November 19, 2025 – Recently, there has been a lot of chatter about a policy proposal: the 50-Year Mortgage. The proposal received significant pushback from all corners of society. Almost the entire political spectrum agreed that this was a bad idea. It’s rare these days that everyone agrees on something. So, I’ve been sitting back and watching the public outrage unfold. Oh, how terrible and irresponsible this is! You’re paying too much in interest over the life of the loan. You’re paying more in interest than the total value of the loan. You’ll still have a mortgage when you’re 90! Instead of passing wealth to your heirs, you only pass on a mortgage. The horror! For the record, I’m not a big fan of a 50-year mortgage. However, most reasons presented are not particularly convincing. Let’s take a look…
Continue reading “The 50-year mortgage is not as bad as we’ve been told!”Category: General
Will Early Retirement Reduce My Life Expectancy?
August 22, 2024 – Welcome back after a long, relaxed summer break this year. Today’s post – suggested by a reader – deals with an intriguing question: how does early retirement impact my life expectancy? You see, since retiring six years ago, I’ve always assumed I’m doing my body a favor. I live a more relaxed life, exercise regularly, and sleep more every night. So, I’ve always believed my 2018 early retirement decision should improve my health and increase my life expectancy, right? Well, shockingly, the academic research on this topic is mixed. True, some studies seem to indicate early retirement reduces mortality. However, several studies point in the opposite direction. The commonly referenced rationale for this paradoxical result is that early retirees ostensibly often have reduced social contacts and physical and intellectual stimuli, increasing the risk for physical and mental decline.
Bummer! Was it a mistake to retire early? I did notice more gray hair in the last six years. Have you noticed a decline in my mental capacities? Am I becoming a curmudgeon? Be honest, everybody! Well, not so fast. There are many reasons not to be too concerned about (early) retirement’s alleged adverse health effects. Let’s take a look…
Continue reading “Will Early Retirement Reduce My Life Expectancy?”100% Stocks for the Long Run?
February 12, 2024 – Last week, I wrote about how equities historically outperformed bonds by a comfortable margin. So, the principle of “stocks for the long run” is still valid. Does that mean a portfolio with 100% stocks is a good long-term strategy? That’s a recommendation from another finance research paper that’s gotten a lot of publicity lately. Three finance professors claim that a 100% stocks portfolio, 50% domestic and 50% international stocks, would have consistently outperformed all other conventional wisdom asset allocations, e.g., 60/40, glidepaths in target date funds, etc. Quite a sweeping claim! They claim they have the empirical evidence to prove it.
I have my doubts, though. Let’s take a look…
Continue reading “100% Stocks for the Long Run?”We’re All Millionaires! (on average)
December 3, 2023 – When I wrote my post on the “Die With Zero” philosophy in October, I dug through the Survey of Consumer Finances (SCF). I used the detailed wealth distribution data to study the extent of asset overaccumulation late in retirement. The Federal Reserve releases the SCF only every three years, and just a few weeks ago, we got another survey covering 2022 and providing a wealth of information – pun intended. Quite amazingly, in 2022, for the first time in history, the average household net worth crossed one million dollars, now standing at about $1,060,000. Of course, wealth is unequally distributed, so while we may all be millionaires on average, the number of millionaire households is much smaller.
Then, what’s the percentage of millionaires? Is it a tiny elite, like the wealthiest 0.1% or 1%? I remember reading years ago that the share of millionaires was in the high single digits. So, I was surprised that more than 18%(!) of households were millionaires in 2022. That’s across all households and all age groups, and it is significantly higher for older folks. Also, the overwhelming majority of millionaires are homeowners. Homeownership can’t be such a terrible investment after all.
Since I did all that work, writing a Python program to dig through all those datasets, I thought I might as well write a blog post and share the results with you. Let’s take a look…
Continue reading “We’re All Millionaires! (on average)”A Post-Mortem for a Crypto Exchange: Is FTX worse than Bernie Madoff?
December 7, 2022 – The number one story in the crypto world this year (or decade? or century?) must be the FTX crypto platform collapse. It’s mindblowing how quickly FTX went from one of the largest crypto exchanges with a 150-second Superbowl commercial in February 2022, naming rights to sports arenas, numerous A-list celebrity endorsements, etc., to becoming the pariah of the financial world in just one short week in November 2022.
