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How to Retire in 10 Years (starting with $0)

2022-09-24 · Long video (solo, talking head or whiteboard) · Ali · recording, 14:43 · watch on YouTube

Topic: Money and investing · mode: Explanation and tutorial · tags: Lesson from a book, His medical past, Sponsor segment present

In a Money Club episode Ali sets out three levels of retirement (traditional, mini-retirements, perpetual retirement after Naval Ravikant) and three ways to retire early (fat FIRE, lean FIRE, work you would do for free), and says his own plan combines all three.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — Retirement in your 20s or 30s: the 3x3 framework in the Money Club series

  • ★★★ Ali splits retirement into three levels; level one, traditional retirement, means working and working until you finally retire at 60 or 70. — 00:00:29
  • ★ This video is an episode of Money Club, Ali's ongoing series on strategies, ideas and tools for the shared journey towards financial independence. — 00:00:29 · work optional

00:00:43 — Part 1: traditional retirement, mini-retirements and perpetual retirement

  • ★★ Ali says retirement was invented in 1889 by German chancellor Otto von Bismarck, who, facing youth unemployment, paid people to quit their jobs at 65 or 70. — 00:00:58
  • ★★★ Traditional retirement worked when life expectancy was 70 or under, Ali says, but not today: studies show retirees' risk of health complications rises and they lose meaning in life. — 00:01:27
  • ★★ In Okinawa, an island in Japan where people live to 100 plus with a good quality of life, there is no word for retirement, Ali says; they use the word ikigai instead. — 00:01:27 · Japan
  • ★★★ Ali does not want to wait until 65 or 70 to enjoy life: working for ages and enjoying life at 65 with osteoarthritis in both knees is not how he wants to live. — 00:01:56
  • ★★ Level two of retirement is mini-retirements, an idea Ali says Tim Ferriss first broadly popularised in 2007 in The 4-Hour Workweek, which he calls fantastic. — 00:01:56 · Tim Ferriss, The 4-Hour Workweek
  • ★★ Mini-retirements spread retirement through life: with a job that gives autonomy, where work is delegated and automated, you take a month or six weeks off a few times a year to travel while young and healthy. — 00:02:26
  • ★★★ In medical school Ali planned mini-retirements from medicine with tech startups on the side; with more financial success from his businesses, channel and investments he moved to perpetual retirement, from Naval Ravikant's Almanack. — 00:02:55 · Naval Ravikant

  • ★★★ Naval Ravikant (quoted): Naval Ravikant writes that retirement is when you stop sacrificing today for an imaginary tomorrow: when today is complete in and of itself, you are retired. — 00:02:55 · Naval Ravikant

    “retirement is when you stop sacrificing today for an imaginary tomorrow”

  • ★★★ We call it work, Ali says, because we sacrifice something: most of us do not work for fun but trade our life energy for money, to enjoy that money in the future. — 00:03:43

  • ★★ Ali likes the definition of perpetual retirement: you are retired when you are not sacrificing today for a better tomorrow and today is complete in itself. — 00:04:12

00:04:25 — Part 2: fat FIRE, lean FIRE and work you would do for free

  • ★★ FIRE, Ali explains, is an internet movement whose name stands for Financial Independence Retire Early; within it are fat FIRE and lean FIRE. — 00:04:41
  • ★★★ The first way to retire early is fat FIRE: being financially independent because you have made loads of money and put it into fairly safe investments. — 00:04:41
  • ★★★ The 4% rule of the FIRE community: withdraw 4% of an investment portfolio a year to live on without touching the principal; $1 million in an S&P 500 account gives $40,000 a year, as it probably grows 7% to 10% a year. — 00:05:10 · S&P 500
  • ★★ The problem with fat FIRE, Ali says, is that it requires making a rather large amount of money, as early as you can. — 00:05:40
  • ★★★ The second way to retire early is lean FIRE: driving down the cost of your lifestyle as much as you possibly can. — 00:05:40
  • ★★ Under lean FIRE, a lifestyle costing $20,000 a year needs only $500,000 invested, which Ali says he could probably save in a high-paying UK career and so retire within a few years. (hedged) — 00:06:09 · United Kingdom
  • ★★ The problem with lean FIRE, Ali says, is that many people like nice things such as holidays, a nice school for their kids and a nice neighbourhood, so their lifestyle costs keep rising. — 00:06:38
  • ★★★ The third way to retire early is when the work you do for income is work you would do for free anyway: doing what you love so you never work a day in your life, which Ali calls cliché but very true. — 00:07:07
  • ★★★ Doing work you would do for free is a very privileged position, Ali says, but a more realistic route to early retirement than fat FIRE or lean FIRE. — 00:07:07
  • ★★★ Ali is not yet fully retired in this sense but thinks he is pretty close: most of what he does day to day he would do for free anyway. — 00:07:43

