The finances behind FIRE isn’t complicated:
- Spend less money than you earn
- Invest that difference
- Eliminate/avoid debt
- Avoid lifestyle inflation
Do these four things and you can reach financial freedom in about 10 years. Easy to say, not always easy to do when life gets in the way. If you’ve ever lost your job, suffered a major illness, or had your business fail then you know what I’m talking about.
But sometimes we get in our own way and make boneheaded financial moves, like selling our assets. Selling a wealth creating asset is like killing the goose that laid the golden egg. Don’t kill your goose, keep it and let it produce!
Killing The Golden Goose
I’ve sold wealth creating assets before, but these days I’m much more interested in collecting and accumulating them, not separating myself from them.
Selling an asset is like killing the goose that laid the golden eggs. Once it’s gone it can’t produce for you any longer.
A few years ago I sold about $5,000 worth of stock to pay for a family vacation to Disneyland. The vacation was amazing and we now have great family memories that will last a lifetime. I’m happy we took the trip, but killing my goose to pay for the vacation was dumb, dumb, dumb! The smarter move would have been to save up for the trip instead.
With a little foresight and planning, we easily could have saved up enough cash to pay for the trip in a relatively short amount of time. Had I done so, I’d still have my vacation memories AND my stock (which would be worth quite a bit more than $5,000 today). The more time that passes, the more expensive my vacation ends up costing me because the asset I sold to pay for the trip just keeps getting more and more valuable.
Assuming an average 7% return, my $5,000 would have doubled in about 10 years. Then doubled again in another 10 years. By the time I’m ready to retire, that $5,000 would be worth over $20,000. Ouch!
Don’t kill your goose, let it produce! Keep it alive and healthy. Buy more geese. Trade one goose for another one, but whatever you do: keep your wealth producing assets!
Chime in!
Have you ever sold a wealth-creating asset and regretted it? Have you sold one and NOT regretted it? Let me know!
7 replies on “Selling a Wealth Producing Asset is Like Killing the Golden Goose”
It’s so easy to be short-sighted and not protect your assets that produce! We thought hard about selling one of our investment properties until we realized that when it’s paid off, it could pay our health care bills down the road. If we sold it, we could pay off some mortgage debt now – but that wouldn’t help continually generate income down the road. It’s important to think long-term – and it’s easier said than done sometimes!
The man is back! Great to see this post Ty, I hope you have more to come, and before 2018! Ha, I kid. This is such a great way to look at money invested. I have a similar post coming out shortly, which examines the future value of money saved through frugality. If only we could always think long term about these things! : )
Thanks man! I’m actually pretty decent (these days) at thinking long term. My problem is succumbing to moments of weakness and completely blowing up previous hard work (that’s a hint re: my next post). Thanks for stopping by!
I haven’t sold a goose. My problem is that I took a long, long time to procure any geese. I wasn’t really in the goose buying business until 2016, and that was really, really dumb. These days I’m snatching up geese as fast I as can.
Hey Ty,
Great post! Unfortunately, I have experienced the feeling of selling a golden goose :(. I sold some assets during my year off and am regretting that I did. Though I enjoyed the year off and created memories that will last forever, I still wish I planned better. Thanks for the reminder! Hope you’re having a great weekend!
100% agree with this line of thinking. Income producing assets giving you passive income are what I consider the holy grail. By selling off a portion, I reduce the passive income and significantly have impacted my path to FIRE.
As you mentioned, the best thing to do is save up for a planned event.
Making Money Is Counter Intuitive……. the more we touch our money, the less it grows.