Likewise, FTX’s founder, Sam Bankman Fried (SBF), went from a modern-day J.P. Morgan to Bernie Madoff 2.0. Is it even appropriate to compare SBF with Bernie Madoff? Isn’t that a bit of an insult? You bet! It’s an insult to the late Bernie Madoff! Along several dimensions, the FTX collapse is actually more outrageous than Bernie’s decadelong Ponzi Scheme. Let’s take a look at why…
Continue reading “A Post-Mortem for a Crypto Exchange: Is FTX worse than Bernie Madoff?”2022 FI Chautauqua in Ecuador
October 27, 2021 – Hi Everybody! Not a big blog post today, just a quick announcement: I will be heading to the 2022 Chautauqua in Ecuador as one of the invited speakers. The event will span an entire week: June 18-25 in 2022. So, if you want to spend a fun-filled week in a beautiful location with an opportunity to interact with like-minded FI and FIRE enthusiasts and four awesome FIRE thought leaders please consider joining us there!
Here are more details…
Continue reading “2022 FI Chautauqua in Ecuador”Our Three-Year FIRE Anniversary
July 1, 2021 – Time flies! I can’t believe I already had my 3-year FIRE anniversary last month! Time to reflect and think back on the first three years of early retirement: travel, moving, “market timing”, dealing with the shutdown, and some other exciting news in the ERN retirement life. Let’s take a look…
Continue reading “Our Three-Year FIRE Anniversary”Stealth Frugality
June 16, 2021 – We all heard about stealth wealth, i.e., being wealthy without being flashy! Live below your means! There are blog posts about it (Physician on FIRE, Retirement Manifesto, and many more). A large part of The Millionaire Next Door book (paid link) is about Stealth Wealth. We certainly have been practicing that principle while accumulating wealth, and especially now that we live our comfortable life in early retirement.
But we never overdid the stealth wealth either. In other words, when I announced my retirement in 2018, not a single relative, friend, or colleague blurted out “Yeah, you’re such a cheapskate, no wonder you accumulated seven figures!” Quite the opposite, people wondered how we were able to save and accumulate so much without looking cheap to the outside world. Very simple, we were frugal, but we were able to hide that frugality very well. In other words, we were practicing…
Stealth Frugality = frugality without looking and acting like a miser!
And Stealth Frugality doesn’t rule out Stealth Wealth. It’s more of an extension, a less extreme form of stealth wealth. Being a math wonk, let me make the point with the diagram below. If we plot on the x-axis the perception of wealth and on the y-axis the reality, then really everything above the 45-degree line, i.e., reality > perception, is stealth wealth of sorts. But the trick is to move out of that top-left corner (act poor, big bank account) and a little bit more to the right. Without dropping too close to the x-axis and certainly not all the way to the lower right corner (=Keeping-up-with-the-Joneses, drowning in debt). In other words, Stealth Frugality involves spending wisely without breaking the bank, i.e., try to find some spending categories to splurge on that follow a flatter path than the Minus-45-degree line!
So, why and how did we practice Stealth Frugality? Let’s take a look…
Continue reading “Stealth Frugality”Million Dollar FIRE Summit: My interview with Liam Austin on the Bear Market and what it means for the FIRE community
April 4, 2020 – Are you worried about how the current bear market will affect your financial situation? I had the pleasure of chatting with Liam Austin of Entrepreneurs HQ about the FIRE community and what the current market conditions mean for folks in the FIRE movement.
I’ll be sharing my thoughts at the Million Dollar FIRE Summit (Special Market Crash Edition), on Thursday, April 9. It’s a free, virtual event, meaning you can tune in from anywhere. So, if you like to hear from me and four other FIRE/Personal Finance bloggers who I really like:
- Kevin Ha – Financial Panther
- Travis Hornsby – Student Loan Planner
- Michael Quan – Financially Alert
- “Cubert” – Abandoned Cubicle
… then head to
—> This link <—
… and find out more.
Again, this is a free event but it does require registration. I don’t make any money from this event. I simply chatted with Liam because I feel passionate about personal finance.
I hope to see you there!
Stay safe
Karsten
PS: Some additional resources and posts I mentioned in the interview:
Some Random Thoughts on the State of the World
March 27, 2020 – Wow, I’m in a writing mood these days. A second post this week! Here are a few random thoughts about the current situation. All the things on my mind right now that might be too short to put into a separate blog. Since you’re likely all sitting at home feeling bored, I thought you might enjoy this… Continue reading “Some Random Thoughts on the State of the World”