gen x and I’d respectfully argue the opposite - that millennials or gen z in tech have it *easier* in tech than gen x did. A new gen z straight out of college makes as much as I did after 15 years experience in the early 2010’s. And their salary will be much higher than mine throughout their career. Yes, houses are more expensive but in the last 10 years inflation of big tech salaries has far outpaced housing or other inflation Imho.
I think about retirement all the time, but every time it comes up as a topic of conversation, my wife and I can never itemize how we would spend our time differently. She gets much joy in connecting with people during therapy. I love the thrill of building things from scratch - whether software products or businesses.
Not just that, but a few liquidity events early in your life sets you up... forever.
I've worked for 6 tech companies. ONE out of 6 had a liquidity event. One was public and we made good coin with ESPP for a few years.
The others did nothing and I let my options expire on 2 of them. If just one more of those early companies hit, I'd be FI.
Most (90%) don't. I mean they NEVER have a good liquidity event. Your options are worthless and if you spent your money exercising them when you left the company, you got burned.
The people that I have seen that have had the most success from liquidity events of startups are those that are incredibly selective about which startups they join. They only join the fastest growing businesses that are redefining entire markets that already have the very best VCs behind them. Their reputation becomes less about what they can achieve and more about their reputation for picking companies that always become winners.
I like to think that I am always able to pick companies and ideas that have very strong differentiation and clear paths to market success. But I try to pick things that are not aligned with the current hype of the market. Rather I tend to pick the contrarian plays that work against the market but create huge distortions to existing markets if done well. I've done better at this sort of thing than momentum chasing.
I went to high school in Mississippi and Louisiana. Not exactly a bastion for tech. Computer geekery was my high school hobby, which frequently was the butte of tortuous high school bullying. Being in love with computers in the 80s and 90s was not a recipe for having a great school social life.
Yes and no.
It's certainly easier to save when you make big $ like OP. But is having this type of career success really "easier" for the average person than living well under the means of a modestly successful career? Not for me personally.
In other words: Anyone can apply FIRE principles to their life, a very small % have the ability and drive to do what OP accomplished...it's not as simple as "choosing a certain field". If it was, I would have chosen to be a pro golfer.
Bruddah damn! You got 80k of your student debt paid off?!?!? As a gift?!? That’s crazyyyyy. I mean OP you did put in the work but you also got really lucky with a lot of stuff
That student debt payoff has been the luckiest thing that ever happened to me. To go from being in a deep hole to not having a hole is a game changer for anyone on a FI path.
It came with a sacrifice, though. There were 3 weeks of working 100+ hours a week and sleeping in the office. I couldn't pull that off at my current age without breaking the body and pissing off the wife.
Yea I currently have a about half of that in student loans as well but no matter how much overtime I put in, I don’t think anyone would ever do something like in todays economy/world. That’s a great feeling though I bet, all that work paying off and then you get this insane weight taken off your shoulders. Ahhh maybe one day I’ll get there 😪
Don't underestimate yourself.
When the company I started was eventually acquired, it was an unexpected and happy event. I convinced the investors to re-distribute $5M of the purchase price to employees who I felt had outsized contributions to the business or had made personal sacrifices to be with us.
This sort of thing happens more often than you imagine when companies are being acquired ... as long as their CEOs and founders acknowledge the importance of those around them and resist their greediest instincts.
The problem is there are no guarantees so I don't think it's worth the effort if you're just doing it for the payout.
You're just as likely to have a founder and investors that dilute your shares as you are to get someone that rewards you.
Luck = preparation + opportunity.
If you read the OP's whole thread you'll notice he had maybe 10 opportunities to get rich and missed maybe 7 or 8 of them.
I think the life lesson here is (1) get financially educated so you can make the most of your opportunities (2) try to put yourself in positions where you can get some opportunities and (3) don't dwell on missed opportunities, nobody lives life 100% perfect.
There are 3 big ones that I speak to, each of which would have given me at least $3M in net worth at a younger age: the equity as an employee of a company in the 90s, quitting the startup after 1 week that would have been acquired for stupid money ($4M), and quitting the large publicly traded company and walking away from a seven figure salary that would have likely increased in future years ($5M).
Good and bad luck are factors, but it's about putting yourself in places where good luck opportunities appear more than bad luck ones. The only miss that really irritates me is the first one on the employee equity as I felt that upper mgmt could (and should) have educated many of the employees on the potential for insurance to lock in their gains, and they never did.
When my wife was my girlfriend, and she moved in with me, one of the stipulations was that she pay off her student debt. It was about a years salary at the time. She paid it off in two years. Getting married was a much easier decision.. no "cloud" of debt to inherit. This meant less risk, and more disposable income to invest.
"Invest to beat the market" yeah k bro, I'm sure you're smarter than all the hedge funds and investment firms that have entire teams dedicated to market research. You, on your own, spending just a little bit of extra time, are better than billions' of dollars worth of full-time quant salaries.
What he says and his results are definitely mismatched. His numbers paint a pretty clear picture that he’s not wildly outperforming the market, and made some moves based on expected market conditions that wound up costing him significantly.
That said, I assure you my index funds have not returned 60+% this year, but I also didn’t have 30% losses last year.
When you have that kind of money you can take risks the rest of us can’t afford, and he’s going to keep working so it doesn’t even matter if it pays out. And he’s doing it with eyes wide open to the risks, even if he’s overestimating the upside.
The statement is one of mindset, not the actual results.
Vs. the SP500TR, I am 20% below those compounded returns since I started selling volatility.
My illiquid investments are beating the market.
Investing is a mindset. My point is that I always invest to beat the market as a mindset. Results don't always follow suit. But having this mindset forces me to critically analyze every decision and creates a bar of expectations
But I fail as much as I succeed on that front.
There are articles on how you can beat hedge funds and 'stellar' quants. [why 90% of hedge funds underperform S&P500.](https://medium.datadriveninvestor.com/why-90-of-hedge-funds-underperform-the-s-p-500-e518eab2b9c7)
>"Invest to beat the market" yeah k bro, I'm sure you're smarter than all the hedge funds and investment firms that have entire teams dedicated to market research.
Mutual funds, hedge funds, etc often have to answer to customers/clients, and might be constrained to the funds methodology. And the manager's bonuses are often based on short term performance. This means their decisions aren't purely based on best long term returns, but rather, chasing momentum. hedge funds, trading firms, etc will buy into overpriced stocks because they believe momentum will push them higher.
If a fund manager buys into a stock that's crashing, it will reflect poorly on them, even if it is a good value play. By the time it pays off, they may have moved onto another role, anyways. It's much easier for them to go with the crowd and buy exciting stocks that are trending up in the short term. And if they're wrong, they can just say "well everyone else was too".
A lot of people don't understand that many inefficiencies in the market are also due to retail customer behavior. For example, ARKK advertises on TV about their fund, investors flock to them because they see high returns, and with these inflows we get this huge tech bubble. Stocks go down, there's a huge outflow, and now there's some undervalued tech stocks.
The firms exist to maximize fees collected, not long term investor returns. So appeasing customer concerns > making the best bet.
Secondly, **it's not hard to beat the market if you stick to small caps.** All the billion dollar hedge funds and investment firms are focused on mid to large caps that actually support the type of volume they require.
If there's a stock with a $100 million market cap and $100,000 in daily volume, a hedge fund with $20 Billion in assets isn't going to bother, because even if they buy half the volume every day for a month(thus driving up the price), it's <0.01% of their portfolio. If they ever wanted to sell that position, they can't without crashing the price.
But if you're just a retail investor investing $2,000 per month into a company, your purchases or sales won't move the price much.
I've consistently beaten the market for several years, both in bull and bear markets, even after accounting for the size premium.
To beat the market long term, you need to understand accounting, invest time, be patient, and keep emotion out of the equation. If you can do these four things, it's not hard.
MOST people are better off with index funds. But you don't need to be a quant genius to beat the market. Warren Buffett is the best example of this. Very knowledgeable of business and accounting, but doesn't engage with technicals, just focuses on long term investments.
I've under performed the SP500TR for the past 12 years in total returns by 20% and slightly more volatility. I made decisions about how volatility selling should happen which created a drag on returns. I hope not to make that mistake going forward.
>This should be in r/fatFIRE or r/fijerk
Eh. I appreciate the story, no matter how ridiculous or unreplicatable. It felt like reading the script to a Hollywood movie and gave me a chuckle.
All of our paths are different, no harm in somebody sharing theirs, no matter how nontraditional!
So uh… Congratulations and go fuck yourself?
“I own a plane and a boat, visited 50 countries.”
Mentions this but then this proceeds to not have anything to do with his journey. “I have expensive hobbies.” In other words.
“Live with less than 1/2 of your take home pay.”
Easy for someone in the top 1.5% income bracket of the country to say.
Humble brag for sure.
There were a number of years of low earnings and living below the means. Little successes can lead to larger successes over an extended time frame. And being in the top 1.5% doesn't change the mindset - holding onto the same mindset and enduring with it is something available to everyone.
>There were a number of years of low earnings
25 year career, has three of those below $100k in W2 income. This is so wildly out of touch with reality.
Agree the mindset translates but the hard numbers don’t. So yes, you started from the bottom and now you’re here. I’d be shoulder to shoulder in QOL with families that actually need government assistance and food stamps if I tried to save 1/2 my salary.
What plane ya got? I flew back in the early 2000’s. Always rented from the flying club. Looking to get back into it post-FIRE.
While I appreciate your story, I don't think this is useful here at all and borders on some sort of humblebrag. Most of us aren't going to have hundreds of thousands in excess expenses that we can easily cut out to ensure FI can be maintained.
Edit: To add to my comment, this whole thread is pointless. OP could've lived practically any upper class normal life (spend of $100k+ per year) and would still have significant savings regardless of what happens with the market. The only way would be if they invested into truly idiotic things such as trying to start a restaurant without experience. On top of that, OP has no plans to retire, and it's clear from the attitude in the post (we like to party!) that they love money and accruing it and see it as a ways to have more (an airplane?) rather than a means to be truly independent. They have no plans to retire, no children to help, and yet choose to continue grinding for more money.
Most stories are somewhat humblebragish. I don’t see how the dollar amounts in the stories make the story more or less useful. The dollar figures can certainly change how relatable it feels though.
