The inspiration for “Just Keep Buying” comes from Casey Neistat’s video 3 words got me 3 MILLION SUBSCRIBERS. It’s advice from Roman Atwood to Casey: “Just keep uploading.”

Dollar cost averaging

To build wealth: don’t think about timing the market. Just buy.
Buy a diverse set of income-producing assets. Assets that can generate income for you far into the future, even if it isn’t paid directly to you. For example, stocks, bonds, real estate, and so on.
It’s not about when, how much, or what.
Make it a habit to invest your money, just like it’s a habit to pay your rent.

Early career

If you don’t have much money invested, focus on increasing your savings & investing it.
If you already have a sizeable portfolio, you should spend more time thinking about the details of your investment plan.

Early in your career, it’s better to spend time developing your career (increasing income potential) than thinking too much about your investment decisions. E.g. just buy S&P500. You can fine-tune later.

Figure out where you are in the Save-Invest continuum.

• How much can you easily save this year?
• How much do you expect to earn (in dollars) on investments?

If the former is largest, focus on saving. If the latter is largest, focus on investing. If they’re close, do both.
You’ll increasingly spend more time on investing as you age.

Save what you can

Save more when you can, save less when you can’t.
It doesn’t make sense to have hard, unchanging rules for your finances, because they’ll change throughout your life.

Save what you can.
Be mindful and realistic. Don’t use this as an excuse not to save when you could.

It’s essentially Savings = Income - Spending.

How to save more

Increasing your earnings is a good way to save more. There will be more money to save simply by you earning more, and your spending isn’t likely to increase as much as your increasing income.

And if you are a low earner already, there’s a limit to how much you can cut spending, and therefore save.

The most consistent way to get rich is to grow your income and invest in income-producing assets.

Don’t listen to those saying “cut the Starbucks”. It’s not wrong that cutting spending is good, but it can have more negative effects than good, and isn’t always the most important thing.

To save more: tighten up where you can, then focus on increasing your income.

Increasing your income

Find ways to use your human capital: the value of your skills, knowledge, and time.
Your human capital is an asset that can be converted to financial capital.

Some methods to consider:

• Sell Your Time/Expertise
  • Easy to do & has low startup cost. Doesn’t scale because time is limited.
• Sell a Skill/Service
  • Higher pay. You can build a brand. But you need to develop a marketable skill and it doesn’t scale easily.
• Teach People
  • Scalable. But there’s lot of competition & attracting students isn’t easy.
• Sell a Product
  • Scalable. But requires upfront investment and constant marketing.
• Climb the Corporate Ladder
  • You get skills and experience. There’s less risk around income growth. But you don’t control your time or what you do.

All of these should be viewed as temporary measures. Ultimately, your extra income should be used to acquire more income-producing assets.
“To save even more, think like an owner.”

I’ve heard of many SWEs that had a high wage for years, invested it, and then they were financially independent. But it’s only because they used their high income to acquire income-producing assets it worked out.

The end-goal of your wealth-building journey shouldn’t be to sell your time, skills, or products. It’s to own income-producing assets.
You need to convert your human capital into financial capital to build long-term wealth.
To do that, you need to think like an owner.

How to spend money guilt-free:

• The 2x Rule: whenever you want to splurge on something, take the same amount of money and invest it as well. This corresponds to a 50% marginal saving rate.
• Focus on Maximizing Fulfillment. The difference between fulfillment and happiness is important.
  • Daniel H. Pink proposed a framework for understanding human motivations: autonomy (self-directedness), mastery, purpose (connected to something bigger than yourself) are key components of human motivation and satisfaction.
  • Think about those categories when deciding how to spend your money.
    • Buying a latte daily can be unnecessary. But if it helps you perform your best at work, then it’s enhancing mastery, and is money well spent.
    • Similar logic applies to increasing autonomy or your sense of purpose.
  • Money is a tool to create the life you want. So what do you want out of life?
    • What kind of things do you care about?
    • What scenarios would you prefer to avoid?
    • What values do you want to promote in the world?

Some lifestyle creep is okay. The limit depends on your savings rate. For most people it’s around 50%. Once you start spending more than 50% of your future raises, you start delaying your retirement.

The more you spend, the more you need saved up to maintain your lifestyle post-retirement. Therefore you need to save more the more you earn, otherwise you’ll end up having to delay retirement.

Simply save 50% of your raises.

Debt

Useful reasons to take in debt:

• reducing risk
• you can make more money with it than you’ll spend borrowing it

Buying a home

One-time cost: down payment, fees.
Ongoing costs: taxes, maintenance, insurance.

Expect to put down between 3.5% to 20% of the purchase price of the home.

There will also be closing costs which will be ~2% to 5% of the value of the home. Application feeds, appraisal fees, origination/underwriting fees, and so on. Some sellers cover these costs.

Real estate agents are another big cost. They typically charge a 3% commission.

So the one-time costs of buying a home can be in the range 5.5% to 31% of the value of the home. Ignoring the down payment, the transaction cost is in the range 2% to 11%.

The ongoing costs can be significant as well.

There are also time costs. Being a homeowner can be like a part-time job. Home maintenance can take up a lot of time.

