Big News!

A rare GM sighting, kind of like Big Foot! Looks like I’m presenting a blank screen to my audience. I’m sure they were mesmerized.

FI Lesson Learned #1: Track Your Money

Budgeting?

Annual Spending and Net Worth Reports

That grocery and sundries category just keeps going up!

FI Lesson Learned #2: Savings Rate

Between 2005 (the year Mrs. Grumpus and I married) and 2023 (the last year I worked full-time), our family savings rate averaged 27%. How do I know this? My money tracking software made it easy to pull our cash flow rate for those years!

Of note, our savings rate history included a low of -5% in 2005 and a high of +49% in 2023. As explained above, saving wasn’t smooth sailing at the beginning, but we quickly righted the ship. By 2023, when I was working in New Zealand and earning two pensions, saving everything I made that year was simply automatic. Overall, our average savings rate far outpaced the standard 10% most US-based financial advisors recommended for most of my working years. It even blew away the 12-15% average currently recommended by Vanguard.

That’s a lot of peaks and valleys.

In my opinion, our high savings rate directly stemmed from the frugal behavior that obsessively tracking our money created. This frugal behavior synergized with the opportunities that life presented us. These opportunities included the years we spent as DINKs (Dual Income No Kids) and my deployments to tax-free combat zones in the Middle East.

We weren’t without luck either. I deployed in both 2008 and 2009 as the Great Financial Crash (GFC) wrecked the global economy and many families’ finances. Mrs. G also worked most of that time and later accepted a sweet severance package from her former employer in late 2009, which lasted 18 months. This benefit was almost unheard of during the GFC. As the chart shows, we did not waste those opportunities. We achieved a savings rate of over 40% in 2008 and around 35% in 2009.

Two Cheers for Savings

As I explained to the Black FI-day audience, our ability to save through thick and thin allowed Mrs. G and me to do two things. First, we regularly flooded our investment accounts with cash. Saving money equaled cash flow towards our future and our retirement. While we didn’t always know we were saving for something like an early and overseas retirement, it didn’t matter. By limiting spending in the present, we knew we were enabling good things for the future.

The second thing that saving so much money allowed us to do was to make mistakes. As you will learn in the fourth lesson, I made quite a few financial mistakes as the family’s head of finances. In fact, even before we were a family, I was making financial mistakes. However, it turns out that a high savings rate can cover for many mistakes. Maybe not every single one, but enough to avoid sinking the entire effort in one go.

The reality is that you will make mistakes too, but hopefully not as many as I did. Just keep reading this blog, and you will learn what not to do! Seriously, though, a high savings rate will let you forgive yourself when you inevitably make mistakes, because it makes recovery easier. In other words, when you’re banking 30% of your family’s take-home pay each year, a bad investment here or there will not kill you.

FI Lesson Learned #3: Investing

Above all else, investing in the stock market was the engine that built our wealth. As I told the Black FI-day 2025 audience, saving big each year was great, but putting that money to work made the difference. I tracked our net worth and showed them how it grew 12.25 times from 2002 to 2025. Our Compound Annual Growth Rate (CAGR) was 11.3%, meaning our money doubled every 6.4 years. I then discussed how this doubling roughly matched the Rule of 72.

Here’s all those statistics in visual form.

However, while investing was the engine that drove our net worth’s compounding growth, it was the combined effort between saving and investing that allowed us to meet the Rule of 72. Honestly, until I harnessed the power of index fund investing in the S&P 500 in 2014, I wasn’t great at growing our money through investing. That’s not to say I threw it away, but the little investing guidance I received earlier in life left me believing that Warren Buffett-style value investing was the best way to grow your wealth.

Had I left stock picking to a professional, maybe value investing would have worked out, but I did not. From 1998 until 2012, I stunted my and then our wealth-growing opportunities by balancing our investments 50/50 between individual stocks and mutual funds. Unfortunately, my individual stock-picking record included buying and holding too many losers and selling too many winners. On the other hand, that 27% average savings rate mitigated the worst effects and helped our net worth continue to grow in the background.

The Power of Low-Cost Index Funds

In 2012, in the run-up to a deployment I made to Afghanistan, my wife and I consolidated our various investment and retirement accounts with a financial planner. Why? First off, in case something happened to me while on deployment, I wanted the money consolidated with someone who could work with my wife in the aftermath. Secondly, I was done trying to pick stocks that I thought would be winners, only to end up with losers. I just wanted a simplified wealth-growing strategy, and I thought the professional route was the way to go. Thus, at my request, the financial planner put us into various diversified mutual funds, ending my days of individual stock picking once and for all.

