Dear Financial Samurai,
The 10-year bond yield is back to about a 20-year high at 4.74%, which put pressure on the S&P 500 all last week. If it wasn’t for stronger-than-expected corporate earnings growth, the S&P 500 would likely be 5% to 10% lower.
Curiously, that’s almost exactly Bill Bengen’s updated SAFEMAX withdrawal rate of 4.7%, his conservative assumption of what retirees can withdraw and not run out of money for 30 years. It’s an upgrade from his longstanding 4% withdrawal rate recommendation.
So the risk-free rate and the safe withdrawal rate have converged. Take your average annual expenses, divide by 4.7%, and you get a rough idea of how much in investable assets you need. Hit that number and you can kiss your job goodbye if you wish.
But of course, don’t just leave. Try to negotiate a severance package instead. You’ve got nothing to lose.
The Greed Within
Despite the 4.74% risk-free rate we can all earn, I’m still having a hard time allocating a significant amount of capital to Treasury bonds. Part of the reason is I allocated the maximum I could to a venture capital firm’s 2026 vintage, which is focused 100% on AI across the value chain.
I’ve been a limited partner since 2018 and their track record is good so far. When you see firms like SpaceX IPOing for over a trillion, and now Anthropic considering an IPO at potentially $2 trillion, it’s hard not to want to own more private companies.
The amount of wealth about to be unlocked will be unfathomable. And it’s not fun being left behind. I’m reminded every month when my tenant who works at one of the foundational LLMs sends me their rent.
Eventually this greed and FOMO will have its price in the form of a big correction. But that is the price risk-takers pay for the chance at greater than average rewards.
As I’ve gotten older, I’ve become more greedy for time. I remember like it was yesterday when I left my day job in finance at 34. Now I’m in the last year of my 40s. How sad.
The main way I can gain more time, or at least spend more of it on the people I care about, is with money. Enough money to not have to be at an employer’s beck and call. So I will continue to take calculated risks to stay free.
If you want to reclaim more time, read my newest post: Take More Risks To Avoid Being Financially Average. The post talks about giving yourself a chance to outperform the masses, but it’s really about buying more time to live the life you want.
The Stresses Of Being A Financial Provider
The problem with taking more risk than the person who just dollar-cost averages into an S&P 500 index fund is that you feel more stressed. And when you feel more stressed, you get more distracted with your family and more irritable too.
These costs are worth considering because they can completely nullify the point of having more money. Ever since a large investment of mine unlocked, I’ve been waking up at 4:30 am automatically, excited and anxious to see how it trades.
By the time the market closes at 1 pm PST, I’m tired and just want to nap. But I’m with the kids for Daddy Week Camp from 10 am to 5 pm, so I’ve tried my best to stay present.
If I mess up the analysis or the timing, I could lose years of living expenses from this one position alone. Get it right and I could conceivably buy back three-to-five years of time.
So when it comes to your investments, try to consistently convert your paper or realized gains into time saved from work. For example, if your annual expenses are $100,000 and you make $250,000 on an investment, after tax you’ve bought yourself about two years of freedom.
Turning money into time is one of the best ways to take your investments seriously. But the cost can be your peace of mind.
Read: The Untold Burden Of Being Your Family’s Financial Provider. One thing to note, nobody cares about my stress as a provider, and nobody will really care about yours as well. So unlike me, it’s probably best to keep your concerns private and only share them with someone you really trust.
The Simple Life Grows More Appealing
One way to live a less stressful life is to own less stuff. Minimalism and early retirement go hand in hand, but lifestyle creep is the natural course of action for most people.
While in Honolulu, I toured some amazing 6,000 to 7,000 sqft properties with pools and separate quarters for me to write in peace. They were priced between $8 and $10 million, a price point I had never seriously considered without a day job. But given touring homes is free, I figured why not. It’s always fun to dream big, as you never know what might happen with your investments or job.
After a few tours, my wife and I concluded these magnificent homes were too costly to run and too big to actually use. We already have one bedroom we never sleep in, and these homes are much bigger.
So I’m leaning towards simplicity if we ever relocate back to Honolulu. I share pictures of a couple of the homes we toured and my thoughts on living small and cheap instead here: Buying A Mansion In Paradise Might Be Backwards.
To your financial freedom,
Sam
Sponsored by Fundrise
Every AI breakthrough eventually has to live somewhere physical. Models get trained in data centers, and data centers need land, power, and permits. That’s the unglamorous half of the AI buildout, and it looks a lot more like real estate than software.
Power and permitting are the binding constraints, not chips. Which means the owners of the right dirt in the right markets get paid whether or not any particular model wins.
Fundrise runs one of the largest diversified real estate portfolios available to individual investors, and you can see every property before you put a dollar in. It takes $10 to start.
I’ve partnered with Fundrise since 2016 and have invested over $500,000 of my own money in their products. Fundrise is a long-time sponsor of Financial Samurai.
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Everything I write comes from firsthand experience managing my own money since 2009. Money is too important to be left up to pontification.