The primary cost of renting, outside monthly rent payments, is long-term risk: unknown future housing costs, instability in living situation, and ongoing moving costs.
You won’t know how much you’re paying for housing in a decade. So you’re always buying at market price, which can fluctuate.
Homeowners know exactly how much they’re paying for their housing in the future.

Conditions for when it’s right to buy a house:

• You plan on being in that location for at least ten years.
• You have a stable personal and professional life.
• You can afford it.

If you can’t fulfill all of those, you should probably rent.

Given the large transaction costs of buying a home (2% to 11% of the home’s value), ensure you stay in the home long enough to make up for the costs.

Being able to afford a house means being able to provide 20% as down payment and keeping your debt-to-income ratio below 43%.
Debt-to-Income Ratio = Monthly Debt / Monthly Income

You don’t have to put down 20% when buying a home, but you should be able to.
This shows you have the financial responsibility to save sufficient cash over time.

If you’re deciding whether to save for a bigger home or getting a starter home and transitioning later: wait and get the bigger home.
The transaction costs mean it’s probably better to wait and buy something a little outside your budget than to buy a home and sell it within a few years.
When you buy a home, the riskiest part is in the first few years. Your income will likely grow with inflation, but your mortgage payment won’t.

Do what’s best for both your personal and financial situation. Buying a home is likely the largest & most emotional financial decision you’ll ever make, so spend the time getting it right.

What to do if you’re saving for something big

A home. Getting married. A car.
Whatever it is, it’s time to save up.

But how? Should you save in cash, or invest it while you wait?
You should save it in cash. It’s safest.

When saving for less than two years, cash is optimal, since there’s less risk around what might happen to your money.
If it’s something that’ll take less than three years, use cash as well.
if you’re saving for something that’ll take longer than three years, put your money in bonds.

Short term, cash is king. The further into the future we get, you’ll have to consider other options. You’ll need bonds (and possibly stocks) to avoid inflation’s annual toll.

If you reach your goal earlier than anticipated, that’s nice. Go ahead.
But if you need to wait to make the purchase (e.g. you can only pay after a certain date), you’ll need to invest the money to preserve its purchasing power. That means forgoing cash for higher-growth options, or saving more cash than you need in anticipation of inflation.

When can you retire?

The 4% Rule
Historically, retirees could have withdrawn 4% of a 50/50 stock/bond portfolio annually for at least 30 years without running out of money. Even despite the withdrawal amount increasing by 3% each year to account for inflation.

So you can spend 4% of your total retirement savings in your first year.
4% × Total Savings = Annual Spending, which means Total Savings = 25 × Annual Spending.
To be able to follow the 4% rule, you’d need to save 25 times your expected spending in your first year of retirement.

You probably only have to save even less than that. If you get some benefits while in retirement, then the equation changes.

However, some people are against this rule. It was created in a time when yields on bolds and dividend yields on stocks were higher. Therefore, some suggest that the rule may not hold anymore.

The rule itself is conservative. It assumes your spending will increase by 3% each year. Empirical evidence suggests it’ll decrease by % each year.

If you don’t feel comfortable with the rule, try…

The Crossover Point Rule
Find the point when your monthly investment income exceeds your monthly expenses.

Crossover Assets = Monthly Expenses / Monthly Investment Return

Say you expect your investments to earn you 3% per year.
Monthly Return =

If you divide your monthly expenses by your Monthly Return, you’ll find the crossover assets. That’s the amount of investable assets you’d need in order to reach your crossover point.

But retirement is more than just a financial decision. It’s about lifestyle as well.
How will you spend your time?
What social groups will you interact with?
What will be your ultimate purpose?

If you don’t know, then retiring may set yourself up for disappointment and failure.

Why invest?

The three primary reasons why you should invest:

1. To save for your future self.
2. To preserve your money against inflation.
3. To replace your human capital with financial capital.

Your human capital is a dwindling asset. Each year you work reduces the present value of your human capital because you have one less year of future earnings.
The only way to guarantee you’ll have some income in the future is to build up financial capital.

Asset classes

Stocks

Stocks are shares of ownership in a company and are one of the most reliable ways to build wealth over the long term. Despite their potential for high returns, they can be highly volatile, with significant price declines occurring periodically. Long-term investment horizons can help mitigate the impact of this volatility.

Pros: High historic returns (average annual return of 8%-10%), easy to own and trade, low maintenance since someone else runs the business.

Cons: High volatility, valuations can fluctuate based on market sentiment rather than fundamentals.

How to Invest in Stocks: You can purchase individual stocks or invest in index funds or ETFs for broader exposure. Index funds are preferred for their cheap diversification. Opinions differ on which kinds of stocks to own—some focus on size, valuations, price trends, or dividends. Regardless of the strategy, having some exposure to stocks is what matters.

Investing in individual stocks is generally discouraged due to emotional challenges and the potential lack of stock-picking expertise.

Historical data suggests that most stock markets appreciate over time despite economic turbulence. Investing sooner is typically better than delaying.

