Book Review & Summary: 'Quit Like a Millionaire' by Kristy Shen and Bryce Leung.

Written by two prominent members of the FIRE (Financial Independence Retire Early) movement the book provides a guide on how to retire at a young age. Kristy and Bryce were in their early 30's when they retired as millionaires without 'gimmicks, luck or trust fund'. Some of the ideas and guidance are orientated to the USA and Canada, especially when it comes to property.

Take Five: My main key points from the book.

1. Follow the money

Although many of us may think the best career is a career that you love it may not be the best decision financially. But what if I want to be happy? I can tell you that what I dreamed of doing in my teens is not what I would dream of doing now; we change our minds quite often as we grow older and our tastes change. Instead look at jobs where you can make good money, especially if you are not going to be doing the job for the next 40 years. When you 'retire' you can look at turning a hobby into a side hustle or pursue a previous dream now you have the time and can afford to. Follow the math and your head to build the foundations of financial freedom; not your heart.

2. Avoid the debt trap

Due to her Chinese background, Kristy has always been a saver. Chinese culture promotes saving for the future. If you need to buy something it is better to buy it yourself having saved up for it outright than to take on debt and put yourself at the mercy of someone else. An IOU is an I Own You!

If you are in debt then start cost cutting where possible and paying off consumer debts which have high interest rates. Next, pay off debts with the highest interest rates which is likely to be credit cards down to your lowest such as car loans or personal loans. You can also refinance where possible to reduce the amount of interest you pay such as by switching credit cards. In order to gain financial independence you need to be debt free.

3. Invest in the index over individual stocks

This is covered in multiple finance books and through my blog posts so I won't labour the point but suffice to say that it is worth looking into investing in the stock market. UK pensions are invested in stocks, shares and bonds so I would recommend learning more about investing. Whilst you could pick the next Apple or Tesla stock and make a fortune it is much safer to invest in index funds that track the stock market such as in the S&P 500 or FTSE All Share. Instead of investing everything in one or a few companies the risk spread by investing in many.

4. Saving is more important than what you earn

Every time you earn more money if you let lifestyle creep in and keep spending it doesn't matter how much you earn you will probably still be working at 65. If however, you can keep squirrelling away as much as possible each month those savings will compound over time and before you know it you will be retiring early! If you can bring down costs elsewhere (rent a cheaper house, buy a cheaper car or even use public transport) then you can boost your savings and you may find you will need less to live on in the future.

5. The 4% of your portfolio rule

Working out how much you need in your portfolio to live on in retirement can vary. It could be because you plan to only semi-retire, downsize your house and holidays or use geographic arbitrage by moving to a cheaper country to make your money go further. For example, Kristy and Bryce could live very well on $1,100 a month in Vietnam but in the USA or UK for example that won't go very far.

They recommend using the 4% rule which has shown that a portfolio is self self-sustaining provided you do not take more than 4% of the total value per year. To get the figure needed for this to work take the amount you want per year and times it by 25 to give your total portfolio value. In the UK in order to live comfortably the recommendation is £37,300 a year to live on as a single person. If you get the full state pension of £10,600 a year in 2023 that would leave £26,700. Times that by 25 and you would need a pension pot of £667,500! I had best check my pension calculator...

Final thoughts

I think this book was a good introduction for me to the FIRE movement. Some aspects of the book have been covered in other books which are financially sensible; for example, index fund investing, paying off debt and saving. It is however more personal as you get a feel for the upbringing Kristy had and why saving and retiring early was so important for her. It's a good introduction to FIRE and I think it would resonate well with readers under 30.