Keeping things simple is often best in many areas of life. This applies to personal finance too. Following a few key principles stacks the odds in the practitioners favor. These the most important:
- Always save 10% of your income. Always. No excuses. If you make only one hundred dollars in some difficult month, save ten of them. Work to improve this toward 25% over time by saving one half of any raise you get. Feel free to enjoy the rest.
- Spend as little as possible on houses and vehicles. This is generally true, but is especially important rising interest rates. Lifestyle expenses expand to fit increased income. Often houses and vehicles lead the way.
- When you retire, don't withdraw more than 4% of your portfolio value in any year. Shoot for 3% if possible, but never go over 4%. Find a way. Making a few cuts early means you don't have to make big cuts later.
Success doesn't require perfection, just consistent focus on the right principles.
(Additional investment specific commentary follows for client subscribers)
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