Money Psychology, On Investing, Women and Financial Literacy

My First Stock Purchases (at the Bottom of the Great Recession)

February 17, 2017

For those of you who are familiar with the stock market, do you remember the time when you first got introduced to it? What were some of your early associations with the stock market? At the time, were you anxious to get into it? Was the market something you swore to avoid?

first stock purchases

My Dad’s Warning Message (to me) on the Stock Market

My first impression of the stock market occurred right at the start of the Great Recession. One day, in November 2008, I was having dinner with my family. The news was on the television. I recall my dad telling my brother and I to never ever “gamble” in the stock market.

Yes, to him, participating in the stock market was a form of gamble, not a form of investment. This was coming from someone who had very limited exposure to the stock market other than what he saw and heard on television. However, not knowing any more of the stock market than my dad did at the time, I took his words to heart. The stock market was something to avoid.  

In the following weeks, the messages and images that kept showing up on mass media (covering the beginning of the Great Recession) just confirmed my dad’s belief of the stock market. Seeing and hearing stories of people jumping off buildings, losing their marriages, going into jail, becoming depressed and/or losing their children’s college savings and/or their own retirement savings—all due to steep drops in the stock market—just “proved” the evil side of “gambling”. Yes, the stock market was evil, I concluded.

The Man I was About to Meet and What He Taught Me About the Stock Market

Continue Reading

Spread the message. Encourage others to begin their financial learning!
Behavioral Finance, Financial Independence, Financial Journey, Financial Planning, Lifestyle, Retirement Planning

Calculate How Much Money You Need to Retire: How Safe is the 4% Withdrawal Rule

February 13, 2017

For years, my husband and I didn’t know how much money we would need to retire (you can read about our financial journey in an earlier article I wrote by clicking here). We had our guesses, with numbers anywhere between $3 million to $5 million dollars. Our logic was that by the time we’re ready to retire, our primary residence home would worth $1 million dollars (all in equity). We would also have $2 million or so dollars invested in the stock market and the dividends and interest yields from these investments would be enough to cover our annual expenses.

In that article, I also mentioned about having learned about the financial independence movement in the middle of 2016. Since then, my husband and I’ve decided that we would reach financial independence once our net worth meets 33X our annual expenses. However, in that article, I didn’t mention how we came up with the number, 33 or why we chose this particular number.

4% withdrawal rule

In this article, I’m sharing with you the 4% safe withdrawal rule (SWR) and what this number means for my family’s situation. In the past several months, I’ve read many written documents on the 4% SWR (some of them were more technical than others). It took me a while to understand the different strategies behind this financial planning tool. Feel free to ask me questions on the comment section below and I’ll try my best to respond and/or refer you to further readings.  

The Origin of the 4% Safe Withdrawal Rule

After you’ve spent years saving toward retirement, how do you know how much money you can safely withdraw annually so that you will not outlive your money?

Continue Reading

Spread the message. Encourage others to begin their financial learning!
Kids and Money

Having Money Conversations with My 2-Years-Old Toddler

February 10, 2017

What was your money story like growing up? What did your parents and/or grandparents teach you about money? What kind of conversations would you like to have with your child about money? When is a good time to start teaching your child(ren) about money?

My Story with Money

While growing up in China, my parents didn’t talk about money with me and I didn’t ask them questions related to money. I had no reason to. They took care of all my needs (I wasn’t aware of the concept of allowance until I was in my early 20s). There wasn’t much I wanted other than buying snacks at school.

I was 11-years-old when I first stepped inside a bank (with my aunt). That was shortly after I immigrated to the U.S. On that same day, my aunt gave me 37 cents so I could learn the U.S. currency. It was a very memorable experience for me. That 37 cents seemed like a lot of money at the time.

At the age of 13, I started working part-time. By the time I graduated from high school, I had over $4000 in savings. I used some of that money to buy myself a laptop and a camera for college.

When I finished my undergraduate studies, I saved over $10,000 in my bank account. I had scholarships to cover all my tuition, fees and living expenses. I also worked part-time. With that amount of money in my bank account at age 22, I felt rich!

money talk with my toddler

My Husband’s Story with Money

When I was a child, my father was a truck driver and my mother worked at a photo lab. Neither of them had a high paying job, but both tried hard to make sure my brothers and I were taken care of financially. 

Somehow, I learned to be mindful about money as a young child. I recall going to the grocery store with my father and brothers when I was about 6 years-old and paying attention to the unit price of items. I even took items out of the cart that my younger brothers put in and placed them back onto the shelves. When I was 10 years-old, I helped my father balance his checkbook.

At 13-years-old, I had my first part-time job. I worked throughout high school and college. When I was in middle school, my father told me I’d have to find my way to fund my college education. Since that day, I was determined to become the validictorian in my high school class. And I did. I received a full scholarship ride to attend college. Once I graduated from college, I secured a full-time position with the company at which I was working seasonally.

The Money Story I Hope My Daughter Will Have

Continue Reading

Spread the message. Encourage others to begin their financial learning!
Financial Freedom, Financial Planning, Investment, Money Habits, Retirement Planning

Money Makes Money: January 2017 Non-W2 Income Report

February 3, 2017

Last month, I started sharing our non-W2 monthly incomes. In that article, I also shared why we’re doing this on the blog. Yesterday, my husband and I summed our financial numbers. Below is a chart listing our non-W2 income sources and totals for January 2017.

January 2017 non-w2 income

As anticipated in last month’s report, we expected January’s numbers to be much lower compared to those of December 2016.

From my understanding, most early retirees in the Financial Independence and Retiring Early (FIRE) community fall in one of two groups when it comes to funding their early retirement lifestyles:

Continue Reading

Spread the message. Encourage others to begin their financial learning!
Financial Independence, Financial Journey, Financial Planning, Lifestyle, Money Habits, Money Psychology, Purchase Decisions

Three Ways to Enjoy Today While Building and Maintaining a High Savings Rate

February 2, 2017

On the Path to Financial Independence

As you work toward your financial goals, does it sometimes seem like you’re sacrificing too much today just so you can have a better life tomorrow?

If that’s the case for you, you might be having mixed feelings. I know I’m too familiar with these feelings. A bunch of high days were mixed in with a bunch of low days. There were times when I wished my days away as I eagerly waited to taste the life of having reached millionaire status. During those periods of time, I was not living in or enjoying the present moment. I did not want to spend any money other than the absolute necessary. All I focused on was reaching the million-dollars goal. In that process, I neglected myself in many ways. I went through emotional struggles and have shed lots of tears.

high savings rate

The path to financial independence is not an easy one. There’s no shortcut. Even those who are very disciplined and hardcore (with high savings rates) still take anywhere from 7 to 20 years to get there.

For some of us, we’re okay taking our time. A 20-year horizon is not so bad. For some of us, even a two-year time frame is almost unbearable (and each of us have our own reasons). If you’re in the latter group, sometimes, it’s easy to get into the danger zone of depriving ourselves when we think we’re only being frugal (the gray area between being frugal and feeling self-deprived can be blurry).

When prolonged self-deprivation is left unnoticed, we could be putting our health and our financial plans in jeopardy. Not only is self-deprivation unhealthy, this behavior can lead to the resentment of oneself and others who are in the same team as you (such as your spouse and/or children).

Recently, I caught myself going down the self-deprivation slope. My emotions were strong. In this article, I’m sharing my story. I also recommend three ways for you to stay on course to reach your savings goal without going into self-deprivation mode.  

Continue Reading

Spread the message. Encourage others to begin their financial learning!