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Return On Effort (ROE) Is Your Key To Unlocking A Better Life - Financial Samurai
If you want to optimize your life, it's essential to understand the concept of Return on Effort (ROE). The higher your ROE, the more you get out of your efforts, making it an invaluable framework for decision-making. ROE can also help you better utilize your time by prioritizing tasks and opportunities that yield the greatest
A Net Worth Equal To 25X Expenses Is Not Enough To Retire Early - Financial Samurai
Being financially independent means having enough passive income to cover your essential or desired living expenses. A common guideline is to aim for a net worth equal to 25 times your annual expenses, often used as a baseline for achieving financial independence. However, this approach is overly simplistic because it depends on the composition and
The 4% Rule: Clearing Up Misconceptions With Bill Bengen - Financial Samurai
I had the pleasure of speaking with Bill Bengen, creator of the '4% Rule' for retirement planning. Bill has been a reader of Financial Samurai for many years and has always been courteous in the comments section when I write about safe withdrawal rates. So, I figured it was time we had a chat to
Uncover Your True Investment Risk Profile: It's Not What You Think - Financial Samurai
After reviewing my analysis on a conversation I had with a financial professional in 2013, I decided to take another close look at my finances. To my surprise, I uncovered a huge gap between my perceived risk tolerance and the reality of my portfolio. Since leaving work in 2012, I’ve generally seen myself as a
The Power Of Losing: How Setbacks Can Lead To Success - Financial Samurai
One reason many people shy away from competition is that they dislike losing. With often only one winner, the sting of defeat can feel too humiliating. When people stop competing, they can become more fragile over time, to the point where even small setbacks can disrupt their well being. Ironically, the best path to victory
2025 401(k) Contribution Limits: Bigger Savings, Better Retirement - Financial Samurai
The 401(k) contribution limit for employees in 2025 has increased to $23,500, up from $23,000 in 2024. The employer contribution limit also rises to $46,500, bringing the combined employee and employer 401(k) contribution limit to $70,000 for 2025. Don’t underestimate the power of employer 401(k) contributions, especially as you advance in your career. As you
Financial Planning Through Changing Presidencies: My Journey - Financial Samurai
With Donald Trump set to become the 47th President of the United States, it’s natural to wonder what this new administration could mean for your finances. For most people under 30, a change in leadership might not significantly impact financial planning. In your 20s, you’re often not earning enough or rich enough for a president’s
Four Years Later, You're Likely Way Better Off Than You Think - Financial Samurai
Every time a political candidate asks if you’re better off than four years ago, I can’t help but sigh. The implication, regardless of party, is always that you’re worse off and that they are the answer to your problems. The Democrat says things went downhill under the Republican, and the Republican says the same about
2025 Tax Brackets: New Ideal Incomes for Workers and Retirees - Financial Samurai
The IRS has announced new income limits for its seven tax brackets for 2025, with income thresholds increased by about 2.7% to adjust for inflation. This follows a 5.4% increase in 2024 and a historically large 7% bump in 2023. Reaching a top one percent income is becoming more challenging given the threshold keeps increasing
The Surprising Benefits Of Donating To Your Kid's School - Financial Samurai
Out of all the things you could donate your hard-earned money to, giving to your child's school might not be at the top of your list. If your children attend a private grade school with sky-high tuition, donating to the school might feel even more unnecessary. With so much poverty, homelessness, broken homes, and people
Apply Stop Losses To Protect Your Wealth And Quality Of Life - Financial Samurai
As an investor, it’s essential to understand that risk assets come with no guaranteed returns. Setting and following a stop loss can help protect your capital from significant losses, especially if you're an active investor who picks individual stocks. Yet, I've come to realize that stop losses aren't only useful for active investors—they can be
Enjoy Your Money: Investing in Fine Wine and Whiskey - Financial Samurai
Investing in alternative assets has become an increasingly popular way to diversify beyond traditional stocks and bonds. Wine and whiskey, in particular, are gaining traction due to their potential for strong returns, resilience during economic downturns, and rising demand. If Goldman Sachs and Vanguard's predictions are true for an abysmally low stock market return over
Finishing Rich Despite A Low-Return Stock Market Environment - Financial Samurai
Since the bottom of the global financial crisis in July 2009, the S&P 500 has generally experienced a strong bull market. While there were challenging periods in 2018, 1Q 2020, and 2022, stock market investors have largely been well rewarded. However, Goldman Sachs warns that the good times might be coming to an end. Goldman
Overwhelmed, Not Bored: An Unexpected Challenge Of Retirement - Financial Samurai
Before retiring in 2012, I didn't fear boredom or loneliness. It never occurred to me that I would be bored with so much potential freedom. My main fear was whether giving up a steady paycheck was an impetuous move that could lead me to financial ruin! After I left work, I found myself telling my
Reflecting On A Year After Purchasing A House I Didn't Need - Financial Samurai
October 2024 marks one year since I purchased the most expensive house I could afford. Leading up to the purchase, I wrestled with uncertainty about whether buying such a home was the right move. For most, a home is the largest purchase they will ever make, bringing with it a mix of excitement and worry.
