The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.

Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.

First, we look at the $5 million net worth lifestyle. From daily living to travel opportunities, luxury, and personal freedom, it reflects how a $5 million net worth could change your life. But at the same time, it is important to look at the downside, such as the responsibilities and expectations that go along with this kind of wealth.

We will look at some of the best investment strategies that aid in building and maintaining a $5 million portfolio. Whether you start with substantial assets or work your way up from a more modest beginning, implementing some key principles of wise investing will pay off. We’ll also cover the types of investments that can help you increase your wealth over time and how to manage risks wisely.

By the end of this discussion, you should have a clearer understanding of what it takes to reach and enjoy the benefits of a $5 million net worth. So if you want to learn how to negotiate this path to financial abundance and what this could mean for your life, keep reading.

Would you like to become a successful and rich investor? Well, that’s a common dream for many individuals, and most do put a lot of effort into making it come true. To better understand what achieving a net worth of $5 million represents, let’s explore an illustrative scenario:

Financial Freedom

Possessing a net worth of $5 million is one milestone on the road to financial independence. With that amount of wealth, you are empowered to design your own retirement plan, which will depend on your requirements and aspirations. You become free of the usual financial dictates that bind careers and personal lives. You can pursue passions, hobbies, or even philanthropy as never before. With such resources, you can take advantage of opportunities that were out of reach previously; you can reinvent a lifestyle, and your descendants may get a chance for a comfortable future—all with a strong financial cushion.

Moreover, this level of financial security allows you to afford high-end experiences and purchases as you see fit. Treat yourself. Whether you go to exotic places on expensive international holidays, buy those designer clothes, or dine at the best restaurants in town, there’s no worry that you’re overspending. This kind of financial cushion gives you the peace of mind to engage in these pleasures to the fullest extent, enjoying life more because each experience offers value without financial stress. This freedom is not about spending money—it allows you to enjoy a life that is rich with experiences, devoid of any financial worry.

Lifestyle Choices

With a net worth of $5 million comes more options for living, opening up opportunities for luxury and leisure, which are affordable to only a few. At that degree of wealth, you can afford to invest heavily in upscale real estate. You could possibly own a sumptuous home in a premier area of the world or even several properties in different parts of the globe.

You can afford top-of-the-line vehicles, enhancing your daily life with both comfort and status. The finer things in life, like yachting, golfing at premier courses, and collecting of fine art or vintage wines, among other expensive hobbies, quickly become an aspiration and, in many cases, an attainable reality. These pursuits not only provide personal satisfaction but also offer unique social opportunities and networking potential in similarly affluent circles.

Furthermore, this financial freedom greatly expands your travel horizons, sending you to far-flung and exotic locations, many of which are off-limits to the ordinary traveler. You can stay in the world’s most outrageously luxurious hotels and delve deeply into a culture in a way that goes far beyond the classic tourist trail. Whether it is a private safari in Africa, a chartered yacht cruising the Mediterranean, or a private luxurious island resort in the Maldives, the travel experiences of the well-to-do are indeed without want. Such adventures broaden your worldview, and, more importantly, help you make vivid memories.

It seems from here that life is a travel and leisure-driven wealth affair. Perhaps it is on this level that the wealth-driven lifestyle, characterized by comfort and luxury, provides a life almost as fulfilling as it is glamorous.

Achieving a $5 million net worth raises many lifestyle choices and opportunities for high-net-worth individuals (HNWIs) and those classified as ultra-high-net-worth individuals (UHNWIs). They have great financial resources at their disposal, which makes it easy for them to adopt a lifestyle in which luxury, security, and economic freedom are some of the hallmarks. A considerable portion of them look for private wealth management services befitting their particular financial situations and ambitions. Such services often include full wealth management services, investment-opportunities, estate planning, and retirement planning, taking into account the local economy and, in some instances, the global economy.

Effective management of a $5 million net worth would, therefore, involve dealing with complexities in both income and capital gains taxes. Federal law taxes income and investments, which can hit your net worth hard. This often translates to needing financial advisors who specialize in creating tax savings through strategic investments and financial planning. These tax consultants are, by definition, more experienced and rational in deciphering the subtleties of tax law and applying strategies in accordance with the client’s aspirations for wealth retention and value accumulation.

