No. of Recommendations: 10
One thing that both Saul and Warren Buffett have in common is that they both got rich with highly concentrated portfolios. Buffett recently had 50% of his equity holdings in just one stock: Apple. And Saul usually holds only 8 or fewer stocks.
Saul's track recordDuring the 18 years from 1989 through 2007, Saul achieved annual returns of 32% compounded, which would put him in the ranks of legendary investors like Buffett, Peter Lynch, and Stan Druckenmiller. He retired early in 1996, thanks to his investing prowess.
More recently, from 2017 through 2021, Saul achieved a total return of 1,877% in only 5 years. That's not a typo. If you started with 100K in Jan 2017, found Saul's board, and followed his buys and sells each month, you would end with $1,877,570 in December 2021, as long as the money was in a tax deferred account. That's a compounded annual return of 80%.
Reference:
https://discussion.fool.com/t/knowledgebase-2019-p...Saul and Buffett's drawdownsYou know what else Saul and Warren have in common? They both experienced 50% drawdowns twice in their decades-long investing careers. People holding Berkshire Hathaway saw it decline 50% during 1998-2000 and it also declined 54% during 2008-09. Saul experienced a 62% decline in 2008, and a 68% decline in 2022. None of these events are "tragedies" for investors who know the risks of holding a concentrated basket of stocks and therefore allocated only a portion of their total assets to this particular basket.
Achieving financial independenceI don't mean to spread FOMO by describing Saul's track record above. Achieving financial independence is much simpler.
1. Start investing early, preferably in your 20s
2. Live below your means, max out your 401K contributions each year, and allocate 100% of that to an index fund
3. Let that compound and grow tax deferred. It's amazing how many people don't know the mathematical power of compounding.
4. Don't get cute and try to time the market.
5. Once you hit your retirement number, set aside N years of living expenses in cash or cash equivalents. The number N depends on what each person finds comfortable, I recommend 3 to 5 years. The rest can be split between an index ETF and a bond fund. At this point, 4% of your liquid assets should be able to fund your annual living expenses. Consult with a professional financial advisor if you're not sure about how to manage your nest egg.
6. Enjoy your retirement. You've earned it. Don't look at your portfolio every day or every week.
