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1 © Pariveda Solutions. Confidential & Proprietary.
James Kupferschmid
CFO – Executive Team
Robert Greiner
Principal – Dal...
2 © Pariveda Solutions. Confidential & Proprietary.
FOUNDATIONS OF
FINANCIAL
INDEPENDENCE
3 © Pariveda Solutions. Confidential & Proprietary.
4 © Pariveda Solutions. Confidential & Proprietary.
This talk is for education and entertainment
purposes only and reflect...
5 © Pariveda Solutions. Confidential & Proprietary.
HOW TO PURCHASE THE
ULTIMATE LUXURY ITEM
6 © Pariveda Solutions. Confidential & Proprietary.
THE ULTIMATE LUXURY
PURCHASE?
7 © Pariveda Solutions. Confidential & Proprietary.
Freedom
Flexibility
Time
Basics
THE ULTIMATE LUXURY PURCHASE
A machine...
8 © Pariveda Solutions. Confidential & Proprietary.
LET’S START WITH AN EXPERIMENT
9 © Pariveda Solutions. Confidential & Proprietary.
$20 TODAY
OR
$22 IN 6
MONTHS?
TODAY 6 MONTHS
 Select an audience memb...
10 © Pariveda Solutions. Confidential & Proprietary.
 10% on $20
 20% Annual Return
 Guaranteed
$22 in 6 months is
the ...
11 © Pariveda Solutions. Confidential & Proprietary.
12 © Pariveda Solutions. Confidential & Proprietary.
13 © Pariveda Solutions. Confidential & Proprietary.
At its core, FI is about maximizing your savings rate through efficie...
14 © Pariveda Solutions. Confidential & Proprietary.
15 © Pariveda Solutions. Confidential & Proprietary.
Actionable first steps to get you on the Financial Independence Path
...
16 © Pariveda Solutions. Confidential & Proprietary.
17 © Pariveda Solutions. Confidential & Proprietary.
If you implement these principles, you will build wealth, everything ...
18 © Pariveda Solutions. Confidential & Proprietary.
19 © Pariveda Solutions. Confidential & Proprietary.
A very basic investment primer for those of us in the Asset Accumulat...
20 © Pariveda Solutions. Confidential & Proprietary.
The Pariveda 401k is a $54,000/year bucket that you can fill with dif...
21 © Pariveda Solutions. Confidential & Proprietary.
22 © Pariveda Solutions. Confidential & Proprietary.
There is more to life than accumulating money or consuming
DOING WELL...
23 © Pariveda Solutions. Confidential & Proprietary.
IF YOU FOLLOW THE FI PRINCIPALS, YOU WILL HAVE MORE MONEY THAN YOU EV...
24 © Pariveda Solutions. Confidential & Proprietary.
Today
25 © Pariveda Solutions. Confidential & Proprietary.
Ready for the next level? We’ve got you covered.
FINANCIAL INDEPENDEN...
26 © Pariveda Solutions. Confidential & Proprietary.
27 © Pariveda Solutions. Confidential & Proprietary.
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Foundations of financial independence

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Presentation I did with our CFO at a national company-wide presentation event called #FinFest2017. Topics center around the concepts around Financial Independence and practical steps you can take to achieve it as quickly as possible.

This talk is for educational and entertainment purposes only and should not be treated as investment or financial advice.

Published in: Economy & Finance
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Foundations of financial independence