Another important piece of the puzzle for a $5 million net worth is retirement planning, which means providing a stable retirement income that maintains the lifestyle to which the individual is accustomed, without depleting assets. Estate planning professionals work with wealth managers to develop plans that will secure long-term financial security. This collaborative approach ensures that all aspects of an individual’s financial life are considered, from investments to potential healthcare costs, ensuring a robust strategy for wealth succession and retirement.

Moreover, the relationship between HNWIs and their financial advisors is pivotal in maintaining and enhancing their financial status. These advisors provide tailored advice on a range of issues, from the impact of market shifts on investments to efficient ways to handle estate duties and philanthropic endeavors.

By leveraging private wealth management services, individuals with a $5 million net worth can ensure that their wealth not only endures but also thrives across generations, contributing to a lasting legacy that extends beyond mere financial figures. This proactive management helps in aligning their financial goals with the ongoing changes in the economic landscape, both locally and globally, securing their position as resilient and savvy participants in the world of wealth management.

Investment Opportunities

A net worth of $5 million is very easy to scale and is a major financial milestone, allowing access to a host of investment opportunities that are nothing but highly rewarding. At such a level of financial freedom, you can happily wander among the various classes of assets and their benefits. For example, you may invest in high-quality stocks, which have an excellent reputation for stability and growth potential, or you can build a strong real estate portfolio that would provide you with rental value and value appreciation. Further, exposure to alternative investments, such as private equity or commodities, can open up a whole new platform for substantial capital gain. You can spread out your investment in various sectors, meaning less risk but more potential returns from this diversity.

Still, the investor should be cautious and tread carefully when investing because all investments have risks. Enough research should be conducted before making a major financial decision. This may include researching the markets for trends and understanding the economic factors that could influence each class of assets, or even thinking about the impact of world events on investments.

Speak to a finance professional who can provide help tailoring your investments to your financial goals and risk tolerance. These strategic actions not only help you make informed decisions but also integrate the risks involved in making them, enhancing potential returns. Taking these steps ensures you have careful planning and expert advice to grow your wealth safely and sustainably.

Philanthropy

Achieving financial success opens the door to impactful philanthropic opportunities. You’re able to support the causes that you care about or even create a charitable foundation that funds programs in your community. Generosity in such forms doesn’t only help the needy—it’s a much more fulfilling experience.

Achieving a net worth of $5 million certainly offers tremendous financial freedom to live a life of luxury. It brings exciting investment opportunities and an ability to give to charity meaningfully. Keep in mind that wealth does not necessarily bring happiness. Balancing what matters in life is what brings true contentment.

Sometimes More Money Means More Problems

Reaching a net worth of $5 million is an admirable achievement. But such success comes with benefits and challenges. Here’s what you need to know:

Managing wealth

Managing your wealth is a diverse and complex responsibility, requiring wisdom in decision-making and planning. Wise investment remains the cornerstone of wealth management; it guarantees that your assets grow in a way that fulfills your financial objectives in accordance with your risk tolerance. Asset diversification should include shares, bonds, real estate, and alternative investments. This strategy helps reduce risk and yield maximum returns by exposure across markets and sectors of the economy. Market trends in relation to global economic conditions that have an impact on investment performance need to be tracked. Updating and changing an investment portfolio on a timely basis in relation to these dynamics keeps the wealth management strategy strong and responsive.

Engage a financial advisor in this work, which will enhance your wealth management strategy. A financial advisor with decades of experience and who possesses in-depth knowledge of the financial market can provide personalized advice and insights. They will offer an invaluable perspective on the value of prospective investment opportunities and risks, which will help fine-tune your strategy to be more in resonance with your long-term financial objectives. You can talk to your financial advisor about estate planning, tax strategies, and retirement planning as part of comprehensive wealth management.

This is where professional advice comes in handy, guiding you to make informed decisions that optimize the use of your financial resources while keeping them secure, stable, and prosperous in the future. Proactive wealth management not only keeps your assets safe but also lets you enjoy continued growth.

Lifestyle Inflation

Often, with an increase in wealth, appears the attraction of spending on an extravagant lifestyle. The urge to go overboard on luxury items and experiences may be especially strong when newfound financial freedom makes such spending seem feasible. It is important to fight lifestyle inflation. The key is to balance enjoying financial success while living modestly in terms of what you actually spend in order to ensure your wealth is secured for the future. This balance is needed to appreciate the comforts money can buy yet remain prudent for financial stability.

