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Why you should max-out your retirement account (with graphs)

You may have read before that maxing out your Company provided Retirement Account is a good idea. It is actually a fantastic idea considering the amounts of money that the government and your company are willing to give you to participate.

But how good is that idea? Someone who maxes out its 401k could be making 65% as much in retirement as someone who doesn’t participate. Let’s put this on a few graphs to see what is the actual $ benefit of maxing out your contributions.

Liebster Award!


Last week-end I received a Liebster Award from my fellow blogger over at MyMoneyfesto, so thank you very much FelixMoney for the nomination!

If you haven’t already, go check out his blog at www.mymoneyfesto.com. He started his blog in January, bought a business in February, sold his house in March, all while working his full-time job! I suspect he has some special power that allow him to sleep only 4h/night (supporting my guess is that his nomination came in at 1:30AM Sunday morning) so I’m sure he’ll do great with his business ventures and I look forward to reading and learning from his experience along the way.

3 reasons to have a Strategy for Financial Independence


We all have goals.

Some are short term (I really want to publish this post tonight!) some are longer term (I want to make enough money to retire early) and we know all too well that life has a tendency of getting in the way of our ambitions.

This is where a Financial Independence Strategy is helpful, to keep us focused on the important goals and not get lost when life gets in the way.

How to Calculate your Net Worth


Simply put, the net worth of an individual is the amount by which his assets exceeds his liabilities. In business terms, the net worth is also known as the book value.

Why does it matter? The net worth is the single most important number to estimate an investor’s ability to retire early. Income is important, the Savings Rate is important but they both contribute to the same goal : increasing the net worth.

Berkshire Hathaway 2014 Financial report is out!

“Fifty years ago, today’s management took charge at Berkshire. For this Golden Anniversary, Warren Buffett and Charlie Munger each wrote his views of what has happened at Berkshire during the past 50 years and what each expects during the next 50. Neither changed a word of his commentary after reading what the other had written.”

The report is available here: http://berkshirehathaway.com/2014ar/2014ar.pdf

Guidelines to an effective asset allocation


An Asset Allocation is typically based on 4 types of basics assets:

Stocks, Real-Estate, Bonds and Cash and a target allocation very much depends on the individual, his/her goals and time horizon as well as the tolerance for risk.

The main interest of an asset allocation is to diversify an investor’s portfolio is a relevant manner. Rather than proposing a 1-size fits all, this article provides guidelines for Conservative, Moderate and Aggressive investors, based on the “Life-Cycle” allocation model.

3 easy steps to determine your asset allocation


Being able to determine early what is our current asset allocation is one of the important steps to build a path towards Financial Independence.

Knowing where you’re going starts with knowing where you start from. The gap is where we will invest our hard-earned dollars and get our money to work for us.

Because this isn’t a trivial process, the results can be quite surprising!

How to Get Rich 101: Make your money work for you


Stop working for your money

Working towards being Financially Independent is precisely having the goal that at some point, you will have enough money working for you so that it can cover your living expenses. Until then, the only money that covers your rent, your internet, your cellphone, your cable TV … is the money that you work for.

If you do not want to work for your money forever, you have to stop working for it and start making it work for you.

Become a Millionaire


With Discipline …

You have probably read on the internet numerous articles on the 5 steps that will make you a millionaire. I have come across articles that will recommend you drop out of school and start your own (very successful) company, recommend that you delay getting married later until you are 40 and even go as far as recommending to stop buying coffee. Not everyone can start another Microsoft or Walmart. Delaying a marriage until 40 won’t work for a lot of people. Quitting coffee certainly isn’t for everyone either!

There is today in the US a record number of households with a net worth 1+M$, at around 9.6M households. While this number is high, it should be higher and you should be part of it!

How much money is enough money?


It depends

You have probably heard that question before and it is one similar to “What would I do if win the lottery?” as they are both very vague and expect no actual answer other than “it depends”.

However, let us try to frame that question from the perspective of a couple that is aiming at becoming financially independent and who are willing to prepare for the most important expense of their life : their retirement years. If you can figure out how to get prepared for your retirement, you will probably find it easier planning for intermediate expenses along the way (houses, kids education, …).

In addition to retirement being the largest expense to plan for, in many developed countries, the pension system is broke. Our financial savvy couple has better have a plan to have enough money when the time to retire comes, especially if they are currently in their 20s or 30s: there will likely be no retirement or nothing meaningful to support your life-style.

So don’t count on it and start building your own retirement pot.