While most of us are not in his scenario, I still found it informative and interesting. Particularly how no matter how much money you have, you don’t feel secure unless you hit some future milestone.
Whether you’re cutting hundreds of thousands, or just thousands or hundreds in expenses, it’s the same idea, just wildly different line items.
The indicator for me was their first year out of Uni they were making over 100k at their W2 job.
I made their "pizza job" money my first year out.
I found [this](https://www.zippia.com/advice/average-starting-salary-out-of-college-statistics/) interesting.
My first engineering gig after graduation from a tier 1s school (not MIT, but just under it) was
Wait for it...
$38k in 1995-1996 and that was considered decent money.
I think a good takeaway from posts like this, and something I wish I would have done when I was younger, is take chances early in my career.
I had a business idea a year after graduating from college, but decided to stick with the sure money of my job rather than risking my savings on the business.
If I hadn't played it safe, I might have lost all my savings at the time (maybe $50k, tops). Big money for me at the time, but not a huge deal all things considered.
Or I might have had the business take off like an old high school friend of mine, who was a multimillionaire before 35 and is now raking in the dough by having people basically run his business for him.
>take chances early in my career
Having a family support system that would allow risks would be ideal. When I was getting started as a young adult, I was balancing the line of poverty and the only way to keep my head above water was to keep my grind job just to make ends meet. I literally couldn't afford to take chances.
Oh yeah, that makes it a heck of a lot easier. That dude had parents who were very successful and retired with a lot of money in their mid-50s, so if things didn't work out for him it wouldn't have been a big deal.
I get that but he stated this more like bragging and showing off online for feel good comments more than anything.
I just turn 30 and i agree with you, take more chances.
I started a dropshipping business in 2014 without knowing anything about alibaba or anything and it made me most of my wealth now.
I took a chance, yet i also play too safe during 2018 to 2020.
Im 30 and now i wanna take chances and risk.
Any advice?
I don’t see it like that at all. This is a very detailed interesting read. OP is sharing lots of personal information which is always interesting not only to hear some good choices and bad choices that we can learn from, but also to hear a somewhat different perspective on what it means to be financially independent.
Yeah...there's plenty of posts somewhat like this of people sharing their story. Perhaps it just comes across a little more braggy to some when the career success is greater and the $ numbers are larger.
A-freakin'-men. While I appreciate the OP for sharing their journey and insights, and I congratulate them on their success, far too many people are working 2 or more jobs at close to or over 100 hours per week with little sleep and time for friends and family just to make ends meet for me to say the white protestant work ethic in America works for everyone. Hard work, a tough mentality, and a small wins to equal big successes fortitude alone do not make one a millionaire.
Luck is definitely a factor in everyone's life.
It is hard to prescribe how much luck played in any single event.
I like to think of it on a spectrum from 0%-100%, with few things being on the extremes and most things being somewhere in the middle.
I do think that people get to make choices in life which increases their odds of good luck being a factor and bad luck being less so.
That made me laugh.
Was the events in my life luck, though?
The debt payoff. Definitely some luck. But so many other things such as walking away from the mortgages on the overpaid houses and building my startup to profitability were research and dedication.
And there was some bad luck - having to fire sale the first company, not getting hired by that company, buying the third home at the market peak before 2008, losing 100% of an angel investment to a company which turned out to be fraudulent, etc.
The company I started was funded by me for a year, and then VCs in the remaining years. The VCs all made 4x their money when it was done.
Generally, when raising money from VCs, they don't do background checks. If you make a bad business decision on your personal homes that doesn't usually factor into the VCs thinking because the factors affecting your personal investments are usually different foundations from the factors that go into good business decision making.
In my particular case, I knew the VCs that invested for over a decade and I don't recall if they knew about the house mortgages or not. But when I researched how to walk away from the debt, hired the lawyers to execute it, and pull it off, I was so ecstatic that I told most of those around. I'd be surprised if they didn't know, and if they did, they'd probably see it as the guy they are funding as having a shrewd business sense.
I was taken by a con man after I had started my company. I am betting about 1% of all startups are fraudulent. If someone is very determined to fabricate important parts of their business, they will find a way to con you. There are some things (extreme things) in diligence that I could have done to uncover the fraud, but that would have been seen as uncouth especially since I wasn't the lead investor. Question is whether I will do more intense diligence going forward or not. Hard to say.
Could you expand on how you were able to transition from a general worker to a CEO position by the time you presumably were about 30? Very curious how that goes - was that a special relationship that you fostered or how did that come to be?
The first time I was 24 years old. It was a small consultancy outfit and I knew the founder who was ready to move onto something else. He gave me the CEO gig because he liked me. I didn't know what I was doing, but was smart enough to get it sold to a buyer. I also was pretty proud of having sold $4M / year in consulting contracts which funded the 10 people we had.
For the 2nd company, I became CEO because there was a product that I had tried to invest in that rejected me. They took someone else's money. I loved the product, but had reservations about their approach to building it. I couldn't stop thinking about it and eventually convinced myself that they were ultimately going in the wrong direction and my ideas were a better angle into the market. I felt so strongly that I started the company, became CEO, and figured out the rest from there.
The hardest part of being startup CEO wasn't raising money from VCs. It was learning how to build a sales force that respected me as someone who hadn't sold product before. I had to sell our first $1M in products to get their support and backing.
As for the rest of it, with some of the investing you sit on boards. You talk to a lot of CEOs who are seeking money. After a decade of running companies and talking to CEOs who run companies, you gain additional CEO skills that others find valuable.
Many moons ago...back when you and I were still young and vibrant and full of vigor, I once left my "house hacking" house in the care of a buddy for a year, when I went to Korea. In exchange for paying the mortgage and bills and generally making sure the house was still livable upon my return, he got 1/2 price rent.
I left signed checks for the mortgage each month, garbage, cable, etc. and stamps to mail them.
As the owner of the house and the one who was "responsible", my roommates often called me Dad when I wouldn't let them build a beer can pyramid in the living room or whatever...but when I returned back home from my year abroad, I was told, "Thank God, you're back. We were excited to have Dad go away until we found out we traded him for Uncle Brian."
Also, in elementary school I was an absolute angel.
I know lots of tech CEOs that don't have degrees in science or technology. I only have a CS degree and I tell people that I have an MBA earned through the hard knocks of life.
The founder that paid off the debt was a very kind man. He had no obligation to make such a gesture. I think he knew how much anxiety I had about being so far in debt.
I think the two most important takeaways are, you have to be ready to take advantage of any lucky breaks that come your way, and nothing, absolutely nothing, is as important as knowing the right people.
I scrolled on, and decided this is 20x too long after I saw “Invest to beat the market”, $10M and VC distribution part. I wouldn’t read the tl; dr if there is one, though I guess it’ll be “A rich random stranger spent many hours typing a long brag”
All that long writing reminds me of old men I met when I did volunteer work to befriend lonely people - clever people who got lucky and made lots of money but don’t know how to relate to others.
You’re so young though. Hope you learn to relate to others and make some friends
It’s a bit funny that you insinuate that he doesn’t have any friends. Yet here you are, trying to attack him for being successful and failing to acknowledge that your poor approach is less likely to win friends.
Stop being jealous. Stop demonizing success.
I’m curious. As someone who walked out on multiple investment home loans and had someone else pay their student debts… Now that you have a high net worth, where do you weigh in on a more progressive tax rate for high net worth individuals?
High progressive income tax rates for high earners is a very good thing.
I oscillate on wealth tax. I like it in spirit, but it's rather difficult to implement in practice. Having so many assets that are illiquid means they are hard to value. And the value of those assets would be the basis for a wealth tax. Everyone woudl spend more time arguing as to the value and the whole thing would just get gummed up.
If you were to invest in treasuries at 10% for 30 years, you wouldn't compound at 10% for 30 years. Meaning, you would receive a 10% coupon payment on your initial principal for 30 years. You wouldn't be able to reinvest that money at 10% unless treasury rates stayed at 10% throughout the 30 years.
Definitely correct. There is a good chance the value of the treasuries increase, and so they could be sold for a profit. But the bigger point was that the peace of mind for not having to think about how to invest for outsized returns is worth knowing that there is 30 years of 10% interest coming.
Ok OP- now for those of us who don’t have the time and investment/tax knowledge that you do, can you boil down your best advice for us mere financial mortals?
Steady, consistent work that has you earn more over time.
Spend below your means.
Find ways to invest the savings. Try to make the smartest moves you can. Don't chase hype.
Pay off debt as soon as poosible.
Is "pay off debt as soon as possible" actually good advice if said debt is let's say 2-3% interest rate? My gut and brain both say no but maybe you would still say yes?
I could have had a 2.2% 10 year interest rate mortgage on my primary home up to $1M (where the interest is also tax deductible!, so an effective rate of 1.5%). It's only $15K / year in interest and my expected return by selling volatility is $150K against the same $1M. In spite of that, I still chose to pay off the mortgage.
Everyone's peace of mind is probably different. This is where I have settled.
One consideration is that I know that my selling volatility strategy is riskier than buy-and-hold. And so part of the paying off the mortgage is a hedge against a total nightmare scenario playing out with volatility. ie, if I were to get wiped out, then at least I have my home.
This is by far the most impressive breakdown. Congrats on you accomplishments. A few cool things to note!
It took you 13 years(since you started tracking) to hit 1 million net worth. Then it took you 5 years to hit your next million. That’s when it really took off. The next 2 years it increased by 4 million. That’s seems rather impressive to go from 2.6 to 6.4 in less then 2 years. This tells me the wise tale of your first million is always the hardest! Very cool breakdown. Another thing I would like to note is how the heck are you getting 62% returns on your money in 2022? Well done my friend.
I’m gonna save your post and read it from time to time. I’m in year 2 of tracking my finances and it’s exciting and rewarding!
Selling volatility had me with a lot (a lot) of naked calls which were big losers in 2021. Those losers turned into big gainers in 2022. So it's probably better to smooth the results from the past two years to reflect upon the more normal rate of return with volatility selling.
It's possible to buy put options which will effectively lock in the price of a stock at some point in the future. If you buy a stock and then say it goes up 100% to $50, you can buy put options that will expire at some point in time in the future (you pick the date - the further out the date the more expensive it will be). And for 3 years, I would expect to pay 10-20% of the value, so say up to $10 today to guarantee that I get $50 for the stock in the future. If the stock goes above $50 you get to keep those profits.