00:08:05 — Shopify sponsor read

00:09:09 — Part 3: his plan combining all three methods

  • ★★★ Ali's plan to retire early combines all three methods: make a lot of money and put it into assets, reduce his lifestyle costs, and make his active-income work the work he would do and enjoy anyway. — 00:09:10 · work optional
  • ★★ From Rich Dad Poor Dad, Ali explains that trading your time for money generates cash flow, which you then use to make or invest in assets, the things that build your wealth. — 00:09:39 · work optional
  • ★★★ Ali's YouTube channel and its business make a profit every month, which he puts into property and stocks and shares. — 00:10:09
  • ★★ Ali also puts some of his profit into crypto, which he says is not doing particularly well right now. — 00:10:09
  • ★★★ Ali counts each YouTube video he makes as an asset that generates money over time; his online courses and the book he is writing are time invested in assets he hopes will compound. — 00:10:38 · Feel-Good Productivity (book)
  • ★★ Ali knows many medics working full- or part-time as doctors who build side hustles alongside, such as YouTube channels, courses and ebooks. — 00:10:38
  • ★★★ Side income is worth having even if it never lets you quit, Ali says: the extra money buys your freedom and optionality and lets you retire earlier. — 00:11:07
  • ★★★ To retire early through fat FIRE by making lots of money, Ali says it is worth having a side hustle of some description. — 00:11:36
  • ★★★ Ali tries to cut his living costs, or at least combat lifestyle inflation: the more you earn, the easier it is to spend on business class, a better apartment or a fancier TV. — 00:11:36
  • ★★★ Ali tests spending different amounts on holidays, a five-star hotel one time and a hostel or Airbnb another; spending three times as much generally does not make the holiday much better. — 00:12:06
  • ★★ Some people Ali has got to know will only fly first class or stay in five-star hotels, which he finds hard to sustain because their lifestyle costs keep rising. — 00:12:30
  • ★★ Increasing the gap between your earnings and your spending, Ali says, leaves a surplus of cash to invest in property or the stock market. — 00:12:30
  • ★★★ Ali asks how he would spend his time with $100 million in the bank: not chilling on a beach, which is boring and a recipe for depression and burnout; then he works out his ideal ordinary week if money were no worry. — 00:13:13
  • ★★★ Retirement is doing the work you want, Ali says, and a life of reading, writing, learning and teaching costs nowhere near $100 million: he does not need fancy stuff to be happy. — 00:13:41
  • ★★★ Ali looks at his calendar for the activities that energise him and those that drain him, and for the drainers either finds a way to make them enjoyable or a way not to do them. — 00:13:41 · energisers and drainers

00:14:27 — Side hustle video and sign-off

Threads in this video

Where the stories that moved here went next

Mentioned

Central: FIRE movement · mini-retirement · Naval Ravikant · perpetual retirement

Also: People: Otto von Bismarck

Works: Feel-Good Productivity (book) · Rich Dad Poor Dad · The 4-Hour Workweek · The Almanack of Naval Ravikant

Organizations: Airbnb · Shopify

Concepts: energisers and drainers · four percent rule · ideal ordinary week · ikigai · life energy · lifestyle inflation · work optional

Places: Argentina · Brazil · Germany · Japan · Okinawa · Thailand · United Kingdom

Products: S&P 500

Only in the description or credits: Tim Ferriss

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