Earn/Save/Invest: excel@2 out of 3 #reckless investor

Posted on by tiger40490 rendered_on [ Thu, 6 Mar 2025 ] 16:06 UTC

 

k_investor_selfEval

A blogpost on FIRE-in-SGP introduced this concept to me: Earn/Save/Invest — you need to excel at 2 out of 3 i.e. doing better than average. Then you could achieve FIRE. I like the simplicity.

Note “excelling” at Save means “strong savings discipline”, with a large cash reserve, similiar to Sg government.

Note: Wise investor is not reckless. Aggressive investor doesn’t always excel at investing.

Beware peer comparison. Some people would be good at all 3, but usually there’s not much we can learn from them !  Specifically, those who Earn well would seldom Save a high percentage, but their absolute Save amount is still substantial. What can a low-earner learn from them? So some peer comparison on Earn/Save/Invest would be counterproductive.

— Earn+Save -> superior brbr
This type includes people who invest very conservatively or keep lots of cash.
If someone good at Earn/Save and invest heavily into SP500, then she probably falls into Earn/Save/Invest triple threat.
— Save+Invest with limited income .. the FIRE theme
How about Save/badInvesting, with a contingency reserve more than 3Y worth of living expenses? This buffer would protect against the investment disappointments. In an disaster, this buffer could save the ship.
— Earn+invest with limited cash reserve .. is the most popular combination. However, it’s important to point out most of us are not going to earn 3 times the median household income, any time soon. (If you earn 2.5 times the median, but save just 10%, then your surplus is 25% of the median income.)

I think my sis might be in this category.

Beware of Earn / lowSaving / aggressiveInvesting. I feel this is quite common. If the aggressive investing is currently profitable, then the individual would tend to increase risk appetite. If in the red, then the low contingency buffer would be a weakness.
— me

  1. I’m A on Save. Not perfect in teaching my kids
  2. I’m B on Earn. Easy to benchmark — You can reference the national income distributions. My biggest hidden strength is career longevity, based on healthy longevity.
  3. I’m C+ on invest, measured by my own standard (leaning towards current income). No universal benchmark here.

C means “decent”, “good enough”; D means “barely enough”; F means Fail.