Welcome Avatar! If you found this website, we can assure you that a large percentage will heavily over-shoot their net worth targets. Not only will they overshoot it but they will realize the original target was higher than they actually needed. We’re not sure what your number is but we’ve stated paid off home $3-5M liquid (depending on where you live) is the complete cliff drop in quality of life improvements. Roughly speaking, if you own your own home and can spend $120K-200K a year, it’s tough to see significant lifestyle improvements from there. (See post on $4M being the new $1M)
This post is going to make you question a lot of the compounding numbers. Once you get past this cliff, you’ll ask yourself why it matters if you’re worth $100M or $150M on your deathbed. Answer: it doesn’t.
Part 1: Life Goes in Phases
We’ll keep it simple and just list it in decades:
10-19: Finding what you’re naturally talents are. Then getting a general idea of where it will pay the most
20-29: Trying and failing a trillion things. Getting new information until you see promise in at least one business idea. Juggling this + career + standard dating/personal life stuff
30-39: Start making real money and decide if you want to have a family or not. Biggest decision you’ll make in your life
40s: Earning a ton due to scaling things in your 30s. Focusing more on capital allocation, nature type activities as you recognize your body is slowing
50s+: Typically just family oriented items and close friends. Perhaps travel if you didn’t get sick of it in your 20s/30s
60s: Basically just retirement. Capital allocation and a fun income to keep your mind sharp. Time is basically dedicated to legacy planning/family otherwise we have no idea what is being done
Most Focus on $ Numbers. Focus on the Age More.
Lets say you’re on track to $50,000,000 in today’s money by age 65. The question is pretty clear… what exactly are you going to spend $50,000,000 on when you’re that old? It doesn’t make any sense at all. Money Compounds. Age Doesn’t.
If you could choose to be 40 years old and have a few million or be 65 and $50M, everyone is choosing to be 40. The main reason is quality of life. There isn’t much out there beyond fancy restaurants, some expensive toys like cars/watches and travel. Even then it will be difficult/impossible to blow through $2M per year with ease (again in today’s dollars just to avoid the entire inflation argument).
The Sweet Spot is Provided in This Meme. You want to Free up your ***TIME*** in the adult phase as fast as possible
How it Works Directionally
Hopefully we can agree on the general point, having money at 65 isn’t really as important as the 401K crowd will make you believe. Yes you need enough money to live a basic life in retirement. Big whoop. Beyond that the real hurdle is freeing up time in adulthood (25-50 is the rough range). If you can maximize those 25 years, that’s when the maximum spending will show up anyway.
20s: When you’re building a name for yourself and learning as much as possible. You really don’t need much money. Lets be honest, a couple drinks at a cheaper place isn’t going to break your bank account. You’re also not meeting your soul mate on Spring Break in Mexico
30s: You spend quite a bit. You need to spend on your biz. You need to save for a house. You are starting to build the foundation for a family (if that is your plan). You are also investing aggressively
40s: You spend about the same as 30s! Despite what people tell you, unless you do foolish things, it should be similar. All your partying, going out, drinking a ton? It’s basically done here. No one really minds if a 40+ year old doesn’t drink so the work + alcohol combo is just an excuse at this age band. Your spending is the same because you replace travel/party with two kids (typical set up, largely offsetting)
50s: Outside of college for kids/other major pre-adult expenses, there isn’t much left. You’re not going to be in clubs popping bottles (you already did it and don’t have an interest - guys like Bezos are the exception as he didn’t “live that life” before)
60s: Once again just retirement. You will spend far less than you expect.
Big Picture: This means your spending is actually going to go down. Think about it like that. If you are working like mad, career/WiFi money etc. The big spending actually peaks out in 30s. By then your earnings are elevated. Read that twice!
If you build simple businesses, then your earnings are multiples higher than your spending.
This is a weird feeling and takes years to get used to. You hit this point where you can live off your investments but you’re still earning significantly more from your E-com portfolio. If you want some rough math, typically your investment income starts covering all living expenses. Then you realize your earned income is 4-5x higher than your investment income.
