Dear Financial Samurai,
Keanu Reeves supposedly once said, “I’m at the stage in life where I stay out of arguments. Even if you say 1+1=5, you’re right. Have fun.” At 48, I’m starting to feel the same way, especially after the latest political violence shaking our nation.
My mission with Financial Samurai has always been simple: help you achieve financial freedom sooner rather than later. When times are good, I want you to maximize your gains, because good times never last forever. When times are tough, I want to help you protect your wealth and position yourself for the inevitable rebound.
I still remember how furious some readers and fellow finance writers were when I published The Proper Safe Withdrawal Rate: The 4% Rule Is Outdated during the depths of COVID in 2020. My premise was straightforward: use 80% of the 10-year bond yield as your safe withdrawal rate. When the 10-year yield collapsed to 0.61%—as investors fled to Treasuries and dumped stocks—I suggested a safe withdrawal rate of 0.5%.
The idea was simple. In times of extreme uncertainty, spend less and save more. Doing so increases your odds of staying retired, while also giving you dry powder to invest in risk assets getting pummeled. As yields rise, your safe withdrawal rate can rise too—reflecting greater risk appetite, stronger investment values, and a healthier net worth.
To me, this “dynamic safe withdrawal rate” was logical, even elegant. But to some, it sounded ridiculous. Critics said it implied you’d need 200X annual expenses (the inverse of 0.5%) to retire. Yet in March 2020, that’s exactly what the market was signaling. Stocks had fallen 32% in a single month, an extreme case. Safety came at a steep price. Of course, as yields rebounded, that multiple quickly dropped.
That period was exhausting, as I was also worried about my own finances. My only goal was to help people think clearly in a storm, but the pushback was intense. Which is why these days, I find myself leaning more toward the Keanu philosophy: do whatever you want.
Because in the long run, markets normalize, people adjust, and I believe you’ll ultimately do what’s best for your one and only life.
Another Warning About FIRE
I’ve shared before some of the things I’d do differently when it comes to retiring early. One realization I’ve had—especially as a father—is that it’s extremely difficult to amass multi-generational wealth without working for decades.
Of course, nobody needs to build a fortune so large that their children and grandchildren never have to work again. But let’s be honest: many parents think about it. It’s a natural instinct to want to shield your kids from misfortune.
The challenge is, the world is only getting more competitive. Recent protests at Columbia revealed that about 40% of its student body is international—highlighting just how fierce the competition is for top spots. On top of that, AI threatens to eliminate millions of entry-level jobs. For the next generation, getting a strong start in life may be harder than ever.
Which is why I urge caution if you’re considering FIRE with too thin of a financial cushion. Life changes. If you have children after you retire, you may suddenly find yourself back in the workforce as the costs of healthcare, housing, and tuition—three of the biggest inflationary pressures—hit hardest for families.
Read: FIRE May Make Amassing Multi-Generational Wealth Impossible
Finance Hack To Boost Your Wealth
Ever since I discovered I was paying over $700 a month in life insurance premiums to USAA—on a policy I thought I’d cancelled two years earlier—I’ve been hyper-vigilant about monitoring my accounts each month. One hack that’s helped me stay disciplined is keeping my checking and savings balances as close to $0 as possible.
Conventional wisdom says to hold six months of expenses in cash as an emergency fund. I’ve taken it to the extreme. By running lean, I stay motivated. And with the stock market up more than 30% since April, these euphoric times make it dangerously easy to get complacent.
So here’s the trick: if you want a financial wake-up call, artificially make yourself feel poor by keeping almost nothing in your checking and savings accounts. That scarcity mindset can light a fire under you—pushing you to make, save, and invest more.
See: Artificially Feeling Poor May Make You Grow Rich One Day
Venture Capital Education
Finally, in what may be the least controversial post I’ve written, I broke down some key venture capital investment terms every investor should know. Since 2003, I’ve allocated about 10% of my investable capital into private companies and private funds. I love the search for opportunities that could potentially 10X or more.
But if you’re going to invest in private funds, it’s critical to understand terms like MOIC, TVPI, and DPI. Once you do, you’ll be far better equipped to evaluate traditional closed-end funds and make more informed investment decisions.
See: Venture Capital Investment Terms You Should Know
An Exciting Week Ahead
All eyes are on the Fed this week as it’s widely expected to resume cutting the Fed Funds rate. A 25-basis-point cut seems almost certain. But there’s still a 10%–20% chance of a 50-basis-point cut, an outcome that could spark a knee-jerk rally in stocks.
On the flip side, I think there’s at least a 50% chance the market sells off if the Fed delivers only the expected 25-basis-point cut. That’s why I’m keeping a recently matured Treasury bill in cash, ready to deploy if we get a pullback.
Enjoy thinking freely and doing whatever you want!
To Your Financial Freedom,
Sam
Subscribe
Pick up a copy of my USA TODAY national bestseller, Millionaire Milestones: Simple Steps to Seven Figures. I’ve distilled over 30 years of financial experience to help you build more wealth than 94% of the population and break free sooner.
If you want to get my posts in your inbox as soon as they are published, sign up here. If you were forwarded this newsletter, join 60,000+ and sign up here. Financial Samurai began in 2009 and everything is written based off firsthand experience and expertise.