Are all the personal finance bloggers software engineers? Maybe not, but I have three of three so far – Lazy Man is my third guest and he is also an IT fellow working in the Silicon Valley.
(If by any chance this introduction does not make sense to you, this is because you have not read the previous investor profiles on this blog).
As usual, I shoot three quick questions to Lazy Man and best of all, I got pretty interesting responses. (Oh and he even provided me with handy HTML – I love techies). Check them out yourself:
SI: What’s the lazy way to reaching 2.25 millions net worth? Have you calculated when you are going to reach it with the current pace and why exactly 2.25M?
I’ll take the easier question first. I calculate how much money I can make off of dividends. If I had $1.25M and could expect an 8% return each year, that would give me $100,000 a year to live on. I feel that’s significant. However, due to inflation (3-4% and increasing rapidly lately), that $100,000 buys less and less. Thus, I need to assume that I’m only making a 4-5% return after inflation. If you work backwards to figure out what generates $100,000 each year at a 4-5% return, you come with a number around $2.25 million.
Now for the harder question. What’s the Lazy Way of reaching 2.25M?
There are three obvious ways:
- Invest early and often – If you managed to scrape up $98,000 on your birth, you could invest at 5% interest (we deduct inflation and taxes again) and have your 2.25M at age 65. I realize we don’t have Suri Cruise baby pictures to bring in that $100,000, but it’s interesting to know you could finish your whole retirement with less than $100,000.
- Be Frugal – I’ve bought a lot of things that gather dust. I never thought about it at the time, but I have around 300 CDs that I bought in college. Today, I listen to about 25 of them and turn on the free radio for the latest songs. I used to go out to restaurants and bars and that got expensive as well. Each time I save some money, I think about how much I’ve moved up my retirement date.
- Do Something That You Love – Running Lazy Man and Money and Lazy Man and Health is a way of making money, but it’s certainly not a lazy way. There’s a lot of things to do each day, more than any non-blogger would imagine. Here’s the thing, though… for me it doesn’t feel like work. When you love to do something, it’s like playing. I like to say that Tiger Woods doesn’t work golf… he plays golf. Sure it’s a lot of work to be as good as he is, but I like to think he’s having fun out there.
SI Notes: 1. You lucky, come here to see how 23% – 24% inflation feels like!
2. I liked the fact he knows exactly how much he wants to save. Not just “be rich and make millions” like many dream.
2. How important is financial success for you? If you can live a modest but carefree life in a tropical heaven, without even needing to work, would you sacrifice your dream to be rich?
Financial success means having the freedom to live in a carefree life in a tropical heaven. I don’t know if I would do that as it doesn’t give me a sense of purpose. I like to think that I don’t need money beyond the carefree life in tropical heaven, but it’s a fantasy. My wife and I will think about starting a family at some point and we’ll need to find our children good schools. We also may need to provide financial assistance to our parents. I have a few things that are really important to me. I would like to have the money to visit and stay in Boston for extended periods – where I’ve spent 95% of life.
It’s where my friends and family are. Lastly, tropical heaven doesn’t exist if I can’t watch the Red Sox and Patriots. While I try to be frugal, I am materialistic in some ways.
SI Note: Don’t forget the mosquitoes. Tropical heavens look like heaven on pictures, because they use Photoshop to remove the mosquitoes from them. So, tropical heaven really doesn’t exist.
SI: Have you experienced any significant shifts in your views about money and investing during the years you run Lazy Man And Money? What are they?
Change happens all the time… Life is a journey and Lazy Man and Money is no different. It would be hard to state all of them in this space, but I learn more every day. When I started Lazy Man and Money, I had this vision that I would race to that $2.25M net worth and then relax in that tropical heaven you spoke of. Now I look to how can I build income streams that bring in lasting income streams. My wife is in the military and at age 42, she’ll be eligible to retire with a small, but significant, government pension (which adjusts for inflation).
Let’s go back to the original $100,000 a year goal… With her pension, plus earnings from Lazy Man Media, some investments (401K, Roth IRAs to boost us in our later years), and rental property income (my wife and I each owned condos when we met) we might have a large part of $100,000 accomplished without a huge net worth.
SI Note: Sounds like a great plan. Do you see how people achieve their dreams without buying “get rich quick” books? Of course, it takes good income and discipline, but it’s doable for anyone.
The Lazy Man (and his money) sounds like a smart guy, what do you think? I would definitely browse the archives of his blog for some of the best posts and subscribe by RSS not to miss the further publications. (Actually I am already subscribed, so this was a hint for you).