Common Sense and Money: A Conservative Path to Financial Independence


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Time for Common Sense

All the benefits of Premium Digital plus: Convenient access for groups of users Integration with third party platforms and CRM systems Usage based pricing and volume discounts for multiple users Subscription management tools and usage reporting SAML-based single sign on SSO Dedicated account and customer success teams. Learn more and compare subscriptions. Or, if you are already a subscriber Sign in. Close drawer menu Financial Times International Edition. Search the FT Search. World Show more World. US Show more US. Types of managed funds Things to consider before investing in a managed fund Buying units in a managed fund Keeping track of your managed fund's performance Types of managed funds Managed funds come in all shapes and sizes and it is important to understand the differences so you can choose a fund that suits your needs.

Single asset or mixed asset managed funds Funds differ in the types of assets they invest in. There are funds that invest in: A single asset class, such as shares or bonds A mixed asset option, such as a balanced or growth fund, which contains a mix of different asset classes. They can include government bonds, bank bills, or mortgage-backed securities.

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The risks of these funds vary greatly depending on the borrower and the purpose of the loan. You receive income as long as the borrower pays their interest. Interest is generally higher than bank deposit interest, but it is also riskier.


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Your investment does not increase in value and it may decrease if borrowers cannot repay their loans and the property cannot be sold for a good price. These funds offer the potential for high returns but with higher risk. You might not be able to withdraw from the fund at short notice; however, this is easier if the property trust is listed. You are not guaranteed a fixed rate of interest or return of your capital.

Mixed asset managed funds Funds that invest in different types of asset classes, also called multi-sector funds, are labelled according to the types of investments that make up the majority of the portfolio. Your investment options Here are the typical investment characteristics of different types of investments options. Listed and unlisted managed funds Traditionally, managed funds were unlisted investments, purchased by applying to a particular fund.

Things to consider before investing in a managed fund Risk and investment timeframe Now that you have an idea of what you can invest in, you should consider: what returns you need to achieve your goals over what timeframe you will invest the level of risk you are comfortable with. Look at long-term performance of managed funds If a fund performs well in one year, this is no guarantee it will do just as well the next year.

Managed fund fees Funds charge a range of fees for managing your money. Entry fee - Also known as an initial contribution or up-front fee. If you deal directly through the fund or use a discount broker, you may not have to pay an entry fee or it may be rebated back to you.

If you use an adviser, you may be able to negotiate this fee. Contribution fee - Similar to an entry fee and charged on each additional contribution you make to the fund. This fee may also be negotiable. It is typically between 0. Funds offering a nil entry fee option will usually charge higher MERs for customers who don't pay an entry fee.

This could cost you a lot more in the long run. Performance fee - This is an extra fee the fund manager may charge if the investment return is better than the benchmark or target return. Adviser service fee - An ongoing fee paid to your adviser for providing advice and arranging your investments.

Compare managed funds and the impact of fees over time. Finally, from hearing horror stories around the web and from family and friends, I knew car ownership could become ridiculously expensive. This was my third priority. Now that I had my priorities, I spent the remainder of my money on fun things. I only hold checking and savings accounts at banks that don't charge fees.

For online spending, I primarily use whatever credit card is offering the best cash back. For in person spending, I use a debit card, to keep impulse buying in check. I never allowed myself to spend more than I had , in high school, college, and beyond, so I've never paid the credit card companies a dime in interest.

This is probably one of the smartest things anyone can ever do.

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Once you fall into the trap of easy credit, it is so difficult to dig out. Most of the success stories you read about online begin with people drowning in credit card debt and eventually paying off their burdens. Educated myself by reading books from the library, blogs, and other online resources. Use it carefully. This covers 4 months of our expenses. This set me up to pay off my student loans 5 years ahead of schedule and save thousands of dollars in interest payments. Because of this aggressive saving, we saved enough to put a down payment on a condo in 3 years.

Build my savings for future expenses, such as a wedding ring, car, or house down payment. I recognized that in the near future I would probably have more expenses, both recurring and one-time. Because of all these changes, my priorities have changed a bit.

Basic Personal Finance for Beginners

Especially important has been continuing my financial education with big picture thinkers like Mr. The global financial big picture has also changed dramatically. New financial products have become available that were not available 3 years ago. The Roth TSP option became available. My wife has never been one for the plan. I was onboard until I started reading more and questioning a lot of assumptions:. What I found was that there IS another path. A path towards financial independence and the freedom to retire early, start a business, take on a second career, spend time travelling, learn a new language, or do whatever you want.

So as of today, December , this is our current roadmap to financial success and lifelong happiness:.

The Case for Conservative Early Retirement Investment Projections

We continue to not accumulate any new debt by automating our savings, spending wisely, and never buying anything we can't pay for immediately. I recently retired my USAA Career Starter Loan, which can be an awesome opportunity to start your military career by paying off your existing higher interest debt or can be a ball and chain you wear for 5 years.

Since Roth IRA contributions can be withdrawn at any time, we are happy to contribute the max every year and invest in diversified Vanguard funds. Because my pay is essentially untaxed through tax free combat pay , the money goes in untaxed, grows untaxed, and can be withdrawn after age We also love living in the moment. Balancing the two is a constant struggle for many people. We have chosen to spend money on the things that maximize our happiness: family, travel, friends, and good food. We can afford these things and still save for FI because of our lifestyle choices.

Small things like this make a world of difference. That leaves 20 years from when we become financially independent until we can access our tax advantaged retirement accounts without penalty, at age Since we take a long term investing view, we invest with low cost, diversified Vanguard funds.

As of May , we are well on our way to achieving FI by age We are rapidly retiring my remaining student loan debt. Because the interest rate on this debt is so low 1. Our income continues to increase through time in service pay raises and promotions in addition to another income generating projects such as AirBnB and this website. We are very excited for what the future holds and to watch our progress towards financial independence at age Check back on this blog for updates! Do you and the wife plan to have kids?

Or to simply continue DINKing? All the same principles apply whether you have no kids or four. His wife still works part time. Plenty of money to be had for those who work for it. There are plenty of people making three times as much as me with a tenth of the net worth.

Common Sense and Money: A Conservative Path to Financial Independence Common Sense and Money: A Conservative Path to Financial Independence
Common Sense and Money: A Conservative Path to Financial Independence Common Sense and Money: A Conservative Path to Financial Independence
Common Sense and Money: A Conservative Path to Financial Independence Common Sense and Money: A Conservative Path to Financial Independence
Common Sense and Money: A Conservative Path to Financial Independence Common Sense and Money: A Conservative Path to Financial Independence
Common Sense and Money: A Conservative Path to Financial Independence Common Sense and Money: A Conservative Path to Financial Independence
Common Sense and Money: A Conservative Path to Financial Independence Common Sense and Money: A Conservative Path to Financial Independence

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