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drbubb

Where are you on the Path to Financial Independence?

The Path to Financial Independence  

133 members have voted

  1. 1. What stage have you reached?

    • I haven't started yet: what is all the fuss?
      0
    • I am spending more than I make, and need to change that
      6
    • I'm free from most consumer addictions: spend on only what I need
      20
    • THe only debt I have is mortgage debt
      25
    • I have no debt at all (except financing my investments)
      30
    • I am debt free, and have a job I like
      44
    • I am debt free, and no longer need to work
      9
  2. 2. How long before you expect to reach Financial Independence?

    • Never. I expect to die in debt, still working
      7
    • I will be financially independent when I retire
      39
    • I should be F.I. in about 10 years
      31
    • I should be F.I. in 5-10 years
      26
    • I plan to be F.I. in 2-5 years
      15
    • I can see F.I. within two years
      3
    • I have already reached Financial Independence
      13


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I havent reached that all elusive "middle class lifestyle". Spending time with my children is a huge luxury. I've never been happier. But its a gamble re future income which makes preserving existing assets even more important during these interesting times. If I had the trading skill and the guts of some on this board then I'd be financially independent now. For me, just staying out of FTSE since Christmas was brave - and probably wrong too. Now, at the eye of the storm, is the once in a lifetime opportunity to save assets before the coming depression/inflation/war/revolution/socialist state (pick one). I just can not work out the right place to put them.

 

Thats a thougthful post George

 

Hopefully if you kids appreciate your good work that will prove a worthwhile investment if they will look after you in older life

 

Being 38 myself and having some assets, sharing some of your concerns and appreciate your comments

 

But also appreciate No6's comments - aim high and not low - otherwise one will only hit the low target.

 

Maybe we should get Gov jobs with guaranteed pension benefits

- I see BP is out (final salary scheme chopped for new members today)

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I'm bumping this.

It is always an interesting topic

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I'm bumping this.

It is always an interesting topic

Agreed.

 

Where am I on the path to FI?

Depends what you mean by FI. Does that mean not having to work at all, or being able to choose what to do?

 

If it's not working at all then I'm not very far!

I have some savings. I could jack in work tomorrow and be ok for 5 years, so I guess that's temporary FI.

I have about £700 of dividend income per annum. Not much but a start and rising every month.

 

I'm also looking into doing some accountancy qualifications at evening classes and in a few years perhaps setting up as a self-employed accountant on the side. Extra income and diversified from my main teaching job.

 

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I have to say I am at step 1.01. I have a little capital in ISAs and a PEP but this will hardly last me a lifetime! I also get shares in my company as part of my remuneration package and over the years this has amounted to a sum that would last me a couple of years. I know I can do better than this, so I have decided to get my house in order.

 

My job has a lot of advantages, but also significant disadvantages so I am planning on making an escape as soon as I can. My initial aim would be to have a sufficient body of money that I can undertake a career change to do what I want to do and not worry about living costs or retiring.

 

So here we go...my first real steps on the road!

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(I am going to transfer this thread to the MAIN section.)

 

I think many of our members, and maybe especially new members (?) are at the same stage as Rifleman.

 

It would be interesting if some of our older members can talk about any progress that they have made over the past 2-3 years.

 

In my own case, I am still trying to recover wealth lost in 2008. But even so, I am more comfortable living with what I have and have become more conservative (ie more "risk averse" since 2008.) That has not served me well. I would have done better to take MORE RISK in 2009 and 2010. But if markets slide again in 2011 or 2012, I would expect to avoid the LOWS of 2008 - both emotionally and financially, I hope.

 

Maybe if I was younger, I would have been more comfortable taking more risk.

 

One challenge that I find hard to beat is the current low interest rate environment. For those who have capital that they would like to invest in (low-risk?) financial assets, like government bonds, current ultra-low rates and increasing government deficits mean that these assets are not providing a favorable risk/reward. Savers are being robbed to subsidise debtor, including those who were reckless and borrowed more than they could afford to pay.

 

The current ultra-low rates very unfair to those who were prudent and avoided debts. And it does also show that our society has become morally corrupted to the point that "robbing savers" has become a widespread strategy of most Western governments. This is chasing people into unproductive investments in precious metals which is doing little or nothing to build a more efficient economy. So true good times seem many years away.

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STR'd in 2009.

 

Have so far invested in gold and silver via Bullion Vault, not thinking of selling, buying dips from time to time.

 

Working to pay for living expenses.

 

Taking a long term view in developing my investing skills.