Bonds

Bonds are loans made by investors to borrowers, typically governments or corporations, to be repaid over a set period with interest. They provide a more consistent income stream and tend to rise in value when stocks fall, offering a safety net during market downturns.

Pros: Lower volatility, good for rebalancing portfolios, safety of principal.

Cons: Lower returns (average annual return of 2%-4%), especially after inflation; less attractive income in low-yield environments.

How to Invest in Bonds: It’s recommended to buy bonds through bond index funds or ETFs because it’s much easier than purchasing individual bonds directly.

Investment Property

Investment properties generate income through rent and can appreciate over time. They offer the dual benefit of personal use and income generation but require active management and come with specific property risks.

Pros: Higher potential returns (average annual return of 12%-15%), especially when using leverage.

Cons: Managing properties and tenants can be demanding; difficult to diversify due to the large capital required for each property.

How to Invest in Investment Properties: The best way is through a real estate agent or by negotiating directly with sellers. The process is involved, so thorough research is recommended.

Real Estate Investment Trusts (REITs)

REITs allow you to invest in real estate without the hassle of managing properties. They own and operate income-producing real estate and are required to distribute at least 90% of taxable income as dividends, providing reliable income streams.

Pros: Real estate exposure without management responsibilities, less correlated with stocks during stable periods.

Cons: Volatility similar to stocks, less liquidity for non-traded REITs, highly correlated with stocks during market crashes.

Returns: Average annual return of 10%-12%.

They generally have stock-like returns (or better) with a relatively low correlation to stocks during good times. They can do well when stocks aren’t. But they tend to sell off during stock market crashes, so don’t expect diversification benefits on the downside.

Farmland

Investing in farmland offers exposure to agricultural real estate, providing income through crop sales or leasing land to farmers. It’s a tangible asset with lower correlation to traditional financial markets.

Pros: Lower correlation with stocks, good inflation hedge, reduced downside risk compared to other assets.

Cons: Less liquidity, higher fees, may require accredited investor status for certain investment platforms.

Returns: Average annual return of 7%-9%.

Small Businesses / Franchise / Angel Investing

Investing in small businesses or franchises can yield high returns but comes with significant risks and a high failure rate. Active involvement can increase opportunities but requires substantial time and effort.

Pros: Potential for extremely high returns, increased opportunities with deeper involvement.

Cons: Significant time commitment, high likelihood of failures can be discouraging.

How to Invest: Deep involvement is often necessary; consider whether to be an owner-operator or a passive investor. Success often requires being embedded in the entrepreneurial community.

“It’s common to make more money from your single best angel investment than all the rest put together. The consequence of this is that the real risk is missing out on that outstanding investment, and not failing to get your money back (or, as some people ask for, a guaranteed 2x) on all of your other companies.”
— Sam Altman

Royalties

Royalties provide income from the use of intellectual property like music, films, or trademarks. They offer a steady income stream that is generally uncorrelated with traditional financial assets.

Pros: Uncorrelated to traditional assets, generally steady income.

Cons: High transaction fees, income can be affected by changing public tastes.

Returns: Average annual return of 5%-20%.

Your Own Products

Creating and selling your own products, such as books or online courses, allows you full control over the asset and potential returns. While offering personal satisfaction and brand building, it requires significant effort with no guaranteed payoff.

Pros: Full ownership, personal fulfillment, potential to build a valuable brand.

Cons: Labor-intensive, returns are highly variable and uncertain.

Returns: Highly variable; while most products may yield modest returns, some can be highly successful.

Assets Without Income Streams

Assets like gold, cryptocurrencies, art, and commodities do not produce income and rely solely on market perception for their value. Their valuations are based on what others are willing to pay, making them speculative investments.

Dealing with volatility

If you want the upside—building wealth—you have to accept volatility and periodic declines that come with it. It’s the price of admission for long-term investment success

Volatility is just a part of the game.

If you’re concerned about market volatility, consider starting with a more conservative portfolio and gradually adjusting it to match your risk tolerance.

Diversification is a way to combat volatility.

“If you’re not willing to react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get.”
— Charlie Munger

Don’t rely on your emotional state for determining when to sell. Come up with a predefined set of conditions under which you’d sell before you invest.
There are only three reasons:

1. Rebalancing
2. Getting out of a concentrated (or losing) position
3. To meet your financial needs

Selling can have tax consequences, which should be avoided as much as possible.

Since markets tend to go up over time, it’s most optimal to sell as late as possible. Therefore, you should sell over time (or as late as possible), rather than selling everything right away.
There can, of course, be circumstances where you’d be better off selling immediately.
Buy quickly, sell slowly.

Rebalancing

Rebalancing is just a way to stick to your target asset allocation.
Otherwise, your portfolio would drift from its target allocation to be dominated by its highest returning asset.
Rebalancing typically doesn’t enhance returns. People do it to reduce risk.

It doesn’t matter when you rebalance, just that you do it periodically.
Annually is recommended. It takes less time, and it coincides with tax season.

You could sell assets to rebalance. But another way—without tax consequences—is to just keep buying. You can buy your way back into a rebalanced portfolio.
But you can’t do that if you don’t have anything to buy with.
And it gets harder to pull off as your portfolio increases in size.