Monday, March 05, 2018
The Art of the Good Life #13 : Fuck You Money
Because this is a financial blog, I would say that this chapter is the only disappointing one so far.
The author positions fuck-you money as having one year of living expenses so that you can say "Fuck You" to your asshole boss and then storm out of the office never to come back to a dysfunctional workplace.
What a horribly bad idea. In this age of tech disruption, some knowledge workers may be unemployed much longer than a year and this idea might only work in a welfare state. Alternatively, you can get an Uber license.
A better solution is to accumulate enough fuck you money so that your dividend income is equivalent to the salary where future salary increases lead to diminishing returns in personal happiness. This translates to about $75,000 in annual income. As it turns out, investing a million dollars at a return of 7.5% will be able to do exactly that which is why it is unwise to scoff at people who aim to become millionaires in society today.
A million dollars is not very meaningful, but $75,000 in annual income without lifting a finger is quite a remarkable
For most ordinary people who are not investing superstar, thanks to Budget 2018, the Lion-Philip SREIT ETF no longer pay 17% taxes, so you can invest your money tax-free and receive dividends of more than 5% with a reasonable prospect for capital gains. To generate $75,000 a year, you will need a portfolio size of $1,500,000. This is challenging for a single person but for a working professional couple.
The rest of the chapter has some down to earth advice for people :
a) Don't react to minor fluctuations to income or assets. I think it's easier to avoid thinking about market volatility if you have a day job and a large asset pool.
b) Don't compare yourself to the wealthy. Also hard because you are trying to become wealthy. I think its better not to compare yourself with the poseurs because the truly wealthy are quite frugal and have very little to show.
c) Live modestly. Which I thoroughly agree.