This is exactly why you will overshoot your net worth targets, your cash flow targets and your “retirement” targets. Since you’re time rich (working for yourself), you don’t have the same issues as your peers.
All the expensive add ons don’t apply as you can do them yourself (who needs after school care if you’re hanging out with them when they are out? Who needs a private school if you live in the right zip code and are not forced to live in the major city? You don’t even need landscaping since you can do it for light exercise. So on and so forth)
All Signs Point to an Age Target of 35-45
Here is the sweet spot for 99% of you. Some of you are absurdly talented and will hit escape velocity before 30. Congrats, you’re the exception to the rule. Some people will start extremely late, too many nights and weekends partying with push-up bra Susan. This results in escape velocity closer to 45.
Doesn’t really matter how it all shakes out, just matters that you land the golf ball on this wide fairway. If you barely miss it, or beat it, the long-term implication isn’t as bad as you might imagine.
Calculate Your Max Burn: Take all the costs you have now. Estimate where peak spending will be (somewhere around age 40). Throw in two kids, take out the weekend party benders and math it all out. What you’ll find is that number is already an over-shoot.
That number is your peak spending, peak expenditure time frame. It just goes down from there no matter what the haters say. If you did well in your business you will have close friends who throw in $1,000 or $2,000 into 529 plans/Trump Accounts etc. All these small gifts end up cushioning the blow dramatically. It’s not like you want to give an 18 year old $1M in a brokerage account. Makes little sense.
Hit FI? Start Spending: Yes, seriously. For illustrative purposes, if you can live on say $200,000 a year because you’re in an expensive coastal city but your portfolio generates $250,000 per year… It’s time to spend every single cent you make beyond that. You’re already putting away another $50,000. The earned income from all your business lines (consulting, real estate, e-com, SaaS, MedSpas, whatever you got going) should be used on something you value.
Easy answers:
Life/Longevity health extension. Could be for you, parents, siblings, whoever
Local scholarships/community involvement. We don’t believe in mega charities as we’ve learned they are complete scams. You could offer benefits to talented people in your city though. Since you’re vetting them, you decide who gets the award
Bucket list items: Make a serious list of things you can’t do at 60+. Go find every single one of those things and knock them off. Do it as soon as possible because the window slowly closes
Yep. That is the list. Realistically, you already know how to set up basic trusts and moved enough money to make sure your kids are set for life. If you are set for life at age 35-45, compounding + doing your own work will ensure that all of them are set as well (unless you decide to go full Nick Cannon mode and blow it up). The only tricky part is the constant psychological operation to convince them that if they don’t try their best they may lose it all!
Part 2: Now Devise a Plan
One of the main reasons we’ve been writing so long is that all of our decisions have actually had the same consistent theme: choose the most mobility
While some think that we went into E-com/Internet based businesses due to Wall Street computer culture, it is actually deeper than that. While Wall Street restricts you to internet businesses (until you’re late 20s to early 30s and have some freedom), the real underlying reason was mobility.
Value of Time
Realizing that time is much more valuable than money, the logic was pretty simple. “If we fail what income stream allows the most freedom”
Yep. The answer is in your hand right now. Computer, Tablet or Smartphone. With that singular device you can move your entire business to any location you like. If you want to move states? Done. If you want to move cities? Done. If you want to work at night instead of in the morning? In most cases… Done!
This is incredibly powerful. One of the big lightbulbs went off decades ago. When you make your first $50,000 online, you realize you cherish that more than your entire W-2 income. You could be earning $200,000 or $500,000 a year… but that first $50,000 hits different. You know that you have value outside of someone else deciding that is true.
For the first time you have direct proof that you can survive without a boss/manager determining your value with a set paycheck + bonus.
If you look at it from this lens it is quite motivating. Even if you don’t make tens of millions from the internet, you will at least make enough money to survive on your own. We’ve been around for a long time and have not seen a single person fail after 3-years of truly eating glass and going all out. We don’t associate with extremely low IQ or low talent people (some selection bias) but the point stands anyway. We have seen hundreds of peopel quit (usually 6-12 months), however, pushing through the full 3-years? Haven’t seen it.
