Coast FIRE
In my previous post I talked about how I felt kind of down and not very satisfied with my life. These past couple of weeks have actually been great for me and I've been feeling a lot better. Something that is also getting better and better are my investments in IWDA. Compound interest is finally starting to do what it's supposed to do and with the current bull market I am seeing great returns for such a relatively "low" investment.
Why I Started Investing
Until I was 29 years old, I never even thought about investing. I figured investing was risky and only for the very rich (or at least the very stupid). I genuinely considered investing in the stock market as pure gambling and therefore stayed far away from it. I was taught by my parents that "investing is way too risky. Just save your money in the bank." Now this in and of itself is good advice and I therefore saved an insane amount of money for someone my age which was just sitting there in my bank account.
Once I got my burn out due to my job as a history teacher I picked up several self-improvement & finance books. The first book I read was Rich Dad, Poor Dad by Robert Kiyosaki. Kiyosaki himself is a controversial figure, but his book opened my eyes to the very real difference of what a perceived asset is and what actual assets are. This book helped me understand what I don't want to invest my money in and what money is actually for. Most people buy a house, car, have 2 kids and call it quits, never thinking about any other options in life. Kiyosaki's book showed me a different way of thinking.
After Rich Dad, Poor Dad I picked up another life changing book called The Richest Man in Babylon by George Clason. After reading the several parables in this book I understood that money was to be used to, well, make more money. It wasn't just there to store away until you might need it one day. Money needed to work for you. I started investigating how I could put my money to work for me and that is when I was introduced to the final person that got me into investing: Warren Buffett.
Warren Buffett
I have mad respect for Warren Buffett. If you have some time make sure to read his Wikipedia page because it highlights how amazing entrepreneurship can be. Warren started out very young in his entrepreneurial journey and made good money at a very early age. What would eventually cause me to invest in IWDA shares every month is something Warren said later in his life. You see, Warren has stated multiple times that you don't have to be very familiar with the stock market to make good money with stocks. By just buying an ETF that tracks the MSCI World, like the iShares Core MSCI World UCITS ETF which is what I'm buying every month, you are beating most active traders on the market.Active traders need to constantly make the right choice. If you just invest in the MSCI World the market makes the decisions for you. If a company underperforms too long they are taken out of the MSCI World and are replaced with a company that is performing well. That makes the MSCI World, which includes companies from several countries with developed markets, a great asset to invest in.
Is it completely perfect? No of course not! Certain years will yield negative returns. That's just how the market works. You also need a significant amount of time for this to work. I am currently 30 and will be able to retire off of my IWDA shares somewhere between the ages of 55 and 60. Now to me this sounds wonderful, but if you want fast money then this is not it!
Coast FIRE
After I started investing I was introduced to FIRE: Financial Independence, Retire Early. This absolutely blew my mind. By practicing FIRE, one invests heavily into an ETF that tracks the S&P500 or the MSCI World in their early life to retire as early as possible. One very famous person to do this is, of course, Mr. Money Moustache. I was planning to do the same. Live with my parents for another 10 to 15 years, invest all of the money I earn from my job into IWDA and then retire with a million euros.At the time this sounded great. But after I turned 30 something changed in me. I still wanted to continue buying IWDA shares to secure my future retirement, but I wasn't prepared to live with my parents for at least another decade. I love my parents more than anything in the world, but I also want more freedom. It was at that moment I learned about Coast FIRE.
Coast FIRE is very similar to regular FIRE, with one small exception: instead of heavily investing into the MSCI World until you have reached your retirement amount, you set an age at which you'd like to stop working and invest enough money while you're still young until the investment that you've been buying does the heavy lifting and starts compounding enough to reach your desired amount of money at the age you've set without you ever having to contribute another cent to your investment portfolio.
This might sound a bit confusing, but the point is: if I invest very heavily now in my early 30's I will have enough money invested in IWDA that it'll compound to a large enough sum over the timespan of, let's say 20 to 25 years, that I won't have to buy IWDA shares every again at the age of give or take 35. This way, I can get an easy job that supports my lifestyle without ever having to worry about saving or investing money again. I just coast through life until I reach my retirement age. My investments will have grown large enough so that I can quit my easy job and live off of the investment alone.