  1. 1. 1 © Pariveda Solutions. Confidential & Proprietary. James Kupferschmid CFO – Executive Team Robert Greiner Principal – Dallas Office
  2. 2. 2 © Pariveda Solutions. Confidential & Proprietary. FOUNDATIONS OF FINANCIAL INDEPENDENCE
  3. 3. 3 © Pariveda Solutions. Confidential & Proprietary.
  4. 4. 4 © Pariveda Solutions. Confidential & Proprietary. This talk is for education and entertainment purposes only and reflects our opinion We are not offering financial or investment advice to any one individual and are not your fiduciary We don’t know the specifics of YOUR financial situation, adjust accordingly
  5. 5. 5 © Pariveda Solutions. Confidential & Proprietary. HOW TO PURCHASE THE ULTIMATE LUXURY ITEM
  6. 6. 6 © Pariveda Solutions. Confidential & Proprietary. THE ULTIMATE LUXURY PURCHASE?
  7. 7. 7 © Pariveda Solutions. Confidential & Proprietary. Freedom Flexibility Time Basics THE ULTIMATE LUXURY PURCHASE A machine that generates your income needs for the rest of your life
  8. 8. 8 © Pariveda Solutions. Confidential & Proprietary. LET’S START WITH AN EXPERIMENT
  9. 9. 9 © Pariveda Solutions. Confidential & Proprietary. $20 TODAY OR $22 IN 6 MONTHS? TODAY 6 MONTHS  Select an audience member at random  Offer a choice (real dollars)  What would you choose?  Respond to our poll! (Slido)
  10. 10. 10 © Pariveda Solutions. Confidential & Proprietary.  10% on $20  20% Annual Return  Guaranteed $22 in 6 months is the correct answer
  11. 11. 11 © Pariveda Solutions. Confidential & Proprietary.
  12. 12. 12 © Pariveda Solutions. Confidential & Proprietary.
  13. 13. 13 © Pariveda Solutions. Confidential & Proprietary. At its core, FI is about maximizing your savings rate through efficient savings methods, reduced spending, and higher income. This will provide the freedom to make lifestyle choices that are in line with your values while not being forced to make decision based solely on income needs. The purpose of this talk is to discuss FI strategies, techniques, and lifestyles regardless of your life goals or how old you are. What would you do with your life if you didn’t have to work for money? FI is NOT Retirement FI Before 65?! Intentionality With Finances Investing Not About Hoarding Money
  14. 14. 14 © Pariveda Solutions. Confidential & Proprietary.
  15. 15. 15 © Pariveda Solutions. Confidential & Proprietary. Actionable first steps to get you on the Financial Independence Path WHERE DO I START? Know Your Net Worth (personalcapital.com) Calculate Your ACTUAL Monthly Spending (youneedabudget.com) Calculate Your FI Number (25x Yearly Spend) Calculate Your Savings Rate Calculate Your FI Date Maximize Savings Rate (Make More & Spend Less) Bank Your Promotions! (Avoid Lifestyle Creep)
  16. 16. 16 © Pariveda Solutions. Confidential & Proprietary.
  17. 17. 17 © Pariveda Solutions. Confidential & Proprietary. If you implement these principles, you will build wealth, everything else is efficiency and optimization MAGIC FORMULAS TO ACHIEVE FI Magic Formula • Have a Plan • Avoid Debt • Use Credit Wisely • Spend Less Than You Make • Establish Emergency Funds First • Invest the Difference Savings Rate (Percent) Working Years Until Financial Independence 5 66 10 51 15 43 20 37 25 32 30 28 35 25 40 22 45 19 50 17 55 14.5 60 12.5 65 10.5 70 8.5 75 7 80 5.5 85 4 90 < 3 95 < 2 100 Zero If you have a low savings rate today, that’s OK – do what you can to increase it (could take years) How Much Do I need to Retire • Roughly 25x Your Annual Spend (4% Rule) • YMMV based on lifestyle choices, and that’s OK Savings Rate • Savings / (Income – Taxes) How Long Until I am Financially Independent?
  18. 18. 18 © Pariveda Solutions. Confidential & Proprietary.
  19. 19. 19 © Pariveda Solutions. Confidential & Proprietary. A very basic investment primer for those of us in the Asset Accumulation Phase of life INVESTING BASICS Facts of Life • You must invest in order to become financially independent • The stock market is probably your best bet for compounding your money • The stock market always goes up – in the long term • The stock market sometimes goes down – and will again, sharply • Sequence of returns matter in the few years before and after retirement • The only people who get hurt on roller coasters are those who jump off • You are not smart enough to time the market • Don’t invest until you feel comfortable with what you