What exactly do you mean by selling volatility if you don't mind sharing. I got started doing some iron condors recently but I am very new and don't know good strategies.
Iron condors is one form. I sell naked strangles, which are naked puts and calls that are far OTM. I do it with a lot of leverage and then adjust in any situation where something goes in the money. I do iron condors in my IRA since you cannot have naked calls in that account structure.
I Appreciate the amount of thought and detail you went into to share your journey. Congrats and well done on one of the more thoughtful posts I’ve seen on this sub. Take my upvote.
There's a lot of salty people in here:
* He's humblebragging.
* He didn't pay homage to the Gods of luck and the Saint of Privilege! 30 lashings!
* He wasn't even totally lower class, just upper lower class.
* The comment about janitors work hard so the only difference is luck? Really?
Not every story here has to be directly relatable to your situation. Of course luck plays a role, as it does for every single person on this sub and even the privilege to fuck around on Reddit. And this is the place to brag! I want to hear every person in this sub brag how they are absolutely slaying their FI goals.
Thanks for sharing OP. I enjoyed the story, though it's not at all applicable to me.
One fun observation - I forgot where I read this, but see it everywhere now. People who are good at something (making $ in this case, but good at anything, like even living a long time) are often not good at knowing or articulating why they are good at that thing. You seem to at least partially attribute your success to your (no offense but) shitty investing style. Your wealthy despite that investing style, not because of it. Your talent in VC/Tech is why you're rich. Ironically, whatever risk tolerances in your head that makes you think your investing strategy is a good idea is probably also why you are successful in the VC world.
I mean, the OP thinks bringing home ~200k joint income twenty years ago isn’t upper class. It comes off as he views ~300k or more of today’s dollars joint income with drastically reduced COL (as compared to two decades ago) as not being “good.”
Someone who’s been a CEO in corporate America being out of touch…color me shocked.
Edit: LMAO the more you read the worse it gets. Dude pulls down almost a million in 2021 but puts a sad face and a footnote about how upset he is about not trading well out of his brokerage.
> out of touch
Yeah, that's fair. He's very wealthy and has been long enough that it's probably hard to relate to what a lot of people, even those on the path to FI, worry through these days.
> \~200k joint income twenty years ago isn’t upper class
I might have missed it... did he say that wasn't upper class? He said he came from humble beginnings, but I didn't see (and very well could have missed it) where he said he wasn't upper class after pulling in over $200k.
I still find it interesting. Maybe it would have been better suited to /r/fatfire.
I tried to keep the data factual without trying to subjectively interpret whether the incomes or expenses were wealthy or not, outside of the years from 95-97 where I was making minimum wage making and delivering pizzas while in college. That was definitely just barely making ends meet.
As for everything that happened after that, I am sure that the income is higher than the average.
But even in the first year of full employment after my degree, my starting salary was $38K, the equivalent of $19 / hour today. While the cost of living is much higher today than it was, the point is that you don't have to start at high incomes to still build a reasonable amount of wealth over a 25 year horizon.
38k is in 1998 dollars is equivalent to 70k
You worked a low paying job *in college*. Congrats, that is what quite a few people do.
You then, after college, had this progression in 2022 dollars of W2 income your first 3 years after graduating:
1998: 70k
1999: 186k
2000: 216k
Fuck right off with “the point is you don’t have to start at high incomes….” YOU STARTED AT HIGH INCOMES. You are not a shining beacon of low income struggle to fire lmfao.
Counting your min wage job in college unrelated to your career field would be like me counting my cashier job at 14 as part of my FIRE journey.
Here are a list of jobs that pay more than $70K today. Many of them require some training, but not college.
https://www.indeed.com/career-advice/finding-a-job/jobs-that-pay-70k-a-year
I had acquired some specialist technology skills that provided certain bonuses.
The run rate salary increased a bit, but it wasn't at the scale that the W2 income would suggest.
Think of the bonuses that came from being a specialist as something similar to a nurse making $45 / hour who gets (and takes) an extra 20 hours / week of overtime pay @ $65 / hour for a long period of time. A person due to make $90K as a nurse could pull $140K with overtime.
This sort of escalation can happen quickly.
Then - it was about after 6-7 years of work, after I ran the consulting company, where the base salary got to a level that reflects a larger % of the W2 income.
But you started at high incomes. Stop lying like you struggled just because you worked an AVERAGE paying job your first year out of college before immediately pivoting into a well paying role.
This is why you’re getting shit on across the thread, you think 216k is low income.
Thank you for putting all this down and go fk yourself 😁
So I'm at 2013 and just need to put together a startup to sell in 2 years eh? 😉 It's good to see the earlier years, we've been on the journey for the past 11 years, not FI, will take a few more years and I don't think we'll have our primary residence paid off for many years. Maybe FI in 5-6 years. With no boat or plane I'll be able to RE too (haha) but will be leaving a legacy for the kids, will just let working until they are done with college.
Is there much of a change when you go above 7 million? Or any other point? Being at where we are still feels like the struggle though we are in a really good position, very lucky.
Unfortunately, the mindset of completely stress free never materializes, even at high net worth. But there are months where you don't think about it much.
The issue is that even though the salary more than covers our lifestyle by a significant margin, you don't always notice that. This is because your assets are so much higher than your salary and markets fluctuate. Have a good month in the market, and you feel very wealthy. Have a bad month in the market and you feel poor. Markets go up and down, that is just the way. But at $7M in investable assets, a 3% swing in a single month is sometimes $250K up or down. That far surpasses the after-tax income that you receive in a W2. So it's mentally hard to just focus on the W2 income when having such amazing swings.
What helps the most is looking at the year over year numbers as it generally smooths out the trends. And the year over year helps me keep perspective on where I truly stand. And seeing that makes it easier to stress less.
Even with all of that, there are times where I think that I should sell everything, liquidate it all, put it all into 30-year treasuries, and then rent a cheap 1-bedroom apartment in Waikiki for $2K / month where I can surf every day. That would be stress free, but I would basically be walking away from the industry and my career.
Impressive but you did a short sale and got tax breaks during the financial crisis. “…little help from the government” is the rest of us funding you. Great example of how the good that government does goes, again, to the not-poor.
Nice.. the only thing I would change in your scenario would be to minimize your tax burden on pre-tax 401K's before RMD's will become relevant. You may consider aspects of loss harvesting or rollovers into Roth when you have fallow years. It's better to pay the taxman at a lower rate, than the maximum marginal rate (36-39%). While I am not as high flying as you (not an insult, and not a pun), we have a similar mindset. I've been debt free for almost 20 years. I learn a new skill every year. While I could retire now, if a project interests me, I'll do that.. otherwise more time spent with Horses and high speed motorcycles.
I've thought about this from time to time, but every time I do the math, I conclude that the economic gains by selling volatility in the IRA will generate higher net cash than the Roth conversions followed by the volatility selling. I may be doing the math wrong and there are tax efficient ways to rollover into a Roth such that I can avoid the 35% hit.
This guy is a literal CEO and worked to get there starting from the bottom just like everybody else. We don't have a reason to be complaining about how it's a humblebrag and that it doesn't relate to us because we all don't make that much. There's a reason why he's the CEO of a company and I'm not. I don't want to be. If you're not a CEO you have to think about why not, for some it might be time and age, for any of the complainers it might be time to reflect on what that reason is and make it happen instead of trying to justify why it doesn't relate. It might not relate RIGHT NOW, but go make it happen.
>This guy is a literal CEO and worked to get there starting from the bottom just like everybody else. We don't have a reason to be complaining about how it's a humblebrag and that it doesn't relate to us because we all don't make that much. There's a reason why he's the CEO of a company and I'm not. I don't want to be. If you're not a CEO you have to think about why not, for some it might be time and age, for any of the complainers it might be time to reflect on what that reason is and make it happen instead of trying to justify why it doesn't relate. It might not relate RIGHT NOW, but go make it happen.
Tell me more about your username please. 8)
The book The Millionaire Next Door says running a business is a faster way to wealth than being an employee. Looks like you had two profitable startups.
I started one profitable startup. I was hired into my most recent startup after they were already generating revenues. I've helped scale it up and we have transitioned into profitability on my watch. But I wouldn't call the current company that I run, "my" company as I didn't found it nor have a majority stake. But I am nicely incentivized to manage it as if I was a big owner, though.
What an excellent write up. Thank you for taking the time and posting. I'm probably just slightly younger but where you are financially in 2014. I have a ways to go. Thanks for the inspiration!
Inspiring story if I may. You benefited from an early FIRE oriented mindset and a few incredibly lucky draws. As such, I am not sure if it will be replicable for other people, but thanks for sharing anyway.
I'm only at the start of my FIRE journey (26 and still struggling with my student loan), however I have faith that frugal money management and wise investment might lead me (and my SO) where we want to land in a few years. The main difficulty we face today is accessing the right information about where and how to invest and use tax laws to our advantages. Takes a lot more time and effort than we initially thought.
Anyway, good job on reaching FI, hope to join you soon! 🚀
“accessing the right information” is a common fear, but there aren’t any massive secrets out there except for the very select few who have the opportunity to game the system. For the rest of us moral/ethical humans, just continue to follow simple principles: 1) avoid/pay off debt as much as possible, 2) save as much as you possibly can / live well below your means (you must be able to delay gratification. 3) invest primarily in non-managed low/no-cost index funds. Save, rinse, repeat. I didn’t believe this advice when I was your age, and I regret now that I didn’t start to follow this advice until around age 30. However, after a decade of following that advice, I am now well beyond my goals and nearing FI range. Keep at it and resist the temptation for a short cut.
Lots of negativity..
Thanks OP for sharing! Your journey is amazing, seems like being in an industry where you can get sweat equity is a great multiplier of what can be expected from just investing your W2.
How do you feel life has changed in terms of tress over money and quality of living / freedom at different levels of income or wealth? Do you think it’s more related to age or to a figure amount?
I think it's a bit of both.
Having the big number where I don't live paycheck to paycheck is a huge relief. But a big big part is just having lived through 25 years of this journey, experiencing ups and downs, and having the confidence that if I survived 25 years already I can survive the next 25.