How Speaking To A Financial Professional Saved Me From Myself - Financial Samurai
Empower is offering free financial consultations until October 31, 2024, for anyone with over $250,000 in investable assets. I wanted to share my experience speaking with them and how I began my investing journey. If you complete two video calls by the deadline, you'll receive a free $100 Visa gift card. There is no obligation
An 80/20 Stock-Heavy Portfolio in Retirement Might Be Ideal - Financial Samurai
This guest post is by Vaughn, a long-time Financial Samurai reader who retired at 44 and is now 55. Vaughn's early retirement was driven by necessity rather than choice due to a congenital bone disease. Fortunately, his high income during his working years secured a solid SSDI benefit, and his mother’s foresight provided future rental
A Home Insurance Policy Review To Understand What's Covered - Financial Samurai
One of the worst experiences for a homeowner is filing a home insurance claim only to be told it's not covered. After years of paying premiums, the insurance company doesn't deliver when it's needed most. What a disappointment. This disconnect happens because we rarely take the time to review our home insurance policies each year.
A Severance Package Is The Ultimate Catalyst For Early Retirement - Financial Samurai
Retiring early with a severance package is one of the smartest ways to leave the corporate world. Walking away without trying to secure one could leave tens of thousands, or even millions, on the table. I also believe that retiring early is better than retiring rich. For those who choose my preferred retirement path, negotiating
Effective Ways To Protect Your Family From Harm's Way - Financial Samurai
As a parent, your top priority is to protect your children until they are old enough to fend for themselves. Protecting your children requires good health, being alive, having resources, self-defense skills, and using common sense. If you’re missing one of these, the chances of your children and partner being harmed go up. After a
Why Retiring Early Is Obviously Better Than Retiring Rich - Financial Samurai
There are two things most financially-conscience people aspire to: retiring rich or retiring early. But which is better? Many people who haven't retired believe early retirement sounds fantastic, especially since so many are disengaged from work. On the other hand, who wouldn’t want to retire rich? However, to retire rich, you typically have to work
Artificial Intelligence Put My Dad Out Of A Job And I'm Worried - Financial Samurai
For about 10 years, my father has been my primary editor on Financial Samurai. When my father isn't available, my wife steps in. This system has allowed me to maintain a consistent publishing schedule of three posts a week with a relatively high standard of quality. Typically, I spend 1.5–3 hours writing a post. Then,
Settling The Work From Home Debate Once And For All - Financial Samurai
One of the most significant developments to come out of the pandemic, if not the greatest, was the shift to remote work for millions of employees. Beginning in March 2020, businesses quickly adapted out of necessity, keeping their operations afloat with employees working in pajamas from their living rooms. However, this golden era of remote
Government Grift As A Lucrative Side Hustle To Build More Wealth - Financial Samurai
I remember being a broke college student during my senior year at The College of William & Mary. A group of us gathered at the Spanish House, the language immersion dorm where we lived, to brainstorm easy ways to make money. None of us had job offers yet, and we were anxious to prove to
The Curious Inability To Spend Money On Yourself - Financial Samurai
Recently, I hit a major milestone in my journey to overcome what I like to call 'frugality disease.' I spent $160 for an hour of private lessons for my two kids. In the past, I would’ve never paid such an amount. I’ve always been the type to teach them things myself, like swimming and bicycling.
