Choosefi | Financial Independence Podcast For The Stealth Wealth Community

After four years of working on the ChooseFI podcast, Brad and Jonathan want to share their lessons learned, the list of things they might do differently, and highlight a few episodes to re-listen to. Brad is back in the studio after missing out on Episode 290 with Paul Merriman. He's doing fine and appreciates everyone's concern. With Paul Merriman's Ultimate Buy and Hold Portfolio strategy, the thesis is that diversity is great, but own equal amounts of all asset classes versus a cap-weighted index fund to capture the growth potential of small companies. Unfortunately, for the last 12 years, the majority of growth has come from large companies. Brad says Paul's book reads like a FI manual with a high-level overview of small steps that could be million-dollar decisions. The decisions are not little. As discussed in Brad's The FI Weekly email this week, the Rule of 72 states how long it will take you money to double at a given rate of return. 72 divided by the rate of return is how many years before the mon

Does your portfolio own enough of the companies that carry a lot of the growth over extended periods of time? When you buy index funds, you aren't as diversified as you think you are. Cap weighted index funds mean you are buying a lot of the companies that are doing really well. But there are two asset classes Paul Merriman is a fan of that he thinks don't get enough attention, small cap and value. Although many people claim to believe in a buy and hold strategy with investing, their behavior says otherwise. They like to buy when things are hot because they believe it's going to keep going up. If you look back as far as 1928, a lot of the time the S&P 500 is walloping small cap value returns, yet at the end of this 92 year period, small cap value made 24 times the amount of money the S&P 500 did. Even though there are long periods of underperformance, when small cap value does take off, there is outstanding performance. Then when it reverts back to the mean, there is a higher compound rate of return.

For almost 12 months, we've all been trying to do the best that we can. As frequently discussed on the show, we try to do things slightly different, optimize in the ways that we can, and make the best of the situation. Jonathan's wife Dani has been coming up with all kinds of creative little activities for the kids. Even Jonathan was recruited for a rock painting project. Brad has been listening to a new podcast, Ordinary Sherpa, created by Heidi, a member of Jonathan's Talent Stacker podcast. The podcast is about creating little adventures in life with your family. At the same time, in the mastermind group Brad takes part in, he was inspired by a discussion related to dads really showing up to be a part of their kids' lives. The podcast theme and mastermind group discussion converged for Brad when his daughter, Molly, asked him to go explore the creek with her. Rather than playing along for a minimally acceptable amount of time, Brad showed up like he really wanted to be there and they had hours of fun expl

Should you rush to reach FI? Or use it as a map in a lifelong pursuit to master your relationship with time, money, and happiness? Brandon, from the Mad Fientist, wishes he would have found more free time to work on other goals while on his journey to FI. When Brandon was first on the show four years ago, he had just reached FI and discussed the psychological hurdles he had to overcome. What's changed for him since then, and with the benefit of hindsight, what would he do differently? Brandon's dream as a child was to write music and put it out in the world. However, his musical tastes are not mainstream, so becoming a pop star was never one of his ambitions. He did not want to just be a consumer, he wanted to be a creator and always felt that it was his job that was holding him back. It wasn't until after reaching FI that he realized it wasn't was what holding him back at all. He had been spending his free time on things like television on travel instead of his music project. His problem was psychological.

Are you the kind of person who sets New Year's resolutions? Like many Americans, Jonathan used to set weight loss goals for the new year, but not this year. Instead, he and his accountability partner, JD Roth, spent the previous nine months working on it and began the year, at or very close to their goal weight. Not having to work on big weight loss goals is allowing Jonathan to be aware and focus on testing smaller adjustments that will make him feel better and have more energy. Brad once had an experience while on vacation that made him realize how his normal diet was causing him joint pain. He wasn't even aware he had joint pain until one day it was gone. It was only then that he understood he had a problem that needed to be worked on. When you live an examined life, you don't have to accept the things that are reducing your capacity to function as normal. Brad thought his morning smoothies were a healthy choice, but it turns out the negative impact was a sugar crash necessitating an afternoon nap. It was

Many industries we once believed were recession-proof have proven otherwise. What can we do to build multiple streams of income and the resilience needed so that we're not reliant on anyone else for financial security? Side hustles and passive income are key strategies. Daniella worked for an IT company for four years when they laid her the weekend before her wedding. Luckily, she quickly found a remote job working as a contractor but was laid off from it as well. The layoffs ruined Daniella's confidence and self-esteem. Before the first layoff, she was living paycheck to paycheck and carrying debt. Occasionally, she needed to sell things for gas money until the next paycheck arrived. It was a financial low. Daniella still had the severance from her first job in an emergency fund and was encouraged to freelance to keep stable while looking for a new job. Freelancing was something Daniella had some experience with and reached out to an old client. The talent stack Daniella developed was not simply technical.