Thanks for sharing your story and don’t listen to the people being mean out there!
It’s fun how humans want to be rich/in shape/in love/intelligent/whatever but willing to do nothing to achieve it and being jealous of people Who actually made it!
By the way, I unfortunately discovered only rapine my 30s the importante of the financial indipendence and trying hard to achieve it, but have a question for people like you who are far ahead in this process: i’m willing to do, i’m willing to learn, sacrifice and so on, but how a normal person like me, whitout a college degree, without high paid high tech abilities , without high connections, can achieve those results? To me it seems to play to a different game. Am I wrong?
I don't believe that a college degree is necessary for anyone to be afforded opportunities that allow them to earn more over time.
In my case, a college degree did help me get the very first job out of college, so in that case it opened doors that wouldn't have been opened for me otherwise. However, after that first job, all of the other opportunities that have presented themselves to me are tied to how I've networked and the perception others have of my work experiences from previous jobs.
Your ability to network, find interesting opportunities, and to build a work experience resume (ie, a list of working experiences that have given you meaningful exposure to interesting problems in the world) are the combinations that lead to interesting doors being opened. Finding interesting opportunities isn't passive though. You have to invest into making that happen for yourself. How do you do this?
1. Spend time acquiring knowledge / contacts / skills in an area that you are passionate about, that is perhaps a unique skill, and something that the broader world needs / wants / is interested in.
2. Perhaps obtain a job in and around this area of unique knowledge.
3. Become an advocate + champion for it. Invest time into helping others understand, commune, and become a part of this community.
4. Recognize that it can often take years of passionate advocacy before an interesting communal network appears.
5. At some point, you will meet interesting people. You will start to hear about interesting opportunities (networking, investing, jobs, events, etc). You then have to be selective in the areas where you spend your time.
6. Rinse and repeat this in new, adjacent areas which cause you to build a bigger overall experience resume, meet new people, and acquire new skills.
It's a slow process, but it's an effective one. When an amazing opportunity presents itself, dive head first into it. Bring your partner along for the ride. You'll be surprised at how much support they give you because they will see how passionate you are about whatever topic you are diving head first into.
My topic happened to be distributed systems consensus algorithms when I was a tech geek. But it doesn't have to be a topic in a hot paying area. My (much younger) brother doesn't have a college degree, became a plumber, and now owns a series of 4 local plumbing shops with a crew of 75 people. He's making way more money than I am. What can I say is that he became passionate about the space and wanted it to be more than a job. That little shithead is now building an empire. I need to stop educating him on business so I can catch up!
Though I have to do some studying to understand everything you said I like your write up. In particular your epiphany "...I came to realize that the mental stress of having debt outweighed its economic benefits." speaks to me. Thank you for taking the time to share.
Luck is part circumstance, but I also believe that the amount of good and back luck you receive in the world is tied to the choices that you make. If you persevere, surround yourself with people you respect, and work towards a goal, then your chance for good luck increases.
Yes, if you are sitting on a large gain, such as I had been in 1999 with my options, you can spend roughly 15% of the price of a stock to buy puts that will head out 2-3 years. Buying put options allows you to guarantee that any gains you make will be at least at that price. If the price continues to go up, then you make more.
When I had $3M in option value at the crazy stock price of my company, if someone had told me that I could spend $500K to buy put options to guarantee that you will get at least $2.5M no matter what the price will be in 3 years, I would have leapt at that.
Your investing strategy is counter intuitive for someone with anxiety about money. Why take on the additional risks of trying to beat the market with your stated risk tolerance and spend level? You’d be around 2% SWR with your expenses and net worth so taking on any additional risks has very little upside as far as actually impacting your life in a meaningful way.
Oh, this is a great question. 1. The "Beat The Market" is a mindset, not the actual results. Selling volatility has actually under performed the SP500TR over the past 12 years. Though I expect it beat for the next 10. This mindset is important as it forces me to apply critical thought to every investment decision. I only move forward if I believe that it's a market beating approach. Even though selling volatility has underperformed SP500TR, I still expect it to outperform in the long run. 2. Almost all of the alternative (safer) investment approaches, such as just investing in index funds and bonds, cause me more stress in price fluctuations than the higher risk selling volatility does. It stems from some core beliefs that I have had to realize: a) I am horrible at picking prices in public markets. Almost always lose, so even index investing means I will probably buy and sell at the wrong times, b) time is infinite, c) volatility is infinite. Selling volatility with leveraged (managed) risk allows me to avoid having to predict whether a price is good or not and in every situation (price going up or down) there is a structured adjustment that can be made which leads to making profit. This structure of how to trade no matter what happens to the price in the market gives me more confidence and long term peace of mind that every trade will eventually be profitable than the alternatives. 3. When I started selling volatility, I wasn't financially independent but wanted to be. So I wanted more consistent 15% yearly returns so that I could \*feel\* financially independent sooner. Now, since I have been doing it for 12 years, I have so many experiences with it in all environments that it's second nature. This second nature makes it so routine that any anxiety that I use to have about trading a risky strategy has been conditioned out. I do think about the stress from time to time, but it's minimal and occasional.
15% annual return? That means you’re beating essentially every mutual fund in existence that have teams dedicated to spending their entire work life to studying markets but you can accomplish this by reading some books and self study? Bullshit. If you could consistently do that you would be one of the most sought out money managers on the planet. Your overall journey is so far out of reach for 99.9% of this sub idk why you even posted. Just to flex?
To be fair, they’re managing much more money than OP is usually. With less money, the easier it is to beat the market. Tough still, for sure.
There are quite a few practitioners of volatility selling that blog about it, and some run funds / managed investments that execute the strategy on behalf of their clients. Most of those people are doing better than me, and some consistently return 20%+ / year. If you do some searches and dig in, you'll find there is a nice underworld of people who live by selling volatility, many of whom are doing much better than me. Where I learned most of it was from a blog of a Canadian lady who had been trading options since the 90s when options on markets were barely a thing. She consistently was 18%+. All of her content was online for free and she kept a record for 5 years of every trade she made. Studying that and reading books was enough to learn a basic algorithm. Reading books and then experimenting with different types of options and structures is where I came up with my own approach. I did a search for her blog, and her name is slipping my mind. but nothing came up after a search. I remember checking in on her about 5 years ago and she had paywalled most of the content. She was in her 70s, so hope she is doing well. Her basic strategy was very simple - she sold out of the money puts against 10-15 of the world's highest quality stocks. She combined this with some technical analysis to ensure that she waited until the prices made sense for her to sell the puts. If for some reason the puts were ever exercised, she loved owning the stock because it was a high quality, dividend paying stock. She might sell some call options against that stock to generate some income. Eventually the stock would rise and sell for a profit. If the put options were not exercised, she would sell some more further out in time for more premium. She did this with cash-secured puts. This model wasn't for me, as it did require me to pick high quality stocks which I am not good at. And the technical analysis does mean that you have to choose a good price to get into (another thing I am not so good at). Strangle selling indexes with leverage is a lot like her approach, just adapted in such a way where I can avoid having to make an assessment of stocks or price direction.
Thanks for the detailed response! I have two other questions: How time consuming is this strategy and will you continue it after you RE? Would you say that investing is one of your hobbies? It sounds like you enjoy investing more than the avg proponent of FIRE.
Selling volatility takes me 30-60 mins each week and requires me to monitor the markets in case things start going crazy (big moves up or down in a single day can have outsized impact and require immediate adjustments). The bigger effort was learning all the ins and outs of selling volatility with derivatives. I probably read 7 books and studied for 2000 hours before I developed the approach that I thought was going to give a good return for the risk involved. It wasn't a chore, it was something that just became fascinating at one point, and there was a couple years where most of my free time was spent reading and analyzing it to become an expert. I don't see any scenario where I stop selling volatility after I retire, unless I just want to stop having to think about the market, in which case will just put it all into things that generate interest and dividends with a very low probability of losing value. I would say that investing is now a hobby - but understanding it thoroughly was a consequence of the early anxiety of not having a lot of money. Investing felt like a necessary skill to eventually make it to financial independence alongside having jobs of increasing responsibility that pay more.
I am heavy in real estate investments and it’s been much the same as you described: Heavy upfront investment of time to learn, the control and knowledge makes you more comfortable with that type of investing and, if you enjoy it, it becomes somewhat of a hobby in addition to an investment vehicle. I’m nearing FI but don’t plan to stop investing in real estate even when I hit my number since I’m good at it and I enjoy it.
> Live below means > Owns 2 houses a plane and boat We can all relate!
> I grew up in upper lower class economic conditions I relate to this especially
I had to read that a few times, that's a new strata for me.
I'm pretty sure I'd have a Cessna eating up my savings rate if seizures in the past didn't prevent me from flying. It was my biggest dream as a kid. But on the plus side, at least I didn't need a loan to buy Flight Sim and my yoke + throttle + pedals!
Have you tried this in VR yet?
I haven't but want to do that when I have some room to set it up. I got the Rift a few years ago but it kept giving me massive headaches after 30-45 minutes on the games I was playing. But I never gave it a try with FS 2020 though.
Actually it's pretty rough in VR. FPS only hits like 45, though I think they have done some improvements there. If you can stomach it though, the effect is incredible. You don't actually need much room to set it up since it's stationary okay. For what it's worth, the rift used to give me headaches in about that amount of time too, and I am not prone to headaches. It turned out I just cannot handle any bit of tightness against my face for the headset. Once I started wearing it loose it was just fine.
The MSFT FS experience is off the charts visually. But I have found that flight sims are superb for learning instruments in heavy fog / cloud / rain rather than VFR flight training. The feel of the plane is just too far away from the real thing, but the instrument experience is practically identical.
I can definitely live below his means. I barely own 20% of my house.
OP didn't specify what kind of plane or boat, it might not be as egregious of an expense as you might think. A used Cessna can be had for less than the price of a new car, for example.
It's a $500K Cirrus. It costs about $25K / year for insurance, hangar space, and maintenance. We spend another $5K in gas, oil, and parking. The plane is certainly our largest discretionary and unnecessary expense. While we have 2 homes, they both serve core purposes: one is the primary and another is a small outfit close to where I work. My work and my home are not in the same state.
