Written by: Route 2 FI

Compiled by: Luffy, Foresight News

If you have life-changing unrealized profits, take this from me: You need to sell them. This isn’t just advice, it’s a lesson I learned the hard way. Early in my career, I was hesitant to take profits, and I regretted every moment of hesitation. Nominal wealth may change over the course of our trading journey, but the fundamentals remain the same.

One thing I’ve come to understand is that by selling at a life-changing price, you gain a benefit that cannot be measured in monetary terms: a permanent improvement in your life and the lives of those around you. Imagine being able to click “sell” and instantly improve your life situation. It’s amazing! If you have the opportunity to do so, I highly recommend you take it.

I know how tempting it is to wait for the perfect time to sell: believing that if you just hold on a little longer, you'll get more profit. But the truth is: perfect timing is an illusion. The most successful traders I know didn't get to where they are today by timing every peak perfectly; they got there by being consistently profitable and maintaining liquidity. They understood early on that selling for cash is necessary to survive in this game.

One of the most positive things I've learned is that there will always be opportunities. This mindset helps alleviate the fear of missing out that traders often feel when they're considering selling. Yes, it may feel bad to walk away from a well-performing position, but remember: holding on to it out of FOMO will cost you more in the long run.

I often think about what it means to reach “escape velocity”: the point at which your financial situation allows you to take calculated risks without jeopardizing the stability of your life. Once you reach that level, that’s when you can really start playing the game and go all in.

How much money is enough for retirement?

As someone who has been thinking about retirement, I often wonder: How much money is enough? While the media often touts that it requires an astronomical amount, I believe that for many of us, $1 million to $2 million may be the sweet spot. Here are the reasons why, let’s first look at this question from TradFi’s perspective.

In 2022, the average retirement account balance for someone 65 or older is just $232,710. So suddenly having $1-2 million isn't a lot, is it? In fact, only about 3.2% of retirees have more than $1 million saved.

OK, I get it, it’s unlikely that you’re reading this and you’re over 65, and you want to retire before 65. When I first heard that Americans think they need $1.46 million to retire comfortably, I was shocked. But then I realized something crucial: That number is an average. Everyone’s needs may be very different.

Let's consider the 4% rule, a common retirement planning guideline. With $2 million saved, you can withdraw $80,000 per year. For many people, that's enough to live comfortably. Your retirement needs will largely depend on the lifestyle you want. Do you plan to travel the world, or settle for simpler pleasures? The Bureau of Labor Statistics reports that the average annual spending for people 65 and older in 2021 is $52,141. $1-2 million in savings could easily cover that expense.

Where you choose to live in retirement can have a huge impact on how you use your wealth. A $1 million retirement fund might feel tight in New York City, but could provide a luxurious lifestyle in a small town or abroad.

Psychological factors

Knowing you have $1-2 million saved can relieve a lot of financial stress and allow you to truly enjoy your retirement.

Ultimately, whether $1-2 million is enough to retire depends on your personal situation. For many of us, it's more than just enough money, it's more than we ever dreamed of. The key is to start saving early, live within your means, and focus on the things that truly bring joy to your life. Remember, retirement isn't just about money, it's about creating a life you love, with or without millions in the bank.

I understand what Fiskantes said above. Once you already have life changing money in the bank or invested in property etc you can easily participate in the market.

What do I mean by easy? Well, I don't mean it's easier to make money, I mean your mindset is more relaxed. You can calmly make better decisions and just let the trades come to you. And even if you lose, at least you won't lose everything because you're covered.

As Fiskantes said, “This is where the real fun begins.” In that sense, this cycle is more fun for me. If everything goes to zero, then at least I have a safe place to fall back on. That being said, some people work better when they are under more pressure, but I don’t think that’s the case for most people.