Asked on 13 May 2020
I would say go 100% into this but break in down into small goals so it doesn't feel so scary.
I broke it down into 10k, 25k, 50, 75 and 100k. Then I celebrated every mile stone I hit to give myself encouragement. If you just look at it as 100, it can feel pretty scary.
Taking into account your commitments, give yourself a time period to fullfill this. 5 years, 3 years or even 10 years, it doesn't matter. So long as you hit it eventually.
If you keep giving yourself excuses, then you'll never reach it and never have enough for retirement. If you have a wedding and other financial responsibilities, set a different account for them. NEVER MIX your retirement savings with LIABILITIES/RESPONSIBILITIES.
Even if you have only $1 after everything, put it in this investment/retirement account and count it separate. No matter what your circumstances, accept this pressure because the retirement clock starts when you begin working.
Okay, correct me if I'm wrong but I think everyone here misunderstood your question. Since you specified passively, my intepretation is that you want to know if you should invest passively or actively before you have your first 100k.
Honestly, let's first point out trying to beat the market is a fool's errand and 99.9% of people fail either due to lack of knowledge, emotions or uncontrollable circumstances. When stock picking, some times even good and logically sound companies picked based on a solid investing strategy can completely fail. As a young investor with small capital, this would probably devastate you and throw you off investing entirely. I'm not saying its impossible to beat the market, but know that its a tough and emotional journey.
On the other hand, passive investing allows you to focus on increasing your earning power without the stress and extremely likely failure.
Buttttt if you intend to actively manage your investments eventually anyways, my recommendation is go for it, even before you hit 100k. Firstly, the losses now from mistakes you make will be smaller than when you're managing a larger portfolio. Secondly, its good to get your feet wet and build experience. It'll also let you change your mind to invest passively if you decide to do so.
I think passively investing beyond $100k, even to $1million, or to any amount, makes sense.
Focusing on your human capital and earnin ability when you are young take precdence in my opinion, so I totally agree with him!
We spoke about it in a webinar here:
This number is not scalable and not catered to an individual's ability. As such I avoid such vague numbers. A better rule of thumb is to ask what is your current income and scale from there:
While the 100K goal is a great milestone to hit, financial goals should ultimately be individualised. There are many factors to consider, including age, annual income, family situation and others. In "The Millionaire Next Door", Thomas J. Stanley groups accumulators of wealth according to this formula, which attempts to account for 2 variables: age and annual income.
The formula is: Age x pre-tax annual household income from all sources, except inheritances / 10 = your “expected” net worth
"Prodigious accumulators of wealth" are people who have a net worth twice their expected level. Instead of focusing on an absolute number (e.g. $100K), it might be more worthwhile using a formula such as this and reaching for whatever number is expected for your age and annual income.
I think it all depends on how self-motivated you are. in the woke salaryman's blueprint, he stated how he watched YouTube videos to learn video editing and other skills and even joined competitions to hone his skills. he was very driven to upskill himself and create other sources of income.
I am into self-improvement as well, particularly translation and foreign language learning, but i doubt i can relentlessly devote myself to upskilling. sometimes i just wanna chill and watch movies/dramas/plays. to give you a specific example, apart from a full-time job, my brother used to work on Sundays as a pharmacist with Guardian Pharmacy. very diligent. i used to look at him and think that he was working way too hard.
so in order to attain that $100k, we must make sacrifices along the way. are you prepared to make these trade-offs?
Much, much more than that.
Just take it as a pinch of salt for benchmark.
Everyone has different circumstances and different needs.
If you can hit 100K and be happy that is great! If cannot hit 100K and still be happy is great too!
I make videos about interesting stuff at youtube here
Show More Products