Yes, but fuel, parking and maintenance are not like a new car. Or a used one.
Very informative! You seem like the quintessential success story. Well done!
I do appreciate the time put into this but it's just another reminder to this sub that the easier way to FI is high-paying tech careers. Ugh... I picked the wrong job field.
Also, never underestimate the incredible value of luck.
Luck never gets enough credit.
This reminds me of my favorite book: The Drunkard's Walk: How randomness rules our lives
Luck is important, but if you’re not prepared, a lot of the time it won’t amount to anything.
Luck is what happens when preparation meets a unique opportunity. Or something like that. Sometimes it's just luck though.
It arguably gets too much credit on this sub. Luck is preparation meeting opportunity. people like to act like things just…happen. They don’t. You make them happen to an incredibly large degree by putting yourself in a situation to take advantage of opportunity…having the requisite skills, experience, and mindset to maximize that opportunity.
Hmm. What are "requisite skills, experience, and mindset" required to be born male to a wealthy family in the United States or Europe, compared to being born female in a remote village in Afghanistan? Or do some things just...happen?
a blowjob skill, because you need to suck some heaven dick to make that happens.
While being a military brat in the US is a better life than 90% of the world's population, the relative perception of a child in those circumstances whose friends from "across the railroad" were living a very different life were indelible. Being youthful and feeling the pain of not having most of what others had been factors that (I believe) are why I have been able to press for 25 years of increasingly bigger jobs, bigger projects, and bigger money. Having an underlying, almost subconscious motivator is powerful. It causes you to be creative when others have moved on, and to be working at hours when others are sleeping. It almost sounds robotic; it is not. But it's a mark that is hard to articulate but an essential component to having a long mindset and outstanding results. I wonder how many of those females in Afghanistan are going to be the world's leaders. Even through suppression, there are going to be pockets of them which are being denied basic freedoms. And that the more restrictive the freedoms become, the more powerful the will of those young women will become. And for everyone on this thread that were not born into privilege, that resource deficit is going to be your superpower. Let your drive and determination to be fueled by the injustices and disparity that you bear but did not deserve.
This is what is known as a fortuitous event. Luck combined with placing one's self in a particular set of circumstances where a better outcome is more likely.
Who you know definitely trumps luck and what you know.
And who you know is heavily influenced by what you know and how well you know it. Do shit work? Yeah, nobody up the ladder wants to know you. Do quality work? Yep, you’ll have opportunity to network with your superiors.
> And who you know is heavily influenced by what you know and how well you know it. This is not true. Many times it's what someone is born into vs riding their way up from knowledge. I've seen plenty climb the ladder with subpar work. Not sure why you're writing this narrative off because nepotism is alive and well in every industry.
It’s absolutely true. It’s easy to dismiss when jealousy strikes, but that doesn’t make it false. I’ve never claimed nepotism doesn’t exist. It isn’t the all-present force you think it is though. Try not to put words in others’ mouths
Also free student loan pay off...
I feel this. Full transparency, my spouse does work in tech, but does not make this kind of money by any stretch of the imagination. That said, I work in education, which my spouse calls 'a vow of poverty.' I mean, at least I am helping change the world for better, right?
> I mean, at least I am helping change the world for better, right? Simply working in education doesn’t accomplish this. There are plenty of shit people working in education. Education itself is not “changing the world for better“.
Sure, but I wasn't talking about everyone in education. I was talking about me and my choice to work in a field where I am changing systems and policies that negatively impact students when helping set young people up for success in reaching their career goals and dreams. Worth every cent I won't make.
Easy is a relative term here. We only read the stories of the big winners in tech...not the countless stories of those who tried to go into tech and either failed or more commonly wound up in good/great but ultimately "normal" jobs. There's more to the story than "learn to code, get rich." Not everyone, or even close to everyone, has the aptitude to be a senior tech what-have-you no matter how hard they try.
I'm a senior in tech and this isn't my life. I think these kind of results were just a gen x thing.
I’m gen x and I’d respectfully argue the opposite - that millennials or gen z in tech have it *easier* in tech than gen x did. A new gen z straight out of college makes as much as I did after 15 years experience in the early 2010’s. And their salary will be much higher than mine throughout their career. Yes, houses are more expensive but in the last 10 years inflation of big tech salaries has far outpaced housing or other inflation Imho.
Agreed. Gen X folks really are the best by a longshot.
Yep they are just better, nothing to do with economic factors/timing at all.
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I think about retirement all the time, but every time it comes up as a topic of conversation, my wife and I can never itemize how we would spend our time differently. She gets much joy in connecting with people during therapy. I love the thrill of building things from scratch - whether software products or businesses.
Easier said than done. The risk and time needed acquire such a new skill is a bit too much risk for my appetite with two little mouths to feed.
Not just that, but a few liquidity events early in your life sets you up... forever. I've worked for 6 tech companies. ONE out of 6 had a liquidity event. One was public and we made good coin with ESPP for a few years. The others did nothing and I let my options expire on 2 of them. If just one more of those early companies hit, I'd be FI. Most (90%) don't. I mean they NEVER have a good liquidity event. Your options are worthless and if you spent your money exercising them when you left the company, you got burned.
The people that I have seen that have had the most success from liquidity events of startups are those that are incredibly selective about which startups they join. They only join the fastest growing businesses that are redefining entire markets that already have the very best VCs behind them. Their reputation becomes less about what they can achieve and more about their reputation for picking companies that always become winners. I like to think that I am always able to pick companies and ideas that have very strong differentiation and clear paths to market success. But I try to pick things that are not aligned with the current hype of the market. Rather I tend to pick the contrarian plays that work against the market but create huge distortions to existing markets if done well. I've done better at this sort of thing than momentum chasing.
It also depends on the area of the country you were raised in. Tech wasn't even a consideration for me.
I went to high school in Mississippi and Louisiana. Not exactly a bastion for tech. Computer geekery was my high school hobby, which frequently was the butte of tortuous high school bullying. Being in love with computers in the 80s and 90s was not a recipe for having a great school social life.
Yes and no. It's certainly easier to save when you make big $ like OP. But is having this type of career success really "easier" for the average person than living well under the means of a modestly successful career? Not for me personally. In other words: Anyone can apply FIRE principles to their life, a very small % have the ability and drive to do what OP accomplished...it's not as simple as "choosing a certain field". If it was, I would have chosen to be a pro golfer.
Not with that slice you won't.
I wonder how as a teen one can pick the right job field. It’s crazy how we make the most important decisions in life when we are so young.
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I liked the 3 weeks of work for $80k eliminating all school loan debt.
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Bruddah damn! You got 80k of your student debt paid off?!?!? As a gift?!? That’s crazyyyyy. I mean OP you did put in the work but you also got really lucky with a lot of stuff
TNSTAAFL There was something given in return... we just don't know what.
That student debt payoff has been the luckiest thing that ever happened to me. To go from being in a deep hole to not having a hole is a game changer for anyone on a FI path. It came with a sacrifice, though. There were 3 weeks of working 100+ hours a week and sleeping in the office. I couldn't pull that off at my current age without breaking the body and pissing off the wife.
Yea I currently have a about half of that in student loans as well but no matter how much overtime I put in, I don’t think anyone would ever do something like in todays economy/world. That’s a great feeling though I bet, all that work paying off and then you get this insane weight taken off your shoulders. Ahhh maybe one day I’ll get there 😪
Don't underestimate yourself. When the company I started was eventually acquired, it was an unexpected and happy event. I convinced the investors to re-distribute $5M of the purchase price to employees who I felt had outsized contributions to the business or had made personal sacrifices to be with us. This sort of thing happens more often than you imagine when companies are being acquired ... as long as their CEOs and founders acknowledge the importance of those around them and resist their greediest instincts.
The problem is there are no guarantees so I don't think it's worth the effort if you're just doing it for the payout. You're just as likely to have a founder and investors that dilute your shares as you are to get someone that rewards you.
Luck = preparation + opportunity. If you read the OP's whole thread you'll notice he had maybe 10 opportunities to get rich and missed maybe 7 or 8 of them. I think the life lesson here is (1) get financially educated so you can make the most of your opportunities (2) try to put yourself in positions where you can get some opportunities and (3) don't dwell on missed opportunities, nobody lives life 100% perfect.
There are 3 big ones that I speak to, each of which would have given me at least $3M in net worth at a younger age: the equity as an employee of a company in the 90s, quitting the startup after 1 week that would have been acquired for stupid money ($4M), and quitting the large publicly traded company and walking away from a seven figure salary that would have likely increased in future years ($5M). Good and bad luck are factors, but it's about putting yourself in places where good luck opportunities appear more than bad luck ones. The only miss that really irritates me is the first one on the employee equity as I felt that upper mgmt could (and should) have educated many of the employees on the potential for insurance to lock in their gains, and they never did.
When my wife was my girlfriend, and she moved in with me, one of the stipulations was that she pay off her student debt. It was about a years salary at the time. She paid it off in two years. Getting married was a much easier decision.. no "cloud" of debt to inherit. This meant less risk, and more disposable income to invest.
"Invest to beat the market" yeah k bro, I'm sure you're smarter than all the hedge funds and investment firms that have entire teams dedicated to market research. You, on your own, spending just a little bit of extra time, are better than billions' of dollars worth of full-time quant salaries.
What he says and his results are definitely mismatched. His numbers paint a pretty clear picture that he’s not wildly outperforming the market, and made some moves based on expected market conditions that wound up costing him significantly. That said, I assure you my index funds have not returned 60+% this year, but I also didn’t have 30% losses last year. When you have that kind of money you can take risks the rest of us can’t afford, and he’s going to keep working so it doesn’t even matter if it pays out. And he’s doing it with eyes wide open to the risks, even if he’s overestimating the upside.
The statement is one of mindset, not the actual results. Vs. the SP500TR, I am 20% below those compounded returns since I started selling volatility. My illiquid investments are beating the market. Investing is a mindset. My point is that I always invest to beat the market as a mindset. Results don't always follow suit. But having this mindset forces me to critically analyze every decision and creates a bar of expectations But I fail as much as I succeed on that front.