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OMG, i posted here almost 4 years ago. Time has flown and I need to focus better. Work took off and I neglected investing a bit. However, true to what I said, I made sure my investing style realistically matched the time and effort I could spend on it. That meant slowing down on the trading. I avoided much of the bad patch when the markets tanked as my system got me out and the losses I thought I had made were much smaller when converted into GBP. Alas, the lesson learnt about sticking to a system did not last into the recovery. My system told me to buy but I was convinced it was a bear rally like in the 1930's (where the bigger losses were after the initial fall). And then work took over and it all passed me by. The key lesson from all this was to focus on physchology and hence I've been reading up on its role in trading. I need to apply my system consistently.

 

I have also become more sophisticated and conservative. I have set up funds to focus on different objectives - hard assets for wealth preservation, income for conservative growth, and trading for capital accumulation. I have watch lists, triggers and patience for each. I have also bought a cottage and land for when things blow up and am buying all sorts of capital goods I will need as this seems a good place for my money in a high inflation and low interest environment (yes I know, just what the bu**ers want me to do). At last I feel like I have a strategy, understand the underlying drivers to my environment, and feel in control. All i have to do is control the physchology and execute in an consistent manner. I also need to focus on investing more and work less. My biggest questions now are how much do I need to retire (i.e. switch to investing full time) and do I still have more work related things to prove or do first?

 

Funny thing is, the wealthier I become (thanks mainly to PMs and income) the less things I want (my next car will be a C1 or similar!). As Ronnie Barker once said, no-one got rich by wasting money! We're all on a path and what we set out for changes as we walk it. We also become more understanding of, and closer to, our "fathers" and those who have walked ahead of us. It's rarely an untravelled path.

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I am taking the unconventional road. I set up with a broker at the start of 2009 to trade options with some of the cash from my STR fund. I STR in September 2007.

 

Screenshot2010-11-18at080306.png

 

A year ago my girlfriend and I bought a home again, she wanted the security of ownership, I yielded. But, we live in a beautiful location on the west coast of Scotland, with an inspirational view. Occasionally the view pulls me away from the prices on my screen.

 

 

Screenshot2010-11-18at081243.png

Stop distracting me

 

I funded my account with an amount that I intended to blow, just to practice trading, (a small sum). After I'd run that down to 30% I put much more in and continued trading options. My broker recently added some taxation functionality that allows you to analyse all your trades, I had turned over many multiples of my account over the first 18 months, and was down, but only slightly, mostly down to the commissions involved. I gained a lot more than I had lost - very cheap tuition. For the first 18 months I was simply churning my account.

 

 

Screenshot2010-11-18at081020.png

Contemplating churn

 

I started with a belief that if you are determined and have an iron will, you can achieve whatever you set your mind to in life. Clearly I had many doubts during the churn period but, unless you are some sort of genius, it's not going to work straight away. More recently I have turned my hand to trading futures and well, how much easier it is to trade them than options, it seems a much more natural way to trade. I always wanted to create my own "work" and that is what I am in the process of doing at the moment. Having developed my own indicators I am seeing some success with trading now, and I have engineered a situation whereby I work one week at the day job, and do reduced hours every other week, so I can trade full time during that other week, thanks to the 2.30pm open of the US markets. I didn't have a particularly large amount to start with and actually, for me, I believe that has given me a large advantage over others. I had to learn how to control my risk quickly and play to my strength, being able to think for myself in a creative manner. I also post on another forum www.bigmiketrading.com, an interesting place to learn about trading but sometimes I don't understand the approach others use (eg scalping).

 

So where am I on the path? Well, relatively near the start. However the system I have developed, (the indicators / trading plan) is doing very very well. More than I thought would have been possible a year ago. It's averaging over 100 NASDAQ points per month, although it's almost there this month (99.25). I am very pleased with the consistency of the system I have developed so far. The big question of course is whether it's sustainable longer term. I should point out that that is not what I am gaining per month, since I am not available to trade all the signals. Actually I would have been better off if I'd have given up work to concentrate on it full time but to me that is very risky since it's very early on. I am going through a process of trading it and developing it, I am at week 12 and already I am happy with it, although I am reading a lot from other traders to see how I might finesse things. The great thing about trading futures is that it is scalable. I have made mistakes, but I am still profitable despite them, I seem to have developed a highly profitable system, but I must not get ahead of myself, it's early days, if after a year I see consistent gains month in month out then I/it will have proved itself. My aim is to grow my account to a point where I am comfortable with the system such that I can add to positions, or trade more contracts with the initial position whilst keeping overall risk very low. It seems very consistent so far, obviously very important. I want to work with it for 12 months before I get more adventurous. After I have a year of trading futures behind me I may look at approaching a proprietary trading firm, so I have more capital and experience to trade with. Working with other professionals would help me a lot I'm sure, since everything so far is what I have learned/created myself. It's not very British to sort of promote yourself as being good at something, and I am really quite a modest sort of person but I think I may have found something I have a talent for, and it's very interesting for me to explore this situation.

