I have no disrespect and I understand everything he had now is all passion and hardwork.

I'm saying with that capability of income per hour it's not a difficult decision to make whether to invest or to pay off loans.

Most would just pay off loans and invest later on.

He can make a million in maybe less than a year time.

How many can do the same?

What is necessary is subjective..

Principle sum may be devalued by inflation but loan interest rate is normally higher than inflation rate. Extended loan tenure may encounter economic uncertainty e.g recession which heighten default risks.

No fear of default if your cash exceeds your loan liabilities

I feel invest the balance, can obtain higher returns, as my time horizon is long

I normally keep it for years. Enjoy the capital appreciation and dividend.

This post has been edited by wheimeng: Jun 20 2020, 02:25 PM

i think we may have different interpretation of the terminology of FI/RE.

what is FI/RE?
If someone needs 100m to have FI/RE, i would very much like to know what are the $$$ for.

FI to me is the person must be free of debt.
RE to me means the person has attained sufficient reserve to guarantee basic needs are covered till their demise.

therefore my basic understanding of FI/RE would be:
1. free of debt (be it mortgage, car loans, education fund, insurances, etc)
2. sufficient reserve of RMx/month x anticipated duration of balance life + contingencies for emergencies

whatever extra and over would be for enjoyment such as:
1. new car every 3 years
2. 4 overseas trip
3. etc

i think generally a lot of people tends to factor in the extra as part of FI/RE.
it's not wrong as it's a great motivator to keeps one growing. but in truth, am sure there are plenty of people who has achieved FI/RE but they are just growing their warchest for the "nice to have" instead.

trajectory is very important to keep one in check.
if you perform an excel, a simple starting pay of RM2k at 3% increment yearly without bonuses and 5% yearly epf dividend, the person should amass >RM1mil by end of year 40.
so if RM1mil is your target, you just need to make sure you beat either:
1. a higher starting pay
2. better than 3% increment yearly
3. have bonuses
4. pray for higher than 5% dividend from epf
5. work for 40 years

as you can see, these goals are indeed very achievable once things are put into perspective

You need to read up on FIRE. FI does not equal to free of debt.

And yes, there is no specific number to FIRE, it is up to the individual.

Different people have different interpretations and different end points. Being free of debt makes for better control of financial planning overall - but as long as what you generate passively outstrips what you have to pay/your commitments, then, by one definition, that’s already financial independence

One needs not to be debt free to be FI, quite correct.

Take a scenario, both with 1 mil net worth

A: 1 mil debt with 2 mil cash on hand.
vs
B: debt free with 1 mil cash on hand.

Technically and mathematically, they are the same.

But for A situation, most people generally may become more adventurous and take more risk in investment as having 2 mil compared to 1 mil.

Not debt free proponent A - those money instead being used to settle the loan and debt free, it is better to use the money to invest elsewhere, expand business to generate more return etc especially with low loan interest rate.

Eg.
Instead of paying back 1 mil loan debt and debt free, the 1 mil being invested into boba tea shop, bnb etc.
But due to averse economy condition, those 1 mil investment in boba and bnb may at risk while still having to service the 1 mil debt.

While in good day, for sure, A is more rewarding than B.

Conclusion
The risk exposure of A is higher than B.

But still there is no right or wrong, or which is better though.

yes. fully agree.
just that my own interpretation a person who is FI must be debt free.
and again my own definition of the debt free doesn't literally means no outstanding loan but cash in hand must exceed the loan amount AND the more important criteria is the cash in hand must not be used in any risky investment that may jeopardize the value to affect the repayment of the loan.
if a person having cash in hand of 2mil but parked at safe haven investment such as capital guarantee bonds/investment, FD, etc is fine. but if the 2mil is parked at stocks, business, etc, i wouldn't exactly say they are fully covered since from the covid pandemic, wht was once deemed safe stocks can also dwindle down.

eg. BAT stock year high and low for this year alone ranges from 8.xx to 31.xx.
dy 11% currently but is that any form of guarantee?

Being debt free does not make one FI.

What about living expenses? One cant say one is FI if there is no means towards paying for living expenses.

a part of FI
Freedom from Debt Payments.
reducing the expense per month

obviously you are not reading my previous post.
that's under RE.

https://forum.lowyat.net/index.php?showtopi...post&p=97238491

anyway, will not continue to debate the definition with you. am merely sharing my own interpretation.

Alright thanks, I get it. It's YOUR OWN interpretation.

By the way, what do you call someone who has enough money that he never has to work again, but is not retired? You can't call him RE


This post has been edited by Bora Prisoner: Jun 24 2020, 09:59 AM

It can be, but not necessarily

Hi All,

I am curious, for most of you who already achieved FIRE, how are you maintaining your assets. FD, stocks, unit trust, ponzi scheme?

What is the standard of ROI per year for your investments, 3%, 4%?

Thanks.

This post has been edited by Slash21: Jun 28 2020, 11:16 PM

Ponzi scheme for FI/RE folks ?

I'm averaging 4 - 5%, and to be honest, I'm already very pleased with that, given the climate we're presently in at the moment.

He is Wealthy.

So you dont call that person FI?