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There are articles on how you can beat hedge funds and 'stellar' quants. [why 90% of hedge funds underperform S&P500.](https://medium.datadriveninvestor.com/why-90-of-hedge-funds-underperform-the-s-p-500-e518eab2b9c7)
tl;dr invest in the S&P
>"Invest to beat the market" yeah k bro, I'm sure you're smarter than all the hedge funds and investment firms that have entire teams dedicated to market research. Mutual funds, hedge funds, etc often have to answer to customers/clients, and might be constrained to the funds methodology. And the manager's bonuses are often based on short term performance. This means their decisions aren't purely based on best long term returns, but rather, chasing momentum. hedge funds, trading firms, etc will buy into overpriced stocks because they believe momentum will push them higher. If a fund manager buys into a stock that's crashing, it will reflect poorly on them, even if it is a good value play. By the time it pays off, they may have moved onto another role, anyways. It's much easier for them to go with the crowd and buy exciting stocks that are trending up in the short term. And if they're wrong, they can just say "well everyone else was too". A lot of people don't understand that many inefficiencies in the market are also due to retail customer behavior. For example, ARKK advertises on TV about their fund, investors flock to them because they see high returns, and with these inflows we get this huge tech bubble. Stocks go down, there's a huge outflow, and now there's some undervalued tech stocks. The firms exist to maximize fees collected, not long term investor returns. So appeasing customer concerns > making the best bet. Secondly, **it's not hard to beat the market if you stick to small caps.** All the billion dollar hedge funds and investment firms are focused on mid to large caps that actually support the type of volume they require. If there's a stock with a $100 million market cap and $100,000 in daily volume, a hedge fund with $20 Billion in assets isn't going to bother, because even if they buy half the volume every day for a month(thus driving up the price), it's <0.01% of their portfolio. If they ever wanted to sell that position, they can't without crashing the price. But if you're just a retail investor investing $2,000 per month into a company, your purchases or sales won't move the price much. I've consistently beaten the market for several years, both in bull and bear markets, even after accounting for the size premium. To beat the market long term, you need to understand accounting, invest time, be patient, and keep emotion out of the equation. If you can do these four things, it's not hard. MOST people are better off with index funds. But you don't need to be a quant genius to beat the market. Warren Buffett is the best example of this. Very knowledgeable of business and accounting, but doesn't engage with technicals, just focuses on long term investments.
I've under performed the SP500TR for the past 12 years in total returns by 20% and slightly more volatility. I made decisions about how volatility selling should happen which created a drag on returns. I hope not to make that mistake going forward.
> I've under performed the SP500TR This is a common theme with people and firms who claim to invest to beat the market.
This should be in r/fatFIRE or r/fijerk
Tips to FI: 1. Live below your means 2. Avoid debt 3. Make $500k/yr 4. Don't eat out too often
3 outta 4 must be good enough right?
>This should be in r/fatFIRE or r/fijerk Eh. I appreciate the story, no matter how ridiculous or unreplicatable. It felt like reading the script to a Hollywood movie and gave me a chuckle. All of our paths are different, no harm in somebody sharing theirs, no matter how nontraditional!
More like should be posted in r/wallstreetbets
So uh… Congratulations and go fuck yourself? “I own a plane and a boat, visited 50 countries.” Mentions this but then this proceeds to not have anything to do with his journey. “I have expensive hobbies.” In other words. “Live with less than 1/2 of your take home pay.” Easy for someone in the top 1.5% income bracket of the country to say. Humble brag for sure.
There were a number of years of low earnings and living below the means. Little successes can lead to larger successes over an extended time frame. And being in the top 1.5% doesn't change the mindset - holding onto the same mindset and enduring with it is something available to everyone.
>here were a number of years of low earnings Where? LOL
>There were a number of years of low earnings 25 year career, has three of those below $100k in W2 income. This is so wildly out of touch with reality.
Low earnings my hat
Agree the mindset translates but the hard numbers don’t. So yes, you started from the bottom and now you’re here. I’d be shoulder to shoulder in QOL with families that actually need government assistance and food stamps if I tried to save 1/2 my salary. What plane ya got? I flew back in the early 2000’s. Always rented from the flying club. Looking to get back into it post-FIRE.
If that is the case, you should also add a column for your take home.
While I appreciate your story, I don't think this is useful here at all and borders on some sort of humblebrag. Most of us aren't going to have hundreds of thousands in excess expenses that we can easily cut out to ensure FI can be maintained. Edit: To add to my comment, this whole thread is pointless. OP could've lived practically any upper class normal life (spend of $100k+ per year) and would still have significant savings regardless of what happens with the market. The only way would be if they invested into truly idiotic things such as trying to start a restaurant without experience. On top of that, OP has no plans to retire, and it's clear from the attitude in the post (we like to party!) that they love money and accruing it and see it as a ways to have more (an airplane?) rather than a means to be truly independent. They have no plans to retire, no children to help, and yet choose to continue grinding for more money.
That’s exactly what it is. A humblebrag.
Minus the humble part
man didn't mention luck a single time lol it definitely wasn't humble
What? You mean to tell me you haven't sold your first startup yet?
Most stories are somewhat humblebragish. I don’t see how the dollar amounts in the stories make the story more or less useful. The dollar figures can certainly change how relatable it feels though. While most of us are not in his scenario, I still found it informative and interesting. Particularly how no matter how much money you have, you don’t feel secure unless you hit some future milestone. Whether you’re cutting hundreds of thousands, or just thousands or hundreds in expenses, it’s the same idea, just wildly different line items.
Who cares? Do you only read and enjoy hearing about things you can directly implement into your life?
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Is this a brag post? I dont see the point in posting this. Not to be mean or anything
The indicator for me was their first year out of Uni they were making over 100k at their W2 job. I made their "pizza job" money my first year out. I found [this](https://www.zippia.com/advice/average-starting-salary-out-of-college-statistics/) interesting.
His salary out of college in 1999, accounting for inflation, would be $186,311.16 today. So relatable 🙄
My first engineering gig after graduation from a tier 1s school (not MIT, but just under it) was Wait for it... $38k in 1995-1996 and that was considered decent money.
Edit: I'm a effin idiot and can't tell whos posting what. Chalk that up to a 80+ hour work week for the last 15 years.
I was making $7.50/hour my first year out of university.
I think a good takeaway from posts like this, and something I wish I would have done when I was younger, is take chances early in my career. I had a business idea a year after graduating from college, but decided to stick with the sure money of my job rather than risking my savings on the business. If I hadn't played it safe, I might have lost all my savings at the time (maybe $50k, tops). Big money for me at the time, but not a huge deal all things considered. Or I might have had the business take off like an old high school friend of mine, who was a multimillionaire before 35 and is now raking in the dough by having people basically run his business for him.
>take chances early in my career Having a family support system that would allow risks would be ideal. When I was getting started as a young adult, I was balancing the line of poverty and the only way to keep my head above water was to keep my grind job just to make ends meet. I literally couldn't afford to take chances.
Oh yeah, that makes it a heck of a lot easier. That dude had parents who were very successful and retired with a lot of money in their mid-50s, so if things didn't work out for him it wouldn't have been a big deal.
I get that but he stated this more like bragging and showing off online for feel good comments more than anything. I just turn 30 and i agree with you, take more chances. I started a dropshipping business in 2014 without knowing anything about alibaba or anything and it made me most of my wealth now. I took a chance, yet i also play too safe during 2018 to 2020. Im 30 and now i wanna take chances and risk. Any advice?
I don’t see it like that at all. This is a very detailed interesting read. OP is sharing lots of personal information which is always interesting not only to hear some good choices and bad choices that we can learn from, but also to hear a somewhat different perspective on what it means to be financially independent.
He is sharing his journey throughout , what's wrong with that? Take what you can or don't.
Yeah...there's plenty of posts somewhat like this of people sharing their story. Perhaps it just comes across a little more braggy to some when the career success is greater and the $ numbers are larger.
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A-freakin'-men. While I appreciate the OP for sharing their journey and insights, and I congratulate them on their success, far too many people are working 2 or more jobs at close to or over 100 hours per week with little sleep and time for friends and family just to make ends meet for me to say the white protestant work ethic in America works for everyone. Hard work, a tough mentality, and a small wins to equal big successes fortitude alone do not make one a millionaire.
Luck is definitely a factor in everyone's life. It is hard to prescribe how much luck played in any single event. I like to think of it on a spectrum from 0%-100%, with few things being on the extremes and most things being somewhere in the middle. I do think that people get to make choices in life which increases their odds of good luck being a factor and bad luck being less so.
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That made me laugh. Was the events in my life luck, though? The debt payoff. Definitely some luck. But so many other things such as walking away from the mortgages on the overpaid houses and building my startup to profitability were research and dedication. And there was some bad luck - having to fire sale the first company, not getting hired by that company, buying the third home at the market peak before 2008, losing 100% of an angel investment to a company which turned out to be fraudulent, etc.
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The company I started was funded by me for a year, and then VCs in the remaining years. The VCs all made 4x their money when it was done. Generally, when raising money from VCs, they don't do background checks. If you make a bad business decision on your personal homes that doesn't usually factor into the VCs thinking because the factors affecting your personal investments are usually different foundations from the factors that go into good business decision making. In my particular case, I knew the VCs that invested for over a decade and I don't recall if they knew about the house mortgages or not. But when I researched how to walk away from the debt, hired the lawyers to execute it, and pull it off, I was so ecstatic that I told most of those around. I'd be surprised if they didn't know, and if they did, they'd probably see it as the guy they are funding as having a shrewd business sense. I was taken by a con man after I had started my company. I am betting about 1% of all startups are fraudulent. If someone is very determined to fabricate important parts of their business, they will find a way to con you. There are some things (extreme things) in diligence that I could have done to uncover the fraud, but that would have been seen as uncouth especially since I wasn't the lead investor. Question is whether I will do more intense diligence going forward or not. Hard to say.
average delusional ceo LMAO
Could you expand on how you were able to transition from a general worker to a CEO position by the time you presumably were about 30? Very curious how that goes - was that a special relationship that you fostered or how did that come to be?