What You'll Get Out Of Today's Show 2021 kicks off the fifth year of the ChooseFI podcast. Despite being at different points in their own financial journeys, Brad and Jonathan have experienced the benefit of incremental growth with both their finances and self-improvement. While it may seem simple and even mediocre, they are living amazing lives. You need to control what you can control, starting from wherever you are. If you can optimize at the margins, you can reclaim decades of your life. It's not just the ChooseFI podcast trying to share this message and concepts. The entire community is working to share this message. In a Facebook post from Jessica, she shares that her goal at the age of 19 was to save $5,000 so that she could feel stable. She began finally saving at the age of 26. By spending less and earning more, five years later, she hit the net worth milestone of $100,000. The concepts ChooseFI presents are not new. The show brings information together to tell a story to motivate and encourage peop

When it comes to investing strategies, one of the most influential books available claims that if you keep it simple, you'll actually do better. Here to talk about the philosophy behind his investment strategy is one ofChooseFI's most requested guests, JL Collins, author of The Simple Path to Wealth, and popular blog series, The Stock Series. The influence of JL Collins cannot be overstated. The content he produced changed the trajectory of Brad's life and made him feel comfortable investing. In 2011, JL's daughter was in college but was turned off of all things financial after he pushed too hard. Because he wanted her to know how to invest and handle money, he decided that he needed to write it down for when she was ready. It was suggested that he archive the advice in a blog and share with friends and family. Much to his surprise, strangers began to find it and he quickly had an international audience. The book came out of the growth of his blog. Always having the ambition to write a book, The Simple Path

It's Part 3 of ChooseFI's end-of-year wins where we hear directly from our community members. During this live event, listeners shared the actions they've taken during the past year that have helped them to spend less, earn more, and enjoy the journey. This year, the year-end-win episode took place in a three hour live Facebook and YouTube event featuring around 20 members of the community. Are you building an amazing life or are you a cog stuck in a very depressing wheel? It could be either or it could be both. The community members featured in this end-of-year wins episode have had the wake-up call. We can't control everything, but there probably are some things we can control that we haven't yet considered. Hopefully, these wins from the community will provide inspiration and imagination to find improvement with at least one thing. Our first win comes from Sara, who teaches high school science. She began listening to the podcast in December of 2018 and after binge listening to half of the available episod

It's Part 2 of ChooseFI's end-of-year wins where we hear directly from our community members. During this live event, listeners shared the actions they've taken during the past year that have helped them to spend less, earn more, and enjoy the journey. This year, the year-end-win episode took place in a three hour live Facebook and YouTube event featuring around 20 members of the community. After listening to the podcast for months or years, how did individual members of the community take in information and take action leading to success in a very challenging year? Success isn't just the nuts and bolts of money. Ultimately, it's a life optimization strategy. In response to Brad sharing in an earlier episode that he was joining Alan Donegan in his burpee challenge, Christine wrote in to share that she was inspired to step up her run by throwing in burpees along the way even if she couldn't complete the pushups. Being perfect isn't realistic. Challenge and struggling are important, as is trying to get to the

It's the ChooseFI Christmas Edition where we hear end-of-year wins direct from our community members. During this live event, listeners shared the actions they've taken during the past year that have helped them to spend less, earn more, and enjoy the journey. This year, the year-end-win episode took place in a three hour live Facebook and YouTube event featuring around 20 members of the community. Despite how tough this year has been, many people were able to implement some of the strategies and tactics discussed on the show into practice and find more margin in their lives. The first featured win comes from Valerie. She purchased a condo a couple of years ago and has been working on renovating it. While not a financial win, Valerie says putting it behind her is her biggest personal win. Finally closing out the permits allowed her to refinance her mortgage, saving her $466 a month. She was also able to pay off her credit card renovation debt, saving her an additional $600 a month. In total, Valerie paid off

Is it possible to live fabulously without being fabulously broke? The Debt Free Guys say you can. After a year and a half of dating, John and David finally came out of the closet to each other regarding their finances. Between the two of them, they had $51,000 in credit card debt even though they had 15 years of experience in financial services helping others with managing their money. Starting with the first credit card his parents gave him for emergencies, David began a 17-year run carrying credit card debt. Instead of reserving for emergencies, he viewed it as a source of side money and never understood the value of paying it off. Despite never paying the balance off, his credit card limits kept increasing. After accumulating a significant amount of credit card, he began having trouble making even the minimum payments. Once, when his parents wired him money, it was immediately garnished from his bank account because he had failed to make payments. And yet he still didn't learn his lesson. Both John and

Teachers have been getting taken advantage of when it comes to their investment options. Thankfully, the internet and technology have made it easier to get the word out and help teachers wanting to do better. During his first year of teaching, Dan Otter was asked if he cared about his financial future. He politely listened to a hardball sales pitch about an investment scheme he didn't fully understand. Rather than blindly following other teachers at his school who had invested in it, Dan began to educate himself by learning about John Bogle, Vanguard, and low-cost investing. He learned the salesperson who had approached him was trying to sell him a high-cost annuity inside a 403b and that it was a terrible product. Unfortunately, most of his colleagues had signed up for these poor investment products despite having more than 100 options available to them, including Vanguard. Dan began to speak up and asked pointed questions when other teachers began to talk about their sales agent in the teacher's lounge. Th

