Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required


Title: Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required
Authors: Kristy Shen, Bryce Leung
Edition: 1
Finished Date:
Rating: 5
Language: English
Genres: Finance, Financial Independence
Level: Entry
Publishers: TarcherPerigee
Publication Date: 2019-07-09
ISBN: 978-0525538691
Format: ePub
Pages: 336
Download: ePub


我的系统主要关注dividend yield. 我们没法控制股票价格, 但是能局部控制分红率.

因此, 我想每年有1万美元分红, 10% yield, 那么我需要有10万美元去买.

他们总用6%每年的赚钱来计算, 我总觉得没法实现6%.

POT = median one year-earning / total tuition fee

The higher the ratio is , the better the return is.

Follow the money first, and you can do what you love later.

不要想过去犯的错误, 专注现在可以改变的事情.

The more stuff people owned, the unhappier and more stressed they tended to be. Conversely, the less stuff people owned and the more they spent on experiences like travel or learning new skills, the happier and more content they were.

Let’s look at someone who spends money on experiences. Since every experience is different, your happiness spikes each time. Not only that, once the experience is over, you don’t own anything, and as a result you don’t need to protect it. So, you don’t get that conversion of splurge–to–unexpected cost spending.

3 types of spending

name explain effects
baseline cost day-to-day costs, e.g., rent, utilities don’t increase or decrease happiness
splurges an occasional purchase increase happiness
unexpected costs fix something that is gone wrong decrease happiness

Step 1: elimiate baseline costs that don’t make you happy.

  • bank fees
  • subscriptions to things you no longer use
  • cable packages for channels you don’t watch
  • landline

Step 2: eliminate baseline costs that hurt but you’ll get used to

  • jogging to work
  • cooking at home
  • biking to work
  • buying used things

Once nucleus accumbens kicks in, happiness level will return to baseline.

Step 3: reduce the expensive things you own that cost your money.

  • car
  • home

Step 4: add splurges back into your life.

Rule of 150: a more accurate estimate of housing costs

“Since the extra ownership costs are approximately equal to the interest of a typical mortgage over nine years, and the interest is approximately 50 percent of your mortgage payment during that time, you have to multiply your monthly mortgage payment by 150 percent. This is how much your house will actually cost per month, once all expenses are factored in. If that Rule of 150 monthly cost is higher than your rent, then it makes sense to rent. If it’s lower, then it makes sense to buy. ”

Excerpt From: Kristy Shen;Bryce Leung;. “Quit Like a Millionaire.” Apple Books.

  • monthly mortgate payment * 150 > rent: rent
  • otherwise: buy

Rich dad poor dad: Poor people buy stuff. The middle class buys houses. Rich people buy investments.

buying bonds + stocks

x is a percentage

  • $1-x$ bonds
  • $x$ stocks
    • 50% $x$ US
    • 50% $x$ rest of world

rebalance portfolio percentage: sell the percentage that is high.

retirement plan

Loophole Alert #1: Double-Contributing to Your Retirement Accounts

Depending on how your company is structured, it may be possible to qualify for two employer-sponsore “qualify for two employer-sponsored retirement accounts. For example, if your employer is both a nonprofit and is paid by state funds, you could qualify for both a 403(b) and a 457. Hospitals tend to be both; universities, too. Government contractors, including lawyers, architects, and defense workers, can also double-qualify, depending on how their businesses are structured. Amazingly, the contribution limits stack up, meaning you’d be able to tax-defer $\$$ 19,000 in the 403(b) and $\$$19,000 in the 457, for a total $\$$38,000 deduction! And if you’re fifty or above, the extra $\$$6,000 you can contribute also stacks up, for a total of $\$$50,000!

If you suspect you may be eligible, go to your HR department and ask point-blank whether you qualify to open up another retirement account.

Loophole Alert #2: Back-Door Roth IRA for people who make too much money

Open up a traditional IRA account.
Contribute the maximum ($\$$6,000 in 2019) as a nondeductible contribution.
Ask your financial institution to convert the entire account over to your Roth IRA.

tax rate for stock dividends: How rich people legally avoid taxes

if you were to stop working, your employment income would drop to $\$$0. And if you were to structure your portfolio such that it earned money as dividends and capital gains, you could end up never paying taxes again.

After you retire early, you can access the money in your 401(k) without paying a penalty by building a five-year Roth IRA conversion ladder.

  1. consolidate all your 401(k) accounts into a traditional IRA.
  2. perform a Roth IRA conversion equal to your standard deduction.
    Keep doing this every year
  3. After five years, you’ll be able to access the first converted amount penalty-free.

Capital gains harvesting can be used to eliminate capital gains taxes.

Every year, realize as many capital gains as you can inside your 0 percent tax bracket by selling some ETF units.
Shortly thereafter, rebuy those units back to reset your cost basis.”

How long does it take to retire?


The 4 Percent Rule states that if your living expenses equal 4 percent of your investment portfolio, you will be able to retire and not outlive your money with 95 percent certainty over thirty years.

save的比例越高, 不同的return的回报率给出相近的可退休的年限

The Scarcity Mind-set becomes a problem when you’re no longer in poverty. Now it’s a Hoarding Mind-set, which causes you to be needlessly fearful forever.

