I am one of those people who have lived this advice and after 10 years of following some of the recommendations here, I can confirm that it works.
Here are my 5 simple rules that I followed, no lottery/IPO, just a steady single income.
- Max out 401K and get company match
- Max out Roth IRA for me and my wife
- Invest in Vanguard S&P 500 Index Funds, some international funds and some bonds
- Invested in a property in India
- Lived below 35% of the salary
- Always bought a used car and kept the car for as long as it runs
Results
- After 10 years, I am financially independent
- I am working for Google just because I enjoy working and not because I need a paycheck
- My wife works as a teacher and she enjoys her job as well. She is working because she likes to and not because we need a paycheck
What was hard ?
- To see friends buying expensive cars just after getting their first job and not doing the same
- Friends buying > 1M$ houses while I kept renting since I like the flexibility and staying in a community
- Friends going on exotic trips
This is good advice but may also have some element of survivorship bias. If you haven't noticed, not everybody works for Google. In fact, not everybody works for a company that will match their 401(k). If you're lucky enough to be taking home a six figure salary (not to mention one that grows with bonuses as you progress) every year, maybe this advice is good. But you should consider in your advice that not everyone is taking home $xxx,xxx per year, plus bonuses, plus full company 401(k) matching and all benefits. You are very lucky that you were able to live below 35% of salary.
Still, I wonder if advice would be different for people who are making less?
Here are my 5 simple rules that I followed, no lottery/IPO, just a steady single income. - Max out 401K and get company match - Max out Roth IRA for me and my wife - Invest in Vanguard S&P 500 Index Funds, some international funds and some bonds - Invested in a property in India - Lived below 35% of the salary - Always bought a used car and kept the car for as long as it runs
Results - After 10 years, I am financially independent - I am working for Google just because I enjoy working and not because I need a paycheck - My wife works as a teacher and she enjoys her job as well. She is working because she likes to and not because we need a paycheck
What was hard ? - To see friends buying expensive cars just after getting their first job and not doing the same - Friends buying > 1M$ houses while I kept renting since I like the flexibility and staying in a community - Friends going on exotic trips
I think at the end, its worth it.