Posted by Tim Stobbs on September 28, 2007
Larry MacDonald recently had a post on his blog about Derek Foster which was questioning weather the math of Derek’s strategy would let other people follow in his foot steps. The short answer I believe is no.
Each early retirement story I’ve read of very young retirements (ie: under 50) all seem to have a common thread. Each person will tell you how it is possible for you to do the same as them. Yet the reality of it all is a bit of dumb luck is also required.
Granted most of the very early retirees do have plans to make some money with real estate or stocks and they do have a strategy. Yet in every plan there is that wild card of luck. Where the results of your plan far exceed what you expected to happen. For example, when I bought my first house I knew it had a good potential for fixing it up and reselling. Yet the renovations were more expensive than I would have guessed. About $10,000 more expensive due to a leaking roof. So I was hoping to just break even and not lose my shirt. The reality was the local real estate market was hot and I made about $55,000 in profit in two years. You could try to call it good planning or anything else, but in reality it is just dumb luck.
So you see each early retirement path is unique. I don’t expect anyone to take the exact same path as me, because they will have different values and different opportunities. Yet learning from each of these very early retirees teaches you something different such as controlling your spending, dividends are good, or avoid tax is important. Yet each one echoes a similar lesson: luck favours the bold. If you want a retirement under 50 you are going to have to take a few risks.