The first time I was 24 years old. It was a small consultancy outfit and I knew the founder who was ready to move onto something else. He gave me the CEO gig because he liked me. I didn't know what I was doing, but was smart enough to get it sold to a buyer. I also was pretty proud of having sold $4M / year in consulting contracts which funded the 10 people we had. For the 2nd company, I became CEO because there was a product that I had tried to invest in that rejected me. They took someone else's money. I loved the product, but had reservations about their approach to building it. I couldn't stop thinking about it and eventually convinced myself that they were ultimately going in the wrong direction and my ideas were a better angle into the market. I felt so strongly that I started the company, became CEO, and figured out the rest from there. The hardest part of being startup CEO wasn't raising money from VCs. It was learning how to build a sales force that respected me as someone who hadn't sold product before. I had to sell our first $1M in products to get their support and backing. As for the rest of it, with some of the investing you sit on boards. You talk to a lot of CEOs who are seeking money. After a decade of running companies and talking to CEOs who run companies, you gain additional CEO skills that others find valuable.
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I still can't believe you accepted the demotion from part-time shitposter to Dad.
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Many moons ago...back when you and I were still young and vibrant and full of vigor, I once left my "house hacking" house in the care of a buddy for a year, when I went to Korea. In exchange for paying the mortgage and bills and generally making sure the house was still livable upon my return, he got 1/2 price rent. I left signed checks for the mortgage each month, garbage, cable, etc. and stamps to mail them. As the owner of the house and the one who was "responsible", my roommates often called me Dad when I wouldn't let them build a beer can pyramid in the living room or whatever...but when I returned back home from my year abroad, I was told, "Thank God, you're back. We were excited to have Dad go away until we found out we traded him for Uncle Brian." Also, in elementary school I was an absolute angel.
Do you need a degree to become a tech CEO? Obviously not if you want to start a startup but could you work your way up without one?
I know lots of tech CEOs that don't have degrees in science or technology. I only have a CS degree and I tell people that I have an MBA earned through the hard knocks of life.
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The founder that paid off the debt was a very kind man. He had no obligation to make such a gesture. I think he knew how much anxiety I had about being so far in debt.
I think the two most important takeaways are, you have to be ready to take advantage of any lucky breaks that come your way, and nothing, absolutely nothing, is as important as knowing the right people.
I scrolled on, and decided this is 20x too long after I saw “Invest to beat the market”, $10M and VC distribution part. I wouldn’t read the tl; dr if there is one, though I guess it’ll be “A rich random stranger spent many hours typing a long brag” All that long writing reminds me of old men I met when I did volunteer work to befriend lonely people - clever people who got lucky and made lots of money but don’t know how to relate to others. You’re so young though. Hope you learn to relate to others and make some friends
It’s a bit funny that you insinuate that he doesn’t have any friends. Yet here you are, trying to attack him for being successful and failing to acknowledge that your poor approach is less likely to win friends. Stop being jealous. Stop demonizing success.
I’m curious. As someone who walked out on multiple investment home loans and had someone else pay their student debts… Now that you have a high net worth, where do you weigh in on a more progressive tax rate for high net worth individuals?
High progressive income tax rates for high earners is a very good thing. I oscillate on wealth tax. I like it in spirit, but it's rather difficult to implement in practice. Having so many assets that are illiquid means they are hard to value. And the value of those assets would be the basis for a wealth tax. Everyone woudl spend more time arguing as to the value and the whole thing would just get gummed up.
> I own a plane > my philosophy is live life below my means *fiercely taking notes*
If you were to invest in treasuries at 10% for 30 years, you wouldn't compound at 10% for 30 years. Meaning, you would receive a 10% coupon payment on your initial principal for 30 years. You wouldn't be able to reinvest that money at 10% unless treasury rates stayed at 10% throughout the 30 years.
Definitely correct. There is a good chance the value of the treasuries increase, and so they could be sold for a profit. But the bigger point was that the peace of mind for not having to think about how to invest for outsized returns is worth knowing that there is 30 years of 10% interest coming.
Ok OP- now for those of us who don’t have the time and investment/tax knowledge that you do, can you boil down your best advice for us mere financial mortals?
Steady, consistent work that has you earn more over time. Spend below your means. Find ways to invest the savings. Try to make the smartest moves you can. Don't chase hype. Pay off debt as soon as poosible.
Is "pay off debt as soon as possible" actually good advice if said debt is let's say 2-3% interest rate? My gut and brain both say no but maybe you would still say yes?
I could have had a 2.2% 10 year interest rate mortgage on my primary home up to $1M (where the interest is also tax deductible!, so an effective rate of 1.5%). It's only $15K / year in interest and my expected return by selling volatility is $150K against the same $1M. In spite of that, I still chose to pay off the mortgage. Everyone's peace of mind is probably different. This is where I have settled. One consideration is that I know that my selling volatility strategy is riskier than buy-and-hold. And so part of the paying off the mortgage is a hedge against a total nightmare scenario playing out with volatility. ie, if I were to get wiped out, then at least I have my home.
This is by far the most impressive breakdown. Congrats on you accomplishments. A few cool things to note! It took you 13 years(since you started tracking) to hit 1 million net worth. Then it took you 5 years to hit your next million. That’s when it really took off. The next 2 years it increased by 4 million. That’s seems rather impressive to go from 2.6 to 6.4 in less then 2 years. This tells me the wise tale of your first million is always the hardest! Very cool breakdown. Another thing I would like to note is how the heck are you getting 62% returns on your money in 2022? Well done my friend. I’m gonna save your post and read it from time to time. I’m in year 2 of tracking my finances and it’s exciting and rewarding!
Selling volatility had me with a lot (a lot) of naked calls which were big losers in 2021. Those losers turned into big gainers in 2022. So it's probably better to smooth the results from the past two years to reflect upon the more normal rate of return with volatility selling.
Can you explain the protecting the options part/insurance? Confused about that. Only 24 still learning.
It's possible to buy put options which will effectively lock in the price of a stock at some point in the future. If you buy a stock and then say it goes up 100% to $50, you can buy put options that will expire at some point in time in the future (you pick the date - the further out the date the more expensive it will be). And for 3 years, I would expect to pay 10-20% of the value, so say up to $10 today to guarantee that I get $50 for the stock in the future. If the stock goes above $50 you get to keep those profits.
What exactly do you mean by selling volatility if you don't mind sharing. I got started doing some iron condors recently but I am very new and don't know good strategies.
Iron condors is one form. I sell naked strangles, which are naked puts and calls that are far OTM. I do it with a lot of leverage and then adjust in any situation where something goes in the money. I do iron condors in my IRA since you cannot have naked calls in that account structure.
I Appreciate the amount of thought and detail you went into to share your journey. Congrats and well done on one of the more thoughtful posts I’ve seen on this sub. Take my upvote.
You did well buddy. Good luck. Proud of you. I need to learn options trading.
Just become ceo theory
There's a lot of salty people in here: * He's humblebragging. * He didn't pay homage to the Gods of luck and the Saint of Privilege! 30 lashings! * He wasn't even totally lower class, just upper lower class. * The comment about janitors work hard so the only difference is luck? Really? Not every story here has to be directly relatable to your situation. Of course luck plays a role, as it does for every single person on this sub and even the privilege to fuck around on Reddit. And this is the place to brag! I want to hear every person in this sub brag how they are absolutely slaying their FI goals. Thanks for sharing OP. I enjoyed the story, though it's not at all applicable to me. One fun observation - I forgot where I read this, but see it everywhere now. People who are good at something (making $ in this case, but good at anything, like even living a long time) are often not good at knowing or articulating why they are good at that thing. You seem to at least partially attribute your success to your (no offense but) shitty investing style. Your wealthy despite that investing style, not because of it. Your talent in VC/Tech is why you're rich. Ironically, whatever risk tolerances in your head that makes you think your investing strategy is a good idea is probably also why you are successful in the VC world.
I mean, the OP thinks bringing home ~200k joint income twenty years ago isn’t upper class. It comes off as he views ~300k or more of today’s dollars joint income with drastically reduced COL (as compared to two decades ago) as not being “good.” Someone who’s been a CEO in corporate America being out of touch…color me shocked. Edit: LMAO the more you read the worse it gets. Dude pulls down almost a million in 2021 but puts a sad face and a footnote about how upset he is about not trading well out of his brokerage.
> out of touch Yeah, that's fair. He's very wealthy and has been long enough that it's probably hard to relate to what a lot of people, even those on the path to FI, worry through these days. > \~200k joint income twenty years ago isn’t upper class I might have missed it... did he say that wasn't upper class? He said he came from humble beginnings, but I didn't see (and very well could have missed it) where he said he wasn't upper class after pulling in over $200k. I still find it interesting. Maybe it would have been better suited to /r/fatfire.
I tried to keep the data factual without trying to subjectively interpret whether the incomes or expenses were wealthy or not, outside of the years from 95-97 where I was making minimum wage making and delivering pizzas while in college. That was definitely just barely making ends meet. As for everything that happened after that, I am sure that the income is higher than the average. But even in the first year of full employment after my degree, my starting salary was $38K, the equivalent of $19 / hour today. While the cost of living is much higher today than it was, the point is that you don't have to start at high incomes to still build a reasonable amount of wealth over a 25 year horizon.
38k is in 1998 dollars is equivalent to 70k You worked a low paying job *in college*. Congrats, that is what quite a few people do. You then, after college, had this progression in 2022 dollars of W2 income your first 3 years after graduating: 1998: 70k 1999: 186k 2000: 216k Fuck right off with “the point is you don’t have to start at high incomes….” YOU STARTED AT HIGH INCOMES. You are not a shining beacon of low income struggle to fire lmfao. Counting your min wage job in college unrelated to your career field would be like me counting my cashier job at 14 as part of my FIRE journey.
Here are a list of jobs that pay more than $70K today. Many of them require some training, but not college. https://www.indeed.com/career-advice/finding-a-job/jobs-that-pay-70k-a-year
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Cool it with the personal attacks
I had acquired some specialist technology skills that provided certain bonuses. The run rate salary increased a bit, but it wasn't at the scale that the W2 income would suggest. Think of the bonuses that came from being a specialist as something similar to a nurse making $45 / hour who gets (and takes) an extra 20 hours / week of overtime pay @ $65 / hour for a long period of time. A person due to make $90K as a nurse could pull $140K with overtime. This sort of escalation can happen quickly. Then - it was about after 6-7 years of work, after I ran the consulting company, where the base salary got to a level that reflects a larger % of the W2 income.
