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FI Weekly – September 22, 2020

Back to Basics: The Impact of Fees

Following our theme on the podcast of ‘Back to Basics’ I wanted to quickly touch on the impact of fees on your investments. This illustrates why we believe in low-cost index funds so strongly. From Vanguard’s site:

“Imagine you have $100,000 invested. If the account earned 6% a year for the next 25 years and had no costs or fees, you’d end up with about $430,000.

If, on the other hand, you paid 2% a year in costs, after 25 years you’d only have about $260,000.

That’s right: The 2% you paid every year would wipe out almost 40% of your final account value. 2% doesn’t sound so small anymore, does it?”

wrote an article years ago that walks you through a few examples – I think it’s good to get a refresher on this critical topic.

ChooseFI Foundation: Easy Way to Support

I just found an incredibly easy (and free!) way to support our Foundation’s mission to bring FI and financial literacy to underserved communities.

At ‘Amazon Smile,’ with one click you can select the Foundation as your designated charity and then do your future Amazon.com shopping at smile.amazon.com. Amazon donates 0.5% of the purchases at no cost to you. We greatly appreciate your support!

What I’m Reading

Two friends I highly respect both recommended “Breath: The New Science of a Lost Art” by James Nestor and I have to say, I’m blown away by the concepts in this book.

Similar to how meditation has become commonplace in the past decade, I think dedicated breathwork will follow the same path.

I’m always looking for small upgrades to my health and wellness and breathwork is simple, free, and quick to implement. Just the concept of reducing your mouth-breathing is worth the price of the book alone (of course check the library first!!).

ChooseFI Community Taking Action This Week

  • Alejandra said, “I called my car insurance company to get a new price quote. Because I work from home, they were able to adjust my annual mileage. This dropped my monthly payment from $108 to $63. That’s an extra $540 in my pocket a year! All because I simply called to ask. The call took a total of 15 minutes.
  • Alex said, “I made my life 1% better by house hacking a spare room in my house. Because I have been paying my mortgage on my own since I bought the house in June, I am investing the $600/month so that I can scale into a duplex or triplex in the next 3 years! By then, I may be able to fully rent out my current home to passively build equity while using the multifamily to live rent free.”
  • Brooke said, “I paid down another $1200 on my student loan, knocked out 2 more credit cards, and brought my credit up another sizable chunk. Baby steps every month have added up!”
  • Leslie said, “We cancelled our major tv streaming subs. Giving us about $60 a month back and more importantly time for our kids to be creative and playtime back.”

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Lessons From a Young Entrepreneur | Ep 422

At least once in most of our FI journeys, we have pondered what our life would look like if we started earlier. Maybe you have even wondered what value could’ve been gained if you had started in your teenage years. Well, for some context into the possibilities decision that could provide, we decided to have 17 year old listener Devin on the podcast to discuss what life can look like when you go against the cultural norm of going to college, and instead opting for an entrepreneurial and FI friendly lifestyle. Oftentimes we mention that there are rewards that come with stepping out of your comfort zone, and the same can be said for going against the societal norm and carving out your own path! For our younger audience who may be interested in getting started with their FI journey, let this episode be a useful resource and reassurance that this journey can begin no matter your age!

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