In a previous post, I discussed the futility of working when your net worth is declining. During a stock market crash or recession, your Return on Effort (ROE) for working drops significantly. Therefore, the only way to increase your ROE is to work less, not more.
At some point in your life, you’ll reach an investment threshold where you may regularly start making (or losing) more from your investments than from your annual job income. When this happens, work begins to feel optional as you start questioning the trade-off between time and money.
Since stocks and real estate prices tend to rise about 70% of the time in any given year, your desire to retire early or pursue a less stressful and more exciting profession grows stronger. As time becomes more valuable with age, your tolerance for workplace frustrations diminishes.
This post will help you identify the minimum investment threshold to aim for, keeping you focused and motivated. With a clear financial goal, achieving it becomes much easier.
Once you achieve the minimum investment threshold amount, that is when you should have more confidence to change your life for the better. For those of you far into your financial journey where you already have a lot of money, my formula can serve as a wake up call to stop wasting time.
Author Background
I helped kickstart the modern-day FIRE movement with the launch of Financial Samurai in 2009. In 2012, after a 13 year career and investment banking, I semi-retired at the age of 34 with a $3 million net worth. I haven’t had a day job since, but I have done part-time consulting work for startups in San Francisco, as well as written a couple of best-selling books to keep me busy.
For those with over $250,000 in investable assets who want