That relationship did not last long, though, in part because by 2014, I had finally started educating myself on Financial Independence and the power of low-cost index fund investing. I’ve chronicled the resources I used in my FI education process elsewhere on this blog, so I won’t go over them again. I hit the wave tops for the Black FI-day audience, too, but most were already familiar with many of the references. Regardless, by 2014, once I understood both the data on the unlikelihood of active investors beating the index and how much money I could save by investing in low-cost index funds through cheap online brokerages, there was no excuse not to do it ourselves.

As the charts below demonstrate, our net worth began to grow in parallel with the S&P 500 from about 2015 onward. That correlates to me taking over the investments again and investing more and more of our net worth into index funds that either track the S&P 500 or the US total stock market. During the period from 2015 to 2023, I gradually increased our investment risk profile by allocating a larger share of our net worth to those index funds. I did this by investing any new money we saved in that direction and redirecting money previously invested in bond funds. I also invested the proceeds from the sale of our US property in preparation for our move to New Zealand. This effort culminated in 2022, at which point 96% of the family’s net worth was invested in U.S.-based index funds, 50% of which were S&P 500 funds.

GM’s family net worth on the left, S&P 500 performance on the right. They only move in tandem after 2014 as noted by the red ovals.

Risk vs. Reward

To be clear, allocating 96% of your net worth to US-based index funds like the S&P 500 is an extremely growth-oriented, high-risk investment profile. It is not a profile I recommend to many people because it requires navigating the inevitable volatility of the indexes while holding onto your investments for the long term. That is a key point. In my mind, there must be a long-term (10+ years) investing goal for accepting such a large risk profile. This 10+ year time horizon is something I’ve written about before.

In my working years, the goal was to grow the money aggressively over 10 years to enable me to FIRE from the military at 20 years. The risk profile I took on (85/15 stocks-to-bonds by 2018, for example) was safeguarded by my military job (which, for all intents and purposes, I could not be fired from), our frugal lifestyle (which saw us living well below our means), and our savings rate. Since I retired from the military in 2020, our investment goals have changed, as it became apparent that my Department of Defense and Veterans’ Administration pensions (and Mrs. G’s part-time job) covered most of our annual expenses. From that point onwards, it has been about aggressively growing our wealth to enable our New Zealand retirement dream in the near and long term.

In both situations, we maintained a large, multi-year cash reserve that prevented us from dipping into investments in the event of unforeseen circumstances during a down market year. Admittedly, that cash reserve is inefficient, but it allows us to sleep well at night. It also enables us to set a goal of growing our money as much as possible over the long term without worrying about investment volatility. Also, admittedly, since we bought our New Zealand home in cash in 2023, our net worth profile looks a lot different. We currently only hold 56% of the family’s net worth in investments, which are still 100% US-based index funds. The overwhelming majority of the remaining 44% of our net worth is our home’s value.

Property vs. Stock Markets

Why did I spend so much time emphasizing the importance of index fund investing in growing net worth to a New Zealand and Australian-based audience? For one, Kiwis and Aussies tend to overinvest in property to grow their wealth, especially compared to Americans. While all three countries see property as the primary component of net worth for middle-class families (typically the house they occupy), property remains much more important as an asset class for Aussies and Kiwis as they move up the wealth scale than for Americans. It is an interesting phenomenon that may merit its own article in the future. But in general, according to my analysis of data from Stats NZ, the US Census Bureau, the US Federal Reserve, and the Australian Bureau of Statistics, the lay of the land looks like this:

Bottom line: The US is the outlier. The wealthy in the US hold far more of their net worth in stocks, private business equity, or financial assets than in property. NZ and Australia remain property‑centric societies, even at higher levels of wealth.

Interestingly, the message that Mrs. Grumpus and I built our wealth via investments rather than property fell on relatively receptive ears. This surprised me since the audience was dominated by Kiwis. Considering that I presented at a Financial Independence retreat, where the community writ large understands that the Simple Path to Wealth is through index fund investing, maybe it shouldn’t have. That isn’t to say the property way of doing things wasn’t represented, but even those folks were receptive to diversifying their wealth-growth methods. Thus, my FI lesson learned that compounding growth on low-cost index funds over time works as a great way to build wealth wasn’t a hard or controversial sell.

A Real-World Example

That said, just in case anyone in the room thought I might be overselling the power of investing in index funds, I presented a real-world example of where Mrs. G and I got it right. In fact, we got it right almost from the start. I showed them the charts documenting both of our sons’ 529 College Savings Program accounts (below) and explained the story.

