How to Retire Early with Bitcoin
✌️Welcome to BuyBTCRetireEarly!
💸This newsletter is focused on achieving Early-Retirement through Bitcoin!
Good news! I created a telegram group where we can connect and share ideas about investing, money and of course Bitcoin. Join by clicking this link: BuyBTCRetireEarly Telegram group
Good news! I rebranded this substack from “DIY investing for Filipinos” to “BuyBTCRetireEarly”
This name captures more what I am trying to do which is “stack as much as BTC as I can, then Retire Early”
How early?
I hope on retiring when I’m 40. I am now currently 30 years old so I still have 10 more years.
My Early Retirement Journey
I’ve been working now for 7 years. I’m a CPA working in the BPO (Business Process Outsourcing) Industry here in Philippines.
When I started working 7 years ago, I hated it. I always ask myself if this is what I’m going to do for the rest of my life?
Plus the normal path of get a good job, climb the corporate ladder, buy a car buy a house, and be successful in the eyes of the others didn’t appeal to me.
I wanted to the something that I’m passionate about. But the problem is I don’t know what I’m passionate about. Luckily I discovered FIRE.
Stumbling with FIRE
FIRE stands for Financial Independence Retire Early movement.
What this means is that you can achieve early retirement by doing 2 things.
Save as much as you can
Invest to grow this savings
There were people who’ve done it. Some were able to retire in 10 years, some were able to retire before reaching 40 years old.
These early retirees documented their journey though their blogs. Some of the popular one is Mr. Money Mustache.
There’s a book also written about this FIRE movement. There’s a documentary about this also.
Dreaming of early retirement became my coping mechanism on work.
I invested as much as I can when I started working. I didn’t dream of buying a car, which what most of my peers do.
But it turns out, playing with FIRE(Financial Independence Retire Early) wasn’t as easy as advertised.
Is Early Retirement really possible?
Yes according to those who have done it. But in reality, those who have done it, has done it with the help of the rising US stock market over the last 20 years.
The way to early retirement according to this FIRE movement is to:
Cut down expenses and save as much as you can
Invest this savings into a mix of passive index funds of stocks and bonds.
Then do this until your retirement savings reach 25 times of your annual expenses
The 25x target is based on the FIRE movement, where reaching this milestone allows you to withdraw 4% annually for expenses, and your passive index fund investments are expected to grow by 4% as well.
For example, if your annual expenses are $100,000, your retirement goal is 25 times that amount, totaling $2,500,000.
Once this goal is achieved, you can retire and withdraw 4% of $2,500,000, which is $100,000.
After the withdrawal, your retirement balance will be $2,490,000.
However, with a 4% growth in your passive index funds, your savings will rebound to $2,500,000 (initial balance of $2,490,000 plus $100,000 gain).
The theory of the FIRE movement is based on the 4% rule. I believe there was a paper written on this where it shows that you will not run out of money by withdrawing the 4%.
BUT , and a big but, but this is based on theory and past performance.
The reality is no one knows the future. So for FIRE to work, there are two things you need to do which are:
#1 Save a lot of money - something that is within your control.
#2 Grow your saving by investing - something that is not within your control.
Even though saving money is within your control, it is still hard to do because at the same time you want to enjoy life by travelling, or buying a house or car etc.
Meanwhile #2 is something that is not within our control.
The blinds spot that I see on FIRE believers is that they see the passive indexing investing as gospel.
Passive index investing is investing in a fund that tracks an index like S&P 500.
If you read this substack, you know that I hold most of my assets in bitcoin.
I think bitcoin can do in the future what the S&P500 has done in the past.
If your goal is FIRE, I suggest taking a look at bitcoin. You don’t have to sell all your index funds to buy bitcoin. You should only invest what you’re comfortable with. You invested in index funds because you’re comfortable with it. I suggest studying bitcoin so that you can add it to your portfolio. 1% may be enough, the percentage that you will put into bitcoin will depend on your understanding of the asset.
There were some study shows that adding minimal exposure of bitcoin can improve overall returns of your portfolio without the volatility, since the bitcoin exposure is only small.
How Bitcoin Revived my FIRE dreams
When I started FIRE, there was no FIRE community in the Philippines. Now we have Facebook groups, subreddit etc.
Also at that time, 6 years ago, access to S&P500 index funds are not cheap as it is today.
The only way to access index funds at that time was through feeder funds offered by banks and their minimum are quite high for an average salary in the Philippines.
I was stuck with the PSEi , and the PSEi is not doing well since 2018.
PSEi perform poorly compared to S&P 500 and other foreign markets. That’s why I don’t recommend putting all your eggs here in the Philippines (the PSEi). Please see this post for explanations:
Right around 2020, I got demotivated in saving in PSEi index funds, I got an increase in salary and bought house instead.
This is also one of the most expensive tuition fees I learned in life:
“A house is not an investment”
I talk more about that in this post:
Luckily, I found bitcoin on 2022.
I first started buying bitcoin because I wanted to make money. But I discovered more.
I believe bitcoin over a long-term period will be the best performing asset.
Because of this, my early retirement dreams were revived but there’s a difference.
In the past, early retirement was my coping mechanism.
Today, well it is still my coping mechanism, but I learn how to deal with reality. I learn just to be continue being patient and save money.
The motivating thing is saving in bitcoin really feels like saving money.
Because your money is growing over time.
Just a warning that bitcoin is very volatile.
Also, another thing that I discovered is that I’m passionate about bitcoin.
I think the quit your job and find your passion is very overrated. I talk about that in this post:
I’m not saying that I now enjoy my work. There’s nothing enjoyable being an accountant looking at computer screen 8 hours a day. The good thing is that I now have something that I’m passionate about that I can do on my free time. Which is write and share about bitcoin.
So if you’re reading up to this point. I want to express my gratitude and hopefully you will also go down the rabbit hole of how bitcoin can really improve your life aside from pumping your bags.
If you are new to bitcoin, You can start here:
Thank you for reading!
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