Why the FIRE Movement doesn't work (Financial Independence, Retire Early)

hey welcome back talk later you know these videos by the way they're going to get more boring over time because I'm starting to avoid some of the more risque topics as my dad asked me to address this in my prior video but today I wanted to talk about why Fire doesn't work anymore you may have noticed this yourself if you're on fire the financial Independence retire early movement where inflation's at what 9.5 almost 10 percent these days and the market is crashing so this idea that you can maybe live off of your Investments off of your interest only is not working for most people on fire but here's the thing personally as somebody who has tried to fire myself you know I'm back to work you may have noticed most other people are working as well why is this and I believe that fire simply doesn't really work it's kind of this myth that people sell to you in order to try to make money on their own they sell you these fire tips I want you to think about this one thing and if you can understand that you will understand why Fire doesn't work a house when you buy it it is 99 percent investment one percent utility right so what's really happening when you buy a house is most of your money is going into investment you're not actually spending it maybe one percent of that is actually in the utility that you're going to get from the house but most of it is simply being redeployed into further reinvestment so how much of the money are you actually using at this point well really not that much because when you think about it if a house retains a zero value people probably wouldn't buy it or their value would go down very quickly very fast and this house is what may be the biggest purchase of most people's lives and they haven't even really started spending it you know what else do people spend money on maybe clothes Furniture in order to decorate this house isn't that mostly for status can't you buy decent clothes at say Walmart for like just a few bucks here and there can't you use Ikea furniture and the same goes for cars too you can easily drive a used Honda Civic or use one of the past me downs from another family member you don't need to buy that brand new Porsche Lamborghini and so what we've done here start trimming down on your imagined usages of money and how it's going to solve all the problems in your life and how you think you need it into realizing that hey most of the time you're not even actually spending it you're simply redeploying it reinvesting it and refinancing in order to get more money to use money to buy more money and actually most people maybe they need far less than they imagine like for example instead of having to buy this multi-million dollar house I mean you could easily rent an apartment for a few thousand dollars per month the apartment is 100 pure usage right there's zero investment in that and you can invest your money in other stuff you can also just live with some friends relatives family members and you can share a room and you can even Airbnb half of it out and with the right setup maybe even a duplex where you rent the other half out you could maybe even live rent free and so here's what I've been thinking about recently let's imagine that you can get Target gift cards how many tens of thousands of dollars worth of targets gift cards would you like and so you just don't want anymore and you start selling them off so that you can use the proceeds to I don't know invest in stocks or something would you like ten thousand dollars of Target gift cards most people don't even want that and yet this is pure usage this is utility and so what you realize is that you don't really need all of this usage of money you know most people aren't spending that much they just want like a phone they can just surf their phone all day and they're perfectly happy with that maybe get a drink and some food some burgers but most people don't want ten thousand dollars worth of Target gift cards and so in a way I think this gift card example shows what the true utility of money is you know most people they don't want all these gift cards or they have to go actually spend the money for something they want to invest it right that's what most people want it's kind of like imagine you saw a homeless person on the street and you offer them all these gift cards and they don't want it and instead they want to I don't know take those gift cards Pawn them off and trade it in for stock certificates of say apple Amazon Google and you see this homeless person starting to invest in stocks and whatever they do everybody's just saving it saving it for what exactly and you know I've mentioned this before but most people who pursue fire lean fire at least they just want to be able to survive indefinitely and you know most of us already have this by the way like you can just go live with your parents or you can substance on say canned beans and video games and you can live for a very long time on very little so most of us were actually out here to really live and so I think the real question of fire is not how much we need to survive because most of us are actually already way past that point but how much we want and it is a gradient of how good we want our lives to be and fire is not a single point but it is simply on this gradient of how well do you want to live and actually I think what we'll find is that this gradient has absolutely nothing to do with how much money you've got because you know your lifestyle is oftentimes completely independent of the amount of money that you keep stashed away in your bank account like for example people who want to travel the world you know if you want to sit on the beach for example you can certainly go to Southeast Asia Indonesia Thailand go sit on the beach over there substance indefinitely their party all the time and you can do it forever and I mean most people don't do that and I think most of us just maybe imagine or dream about wanting to sit on the beach because we do it for say one or two weeks while on vacation but in reality it's a pretty boring lifestyle most of us don't really want to do that and there are opportunity costs involved right like you have to give up opportunities at work you won't get promoted maybe you have to give up your job even because they're not going to allow all these vacation times maybe your job is just inflexible with this type of schedule so you may want a different type of Lifestyle job or it could be you're simply not done climbing the social ladder maybe you want to see how far how you can go you've already put in the work to get this far and you want to see what your maximum potential is going to be and you don't want to throw in the towel just yet and just go sit on the beach giving up everything that you've worked up for so far and maybe in that sense it's not even the question of how much money is in your bank but a question of desire and as Buddha said that desire is the cause of suffering but without desire what they light you know I've had people ask me before should they marry for a wealth or should they marry somebody that they actually like and my opinion is money is almost always the wrong option because you'll find that once you get it I I don't think it can get you much you'll quickly find that you've already bought everything you want to do with those Target gift cards right and so I think once you attend enough money and let's say this is any amount over around 100 000 or so then that money becomes unusable it becomes something known as capital the solidified form in which you become a capital metal allocator and then you get to start shuffling it around various Investments like Apple stock Google stock Tesla stock and you just move it around you see these numbers on the spreadsheet and that is the true usage of money is this financial game in which you're just moving around all the time and you may even plow it into various real estate properties and then hire house managers to manage these real estate properties and you barely