Save and Invest to catch FIRE (Financial Independence and Retire Early)

                                                                                        401 (k) and Roth IRA are two traditional vehicle for contributing to retirement account. While to participate in 401(k), one needs to be working with a company that offer 401(k) to its employees. However, does not matter employed or unemployed or self-employed, one can always participate in Roth IRA. Check this for the details :  https://www.irs.gov/retirement-plans/roth-iras Facts: 1. All the contributions are after tax. That means you will add the money to this account from your take home salary or earnings. 2. Once you are at age 59.5 or more, you can start with draw without paying any tax. This is one of the most convenient quality of Roth IRA. No body knows what will be the future tax rate, so this will give a good idea how much money you can safely withdraw in retirement. For example, if my Roth IRA has $1 million at age 60, then I can safely withdraw $40,000/year for 20

To me an ideal stock investment should have around 10% annual growth and about 2-4% dividend yield. One good thing about this combination is that even the stock market crashes (like 2008), most probably that 2-4% dividend yield will somewhat minimize the loss. Another beauty is that, if I reinvest the dividend in that time, I could buy more of same stock compared to regular period. Today I will talk about an ETF that is growing about 10% annually for last five years with about 4.4% dividend yield . Additionally this ETF disburses dividend monthly (($0.15/share/month) so its a convenient source of monthly income. Currently I am just reinvesting automatically whatever the dividend amount disbursed in my brokerage account. Invesco S&P 500® High Dividend Low Volatility ETF (SPHD) There are two qualities of SPHD that are worth highlighting. Firstly,  all the stocks are in this ETF are S&P 500 companies, hence they are all large companies. Secondly, they are the lowes

                                        I wish there were courses on investing while I was attending college or high school. Most of us has no clue how important is the contribution of time in growing a portfolio. I was lucky to land a well paid job right after college and spent all of salary on staying in luxury apartment, eating out every meal, traveling  etc. Its true I enjoyed all that but I could achieve same gratification by cutting some corners on spending and invest the balance:) Anyway, lets get some idea how important is to start investing as early as possible once someone starts earning. Lets compare the investment strategy of two buddies Ian  (The investor!) and Paul (The Procrastinator!) Lets assume both get out of college at 25 and starts job at same salary of  $3500/month after tax and both have a plan to retire at 60. Ian started investing at 25 while Paul waited until he reaches age of 35. Now Ian starts adding $500/month to his brokerage or retirement acc

                                                  For a well balanced diversified portfolio, investment in real estate is often necessary. However upfront high cost of purchase and maintenance of real estate properties are not that convenient for everyone. Also real estates are not very liquid class of asset in case I need to sell for some emergency need. Considering all these, currently my house is the only typical real estate asset I own. On the other hand, I also don't want to be left out from owning some income generating real estate properties. So I started investing in REIT (Real Estate In vestment Trust) companies. These companies raise capital by selling stocks and  then invest in different type of real estate assets like Retail store, Office building, Hospitals, Hotels etc. The income generated from rent and other sources, are paid back to share holders as dividends. By rule, REIT companies are required to pay back about 90% of income as dividends to shareholders. S

                                                  I started investing in stock market several years back as a way to grow my portfolio. Prior to that, most of my personal savings were in traditional Savings account with Banks earning dismal 0.01% interest annually. Back then I did not think of much but after starting following some blogs on personal finance, I realized even only inflation (say 2%) would eat up my portfolio over time. After some research, I came up to a conclusion that there are two options to grow portfolio 1)  Investing in stocks 2) Buying rental properties. However I am not a big fan of being a landlord, so ditched the later option. Stocks investing seems better suit as once someone invest correctly, the growth seems kind of in auto pilot mode. And US stock market historically returns around 10% annually if some one holds on tight during market turbulence like 2008 crash. That seemed quite appealing to me considering average net return of 8% (subtracting 2% f

One of my investing strategy is to buy dividend paying stocks and ETFs. Historically dividend paying companies are well established in their sectors and are more or less common household names such as Johnson & Johnson, Exxon, Pfizer etc. My prefererd method for investing in dividend paying stocks via ETF. As dividend oriented ETFs are often diversified across industries, hence better chance of reducing market volatility. So lets see what is dividend and how they are calculated if its not clear to some of my audience. Dividends are a portion of the profit paid back to the share holders in cash. Usually dividends are paid quarterly but few companies/ETF pay monthly as well. As a shareholder, we can take the cash dividend amounts or reinvest in the same stock/ETF. For an example, if I am a retiree in that case dividends can be a good source of monthly income. Or I don't need that money for now, easier is to reinvest which increases my portfolio by compounding. Lets see

One of my  favorite way to get some extra cash to invest is on squeezing weekly grocery expense. This is may sound bit extreme but I find it a fun challenge. Here I am sharing my personal strategy to save additional about 20-30 bucks every week and then invest in dividend paying  stocks or exchange traded funds (etf). Currently my weekly grocery budget is about $130 and I challenge myself to save about 20% of that. Here are some strategy is working quite for me in last few years: 1. Try to shop from a grocery that not located in an expensive neighborhood. I found this way I can easily save 10% of budget. 2. Always compare store-brands with traditionally popular name-brands. What I observers that store-brands are overall  25-35% cheaper than popular name-brands but hardly much difference in quality. For an example, last week I bought 2 roll of  store brand kitchen towel for $1.5. Same pair from Kimberly-Clarke costs almost twice around $3.5. Same lower cost goes  for diapers,