Dear Financial Samurai,
As a FIRE enthusiast, I’m always looking for signals to save and invest more for the future, especially as a parent. I noticed another one this week when Asha Sharma, the new CEO of Microsoft’s Xbox division, laid off 1,600 employees, part of 4,800 layoffs firmwide. She was then appointed to a Federal Reserve task force on productivity and jobs.
Anybody who works in big tech knows there’s a lot of bloat, with multiple layers of management that slow down innovation and decision-making. So the layoffs are not a surprise. What did catch my eye is that Xbox’s cuts were 20% of its division, while Microsoft overall cut just 2%. When a reset comes, it doesn’t come evenly.
Meanwhile, thousands of foreign workers continue to be hired through the H-1B visa program this year. Globalization is clearly upon us. If you are not a highly connected, highly skilled worker, your job is not safe.
When I worked at Credit Suisse, our global head of Asian equities was an Englishman. To nobody’s surprise, the Hong Kong and U.S. desk heads were also English. When he was replaced by a Korean, sure enough, the London and U.S. desk heads soon became Korean too. It may sound unnecessary, but I spent a few hours learning Korean cultural norms and customs so I wouldn’t inadvertently offend my new boss. Cultural awareness can either help or hurt you as you climb the corporate ladder.
Once the Korean global head, with whom I had a great relationship, got laid off, I knew my days were numbered. The new head was French, based in New York City, and I was in San Francisco with no relationship to him.
Saving and investing aggressively requires sacrifice. But I promise you, when a new boss arrives who wants to take care of their own people, and you don’t fit the mold, you’ll be glad you did.
In uncertain times for jobs, I like owning hard assets that generate income no matter who my boss is. That’s a big reason I’ve invested six figures with Fundrise, which manages over $3 billion in residential and industrial real estate across the heartland, where valuations are lower and yields are higher. Fundrise is a long-time sponsor of Financial Samurai.
Greed After FIRE
The irony of FIRE is that you’re giving up the opportunity to make more money by retiring early. If you love money and status, FIREing is nearly impossible.
Once you FIRE, you’ll likely get used to your freedom within a year. And the younger you FIRE, the more investing FOMO you’ll feel as your peers keep getting richer through raises, promotions, IPOs, and M&A. If you happen to live in a hyper-competitive city like NYC or San Francisco, you can’t help but feel like you’re falling behind.
This is why it’s so nice to retire in a less type-A city. Mentally, it’s much chiller here in Honolulu, because nobody is talking about AI’s impending destruction of all jobs while AI employees get rich beyond belief. If you work at an AI company, I’d keep a low profile. You know the revolution is coming.
But if you choose to remain in a hyper-competitive city after FIRE, you must find a way to keep up without over-risking the nest egg that enabled you to FIRE in the first place. As a result, I published a new post: The Dumbbell FIRE Investing Method To Safely Build Max Wealth.
The Dumbbell Investing Method provides the best of both worlds: the ability to feel financially secure no matter how bad things get, while still participating in the upside.
Spending Discipline On Your Kids
I’m loving the World Cup and watching every game. I’m sure hundreds of thousands of American kids and their parents are fired up and ready to feed the youth sports machine, dreaming of one day wearing the red, white, and blue. However, earning a full athletic scholarship and then going pro is about as likely as having bought NVIDIA 10 years ago, held on, sold at the top, and rolled all the proceeds into Anthropic.
The “problem” with kids is that you love them so much, you’re willing to spend almost any amount on them. Because who knows? What if they’re the next Lionel Messi or Caitlin Clark? What a shame to never find out because you were too cheap.
But unless you have unlimited money, you need some discipline, which is why I wrote: The Optimal Time To Stop Paying For Your Kids’ Activities.
Speaking of protecting your kids: if your job is less secure than you thought, your family’s finances shouldn’t be. My wife and I used Policygenius to get matching affordable term life insurance policies, and we felt tremendous relief afterward. Compare free quotes in minutes.
Good To Dream About Living The Dream
Finally, instead of spending five weeks remodeling my parents’ two-bedroom in-law unit like I did last summer, I’ve been doing the opposite: checking out really nice homes. Given Honolulu has no dominant industry like finance in NYC or tech in San Francisco, there’s real danger in buying a far-above-median-priced home here. If you do, you might never be able to sell it when you need to.
You’re more dependent on mainland or foreign buyers, which makes the true cost of luxury property much higher once you account for illiquidity risk. So I decided to tour some sweet properties that have been sitting for over 120 days to understand what’s up.
What I found was quite insightful, as you’ll read in this new post: How The Rich Justify Buying $9+ Million Homes They Barely Use.
To your financial freedom,
Sam
If you found this newsletter useful, check out my USA Today bestseller, Millionaire Milestones: Simple Steps To Seven Figures, where I share the exact frameworks I used to build wealth after leaving my day job at 34.
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