Dear Financial Samurai Readers,
This week, I’ve been digging into what might happen if Goldman Sachs' forecast for a 3% average annual return over the next decade proves true. Interestingly, most readers are skeptical. Yet, if you invested in Q1 2000, it took until November 2012 to actually see returns!
So I wonder—are nonbelievers too young to remember, or did they simply forget? Probably the former.
Like most, I find it hard to believe returns could be so low, especially with tech innovations driving productivity and profits. But having started investing back in 1996, I know that anything can happen.
Read More: Finishing Rich Despite a Low-Return Stock Market Environment
An Example of Outperforming the S&P 500
Last week, I mentioned OpenAI’s funding round boosted its valuation to $156 billion, up from $80 billion in Q1 2024. And now, Anthropic—OpenAI’s closest LLM competitor—is raising money at up to a $40 billion valuation!
Given these valuations, a 3% annual return in public markets feels almost laughable compared to private AI companies’ potential returns. Of course, these companies could face a downturn, but right now, things are looking promising.
The performance gap between private equity in these AI companies and the S&P 500 reminds me of a post I wrote on the two levels of wealth. The first level is the “regular rich,” who build wealth gradually through index funds. The second level is the “ultra-rich,” who amass wealth by building businesses or making significant investments in individual companies. The disparity between these two levels of wealth is staggering.
Besides investing in private AI companies, I’m also staying long on San Francisco real estate. Eventually, liquidity events in tech could benefit real assets like property.
Don’t Fear Boredom in Retirement
In the year following my early retirement, I often told my wife I felt bored. I’d be done writing for Financial Samurai before she even woke up, and my friends were all at work.
After a while, though, I stopped saying I was bored because I found ways to stay busy—hanging out with older friends, writing, traveling, consulting, teaching tennis, and attending conferences. Now, 12 years after leaving work, I’m constantly busy with parenting, school functions, and social events. It can feel overwhelming at times.
If you’re worried about feeling bored in retirement, especially if you retire young, don’t be. You’ll naturally find activities that give you meaning and purpose.
Read More: Overwhelmed, Not Bored: The Unexpected Challenge of Retirement
Invested in a Dashcam for More Protection
Finally, I decided to get a dashcam after seeing a video go viral about a staged car collision for insurance fraud. In the video, the car in front stops abruptly, causing the car behind to brake. When there’s no collision, the front car reverses hard into the vehicle behind, and then the passengers act injured. But when they see the car behind has a dashcam, they jump back in and drive off!
Interestingly, people online noticed two things: the rear seat passengers put up a shield, allowing the driver to swap seats without being seen. Plus, a Kia SUV following behind turned on its hazard lights before the accident even happened. The Kia SUV was part of the setup.
I picked up a basic dashcam that plugs into the cigarette lighter for under $30. I suggest you do the same. Even if it doesn’t record well, it acts as a deterrent to scammers. You're less inclined to steal a car with a recording device.
Stay safe out there, especially if you’re driving with little ones!
To Your Financial Freedom,
Sam