Don't fall for the misconception that financial independence is just for 20 and 30-year-olds. It is for everyone at any age and it's not too late to get started. Amy had a wake-up call in her early 40s. Starting with no net worth, through flexibility and adaptability, she got started and reclaimed decades of her life. Amy describes herself as a trier of many things. She used to wonder how other people do it. How do other people drive new SUVs, live in a large home, dine out, and save for their kids' education and their own retirement? She says most people don't do it all. You have to select for yourself what's important and save wisely to spend on it. Previously, Amy was trying to keep up with everybody else, thinking that she needed it all to be happy. She was buying all the stuff but wasn't saving for the future. She heard something on the radio one day about needing to save a million dollars for retirement and thought it didn't seem possible to get there. She and her husband were in their 40s and she kn

Setting up your financial life includes updating your investor policy statement and examining the rationale for equal weighting inside your index funds. Brad is giving his physical fitness a boost in December with a month-long burpee challenge. A full-body exercise that can be done quickly at home without any equipment, Jonathan asks what would change about your life if you took the challenge of doing 10 burpees every day for the next year? Brad was inspired to take on the burpee challenge after watching Alan Donegan and his wife, Katie, in a video they posted of themselves doing burpees. They weren't holding anything back and completing each rep with a high degree of difficulty. He wondered what it would look like to give everything your all in life, like Alan and Katie were with their burpees? Jonathan reflected on how he is often more focused on getting to the end result than he is in the quality of the movement, which he likens to the old saying about losing sight of the forest for the trees. We should

Continuing the conversation discussing financial basics, today's episode covers how to get started investing, banking, and setting up your financial life. As a recent college graduate, Brad had the motivation to get his financial life together but didn't really know how to go about doing it. During his first job, he wanted to open up a Roth IRA after learning about the power of compound interest. Unfortunately, the investment advisor who helped get him set up invested in a fund with a 5% upfront load. That means 5% of his investment automatically went to pay the advisor's commission. Brad'sinvestment was treated like a quick payday for the advisor. Not all financial advisors are bad, but you can learn how to get set up with a low-fee or no-fee investment without feeling confused or overwhelmed by the process. It's important to understand all of the possible fees that can impact the return on your investment. In addition to load fees, there are other fees to watch for, such as assets under management fees whe

It's no secret that Brad and Jonathan's families are board game fans. One way they can typically save 20-60% on the cost of board games is by watching for price drops on Amazon using CamelCamelCamel. Brad was able to save a substantial amount on the purchase of a squat rack simply by being able to stand by and wait for the price to drop. Listener Liz heard about CamelCamelCamel on the podcast and added a list of board games to her watchlist. She was eventually able to purchase all of them at roughly half the list price. Life may be the ultimate board game where your finances are a piece of it. When you know the rules, it makes it easy to win. Just like there are strategies for winning at Monopoly, there is an unwritten and unspoken framework for living a better life. Now that 2020 is getting back to a more steady-state, it may be time to start wargaming your finances and look at your risk tolerance. This year that stress-tested our investor policy statements and mindset. Perhaps you don't have the risk tol

It's end-of-year tax planning time. As you get further along in your financial independence journey, there are likely more end-of-year tax planning items you'll need to be aware of. Having a checklist to review annually is useful. It's been an unusual year and December is that time to begin making end-of-year tax considerations. In addition to the normal checklist, there may be additional items to consider in this remarkably different year. Sean Mullaney says unique to 2020 are Roth conversions. While Roth conversions should be on the checklist every year, this year there was a much greater chance of diminished income which may provide the opportunity to make Roth conversions in a lower marginal income tax bracket. In any year when income is much lower than it normally is, Roth conversions would be at the top of your mind. The deadline is December 31 and there are no extensions. While complex situations may benefit from professional consultations, anyone with mostly W2 income can find their tax brackets on

We're going back to basics and taking a deep dive into the Roth IRA and the levers, tools, and investing strategies available to investors. Although ChooseFI offers the free FI101 course, taking small actions are important. Get up to speed and start taking action with the free five-day challenge by going to ChooseFI/start. ChooseFI has presented basic investing strategies over the years and will revisit in the coming months to distill and hash out all of the different methods to understand the fundamentals. Many of the strategies have a lot of overlap starting with low-cost broad-based index funds. What they all share is a common-sense approach and simple investing strategy which is that time in the market is better than timing the market. Most traditional index funds are cap-weighted resulting in a higher percentage of money being invested in a few top companies. Rather than take a dogmatic approach to low-cost broad-based fund investing, it may require the application of scrutiny, being open-minded, intell

As the ChooseFI community continues to grow, it's necessary to discuss some fundamental basics that serve the audience who are just getting started, as well as provide a refresher for those who have been on the path for a long time. In this episode, we revisit the magic of compound interest and investing for beginners. Getting to financial independence where work becomes optional and your investments are producing enough income to live off of for the rest of your life is easier when you understand why saving and investing now is important. Kimberly asked a question in the ChooseFI Facebook group requesting help understanding compound interest and the basic principles of a compound interest account. Investopedia states that interest may either be simple or compounded. Simple interest is based on the principal amount. In contrast, compound interest is based on the principal amount plus the interest that accumulates on it every period. For example, in a simple interest calculation, a deposit of $1,000 earning