What Creates That Cozy, Nestled Home Feeling In A Big City - Financial Samurai
Have you ever walked into a home and instantly felt cozy, even in the heart of a bustling city? It's hard to pinpoint exactly why it feels so comfortable and serene amidst all the noise and chaos. In this post, I’ll break down the key elements that create that warm, welcoming atmosphere. As we get
The Biggest Concern After Fed Rate Cuts Is Not What You Think - Financial Samurai
At long last, after four years, the Federal Reserve has finally cut the Fed Funds rate by 50 basis points, bringing the target range down to 4.75% - 5%. Expectations suggest we’ll see another 50 basis points cut in 2024, with a total reduction of 100 basis points by the end of 2025. Fed Chair
Increasing The Retirement Withdrawal Rate At The Wrong Time - Financial Samurai
If you're increasing your safe withdrawal rate for retirement now, you're likely making a mistake. You might be inadvertently top-ticking the market as the Fed embarks on what is likely a multi-year rate cut cycle. One of the main reasons the Fed is cutting rates is due to growing weakness in the labor market. Inflation
The Temptation To Do A Cash-Out Refinance As Rates Collapse - Financial Samurai
With record-high home equity and declining mortgage rates, the temptation to do a cash-out refinance is growing. I’ve certainly considered it myself. However, after careful reflection, my conclusion is that it's probably not the best move. Having written about refinancing since 2009, I’ve seen too many unfortunate cases where people took out a Home Equity
Car Insurance Fraud As A Side Hustle Is Not Worth The Money - Financial Samurai
In my post about illegal immigration, a commenter pointed out that I was lucky to avoid greater financial consequences from my car accident. It turns out that the maneuver where a car accelerates from a stop and then suddenly slams on the brakes is a common insurance scam. This tactic is known as the 'sudden
Bumped Into An Illegal Immigrant And It Could Have Been Costly - Financial Samurai
Like millions of others, I watched with intrigue the first—and potentially only—Donald Trump and Kamala Harris presidential debate. One of the most important topics discussed was illegal immigration and how the Biden/Harris administration allowed millions of illegal immigrants to enter the country. If you're willing to flee your country and attempt to enter America illegally,
Maximizing Real Estate Returns In A Rate Cut Environment - Financial Samurai
At long last, the time has finally come for the Fed to begin cutting rates in September. As a result, real estate investors will likely benefit from a tailwind over the next couple of years, after a rough prior two years. Mortgage rates peaked in October 2023 but rose again from December 2023 through April
MIT and Yale’s Class Profiles After the Affirmative Action Ban - Financial Samurai
In 2013, Students for Fair Admissions (SFFA) filed a lawsuit against Harvard University in the U.S. District Court in Boston. They alleged that Harvard's undergraduate admission practices violated Title VI of the Civil Rights Act of 1964 by discriminating against Asian Americans. As an Asian American, I was intrigued. After lower courts upheld Harvard's limited
Direct Indexing: Growing Investment Strategy Among The Wealthy - Financial Samurai
One of the investing strategies growing in popularity with the wealthy is Direct Indexing. Before my consulting stint at a fintech startup in 2024, I had never really heard of Direct Indexing. If I did, I likely assumed it simply meant directly investing in index funds, which many of us already do. However, Direct Indexing
Careful Giving Up Your Career To Be A Stay-At-Home Parent- Financial Samurai
In April 2017, I made a commitment to be a stay-at-home parent for the first five years of my son's life. When my daughter was born in December 2019, I made the same commitment for the sake of equality. Research shows that the first five years are the most crucial for a child's development. Supposedly,
The Broke Mindset: Your Contrarian Advantage In Building Wealth - Financial Samurai
Since I purchased my house in October 2023, I’ve been feeling broke. I’m living paycheck to paycheck to cover my bills and fund venture capital calls. In fact, even after realizing I had missed a $25,000 capital call, it took me another week to pay it off because I didn’t have enough money on hand.
Consequences Of A Limited Partner Not Meeting A Capital Call - Financial Samurai
Last month, I missed a $25,000 capital call without even realizing it. The Managing Partner of the fund, a friend I've known since business school, texted me while he was on vacation. He wrote, 'Hi Sam—hope you're having a good summer. I'm texting from Holland—sorry for the quick note, but just a reminder that the
A $20 Million Net Worth Should Be Enough To Live Happy & Free - Financial Samurai
Needless to say, a $20 million net worth is a substantial amount of money. It firmly places you within the top 1% of net worth, with the current minimum threshold around $13 million. Previously, we discussed how a $10 million net worth, and even a $5 million net worth, are both ideal amounts for retirement,
To Be A Great Athlete Is Prohibitively Expensive For Most - Financial Samurai
Like most people, I enjoyed watching the Olympics. Some of us might even imagine our children becoming elite athletes one day. Unfortunately, becoming a great athlete is prohibitively expensive for most people, requiring significant time and money to achieve greatness. I've played sports all my life and love the activity. Sports bring people from different
Rental Property Maintenance With Your Kids Solves Two Problems - Financial Samurai
If you're a real estate investor with children, you may face two significant challenges. The first challenge is holding onto your rental property for as long as possible. You understand that the longer you own real estate and stocks, the more likely you are to build wealth. However, as you grow older and wealthier, your