By 2012, a year after Grumpus Minimus #1 was born, I dumped a $26K US lump sum into a mutual fund held in a tax-advantaged higher education investment account known as a 529 in the US. I invested the same amount for our second child in 2015, a year after he came along. At the same time that I opened the account for Grumpus Minimus #2, I also switched both of their investment vehicles to Total US Stock Market index funds. We have not touched the investments since. I monitor them, but do not fiddle.

The power of index fund investing from the beginning.

The results speak for themselves. The Combined Annual Growth Rate (CAGR) for Grumpus Minimus #1’s account by the end of 2024 was 14%, which means it has doubled every 5.30 years. The CAGR for Grumpus Minimus #2’s account was 15% by the end of 2024, with money doubling every 5 years, so far. That’s a lot of growth with minimal effort on our part! In fact, the only “work” we did was saving the money and picking the investment account and vehicles.

FI Lesson Learned #4: Survivable Mistakes

For the fourth and final lesson of my family’s FI journey, I introduced the Black FI-day 2025 crowd to the concept of survivable financial mistakes. The term “survivable financial mistakes” is one I coined way back in 2018 for Part 3 of my financial mistake series, called A Grumpy Meander. As I explained in that post, and to the Black FI-day audience, the concept was inspired by the training philosophy of my final Commanding Officer in the military. The gist of the philosophy was that it was ok to make mistakes in training as long as we learned from them and it didn’t cost life or limb. The application of that mentality in my financial life is what drove me to discuss how a high savings rate can cover for many financial missteps in the 2nd lesson of this post.

After explaining the term ‘survivable mistakes,’ I moved on to highlight some major ones we had survived. Out of them all, the one that elicited the most gasps was the ~US$750K opportunity cost of my decision to sell 300 shares of Amazon (and some others) in 2004 as part of the down payment on a condominium in southern California at the height of the housing bubble. That said, I’m not going to rehash that mistake here because I have an excellent post that I wrote in 2017 about the entire issue that you should read (here)!

Here are the opportunity cost numbers in … blue and white?! They say a picture is worth 1,000 words but this doesn’t do the Grumpy Meander #1 article justice. It’s a good one, go and read it!

Return on Investment (ROI) and Opportunity Costs

Needless to say, the Amazon shares mistake caught everyone’s attention, especially since it was unknowingly primed by a guest speaker the day prior. He made a throwaway comment about no one having the foresight to purchase Amazon stock in 1998 and hold on to it through the DotCom crash. Of course, he had no way of knowing that I was going to discuss that exact scenario. It was simply serendipitous.

I did have the foresight to buy and hold Amazon stock between 1998 and 2004, but I didn’t have the foresight to retain my winners and sell my losers during my rush to get in on Southern California’s housing market’s meteoric rise in the early and mid-2000s. In fact, I did the opposite and sold my winners while keeping my losers. It turns out there’s a well-studied scientific term for my behavior called the Disposition Effect. It’s worth any DIY investor understanding it, in my humble opinion, even FI adherents committed to the simple path.

Regardless, when I wrote the article in 2017 about the Amazon mistake, I calculated the missed return on investment of those sold stocks at 763% (I shudder to think what it would be today). In contrast, when we sold the condo in 2019 in preparation for moving to New Zealand, the ROI on our down payment was roughly 20%. I presented these stark differences to the Black FI-day 2025 audience as a cautionary tale on understanding opportunity costs. I told them that when you choose to do one thing with your money, you are forgoing the opportunity to do other things with it. So, choose wisely.

Finally, I made the story more poignant by pointing out to the audience that this money wasn’t in our investment accounts when I suffered my mental breakdown in 2016. I mentioned that at the time I was trying to determine if leaving the military three years before earning my pension was the correct move, all while trying to obtain mental health support. I’ve written about the impact of this potential missed opportunity several times over the years, including in the 2017 money mistake article and in my book. Fun times.

A More Costly Mistake?

As dramatic as highlighting the US$750K opportunity cost of selling my Amazon shares proved to be for the audience, I did relate one theoretically bigger mistake I made from the very beginning of my personal finance story. But before doing so, I also cautioned that I didn’t see it as a realistic mistake. It was more of a theoretical one.

To emphasize my point, I took the attendees back to 1992, when I received US$104K in a wrongful injury lawsuit. The lawsuit was connected to an accident that almost killed me and left me in the hospital recuperating in intensive and regular care for months as a 13-year-old. Given that I was underage at the time the lawsuit was settled, my parents placed the money in a trust and invested it through their financial advisor, who was a Warren Buffett (i.e., value investing) acolyte. I would meet with him semi-annually, and we would discuss the stocks he had selected for investment and why. That was the only investment education I ever received before my self-education began in 2012.