look at these properties how much of are you actually spending just a very small percentage of it here and there and the thing is in actuality in the modern digital age especially I think that modern people have less usage for money than they used to right like you don't need to buy a huge movie theater anymore you can just get an iPad you can play video games you don't have to go through the arcade and spend a bunch of money you don't need a swimming pool in your own house because these days you can rent a luxury apartments there are so many of them with better City infrastructure and layouts and Architectural plans that everyone can enjoy a swimming pool these days it's not so rare of a thing if you want to drive in a sports car we've got apps for that you can rent any of these cars that you like and so part of it is just better Modern planning that reduces the need for everybody to own their own individual things and arguably you know you can just learn to enjoy things that you don't own right you don't have to own something to be able to enjoy it you can walk in through a hotel lobby nobody actually owns a hotel and you can totally enjoy this hotel lobby this beautiful space you can walk into a restaurant enjoy the good food nobody actually owns this restaurant usually it's going to be a group of shareholders or something but everybody can go there enjoy that and so that's just an aside but personally I think we should all learn to enjoy things without necessarily feeling the need to have to own it for example a really nice suit looks better on another man than on myself because then I can't even see it on myself I can at least admire it on another person now here's the other thing I believe that you cannot really save your way to success nor can you really enjoy the highest points of Life simply through say passive investing passive income because for example passive income is probably not going to be able to afford you some of the luxuries so-called that people desire of and and of course you can learn to either temper those desires which I would recommend but if you're going to go after them you know like passive income probably isn't going to afford you first class plane tickets five-star hotels allowing you to drive Lamborghinis and eating at Michelin restaurants all the time a while you know what are you gonna do there you're going to be talking about your pet hamster because you basically do nothing in your life you're not very productive like what are the people you're going to go to these parties with are they just family and friends or are they going to be colleagues or something when you fly first class to somewhere where are you going are you going to like a business expo or convention or if you're wearing those nice clothes or that suit what event is it that you're going to again is it some charity gala event or some launch of a new product probably not if you're on fire right you're retired you don't do anything you're not very interesting person these days you just play video games and take care of your pet hamster all the time that's your life and so as you're walking around the local flea market in your suit you know you're going to see that Starbucks and you're going to say to yourself you're not going to go there because you're trying to save a bit of money and you know no that's not going to save you that much in the whole scheme of things actually you can't really save your weight two bucks three bucks at a time to success in my personal opinion and it's quite possible all of this may just take you back to square one where you try to make something of yourself because you say you want more out of life you're not willing to put those desires aside and you want to just achieve more do more engage with the world maybe start a company or venture or something and see what you can make of yourself and you know I know there are a lot of people out there who are going to say well if they only had enough money they could actually go after their dreams like they want to become this Master Chef this master poet or artist and you know here I am ready to invest there's plenty of people ready to invest in you if you're serious cook me a meal right now cook me a Michelin star meal and show me your skills if you're a good artist or a poet draw me something or write me a nice poem and show me that most people they have no clue how to do this Simply Having money is not going to make you a master Michelin star chef and so what's lacking is your own passion you actually have to be interested in some of these things and in fact some people or many are actually just using their lack of funds as an excuse to not do more as an excuse for laziness really and it's a self-limiting belief now my other problem with fire and why I don't really subscribe to this movement is even if you take a look at the best case scenario maybe like a higher paid career like say a doctor lawyer or engineer these people even still they have to reach age I don't know 40 or 50 before they actually have enough to save fire and by then their lives already been lived and is pretty much over by then so in my opinion I don't really believe in this whole retirement thing because by the time you reach it your life would mostly have been over by then and so you have to enjoy the journey you know I think a lot of people they struggle through their lives and it's just this horrible nightmarish anxiety train wreck of your life and they get to the end and then they may maybe they even succeeded they make some money and then they look back and think yeah this wasn't worth it they gave up their youth they gave everything up in order to get to this point and they just wonder or I would look at it and say why couldn't you have enjoyed your life Adventures had a really great time full of laughter and happiness and enjoyed this experience this journey this adventure and that's the other thing by the time they get to their older years they have less need for money certainly the search for status May no longer be there you know the need to drive a sports car or wear really nice looking clothes or have beautiful Furniture in your house to impress your friends by that age you probably simply just don't care anymore or don't have the energy to entertain all of this and so overall my view is that money is not something necessarily to be used as much as more often than not just something that is capital allocated money is a byproduct of success available typically to those who have a need for it right like if you're starting a business if you needed to do something then people are willing to invest in you like you can start something people will invest hundreds of millions of dollars into your business but if you have no need for it if you're not engaged with the world maybe you're just sitting around on the beach daydreaming all day with your pet hamster I mean there's nothing around with that but at that point maybe you've also got very little ambition you don't have that much use for our funds compared to something like say I don't know Elon Musk who's trying to do all these things and people are throwing tons of money at him capital in order to try to do more with more and so here's the funny thing a lot of people come to me begging me for money and I'm actually the last person you would want to ask money from because fundamentally I don't think it's going to help you I believe that money is almost always the wrong solution for any problem rather I believe it's more of a byproduct of success and if you're pursuing it you're going after the wrong thing you're going after that byproduct and it should be the lifestyle the success the things you want to achieve that you should be going after and I'll do it for me hope you enjoyed the video let me know your thoughts in the comments below if you liked the video give like And subscribe see you in the next one thanks bye

Channel: TechLead

Views: 286,220

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Id: k2wbW5SwgDM

Length: 13min 8sec (788 seconds)

Published: Thu Oct 06 2022