 

Life is very interesting for me right now. I am seeing lots of possibilities in the future.

 

 

 

110189617_8364110c5f.jpg

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... I have also bought a cottage and land for when things blow up and am buying all sorts of capital goods I will need as this seems a good place for my money in a high inflation and low interest environment ...

That is an interesting comment.

 

If you are willing to talk about it, I would like to hear more about how you chose the place, including how you selected the location.

 

Funny thing is, the wealthier I become (thanks mainly to PMs and income) the less things I want (my next car will be a C1 or similar!).

 

Sounds like WISDOM to me.

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I am taking the unconventional road...

 

... More recently I have turned my hand to trading futures and well, how much easier it is to trade them than options, it seems a much more natural way to trade. I always wanted to create my own "work" and that is what I am in the process of doing at the moment. Having developed my own indicators I am seeing some success with trading now, and I have engineered a situation whereby I work one week at the day job, and do reduced hours every other week, so I can trade full time during that other week, thanks to the 2.30pm open of the US markets. I didn't have a particularly large amount to start with and actually, for me, I believe that has given me a large advantage over others. I had to learn how to control my risk quickly and play to my strength, being able to think for myself in a creative manner. ...

Another of those Rare GEI-ers who trades options.

 

I just want to say this about options:

 

+ I tend to buy deep in-the-money Puts and Calls, and trade them like synthetic Long and Short positions, with "built in risk control."

 

Does this make sense? And if so, have you tried trading options that way?

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Another of those Rare GEI-ers who trades options.

 

I just want to say this about options:

 

+ I tend to buy deep in-the-money Puts and Calls, and trade them like synthetic Long and Short positions, with "built in risk control."

 

Does this make sense? And if so, have you tried trading options that way?

 

The option delta I chose really varied depending on what I was looking for the price to do, how much I wanted to risk and the time-frame I was looking at. Since I'm looking at trading mostly short-term intraday moves it's more efficient to use futures. Sometimes I would go for maybe up to 80 delta but most of the time I would go for slightly in the money. There are times where I would like to hold a position overnight or through a week-end so I'm looking at options on futures for that. Eg There was a trade I did back in February on USO, I bought calls on 18th February as things were starting to happen in the middle east yet oil seemed mispriced at the time. I went back to check how the trade would have performed using the equivalent option on the Crude futures contract and I would have been better trading the option on the future, rather than USO.

 

From time to time there are special situations where out of the money options are useful, like Crude in February and the recent silver move also, but these don't crop up so often, most people are best avoiding them. If I wanted to take a longer term view I might by using well in the money options, rather than an outright purchase of shares.

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The option delta I chose really varied depending on what I was looking for the price to do, how much I wanted to risk and the time-frame I was looking at. Since I'm looking at trading mostly short-term intraday moves it's more efficient to use futures. Sometimes I would go for maybe up to 80 delta but most of the time I would go for slightly in the money. There are times where I would like to hold a position overnight or through a week-end so I'm looking at options on futures for that. Eg There was a trade I did back in February on USO, I bought calls on 18th February as things were starting to happen in the middle east yet oil seemed mispriced at the time. I went back to check how the trade would have performed using the equivalent option on the Crude futures contract and I would have been better trading the option on the future, rather than USO.

 

From time to time there are special situations where out of the money options are useful, like Crude in February and the recent silver move also, but these don't crop up so often, most people are best avoiding them. If I wanted to take a longer term view I might by using well in the money options, rather than an outright purchase of shares.

PD, what brokers/dealers do you use for Futures (and the Options on Futures)?

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PD, what brokers/dealers do you use for Futures (and the Options on Futures)?

 

ThinkorSwim, the commissions aren't the cheapest but the overall package, especially the platform, is very good.

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I am not really understanding what is meant by financial independence? I have made myself debt free over the last couple of years and have a job which I very much enjoy running, my commercial photography business. Work is much thinner on the ground these days since the 2008 crash, but still working enough to keep me occupied and pay the bills.

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It's when work becomes a choice rather than a necessity.

Not quite there yet then. smile.gif

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It's when work becomes a choice rather than a necessity.

Nicely put. I think I must be nearing financial independence then. I've been procrastinating over whether to teach at a Japanese university, or freely live and enjoy the great outdoors of NZ... by living frugally out of a campervan.... for the time being.

 

Factors towards free living for me are:

 

1] No dependents.

2] Enjoy simplicity.

3] Capital invested in bullion.

4] Property deflating against bullion.

