Feed the Beast!
Hello folks! As always, I appreciate you stopping by. Happy Halloween! What a great holiday and I hope you are all in the spirit. Today I want to talk about something that has been on my mind for a while now. And that is how important it is to feed the beast…because one day it will feed you! And what better day to talk about feeding beasts than today, Halloween!
Why has feeding the beast been on my mind? It’s my motivation to keep working hard, earning a good salary, and saving/investing diligently. I need to keep feeding the beast because it isn’t big enough to feed me yet. But one day it will be, and that will be a glorious day!
What exactly am I talking about? Your investments! Feed them by working harder and smarter, by living the frugal life, and growing your beast by investing to win. As you take your hard earned money and give it to the beast, the beast will eventually pay you in kind for the rest of your life with investment income.
By feeding the beast over and over again, month after month and year after year, you are paying it forward and giving yourself the gift of a beast the day you decide to retire. No doubt it is hard work and it takes a lot of time to feed a growing beast, but when the day comes where it is ready to go out and earn you a living all by itself…you’ll never regret it!
The Power of a Beast
Your beast can be as big as you desire to make it and as powerful as you want it as well. By that I mean you can wait to retire until you have a ginormous fail-safe beast that will last not only your lifetime, but your kids’ lifetime as well. Or you could shoot for the bare minimum sized beast that will provide you for your lifetime with the goal that your last check bounces the day you die.
Further, you could choose to invest your beast in a multitude of ways, from the fail-safe government securities that earn you next to nothing, or you could choose to invest it more aggressively in the stock market.
That is a discussion for another day, but regardless, once big enough, your beast will have the power to grow by leaps and bounds while allowing you to withdraw from it to cover your annual expenses. That, my friend, is the power of the beast. And if you grow your beast big enough, it can be very, very powerful! Truly amazing, let me tell ya! So now we just need to decide what kind of a beast you need…
What Kind of Beast?
There is no one size fits all when it comes to beasts. Many folks within the Financial Independence, Retire Early (FIRE) crowd consider 33 times annual expenses to be a safe number for your investment portfolio to allow for a comfortable retirement. We’ll use that as our proxy in determining what kind of beast is most appropriate for you.
The Dire Wolf is one of the most famous prehistoric carnivores that roamed North America about 10,000 years ago. It was a fierce competitor and a pack-hunter that weighed about 150 lbs, or slightly larger than many of the modern era wolves.
For retirement accounts, I’d compare the Dire Wolf to a million dollar portfolio. A million dollars is a lot, no doubt about it, and it will get the job done for an early retiree. It’s dependable and pays the bills. But you can only rely on the Dire Wolf so much, and you can expect a million dollar portfolio to comfortably provide for a lifestyle of ~$30,000 per year. If your home is paid off completely, don’t have kids that rely on you and are willing to live the frugal lifestyle indefinitely, then the Dire Wolf may suit your needs.
But being a pack-hunter, the Dire Wolf may require your assistance to feed the family…meaning you may need to be flexible and willing to go back to work if the need arises.
Smilodon (Saber Toothed Tiger)
The Smilodon is the largest saber toothed tiger and was one of the primary competitors to the Dire Wolf in North America. It’s about 5 feet long and weighed up to 220 lbs. The Smilodon is a freak, plain and simple, and was adapted for precision killing.
For retirement purposes, the Smilodon is going to get the job done with no issues and provide for a comfortable and long-lived retirement. I’d equate the Smilodon to a $3 million dollar portfolio, practically bullet-proof. You could expect this to kick-off approximately $90k year after year for as long as you live, and likely have plenty left over for an inheritance. $90K buys a lot and you could certainly expand from your frugal lifestyle today. It could help pay for a second home, it could allow for lavish gifts to friends and families for weddings, graduations, birthdays, etc., and provide for significant amount of world travel or other forms of entertainment for you and your loved ones.
Similar to how the Smilodon was a solitary hunter, in all likelihood you wouldn’t be called upon ever again to feed the family. The Smilodon will take care of you with no help needed.
The Woolly Mammoth is a beast among beasts. They can grow up to 12 feet tall and weigh over 6 tons! Similar to the Dire Wolf and Smilodon, the Woolly Mammoth was most recently known to roam North America about 10,000 years ago.
In relation to retirement accounts, the wide moat of the Woolly Mammoth parallels the wide economic moat of a $10 million dollar investment portfolio. This size of this portfolio will provide for a lavish lifestyle and should sufficiently allow for $300K in annual expenses. Now that is beastly! While the Woolly Mammoth prefers to browse and graze endlessly, the Woolly Mammoth retirement account will likewise allow you to browse and graze the world endlessly.
Personally, I’ve been feeding a Smilodon. When deciding my target beast there were a lot of pros and cons to weigh. Not least of which is the length of time to grow a Smilodon as well as the added comfort it would provide in retirement. To me, while I recognize the Dire Wolf provides a comfortable lifestyle and would allow me to retire early, I’ve chosen the Smilodon for a number of reasons including: (1) the second and third million are easier to achieve than the first since that is when compounding really kicks in, (2) while it has taken me almost 10 years to reach Dire Wolf status, I only estimate it to take an incremental 7-8 years to feed a Smilodon, and (3) my wife and I still have a very young and growing family to provide for so extra cushion is preferable.
While I expect it to take me a total of approximately 17 years to grow my Smilodon to a $3 million dollar portfolio (since graduating from college), I recognize the additional length of time to feed a Woolly Mammoth to a $10 million dollar portfolio would take an incremental 12 years of hard work and hustle. So while I find it worth the sacrifice to reach Smilodon status, conversely, an extra 12 years to reach Woolly Mammoth status is just too much sacrifice and not worth the extra gain. I would miss too much time with my friends and family (my kids, parents, siblings, etc) and too many opportunities to live the life I want.
So now I’ll throw it out to you folks. If you aren’t too shy to share, what beast are you feeding? Is it the Dire Wolf, Smilodon, Woolly Mammoth, or something entirely different. Perhaps a Megalodon? Let me know your thoughts in the comments below, and get yourself a beast!
Thanks for taking a look!
The Green Swan
Work Harder, Work Smarter, Retire Earlier and Find Your Beach
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