This week's newsletter is brought to you by How To Engineer Your Layoff, my severance negotiation book. As the economy slows down, there will be more layoffs this winter, especially before bonus period. Hence, I recommend preparing now so you can better position yourself for the best exit package possible. Use the code “saveten” to save $10 at checkout.
Just like that, volatility is back, and tech stocks got hammered for the week due to disappointing results from Tesla and Google.
Personally, I've been buying the dip and will continue to do so all year as I rebuild my public equity exposure. However, even with my reduced equity exposure after purchasing a house last October, the losses still hurt.
These losses remind me of the importance of cash flow over net worth. Net worth is subjective, while cash flow is tangible. Cash flow is what will pay for everything you want in life. Therefore, you should accumulate assets that regularly generate income. Otherwise, you need to practice selling stocks occasionally to capitalize on gains. However, timing sales correctly is no easy task, especially considering tax consequences.
Although managing rental properties takes work, I find the double benefit of rising rents and appreciating property values over time to be powerful wealth creators. Add in a monthly decline in the mortgage balance, if you have one, and you've got yourself a winning asset class.
This week, I examine the difference between stock dividends and rental property income. Check out my new post, Why Rental Property Income Is Superior To Stock Dividends. I haven't seen anyone tackle the two income streams the way I have.
Newsletter Chart Of The Week
Below is an interesting chart that shows the performance of various real estate-related stocks versus the S&P 500.
Notice how homebuilding stocks like Lennar and D.R. Horton have trounced the competition, while Redfin has been a major dud. It's unfortunate for Redfin, as I like their user interface the best, and the platform has more accurate data compared to Zillow.
Existential Dread
I'm curious to know if any of you feel some existential dread. I'm not sure if I'm going through a mid-life crisis, but I'm thinking more about the point of everything.
For example, I was talking to another dad at a birthday party the other day. He was talking about how he's been traveling so much and working so hard to get a promotion. This will be the second year he's up for Managing Director. He says he needs to go to NYC this fall to “kiss the ring” to elevate his chances.
If he gets promoted, he'll make more money, but he'll also have to work and travel more. So what's the point? To spend even more time away from your family for the sake of money and status? I guess. It's just strange for me to hear his desires since I've been out of the corporate grind since 2012. Maybe I'm just jealous!
Part of the reason I'm feeling this existential dread is because this will be the last summer before my daughter goes to school full-time. The more you dedicate to something, the more you might dread when that time is finally over.
If you've been super-focused on your personal finances since you were young, you might also be super-focused on meeting all your parental financial obligations. If so, you might meet these obligations quicker than average, which may lead to a letdown as you wonder what's next.
In my new post, A Parent's Existential Crisis, I explore the main financial obligations parents have for their children. Then, I offer tips on how to deal with your existential crisis, if you have one.
From Employed To Unemployed Once More
Finally, I wanted to share that I went back to work late last year but only lasted four months. It was a good experience, but it just wasn't the right fit like I had hoped.
The people were great, and the product had a lot of potential. Ultimately, it was too much work for me to handle while my daughter wasn't in school full-time yet. The company deserved a full-time employee, and I wasn't able to fulfill that role as a part-time contractor.
It's funny; I wrote about how finding a job after years of early retirement can be difficult. It's important to keep your skills up-to-date and maintain your contacts, just in case you find the need or the itch to return to work.
However, depending on how long you've been out of work and how much you need the money, staying in a job long-term after years of retirement could be even harder! So if you've been retired or taking a break from work for a while, you might find my insights fascinating.
Check out: I Went Back To Work But Only Lasted Four Months: Here's What Went Wrong
I plan to enjoy the remaining months of summer with my family and then see how I feel once both kids are in school in September. If I feel restless, I'll try my job search again.
To Your Financial Freedom,
Sam
Newsletter Recommendations
Please never quit a job you've had for longer than a year, try to get laid off instead. If you quit you get nothing. But if you get laid off, you can get a severance package, WARN act pay, unemployment benefits, and healthcare benefits.
To learn how, read How To Engineer Your Layoff, my bestselling severance negotiation book. The right way to leave a company makes all the difference to your employer. No employer wants an unhappy, vindictive ex-employee. Use the code “saveten” to save $10 at checkout.
If you were forwarded this newsletter and would like to sign up, join 60,000+ others and sign up here. Every newsletter is free and based off firsthand experience to help you achieve financial freedom sooner, rather than later. The newsletter has run since 2010.