are doing • The Pariveda 401k is all you need from C-P (~$53k max total contributions) • Nobody manages your money with more care than you, learn this stuff • Fees compound as well and will destroy your returns over your career • Feel free to use a model portfolio (401k) or target date fund to get started Further Reading: http://jlcollinsnh.com/stock-series/ & https://www.bogleheads.org/wiki/How_to_build_a_lazy_portfolio Fund Description Expense Ratio Allocation VADDX Invesco EW S&P 500 0.04%* 60% - 80% FSTPX Fidelity Mid Cap Index Fund 0.06% 10% - 15% FSITX Fidelity US Bond Index Fund 0.05% 0% - 20% FXIVX Fidelity International Index Fund 0.08% 15% - 20% Pariveda 401k Example Basic Portfolio Fund Description Expense Ratio Allocation VTSAX Vanguard Total US Stock Index Fund 0.04% 60% - 80% VBTLX Vanguard Total Bond Index Fund 0.05% 0% - 20% VTIAX Vanguard Total International Index Fund 0.11% 15% - 20% Lazy Portfolio – Non Pariveda Account
  20. 20. 20 © Pariveda Solutions. Confidential & Proprietary. The Pariveda 401k is a $54,000/year bucket that you can fill with different contribution types FI HACK – THE MEGA BACKDOOR ROTH 401k http://www.madfientist.com/after-tax-contributions/ $54,000$28,000 $3,000 $5,000 $18,000 ESOP TotalAfter-Tax (Approx.) Roth / Traditional Match (3%-4%) Convert to Roth
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  22. 22. 22 © Pariveda Solutions. Confidential & Proprietary. There is more to life than accumulating money or consuming DOING WELL BY DOING GOOD: GIVING AS A SOURCE OF HAPPINESS • Experiment #2 • People who give to others are measurably happier • The more generous they are, the happier they are • Don’t save money just to hoard it The benefits to the giver and by extension the community are clear, but how best to help people be more generous? * Not the goal
  23. 23. 23 © Pariveda Solutions. Confidential & Proprietary. IF YOU FOLLOW THE FI PRINCIPALS, YOU WILL HAVE MORE MONEY THAN YOU EVER NEED FOR YOUR DESIRED LIFESTYLE AND TO LIVE GENEROUSLY FINANCIAL INDEPENDENCE AS A SOURCE FOR GENEROSITY • Generosity doesn’t increase based on income earned, it increases based on how one feels about their financial situation • The more secure or in surplus one feels, the more generous they are • Creating a “healthier relationship with money” is key • Be aware of potential pitfalls • Bring your kids along for the ride! Who wouldn’t want to be in a position of surplus and be able to help people – on your terms with your values?
  24. 24. 24 © Pariveda Solutions. Confidential & Proprietary. Today
  25. 25. 25 © Pariveda Solutions. Confidential & Proprietary. Ready for the next level? We’ve got you covered. FINANCIAL INDEPENDENCE 102 Books • The Simple Path to Wealth • The Millionaire Next Door • The Bogleheads Guide to Investing • If You Can: How Millennials Can Get Rich Slowly • Early Retirement Extreme • Your Money or Your Life • The Automatic Millionaire Blogs / Websites • http://mrmoneymustache.com/ • http://madfientist.com/ • http://jlcollinsnh.com/ • http://rootofgood.com/ • http://frugalwoods.com/ • http://gocurrycracker.com/ • http://1500days.com/ • http://financialsamurai.com/ • https://www.bogleheads.org/ • http://www.fifeeds.com/ • http://www.fierymillennials.com/ Podcasts • http://www.choosefi.com/ • http://www.madfientist.com/podcast/ • https://www.stackingbenjamins.com/ • https://radicalpersonalfinance.com/archive/ Tools • You Need a Budget • Personal Capital • CFIREsim • Networthify • FIRECalc • Money Prioritization Flowchart • Personal Capital Retirement Planner • https://reddit.com/r/financialindependence/ Curated Articles • Getting Rich: from Zero to Hero in One Blog Post • The Shockingly Simple Math Behind Early Retirement • A Millionaire is Made Ten Bucks at a Time • Stock Series (How to Invest for the Long Term) • Mega Backdoor Roth • How Much Do I Need For Retirement • Mr. Money Mustache Interview • Lazy Portfolios (BogleHeads) • Ten Pillars of Financial Independence • What is Your Retirement Number (4% Rule) • Reddit FI FAQ • How to Access Retirement Funds Early • HSA – The Ultimate Retirement Account • The Millennial Path to FI (Podcast Interview) Continue the Discussion: #financialindependence
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  27. 27. 27 © Pariveda Solutions. Confidential & Proprietary.

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