Mindful spending—even those with substantial savings could run out of funds when living an extravagant lifestyle. Instead of consuming part of your income, secure your financial future by saving and investing, based on a plan you have conceived and are committed to following. This budget allows some luxury and comforts, but you won’t compromise your financial security. You should allow for an occasional luxury to enjoy the pleasure and comfort that come from success. This disciplined approach ensures the safety of your assets, securing your financial future so you can build and manage your wealth in a sustainable manner.

Taxes

Your financial problems become more complicated with increased net worth, and one of the greatest challenges is taxation. Sound financial planning is necessary to increase tax efficiency, which means deploying legal strategies and financial tools designed to keep your tax liability at the absolute minimum. This may include choosing investments that come with built-in tax benefits, engaging in retirement planning that features tax deferment, and tax-deductible charitable giving. These strategies must be considered in the context of your financial objectives, and they should support your long-term goals and contribute to your financial health.

Probably a good way to handle these strategies effectively is to work with experienced tax professionals and financial planners. They can offer tax planning advice directly targeted to the financial problems you face. They can navigate the rough waters of tax law to keep you compliant with regulatory requirements. By being proactive in you tax planning, you can reduce your tax liabilities and maintain a strong foundation for financial growth and stability.

Security

The wealthier you are, the more susceptible you are to security threats, including scams, fraud, and other illegal activity, that can jeopardize your financial status. Stringent measures must be put in place to safeguard your money and personal information. This includes keeping updated with the latest security protocols, using highly secure encryption for all your financial transactions, and most importantly, updating your passwords and security settings frequently enough to avoid unauthorized access. In short, vigilance is the key to protecting your assets from increasingly sophisticated cyber criminals. Moreover, consider staying away from websites that do not require multi-factor authentication in any circumstances related to your finances.

Collaborating with some of the best minds in finance and law is a way to reinforce your defenses against threats. These partners offer professional advice relevant to your situation and help you establish wealth protection measures, including popular ones such as trusts, wills, and secure investment vehicles. Consulting such professionals will protect you from risk. They also understand the maze of financial regulations and can optimize your asset protection and tax strategy in that regard. Ultimately, such proactive measures are key to keeping the integrity and security of your wealth intact, so you can focus on growth and preservation without being unduly concerned with breaches or loss.

Relationships

Financial success, while desirable, can sometimes create tension in personal relationships. The ticket to mitigating such strains—open and honest communication. What’s needed is an environment where family, friends, and colleagues can express their feelings and expectations without fear of being judged. This transparency helps in setting clear expectations, and if there are differences in perception or financial status, it helps clear the air. Moreover, ensuring that wealth does not become the core of interactions is crucial; relationships should be based on mutual respect and shared values, not financial metrics. By prioritizing open dialogue and understanding, individuals can maintain healthy and robust relationships even in the face of wealth disparities.

Additionally, actively engaging in activities that promote teamwork and mutual respect can further solidify personal connections, creating a strong and supportive network. Activities such as community service, team sports, or collaborative projects allow for shared experiences that strengthen bonds beyond financial ties. This not only helps in grounding relationships but also in building a sense of community and belonging, which is often lost in the pursuit of financial success. Ensuring that interactions remain genuine and are not dominated by financial achievements encourages a healthy balance, fostering relationships that are resilient and supportive. Adopting this balanced approach is essential for anyone looking to maintain enduring, meaningful connections while navigating the complexities of financial success.

Budget For a Family of Three in San Francisco

In preparation for retirement in a costly urban setting like San Francisco or New York, I crafted an aggressive after-tax investment chart. This chart is particularly useful for those aiming for an early retirement in an expensive city, where living costs dramatically outstrip those in less pricey locales. An aggressive investment strategy is essential for anyone hoping to maintain a comfortable standard of living without the continuous inflow of a regular salary. Let’s revisit this aggressive chart to refresh our understanding and ensure we’re on track with our financial planning goals.

A 40-year-old, considering retirement, has $2,500,000 in after-tax liquid assets. The amount would have to be pretty large. However, in practice, that would still produce at best roughly $100,000 a year purely from gross income alone, using a safe 4% withdrawal rate. However, in most high-cost urban areas, an income of $100,000 a year would not stretch far enough, which is particularly true when adding the ballooning costs of housing and funding education for dependents.

The Department of Housing and Urban Development defines a $100,000 annual income as “low income” for a family residing in these cities. This clearly tells us just how hard it could be for retirees to have a retirement lifestyle commensurate with their prior lifestyle in such an expensive environment without proper financial preparation.