5] Only have one life.

6] Don't want to live an ordinary producer/ consumer life.

7] Prefer semi-rural life to urban.

 

imo the largest force against freedom is peer pressure; most people [friends and family] think conventionally, and don't get at all what you're doing, or the resaons for it. imo to pursue real concrete freedom [as opposed to the abstraction], you have to be very independently minded.

 

I'd add that to being truly financially independent might also have to involve being "independent of finance"; you have to ask yourself when enough is enough... otherwise you'll be forever striving for more. When you consider yourself having enough money, then you're free to pursue other goods in life.... chief among which has to be self-determination/ freedom.

 

.... so then to paraphrase your sentence: it's when money [the pursuit of] becomes a choice rather than a necessity. The question then is if money becomes unnecessary, is the pursuit of it - for its own sake - a poor choice.

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imo the largest force against freedom is peer pressure; most people [friends and family] think conventionally, and don't get at all what you're doing, or the resaons for it. imo to pursue real concrete freedom [as opposed to the abstraction], you have to be very independently minded.

 

I'd add that to being truly financially independent might also have to involve being "independent of finance"; you have to ask yourself when enough is enough... otherwise you'll be forever striving for more. When you consider yourself having enough money, then you're free to pursue other goods in life.... chief among which has to be self-determination/ freedom.

Too true. I was near-as-dammit financially independent. Then I got married and had kids... oy veh...

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I'd add that to being truly financially independent might also have to involve being "independent of finance"; you have to ask yourself when enough is enough... otherwise you'll be forever striving for more. When you consider yourself having enough money, then you're free to pursue other goods in life.... chief among which has to be self-determination/ freedom.

 

Self-determination/freedom does not have to be the chief good in life and should not be in my opinion. Happiness, it seems to me, is a more worthy goal. There is a thread on that somewhere here. And some have suggested one must make a free choice to give up one's own self-determination/freedom (and financial independence too) for the good of others, in order to be truly happy.

 

The question then is if money becomes unnecessary, is the pursuit of it - for its own sake - a poor choice.

 

The answer to that question is obvious. Money is a means to an end. The real question is, have I chosen the right end for my life? And then, are my actions advancing my life to that end?

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It's when work becomes a choice rather than a necessity.

 

Beyond that one moves into unlimited territory, so may I up the definition to

 

Financial independence is when the expense of a decent yacht is of no concern.

 

 

 

Note to roman's holiday. On your list, No5 is incorrect.

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Self-determination/freedom does not have to be the chief good in life and should not be in my opinion. Happiness, it seems to me, is a more worthy goal. There is a thread on that somewhere here. And some have suggested one must make a free choice to give up one's own self-determination/freedom (and financial independence too) for the good of others, in order to be truly happy.

Yes, happiness is what most pursue.... except, like the horizon, it seems to recede the more you chase it [so much for buying a boat]. I don't think happiness simply depends on money, and most millionaires will corrobate that.... it's more like a by-product , whatever your material circumstances. A modicum of self-determination was thought necessary by the Greeks [not the present decadent kind] in order to live "the Good Life". I think there is something in that. What we in the modern world do is split the mind from the body and then insist the mind can be etherally "happy".... even if chained to a body of production/ consumption. Of course, there is a different logic/ ethic at play here, an economic one; we all work towards the good of that other abstraction; "society".

 

I can't help but think of cities as people farms sometimes.... with Aristotle's dictum in mind: "People are not cattle to be farmed". Seinfeild's Kramer obviously had the same thing in mind when shouting "I am not an animal!" :lol:

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Too true. I was near-as-dammit financially independent. Then I got married and had kids... oy veh...

Congratulations..... or should I say commiserations. :lol:

 

I've always ran a mile.... as St Paul said, "Marriage is not for everyone". [phew]

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Note to roman's holiday. On your list, No5 is incorrect.

More than one life? So not only are we stuck on an economic running wheel of producing and consuming in this life, but for a series of purgatorial lives to come? Then surely your task becomes to escape the running wheel?

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More than one life? So not only are we stuck on an economic running wheel of producing and consuming in this life, but for a series of purgatorial lives to come? Then surely your task becomes to escape the running wheel?

 

Not so much a task, more the task. Although 'task' might be replaced with 'purpose'.

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Not so much a task, more the task. Although 'task' might be replaced with 'purpose'.

OK, so then the enlightened task is to eliminate illusory desires [ie, consumption]in order to escape the eternal recurrance of the wheel of life. Won't argue with the practicality of that. Main point being that freedom from unworthy wants is a very worthy goal.

 

How to deem something worthy/ unworthy involves a higher order ethic.... transcending mere economics.

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