Approaching Financial Independence – ever increasing options

The approach to Financial Independence can be both exciting and worrying. After nearly nine years on this journey, I have started to notice the impact of the compound effect. After my latest quarterly net worth update and review I have reached over 67% of my Financial Independence (FI) target. At this rate, depending on stock market movements, it is possible to achieve lean FI within the next year or two.

The basics

To get here I set out a few basic principles. Simplicity is key here:

Once you get to grip with these it will typically take a few minutes a month to manage your finances.

Consistently apply these principles regardless of what the economic landscape looks like and not losing faith definitely helps. No need to get bogged down in ‘investment’ schemes, crypto, currencies, gold and day trading.

Options, Options, Options

A good problem to have with this level of two thirds to FI is that the options available start getting more and more. It will also be easier to determine the impact of any major life changes and adjust accordingly. 

For example, if you happen to live in a High Cost Of Living area you could move to a lower cost area and be closer to your goals. You could also be able to move to another country and stretch your cash even further. I will be looking into these ideas more closely from now on.

Another option is to up your standard of living according to your ever growing passive income. This may be tough to do after several years of careful spending and investing but doable if you stay within certain limits like having a particular savings rate.

Personally, I am having this mind shift; from a state of scarcity to one of abundance. If you couple this with minimalism, your realise that at this stage, spending on high end products (including clothing, technology, shoes etc) will have a negligible impact on your net worth. Might be time to finally get this new Air Jordans.

Another thing I have noticed now is that after years of avoiding lifestyle inflation along with pay rises, my savings rate has crept up to a very high level, typically over 70% in the past year. Of course this will accelerate the process of wealth building but I feel that there is room to reduce this and channel funds to bigger things like housing and transport. Exciting times ahead.

Interesting reading

Checking out Warren Buffett’s annual letter to Berkshire Shareholders has been a key part of my journey and in shaping my strategy. This year’s letter is out and has more timeless advice including holding stocks for the long term, believing in the power of entrepreneurs to keep forging miracles to spread prosperity across the world and that investment expenses are Wall Street’s profits. The letter can be found here.




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