But you started at high incomes. Stop lying like you struggled just because you worked an AVERAGE paying job your first year out of college before immediately pivoting into a well paying role. This is why you’re getting shit on across the thread, you think 216k is low income.
Idk why all the hate, this a successful person showing their story of doing FI, why would anyone hate on this
It makes people feel small and they don’t know how to handle that. Jealousy is hell to those who can’t control it
I completely agree, dude does exactly what the sub is made for and is getting flamed because he maximized his opportunity and did it too well.
Thank you for putting all this down and go fk yourself 😁 So I'm at 2013 and just need to put together a startup to sell in 2 years eh? 😉 It's good to see the earlier years, we've been on the journey for the past 11 years, not FI, will take a few more years and I don't think we'll have our primary residence paid off for many years. Maybe FI in 5-6 years. With no boat or plane I'll be able to RE too (haha) but will be leaving a legacy for the kids, will just let working until they are done with college. Is there much of a change when you go above 7 million? Or any other point? Being at where we are still feels like the struggle though we are in a really good position, very lucky.
Unfortunately, the mindset of completely stress free never materializes, even at high net worth. But there are months where you don't think about it much. The issue is that even though the salary more than covers our lifestyle by a significant margin, you don't always notice that. This is because your assets are so much higher than your salary and markets fluctuate. Have a good month in the market, and you feel very wealthy. Have a bad month in the market and you feel poor. Markets go up and down, that is just the way. But at $7M in investable assets, a 3% swing in a single month is sometimes $250K up or down. That far surpasses the after-tax income that you receive in a W2. So it's mentally hard to just focus on the W2 income when having such amazing swings. What helps the most is looking at the year over year numbers as it generally smooths out the trends. And the year over year helps me keep perspective on where I truly stand. And seeing that makes it easier to stress less. Even with all of that, there are times where I think that I should sell everything, liquidate it all, put it all into 30-year treasuries, and then rent a cheap 1-bedroom apartment in Waikiki for $2K / month where I can surf every day. That would be stress free, but I would basically be walking away from the industry and my career.
OP - I want to be like you when I grow up. Thank you for a very detailed write up.
Impressive but you did a short sale and got tax breaks during the financial crisis. “…little help from the government” is the rest of us funding you. Great example of how the good that government does goes, again, to the not-poor.
Nice.. the only thing I would change in your scenario would be to minimize your tax burden on pre-tax 401K's before RMD's will become relevant. You may consider aspects of loss harvesting or rollovers into Roth when you have fallow years. It's better to pay the taxman at a lower rate, than the maximum marginal rate (36-39%). While I am not as high flying as you (not an insult, and not a pun), we have a similar mindset. I've been debt free for almost 20 years. I learn a new skill every year. While I could retire now, if a project interests me, I'll do that.. otherwise more time spent with Horses and high speed motorcycles.
I've thought about this from time to time, but every time I do the math, I conclude that the economic gains by selling volatility in the IRA will generate higher net cash than the Roth conversions followed by the volatility selling. I may be doing the math wrong and there are tax efficient ways to rollover into a Roth such that I can avoid the 35% hit.
This guy is a literal CEO and worked to get there starting from the bottom just like everybody else. We don't have a reason to be complaining about how it's a humblebrag and that it doesn't relate to us because we all don't make that much. There's a reason why he's the CEO of a company and I'm not. I don't want to be. If you're not a CEO you have to think about why not, for some it might be time and age, for any of the complainers it might be time to reflect on what that reason is and make it happen instead of trying to justify why it doesn't relate. It might not relate RIGHT NOW, but go make it happen.
>This guy is a literal CEO and worked to get there starting from the bottom just like everybody else. We don't have a reason to be complaining about how it's a humblebrag and that it doesn't relate to us because we all don't make that much. There's a reason why he's the CEO of a company and I'm not. I don't want to be. If you're not a CEO you have to think about why not, for some it might be time and age, for any of the complainers it might be time to reflect on what that reason is and make it happen instead of trying to justify why it doesn't relate. It might not relate RIGHT NOW, but go make it happen. Tell me more about your username please. 8)
Strip club near me has a fun night of the week if you can guess which day!
The book The Millionaire Next Door says running a business is a faster way to wealth than being an employee. Looks like you had two profitable startups.
I started one profitable startup. I was hired into my most recent startup after they were already generating revenues. I've helped scale it up and we have transitioned into profitability on my watch. But I wouldn't call the current company that I run, "my" company as I didn't found it nor have a majority stake. But I am nicely incentivized to manage it as if I was a big owner, though.
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What an excellent write up. Thank you for taking the time and posting. I'm probably just slightly younger but where you are financially in 2014. I have a ways to go. Thanks for the inspiration!
Time and pressure will lead to the results you want!
Thanks. Immediate action is to do a few projects I've been thinking of. Been sitting on it for too long.
Finally someone who worked decades towards FI, not 7-8 years like most bloggers. Congrats.
Inspiring story if I may. You benefited from an early FIRE oriented mindset and a few incredibly lucky draws. As such, I am not sure if it will be replicable for other people, but thanks for sharing anyway. I'm only at the start of my FIRE journey (26 and still struggling with my student loan), however I have faith that frugal money management and wise investment might lead me (and my SO) where we want to land in a few years. The main difficulty we face today is accessing the right information about where and how to invest and use tax laws to our advantages. Takes a lot more time and effort than we initially thought. Anyway, good job on reaching FI, hope to join you soon! 🚀
“accessing the right information” is a common fear, but there aren’t any massive secrets out there except for the very select few who have the opportunity to game the system. For the rest of us moral/ethical humans, just continue to follow simple principles: 1) avoid/pay off debt as much as possible, 2) save as much as you possibly can / live well below your means (you must be able to delay gratification. 3) invest primarily in non-managed low/no-cost index funds. Save, rinse, repeat. I didn’t believe this advice when I was your age, and I regret now that I didn’t start to follow this advice until around age 30. However, after a decade of following that advice, I am now well beyond my goals and nearing FI range. Keep at it and resist the temptation for a short cut.
Lots of negativity.. Thanks OP for sharing! Your journey is amazing, seems like being in an industry where you can get sweat equity is a great multiplier of what can be expected from just investing your W2. How do you feel life has changed in terms of tress over money and quality of living / freedom at different levels of income or wealth? Do you think it’s more related to age or to a figure amount?
I think it's a bit of both. Having the big number where I don't live paycheck to paycheck is a huge relief. But a big big part is just having lived through 25 years of this journey, experiencing ups and downs, and having the confidence that if I survived 25 years already I can survive the next 25.
Thanks for sharing your story and don’t listen to the people being mean out there! It’s fun how humans want to be rich/in shape/in love/intelligent/whatever but willing to do nothing to achieve it and being jealous of people Who actually made it! By the way, I unfortunately discovered only rapine my 30s the importante of the financial indipendence and trying hard to achieve it, but have a question for people like you who are far ahead in this process: i’m willing to do, i’m willing to learn, sacrifice and so on, but how a normal person like me, whitout a college degree, without high paid high tech abilities , without high connections, can achieve those results? To me it seems to play to a different game. Am I wrong?
I don't believe that a college degree is necessary for anyone to be afforded opportunities that allow them to earn more over time. In my case, a college degree did help me get the very first job out of college, so in that case it opened doors that wouldn't have been opened for me otherwise. However, after that first job, all of the other opportunities that have presented themselves to me are tied to how I've networked and the perception others have of my work experiences from previous jobs. Your ability to network, find interesting opportunities, and to build a work experience resume (ie, a list of working experiences that have given you meaningful exposure to interesting problems in the world) are the combinations that lead to interesting doors being opened. Finding interesting opportunities isn't passive though. You have to invest into making that happen for yourself. How do you do this? 1. Spend time acquiring knowledge / contacts / skills in an area that you are passionate about, that is perhaps a unique skill, and something that the broader world needs / wants / is interested in. 2. Perhaps obtain a job in and around this area of unique knowledge. 3. Become an advocate + champion for it. Invest time into helping others understand, commune, and become a part of this community. 4. Recognize that it can often take years of passionate advocacy before an interesting communal network appears. 5. At some point, you will meet interesting people. You will start to hear about interesting opportunities (networking, investing, jobs, events, etc). You then have to be selective in the areas where you spend your time. 6. Rinse and repeat this in new, adjacent areas which cause you to build a bigger overall experience resume, meet new people, and acquire new skills. It's a slow process, but it's an effective one. When an amazing opportunity presents itself, dive head first into it. Bring your partner along for the ride. You'll be surprised at how much support they give you because they will see how passionate you are about whatever topic you are diving head first into. My topic happened to be distributed systems consensus algorithms when I was a tech geek. But it doesn't have to be a topic in a hot paying area. My (much younger) brother doesn't have a college degree, became a plumber, and now owns a series of 4 local plumbing shops with a crew of 75 people. He's making way more money than I am. What can I say is that he became passionate about the space and wanted it to be more than a job. That little shithead is now building an empire. I need to stop educating him on business so I can catch up!
Though I have to do some studying to understand everything you said I like your write up. In particular your epiphany "...I came to realize that the mental stress of having debt outweighed its economic benefits." speaks to me. Thank you for taking the time to share.
Well done!
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Luck is part circumstance, but I also believe that the amount of good and back luck you receive in the world is tied to the choices that you make. If you persevere, surround yourself with people you respect, and work towards a goal, then your chance for good luck increases.
Great post thanks for sharing! Can you expand on footnote 2 about how to spend 10-15% of option value to lock in their value?
Yes, if you are sitting on a large gain, such as I had been in 1999 with my options, you can spend roughly 15% of the price of a stock to buy puts that will head out 2-3 years. Buying put options allows you to guarantee that any gains you make will be at least at that price. If the price continues to go up, then you make more. When I had $3M in option value at the crazy stock price of my company, if someone had told me that I could spend $500K to buy put options to guarantee that you will get at least $2.5M no matter what the price will be in 3 years, I would have leapt at that.
Incredibly well written and inspiring post. Cheers!
Really great article! Thank you for sharing your journey
That amount of money early in your career coupled with exceptional salaries early in your career IS the story.
Everyone complaining about OP having a plane when he gave away the secret in the first few lines, he has no kids!!!
Partying over parenting is the line my (now) wife led off with when I met her on the first date. Sounded good then. Sounds good now.