Financial Samurai Newsletter May 26, 2024: Weird Misfits

This is a free Financial Samurai newsletter that was published on May 26, 2024. Every week, I come out with a free weekly newsletter to help readers achieve financial freedom sooner rather than later. Join 65,000 other readers and subscribe here. This way, you'll never miss a thing.

Financial Samurai began in July 2009 and is the leading personal finance website today with over 1 million organic pageviews a month. Everything is written based off firsthand experience because money is too important to be left up to pontification.

Sam is the pioneer of the modern-day FIRE movement. He attended The College of William & Mary for undergrad, got his MBA from UC Berkeley, and worked at Goldman Sachs and Credit Suisse for 13 years until he retired in 2012 at age 34. Sam is one of the rare personal finance writers who actually has the background and experience in finance.

You can learn more about Sam Dogen by clicking his About page. You can also visit his Top Financial Products page to help you save, invest, and organize your finances better.

Financial Samurai Newsletter May 26, 2024: Weird Misfits

I'm realizing that the more I reintegrate with society, the more I see that we may be misfits when it comes to our money views. This includes you, someone who reads a personal finance newsletter on a weekend when you could be doing something unproductive!

I was at an event yesterday when a dad was giving me advice on where to vacation with kids in Honolulu (where I'm from). He mentioned that he spends 13 nights at Disney's Aulani Resort every summer, costing $19,000 for lodging alone! Holy moly. I kept thinking how I'd rather invest that $19,000 in an S&P 500 ETF or a private real estate fund and potentially double it in 7-10 years.

You may be thinking the fellow dad must be rich, but I'm not so sure. They live in a median priced home. Perhaps the reason they have a lot of disposable income for fancy vacations is because they live in a relatively inexpensive home. Could be! 

As for our vacation plans, we're finally planning to take a flight with our kids next month, but we're staying with my parents. We considered paying $2,000 for two nights for two adjoining rooms at a hotel in Waikiki, but haven't been able to justify the cost yet. It just feels wrong to pay for lodging when we have a free place to stay.

What I am sure of is that the majority of us are saving, investing, and working far more compared to non-finance enthusiasts. It's as if we're weird misfits in comparison. And I'm not sure if this is healthy.

Along this topic, I penned a new post called, An Awkward Money Situation Reveals A Hard Truth

Average Real Household Wealth Per Household

AI Mania Accelerating

Nvidia beat revenue forecasts with a 262% jump to $26 billion. Net profit soared 628% to $14.88 billion. The company raised its forecasts and expects revenues of $28 billion in the next quarter.

Instead of fading demand, demand is actually accelerating. CEO Jensen Huang said, “Our data center growth was fueled by strong and accelerating demand for generative AI training and inference on the Hopper platform. Beyond cloud service providers, generative AI has expanded to consumer internet companies, and enterprise, sovereign AI, automotive and healthcare customers, creating multiple multibillion-dollar vertical markets.”

Apple's World Wide Developer's Conference (WWDC) will also take place between June 10-14, and the street is expecting iOS 18 with an AI focus, iPadOS 18, macOS 15, tvOS 18, watchOS 11, and visionOS 2. Apple has been notoriously late to the AI game, but new developments next month should boost AI interest further.

It seems to me that Apple is on the verge of a new product upgrade cycle, which could also be a catalyst for increased AI demand. Hence, I continue to be long on both Apple and NVIDIA.

Additionally, I'm methodically investing in venture capital funds that focus on private AI companies.

If you are considering doing the the same, read my new post, Why Investing In Venture Capital Funds Beat Investing In Individual Private Companies

I've been investing in private companies and funds since 2001, and unless you plan to build a portfolio of 20+ names, it's much better to invest in a fund instead.

Giving May Be Harder Once You Are FIRE

Finally, ever since the NY Times article about Fat FIRE came out, I've been thinking a lot more about the topic. As you know, I've been writing about FIRE since 2009, when I launched Financial Samurai.

During this journey, I've heard all the criticism about FIRE. Examples include: 

  • It's selfish as you stop becoming a productive member of society
  • You just haven't found something you love doing
  • You're fooling yourself if your spouse is working full-time
  • You'll run out of money and come crawling back to work

Well here's another criticism worth considering. FIRE people are stingy when it comes to giving! 

It makes sense if you think about it. Giving is a form of spending, and FIRE people are focused on saving and investing as much as possible to be free one day. We don't spend as much as the average person, which may mean giving less money to others too. 

To put my thesis to the test, I looked online at all the budgets of people who claim they are FIRE and I saw little-to-no giving. Instead, there was a focus on paying little-to-no taxes and getting healthcare subsidies. In other words, the focus was on taking.

Given this observation, I decided to write a new post called, The Stinginess Of Financial Independence, as a challenge to myself and any others reading to be more generous. 

I've been doing my best to give back by writing this newsletter and my posts without a paywall since 2009. And yes, it's ironic that I pay to subscribe to the NY Times and gifted a free link to their Fat FIRE article to you. But that's OK because it feels good to share.

If we can't give money, we can always give our time and knowledge. Let's not make excuses if we've been fortunate enough to benefit from this bull market!

To Your Financial Freedom,

Sam

Invest Wisely To Grow Your Wealth

The best way to get rich over the long term is to invest in real estate. Real estate is the best asset class to build wealth because it is tangible, generates income, and has steadily outperformed inflation over the past 100 years. 

Check out Fundrise, my favorite private real estate platform. Fundrise runs private real estate funds that predominantly invests in the Sunbelt region where valuations are lower and yields are higher. Its focus is on residential and industrial commercial real estate to help investors diversify and earn passive returns. 

Fundrise currently manages over $3.5 billion for over 500,000 investors. I've invested $954,000 in private real estate funds since 2016 to diversify my investments and make more money passively. After I had children, I no longer wanted to manage as many rental properties. 

Fundrise is a Financial Samurai sponsor and Financial Samurai is a six-figure investor in Fundrise funds. 

Invest In AI And Private Growth Companies

Today, one of the things I stress about is whether artificial intelligence will take away my kids' future jobs. The world is already ultra competitive thanks to globalization and technological advancements. Now AI has the potential to wipe away millions of jobs in 20 years.

Because I care for my kids, I've come up with a solution. I am actively investing in private and public AI-related companies as a hedge. If AI does revolutionize the world over the next 20 years, then my AI investments have a high likelihood of making a positive return. If not, then my kids will at least have decent jobs after so many years of education.

I recommend checking out the Innovation Fund, an open-ended venture capital fund that invests in AI companies and only has a $10 minimum. Roughly 90% of the fund has investments or exposure to artificial intelligence. It owns top AI companies such as OpenAI, Anthropic, and Databrick.

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