A scan of a polaroid of me, age 13, getting a hospital visit from the US Army’s Golden Knights Parachute Team. Who knew that they had emojis in the 1980s? Trust me, I’m not smiling under there.

Thus, from 1992 to 2012, investing for me meant picking individual stocks and holding them long term. Not surprising for someone who grew up in Warren Buffett’s hometown. But there’s an alternate universe where a young Grumpus, or his parents, discovered index fund investing instead. In that universe, if the lawsuit money had been invested in one of the two S&P 500 index mutual funds that existed in 1992, like Vanguard’s 500 Index Fund (VFINX), and left untouched, it would be worth more than our net worth today. In other words, US$104,000 invested in an S&P 500 index fund in 1992 left untouched until 2025 would be worth approximately US$3.3 million.

Our net worth growth from 2002 onwards on the left. The alternate reality of investing the lawsuit money from 1992 to 2025 on the right. I know which total I’d prefer.

I am not saying that was a realistic outcome. I told the Black FI-day audience that as well. First off, no one in Warren Buffett land was talking about index fund investing in 1992. Maybe if I had grown up in Malvern, Pennsylvania, home to Vanguard and Jack Bogle in 1994, things would’ve been different. I didn’t, and they weren’t.

Second of all, I touched the money several times, even before I reached my Grumpus the Day Trader point in the late 1990s. That’s when I bought the Amazon stock, as chronicled in Grumpy Meander Part 1. Even in the alternate Jack Bogle-inspired universe, I would have still touched that money for those events. Thus, those withdrawals would have lessened the total to around US$2.9 million in 2025. Regardless, roughly US$3 million is a lot of money, no matter how you cut it, but my point here was more illustrative than anything else. Index fund investing over the long term could have truly worked in my favor, had I only known about it.

Surviving

In hindsight, both of these mistakes (and all my others) proved survivable. Despite my decades of meandering towards a coherent investment strategy, our current net worth is still in the multiple millions. How did we do it?

For one, we never squandered our money. Almost all of my major money mistakes were investment-related, so our money still grew in value. The mistakes simply meant that the money didn’t grow nearly as efficiently as it otherwise could have, especially considering the alternatives.

Thus, there is a decided lack of lessons learned in my life where I believe that I wasted large amounts of money on needless purchases or experiences. Believe it or not, I also never risked all our money on one venture or investment. Even when 96% of our net worth was invested in US index funds, our future was not at risk, since index funds are diversified by nature, and we had my pensions.

Secondly, our proven and consistent ability to save an average of 27% of our annual income meant we had cash continually flowing into investments to cover for those mistakes. In other words, we were always generating more money for investing. Unlike the example of dumping a lump sum into my kids’ 529s, there was no one-and-done moment for Mrs. G or me. Were there years we didn’t invest the surplus? Yes, but all that meant was that the money was stockpiling while waiting to be invested. Would the more efficient move have been to “always be buying“? Yes, but then again, it’s better to buy at some point than not at all.

Finally, all of these mistakes happened pretty damn far in the past. Meaning I had time to recover for the most part. Another way to look at it is that I’ve been investing for a long time. Sometimes those were good investments, and sometimes they were not. However, I kept at it and got an early start. They say the best day to invest was yesterday, and the second-best is today. That’s because time is your friend when investing because your returns compound.

I got in there, made my mistakes early, but got a few early wins too. I eventually learned what worked and settled into a winning investment strategy all before age 40. As a Financial Independence Retire Early practitioner, that’s not as quick as some, but it worked for me. As a result, my advice is to start your investing journey early, and if you have to, make your mistakes early too. The longer you wait, the less time there will be for errors. I guess the good news is that I’ve blogged about so many money mistakes that you can at least cross those off your list. Right? Right?

Conclusion

Believe it or not, this post only covers about 2/3rds of what I spoke about at the Black FI-day 2025 event. Turns out I’m a lot better at conveying copious amounts of information in person than in a blog post. Who knew? In any case, those other topics will have to wait for a different post.

To wrap up this post, I think it’s fair to point out that if you are on the road to FI and can follow my four lessons learned, you’re probably going to do OK. Meaning if you can track your money, save it, invest it, and make only survivable mistakes, then you too can achieve Financial Independence. My lessons learned are simple in summary, but not necessarily easy to implement. That said, if you’ve stuck to the end of this extremely long post, then you’re probably up to the challenge. Work hard, and maybe I’ll see you at a future Black FI-day related event!