Playing in waves on the beach can be fun, but have you ever reached open water? Have you ever reached that glorious, calm spot past the surf zone where you feel the massive, effortless strength of the ocean raise you up then gently back down all while happily floating on the surface?
Wading out past the whitewater is no small feat on a surfing beach. Ankle deep in the sand, deflecting past the relentless and unending waves pushing you back to the shoreline, you have to fight for every inch of ground. The battle changes you into a linebacker with Emmitt Smith and Barry Sanders coming at you full speed. Your vigilant eyes watch the fast moving water, your muscles are tense as you try to keep your footing and time the waves just right.
Once you push past the lip of the last wave everything changes. You can relax. You can lay on your back and float comfortably as your eyes become bored and have the time to imagine the clouds as animals floating high above. You can still swim hard if you choose, but that is no longer required.
The wealth equivalent of ‘open water’ is having a stock portfolio 20-30 times your annual spending invested in low cost index funds that gently rises and falls with the massive strength of the economy.
With time, you will become accustomed to rhythmic rise and fall of your net worth just as you feel at one with the ocean because you understand the movement is predictable and natural and that your head will always remain safely above water.
“If you don’t find a way to earn money while you sleep, you will work until you die.”
– Warren E. Buffett
Dividends and capital gains earned from the stock market are far more powerful than earning wages from your job. Whether you currently work to free yourself from debt, increase your income, beef up your savings rate, reduce your taxes, or build your investment portfolio – you might feel like you are on that shoreline fighting for every inch. Remember that some people stay fighting for life, but that doesn’t have to be you. Get to open water.
Keep your savings rate high, invest in stocks (through low-cost, low-turnover mutual funds from Vanguard), find work you enjoy, and work hard at it. As you make progress you will realize the small net worth increases become less and less important because, just as when reaching open water, you are no longer fighting for every inch.*
*When you feel this freedom start to come into your life, it’s a great time to cultivate or enhance your generosity.
Author Bio: TK is a past 3rd Decade graduate who lives and breathes the philosophy taught in class. He avidly researches personal finance and investing topics, and occasionally contributes thoughts here on the blog.
He graduated cum laude from the University of Arizona with his BSBA. As a longtime saver and investor, his net worth today is higher than the total number of dollars earned in his lifetime. He keeps his annual living expenses around $10,000, owns his house free and clear, and has zero personal debt.
TK currently resides in Tucson, AZ with his wife, and works full-time as a firefighter.
You can message him here.