Good Example of How It Goes With No Technology Background. Throw some spaghetti against the wall, most initial ideas don’t work. Keep at it as you learn more. One clicks, it’s obvious, scale scale scale. Look back and say “woah shoulda started earlier”
As usual, they deserve all the credit for actually trying. That’s the message we’ll always stick with. People really have no clue how horrible the three years is. You learn that friends and even family members secretly want you to fail. Some sort of envy/ego/jealous genetics that get passed on from human to human for centuries. Ignore all of them and simply try to make it through those 3 years no matter how awful it is and how many times you consider shutting it all down. In fact, if you haven’t thought about shutting it down 3-4 times, you haven’t tried hard enough!
Avoid Fixed Costs/Lock Down Impact
Until you are entirely certain that you will be setting up shop in a city, there is no reason to ever have a large recurring housing payment. You should throw in car payment as well while we’re at it.
If you’re still in grind mode, that means you shouldn’t need more than a basic 1 bedroom. While people think they need an office or some fancy set up, it’s really just a chair, desk and some terrible lighting in a corner somewhere that starts it all.
Really doubt any of these dudes were doing mortgage calculations.
Once you accept that portable/mobile income is the way forward, it’s extremely hard for you to commit to long-term overhead. This actually makes your life easier from a business perspective as well. You’re always running lean. Besides, if any girlfriend cares that you only have a 1-bedroom while single… she ain’t a catch anyway.
Set the FI Number Aside and Spend
This is going to be psychologically brutal for every single one of you. When you hit the inflection you simply know it. You have to do a full 180 degree turn at this point. Your entire goal was to build, sell, build, scale, sell… over and over.
Now that you’ve done that to a point where investments > than all your living expenses, you’re actually entering real wealth. The following quote from Felix Dennis will hit like a ton of bricks later on:
"Loneliness. And rage that you have only so many years left to enjoy rolling in the sand you have piled up."
What he is saying here is that the majority of people just chase digits. They insulate themselves from society and find out that the sand (money) is never going to run out. It lines up with his older comments about the foolishness of working 12 hour days to get another $50-100M when there was no shot he’d ever spend the $50-100M.
Summary of What This Looks Like
Generally speaking it looks like this:
You need to value dollars made remotely/globally/portable as 2x, 3x or even 5x more valuable than income generated from your W-2. This will massively increase your motivation to keep going. $3K a month might not sound like much until you realize you could live on that in some cheap third world countries if the world goes completely bonkers tomorrow. Once you’re doing 2x your W-2 you should leave in general. Conceptually trick your brain into viewing portable income as multiples of W-2 income
Set the “retirement age” to 45. Sounds foolish? It isn’t. If you make the timeframe shorter your brain is going to decide and find ways to get there. Similar to giving the lazy person the logistics project. If someone is lazy they’ll find the fastest way to do it which is the goal of anything logistics related. Once you say “retired at 45” you start to ignore your 401K and IRA which is also part of the exercise
If you’re serious about maximizing your time on this planet. You should do everything you can to keep mobility at 100%. New W-2 across the country? Gone next month. Your biz scales and you can move to a 0% tax state? Gone instantly. Everything is a discretionary until you’ve decided where to live
Note: this is why young people don’t trust middle aged men who complain about where they live. By that point you should live where you like… which implies you’re not successful if you hate where you live!
When you start to hit the inflection you’ll know it. Come back to this post and read some Felix Dennis again. You do not want to die with tens of millions you didn’t even need. You want enough to allow your kids (if you have them) work on what ever they like. You don’t want them to fight over the 20th brokerage account you have in Malaysia
Hilariously, if you look at our investment themes over the last 10-15 years or so, it has had this undertone as well. Crypto allows you to have a portable bank. Technology removes human friction freeing up more time and location independence. Big Tech companies all earn their money in the digital world (okay not every penny but practically speaking it is true).
Become Time Rich as fast as you can. That’s the real game.
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of Ex-Wall Street Tech Bankers and software engineers who moved into affiliate marketing and e-commerce.
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