I think of this blog as a fun experiment. This will be an exercise in learning to defeat financial dogma and socialization as much as it is about learning the new rules of decentralized finance and digital assets.
The truth is we’re living on the cusp of a major change in the financial world. The things that worked for the last generation are unlikely to work in the future. There are new tools and financial products that are just starting their adoption curve you can use today that pay you higher interest than your bank with essentially the same risk. That, and there are new assets you can allocate to that are likely to grow faster than traditional assets over the next 10 years which will accelerate your pace toward F.I.R.E.
The last 10 years has seen the rise of a new asset class that the mass media, established financial world, and registered investment advisors are just starting to acknowledge as valid.
Digital assets like Bitcoin, Ethereum, Solana, and others have created more wealth for early adopters than any other asset over the past decade. Some of those who had exposure to these assets created wealth, but didn’t know how to keep it because they weren’t well versed on portfolio construction and the F.I.R.E. methodology.
This blog is just as much for them as it is for those who heard about cryptocurrency years ago and thought of it as “too volatile”, or as having “no instrinsic value” (very few things beside basic necesseties like water, food, and shelter do). On this blog we’re going to apply the best of both worlds approach: we’re going to apply timeless investing principles to digital assets so you can achieve financial independence early.
This blog is for everyone, but particularly those who realize the world of finance is changing rapidly, and want to thrive in this new reality. As with most times of great change in history, those with an open mind and curious spriit will outperform those stuck in the past.
The F.I.R.E. movement is a timeless counterculture movement about waking up and seeing money for what it actually is: energy
The book, “Your Money or Your Life” is one of the best books I’ve ever read. It’s top 3 for sure. There aren’t many books I would describe to be transformative. This is one of them.
The book is about personal finance sure… but it’s more than that – it’s about changing your perspective about life by washing off the layers of socialization that clearly don’t serve you.
Your Money or Your Life was the book that started the F.I.R.E. movement back in the 80’s. Back then F.I.R.E. members would save a large part of their income (50% or more) and invest in bonds – a low risk, and at the time, high yield asset. This would allow them to retire early and live off the high interest they earned from the bonds.
Times have changed since the F.I.R.E. movement started
There is an impending global debt crisis: www.nationaldebtclock.org, which means interest rates must be kept low at any cost. The stock market has been a great mechanism for building wealth via the F.I.R.E. principles BUT, when you look at nominal returns vs real returns (something we’ll go into detail on later), you find that the returns on the SP500 have barely exceeded real inflation figures (and I’m not referring to the creative calculus behind CPI).
I like the SP500. I really do, and I expect it will continue to perform around 7% annualized over long time horizons. In our portfolio we allocate to the SP500 just like those in the traditional F.I.R.E. and Boglehead communites. It’s just that the F.I.R.E. movement was originally a counterculture movement, and I believe it has lost its way.
F.I.R.E. was initilally about living a life that challenged the dogma of its age.
We forget that these were all radical ideas at the time: don’t spend your life trading time for stuff… don’t dig yourself into debt buying things you don’t need… do save your money and invest it wisely to escape the currently system.
If the F.I.R.E. movement was birthed in being different and developing good money habits so you can live a life of ultimate freedom, how did we get to the point where most F.I.R.E. bloggers ignore, and even laugh at, the best vehicle for achieving F.I.R.E.?
I suspect this has something to do with the fact that we’re all overinformed with useless information and underinformed when it comes to personal finance education. If the select few people we view as subject matter experts in the personal finance blogging space ignore digital assets, it’s easier to agree with them, than to do the work and arrive at independent conclusions.
There has to be a better way than settling for 7-10% per year. And as it turns out, the past decade has proven that there is.
The F.I.R.E. movement and Bogleheads have the right idea, but the wrong asset allocation
Asset allocation is the most important thing in investing.
There are tons of blogs on F.I.R.E. (financial independence retire early), but none I’m aware of that recommend using decentralized financial protocols and other blockchain-based technology to achieve F.I.R.E.
That seems crazy to me and to anyone who has been paying attention.
Bitcoin, Ethereum, and a few other protocols are indisputably the best performing asset of the last decade. Bitcoin has performed X%, Ethereum X%, and Solana X%.
Why then is there not more discussion about using these instruments to achieve F.I.R.E.?
Financial dogma is supported and spread by personal finance bloggers everywhere
A quick look at other F.I.R.E. blogs (we won’t name names) shows those in the F.I.R.E. movement are opposed to cryptocurrencies, declaring that they have “no intrinsic value”. Some of these bloggers are great writers and have great intentions, we just wouldn’t take advice from them related to digital assets.
Cryptocurrency adoption has only just begun
Some may say, “past performance is not indicative of future results” – and they are technically correct. Nobody knows the future.
Our arguement is simple: you don’t need to know the future to see that rates of adoption for cryptocurrency are accelerating around the world. Nor do you have to know the future to run the math to estimate the spot price of an asset that could have a market capitalization as large as gold in the next 3-5 years.
The past 8 years have been fantastic for those who looked at the traditional world of cash, stocks, and bonds, and decided to go their own way. These investors now have the freedom and opportunity to do what they want, when they want, with whom they want. This is the reward for thinking differently and challenging those who cite “efficient market hypothesis” and eschew values and views that are no longer valid today.
The sad thing is that these same people who are so good at citing financial dogma won’t own bitcoin until their Registered Investment Advisor (RIA) advises them to put it in their portfolio. We think this is interesting and unfortunate. But also, the obvious byproduct of an education system that doesn’t include financial literacy in its curriculum, nor critical thinking in most cases.
The best opportunity is ahead of us
I actually think the next decade will present more opportunity to achieve F.I.R.E. than the previous one so long as you have exposure to the right assets.
This next decade will be tricky for many reasons:
1. technology development and AI disruption is accelerating,
2. many jobs are at risk, and
3. the sovereign debt crisis is the kind of thing that nightmares are made of.
It’s bad, or at least it looks that way now.
Our focus with this blog is to share a new way to use the timeless principles of the F.I.R.E. movement – a way that applies these principles, and a few new rules of risk management to achieve F.I.R.E. faster than those around you (especially those aiming for the historical returns of a 3-fund ETF portfolio).
The nice thing about where we are in space and time is that you have the opportunity to learn about and invest in, many of these technologies. All you need is an open mind, a curious spirit, and the application of what we are going to share with you.
Welcome. We’re glad you’re here. Let’s get started.
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