To further contextualize the financial implications of this income level, consider the budgetary constraints it imposes. After discussions with the financial aid offices of multiple private schools, it’s clear that many institutions offer financial aid for families earning $100,000 or less per child, underscoring the perceived inadequacy of such an income in these regions. If we extrapolate these financial realities to a scenario where a retiree is generating $200,000 a year in passive income, the situation improves somewhat. 

Based on a detailed analysis of our household expenses following our son’s first full year, a $200,000 annual income could cover the essentials comfortably but leaves little room for luxury or unexpected expenses, which are not uncommon in such cities. This budgetary breakdown serves as a crucial reminder of the importance of robust financial planning, especially for those who aspire to retire early in high-cost areas.

Passive Income Analysis

Financial independence—or a comfortable lifestyle—at retirement is something that is coveted by many. It necessitates substantial financial capital, especially when aiming at living a comfortable lifestyle without the need to work in the traditional sense. For most people, an annual income of $200,000 may serve as the minimum—one that is relatively comfortable and allows freedom from drudgery in an office setting. At this earning level, using a relatively conservative 4% withdrawal rate, one would need $5 million in after-tax investments to support the lifestyle that $200,000 before taxes would allow for. For our 40-year-old, this financial targeting will enable living comfortably without having to revert to full-time employment, thus holding onto the quality of life that you have strived so hard to attain.

Since my spouse and I quit our full-time jobs, we’ve become much more conservative in our investments. The primary motivation behind this shift is our firm resolve to never return to traditional employment. This commitment to never re-enter the workforce has led us to prioritize security in our investment choices, focusing on preserving capital and generating stable, reliable returns. This conservative strategy is crucial as it minimizes the risk of significant losses and supports our long-term financial sustainability in retirement.

Despite our comfortable baseline income goal of $200,000, we aim to generate $300,000 a year in passive income to provide additional financial breathing room. The desire for a larger house, coupled with the rising costs of education and healthcare, necessitates a higher income. Moreover, we aspire to enrich our family’s life with travel, including trips to Hawaii and international destinations once our child is old enough to appreciate these experiences. This extra income would more than cover these costs and would provide a cushion against any unexpected financial pressures that a retiree could be under, leaving them much more relaxed and with a better quality of life in general.

We are now working toward reaching this $300,000 annual passive income by the time our son starts kindergarten. Such precise goals and timelines bring structure to our financial planning and give clear milestones along the journey. Even if we fall short, having a defined target date and a clear understanding of why we need this income will undoubtedly help us progress closer to our financial objectives than if we had no set timeline or reasons. This approach underlines the importance of strategic financial planning and the power of having precise aspirations to guide our investment decisions.

Budget Analysis

San Francisco, California, stands as one of the most expensive cities in the world, demanding a thorough and thoughtful budget analysis for anyone considering life here. That financial planning is necessary due to the high cost of living in the city, which is subject to extremely high housing prices, huge healthcare expenses, and stiff competition in education.

Further breaking down the expenses for residents and those willing to come here, including rent or mortgage payments, transportation, groceries, and leisure activities, is important for dealing successfully with the financial hardships of this, indeed vibrant but expensive, urban area. Such budget analysis is not only a means of managing daily expenses but also an ideal tool to determine the appropriate rate of savings, investment, and other financial commitments for the unique economic climate of San Francisco.

Property Costs ($4,628/month)

In San Francisco, a gross monthly expense of approximately $4,600 for a single-family home might sound steep, but it’s actually on the lower end for the area, thanks to strategic financial decisions made earlier, when we opted to downsize to a home that was 40% cheaper, effectively reducing our potential monthly expense from a daunting $8,000 to a more manageable figure. This move highlights the importance of timely and judicious property choices in managing living costs, especially in a high-cost area like San Francisco where real estate prices are notoriously high. 

Living in our current home, an average-sized three-bedroom, two-bathroom house with about 1,920 square feet plus a 250-square foot deck off the master bedroom, combines comfort with affordability. Maintenance is straightforward and economical, helped by a favorable mortgage rate of 2.5%. This rate is particularly advantageous given today’s higher risk-free rates, prompting us to hold onto our current property for as long as possible.

However, the lure of returning to Hawaii is strong, where we are considering purchasing a home that could potentially double the cost of our current one, ideally located near or directly on the beach. This dream, while appealing, brings with it higher maintenance costs, including a significant increase in gardening expenses which we’ve seen can run as high as $450 per month.

