That is the very situation that my wife and I are facing. She wants to quit the corporate world at some point but we were never if we could give up her wage. Having made the transition to frugal living has shown us that not only could we live on my wage (free lance English teacher) but if she worked partime we could save a good chunk of that as well. It’s given her a new sense of enthusiasm for work knowing that in a few years she’ll be able to chuck the corporate world for a part time job, something we could have never of conceived before. Thank you Trent (and all you other bloggers)

Controlling spending until you have a considerable excess of income is probably the most important lesson anyone can learn about finances. Live within or below your means.

Trent’s and Gayle’s point about educating oneself (for at least several months) before launching into stockpicking is absolutely key.

But with regard to frugality, I think people focus too much on the latte factor (consumables) and not enough on curbing spending on the big ticket items like cars, insurance, vacations, “it” bags, electronics.

I mean, maybe an individual super-talented stock picker might, but it’s hard to imagine. Even mutual fund managers don’t get those kind of results.

I have seen many people in their early 20s earning good amount of money ..but are not frugal & not investing either.

another important point : Its important to Invest regularly instead of just Saving

Why would you treat time expenditure on frugality and investment as an either/or situation? Why not do both?

What if Joe spends 10 hours a week (as opposed to 15 hours a week in your example, excluding weekends) on groundwork for his investments, and an hour a week on frugality exercises. How would you compute the returns on such an investment?

Great point Trent!!!

Trent’s thought may not logically project out into infinity, but I think his point is clear. If we get stuck in the minutia, then, as so often is the case — we miss the point.

Breathe.

So, when you aren’t quite rich yet, the quickest way to increase your total is to increase your contributions, not trying to squeeze an extra percent or two.

I also see what Trent is getting at: that all else is unlikely to be equal five years down the road. For example, if you instead spend some of that three hours a day for five years on self development, you may have a whole other story.

This is why it’s good to review your choices every year. If your situation changes, you can adjust your strategy.

If you start looking beyond that, you’re no longer talking about that scenario (a beginning investor) at all – you’re starting to look at investing with a decent bankroll. At that point, investment choices do begin to make a difference, but that’s not who we’re talking about here.

Getting the money in there where it can start earning a return matters more than minor (or even major) improvements in timing or return.

I was working with the premise Trent set up. With a more realistic set of circumstances (say 10% vs. 12%) Trent’s point would have made more sense, but he chose to use 18% and then he selected a five-year window because after that his conclusion falls apart. He was making a point by picking a specific bit of data while ignoring the data that would counter the conclusion he was after.