Such figures lead us to seriously weigh the benefits of buying versus renting. Renting, in particular, aligns well with my BURL strategy (Buy Utility; Rent Luxury), which advocates for purchasing utilitarian properties and renting luxurious ones as a financially sound approach. This strategy might make more sense given the potential for high upkeep and the luxurious nature of beachfront properties in Hawaii.

One considerable financial advantage of buying in Honolulu, despite the higher property costs, is the notably lower property tax rate. At just 0.27%, compared to San Francisco’s 1.24%, even a home costing three times what ours does now would incur lower annual property taxes. This disparity in tax rates is a critical factor in our decision-making, weighing the benefits of serene beachfront living against the financial implications of such a significant investment. This decision will ultimately hinge on a careful analysis of ongoing costs versus lifestyle benefits, reflecting a broader strategy of prudent financial planning and quality of life considerations.

——

Kids ($36,000/year)

Allocating about $36,000 annually for our son encompasses both expenditures and savings, underlining our commitment to his upbringing and future education. The financial plan includes a blend of daily care, educational activities, and savings for future educational expenses. Childcare, although a significant part of the budget, provides indispensable relief and support. 

Hiring childcare help for just five hours a week has been a game changer, allowing us some respite and sanity in our roles as full-time parents. This bit of time off is crucial as it helps us recharge and be more present and engaged when we are with our son. Thankfully, as he has begun sleeping better at night and communicating more effectively, the joy and rewards of parenting have grown, making the challenges more manageable.

Our approach to his social and physical development is structured yet enriching. Regularly scheduled swim and gym classes ensure that he remains active and learns valuable motor skills, while also providing him with the social interaction that is so vital in the early years. Additionally, we make frequent visits to the California Academy of Sciences Museum, taking full advantage of our annual family membership. These activities are not just about entertainment; they are integral to his holistic growth, fostering both cognitive and physical development in diverse, stimulating environments.

Financial planning for his educational future is another critical component of our budgeting. After making a significant initial investment into his 529 college savings plan, we continue to contribute $15,000 annually to steadily build this fund. While our current cash flow appears more flexible due to the way we’ve structured our contributions, the reality reflects a careful strategy to ensure we’re prepared for the high cost of future educational expenses, including private school tuition if he does not secure a spot in a desirable public school.

We remain hopeful that he will be admitted to a good local school through the San Francisco public lottery, but we are pragmatically preparing for all possibilities, aiming to secure his educational opportunities without the necessity of him becoming a “529 millionaire.”

Food ($2,000/month)

In a city where culinary culture is highly appreciated—San Francisco—we spend about $2,000 monthly on food. Such an amount is not destined for the wide palette of opportunities offered on the market but actually means most of all family time. Spending an extra $5 or so on food delivery services, considering whether ordering out or eating in, buys me at least one to two hours a day—the difference between standing in the kitchen at a stove and being with my young son. Although that increases the amount of money spent on food, it’s a sacrifice we are willing to make for more convenience and better moments that our family shares together. However, if we had to toe the line for financial constraints, then this category has the potential for us to tighten our belts in the range of $500–1,000 per month without making a dramatic change in our lives.

Its reputation is well earned, and that is the foodie’s paradise—San Francisco. It has an immense number of restaurants that concentrate on offering quality cuisine from numerous cultures. The health-conscious population can eat from one of the healthiest cities in the US. Options for food delivery are so numerous; they slot in with our lives and make eating out in the city another option of convenience. This convenience of having great food delivered right to our doorstep goes a long way to influence the decision to put aside a higher budget for dining, so we could continue enjoying some of the best meals San Francisco has to offer without having to step out.

Moreover, regular food deliveries are supplemented with monthly grocery shopping trips, particularly through Amazon Prime. These are the ones that I like, mostly because I get to pick some fresh produce for myself—something I find the delivery staff quite wanting at. This mix of personal grocery shopping and availing myself of delivery services becomes handy in managing our food requirements. It is such a perfect balance of convenience with personal choice, ensuring our dietary preferences are met while still having control over the quality and freshness of our groceries. This will provide a compensative, high-caliber approach to our way of life, supporting our aspiration to spend quality time together as a family.

Healthcare Premiums ($1,700/month)

The rise in our healthcare premiums to $1,700 a month since our son’s birth has marked a significant increase from the $1,350 we used to pay. This increase might seem steep, but it appears justified when considering the added value of frequent healthcare visits for our son, including routine check-ups with a pediatrician every three months and necessary consultations with an ophthalmologist in the same interval. These visits are crucial for monitoring and ensuring our child’s developmental progress and overall health, providing some peace of mind that the higher premiums are indeed being put to good use.

The heightened healthcare costs also serve as a personal reminder of the importance of regular health maintenance for myself. It encourages me to make appointments not only to him for the yearly check-up but also for specialized care, like scheduling chiropractic sessions and a consult with the PT for my recurring knee problem. This is needed to keep my health optimized, thus maintaining a value for my money in health insurance; that is, I receive the best from the services I pay for in the face of increased monthly premiums.

The possibility that high premiums can be maintained as a business expense within a business model, whereby they could possibly be integrated like other legit business expenses, would make sure that low premiums for medical care can be achieved. Possible deduction from business income in the form of health care costs would effectively reduce the tax rate for that portion of the business income, for someone owning or thinking to start a business.

This will not only cushion them financially but also integrate personal healthcare with an overall financial strategy that optimizes expenditures and maximizes the financial benefits available through current tax laws. This can be a savvy way to manage significant healthcare costs, making them more manageable in the context of one’s overall financial planning.

Non-essential Expenses

We’ve adopted a minimalist approach to our wardrobes, seldom purchasing new clothing. Since our professional lives no longer require us to maintain a formal appearance, we find little need to update our attire regularly. This lifestyle allows us to comfortably wear casual, sometimes decade-old clothing on a daily basis. Then, when needing a more polished look, we turn to our old work clothes, which have stayed in great condition and continue to fit like new over the years. This not only shows our commitment to living sustainably but also emphasizes the benefit of keeping a certain body size that we link to how we eat.

While it seems far-fetched to dress on a budget, I found my membership at the tennis club a cost-effective luxury at $400 a month. This club is most definitely more than just a tennis playground. It is rather an active place of community life, where I do physical activities and socialize several times a week. The club has also been a great boost to my social circle since I’ve gotten to know many people who, some time later, became my close friends or valuable acquaintances. This environment nurtures my physical fitness and social life; hence, the cost is an investment worth making for my general quality of life.

Thus, when I said that my tennis bill at the club amounted to about $400 each month, it was not merely a matter of court fees but all the basic maintenance of my equipment: restringing the tennis racket every month, a new can of tennis balls each match. Moreover, social engagements in the club, such as sharing beers, food, and snacks with fellow members, humbly contribute to the overall cost. This expense, while notable, enhances my recreational time and enriches my social interactions, proving to be an integral part of my leisure and lifestyle balance.

The X Factor

I have elaborated previously that $200,000 in passive income is more than enough to foot our bills, allowing us to embrace being stay-at-home parents. To many, this level of income is indeed excessive, especially from the point of view of people that inhabit parts of the country where the cost of living isn’t comparably high, or from young people without children. It’s what’s going on for you and what you’re aiming for in your life that determine your lifestyle choices and financial needs. Every situation is different, and our financial plan is tailored to provide for the special demands of a family in our high-cost city environment.

However, it is worth noting that $200,000 is not the total of our household income. We have been saving and investing our income from online work over time, and this is the result. This income is of very great importance, for it will be a bridge to increase our passive income to the range of $250,000–$300,000; that is, we actively work to grow after-tax investments by constantly reinvesting our earnings, thus increasing our financial security and independence.

And a second common feature that, to my knowledge, most early retirees share is that each and every one of them is involved in something which he loves doing and makes money out of his effort. All of them are doing something they like, something that excites them, and makes money from their hobby. They bring relative youth with its vigor to the mix of energy, enthusiasm, and expertise. Personally, I do love working on Financial Samurai very much, part-time though. Started back in 2009, the activity has integrated itself into my everyday schedule, just like I undertake exercises thrice every week; there is no way I could quit that. It brings some satisfaction in addition to the much-needed money.

The other important human side to our finances is understanding how to handle taxes. I used 27% as my effective tax rate in my financial planning. However, with more precise number crunching and strategic tax planning, I think I would be able to bring down this tax burden by another 5–6%, which would mean a save of $10,000 to $12,000 per annum. In matters of finance, and most definitely to do with taxes, a conservative approach is quite advisable. Not only will this ensure compliance, but also it will put us in good stead for any eventuality of additional financial responsibilities, hence retaining financial stability in retirement.

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