2-part system: the Cash Cushion and the Yield Shield

  • the Cash Cusion: cash stored in a high-interest savings account

    When a stock market downturn, the cash can be used as a cushion

    the median length for a stock market to recover from big crash is 2 years.

    5 year cash cusion for a crash in the Depression

    Example: retire with living expenses of $\$$40,000 a year, $\$$40,000*5=$\$$200,000

  • the Yield Shield: Every ETF has a yield

The yield of most ETFs is constant when the market crashes. The yield is based on the purchase price. It does not depend on the daily fluctuation.


1,000,000 portfolio has 3.5% yield = $\$$35,000 

Cash Cusion = (Annual Spending - Annual Yield) * number of years

若每年支出$\$$24,000, 那么需要的退休金额是$\$$24,00025=$\$$600,000

我希望能建立每年10% yield的portfolio. Annual Yield = 60,000

Cash Cushion = (24,000 - 60,000)
number of years < 0.

意思是, 我根本就不需要建立Cash Cushion.

这就是passive income


Asset Type Allocation Yield
Bonds 40% 3%
Canadian Index 20% 2.5%
US Index 20% 1.75%
EAFE Index 20% 2.5%

Annual spending = $\$$40,000

a portfolio size = $\$$1,000,000 (4% Percent Rule)

Cash Cushion = ($\$$40,000 - $\$$1,000,000 2.5%) 5 = $\$$75,000

ETF investing in the preferred share index

Name Country Ticker
iShares S & P/TSX North American Preferred Stock index Canada XPF
iShares US Preferred Stock USA PFF
PowerShares Preferred Portfolio USA PGX

REIT etf

Name Country Ticker
iShares S & P/TSX Capped REIT index Canada XRE

Government bond etf
Corporate bond etf

Name Country Ticker
Vangaurd Total Corporate Bond USA VTC

Dividend stocks

Name Country Ticker
Vanguard High Dividend Yield USA VYM
iShares Canadian Select Dividend Canada XDV
iShares International select Dividend International IDV


  • airbnb
  • travel insurance: World Nomands
    • credit card benfits include international medical insurance
    • or buy travel insurance separately

the Bucket System

Name Accounts Meaning
the Portfolio bucket tax-deferred retirement account (traditional IRA, 401(k), or RRSP), tax-sheltered (Roth IRA, TFSA) low-cost ETFs
the Year Spending money planning on spending that year
the Cash Cushion 5-year reserve

Every Jan. 1

  1. gather all cash generated in the protfolio over the previous year in the Yield Shield
  2. consolidate in the investment account(s)
  3. If the Portfolio Shield cannot cover the Current-Year Spending

    • If overall portfolio has gone up in value, take the ETFs that have risen the most and sell enough units to cover the difference

    • If overall portolio crashed, use the Cash Cusion

      Once the recovery happens, replenish the Cash Cushion.

things concered


the 4 Percent Rule should be applied every year.


  • Homeowner’s insurance: no home, no need to buy insurance
  • Car insurance: no car, no need to have insurance

    • rent a car
  • Life insurance: If you retire early, you don’t need life insurance.

    The portfolio can support you when you live. The same portfolio can support the family when you are dead.

    Life Insurance Benefit = How much you need - How Much You Have


    • current living expenses = $\$$40,000
    • money required to retire = $\$$40,000 * 25 = $\$$1,000,000 (the 4 Percent Rule)
    • currently have = $\$$100,000

      the life insurance benefit needed to buy = $\$$1,000,000 - $\$$100,000 = $\$$900,000

      The only thing needed is term life insurance - a policy bought for a specific amount of time

      Term life insurance is the cheapest type of life insurance because the insurance company is calculating the odds of your dying within the term of the policy, which are typically low.

  • Health care

    • Obamacare (ACA: the first and best line of defense against rising health care costs in retirement

      Obamacare ties the amount you pay for insurance to your income.

      The less you make, the less you pay.

      Every year the federal government publishes a number it determines as the federal poverty levl (FPL).

      Based on your income as a percentage of the FPL, you may qualify for a federal subsidy that helps pay for part or all of your health insurance premium.

      While working, you likely don’t qualify for assistance since your income is too high or your employer already offers health insurance benefits, but after you retire, your employment income drops to zero. And because of that, you may be surprised to see your health care costs shrink to almost nothing!

      Note that the ACA determines your subsidy based on your MAGI (modified adjusted gross income), which includes Roth IRA conversions, qualified dividends, and harvested long-term capital gains. To order to qualify for ACA subsidies, pay special attention to avoid exceeding 400 percent of the FPL while combining the strategies mentioned earlier to minimize taxes.

    • move to a different state

      Obamacare-related subsidies would take care of people from 138 percent to 400 percent of the FPL, while Medicaid would take care of the 0 percent to 137 percent range.

      Some states chose not to expand Medicaid, which created a very dangerous situation known as the “Medicaid gap.” In states where Medicaid was not expanded, it’s possible for your income to be too high for Medicaid but too low for Obamacare subsidies to kick in, leaving you to pay the whole premium yourself. Out of fifty states (plus the District of Columbia), thirty-three have expanded Medicaid while eighteen haven’t. Check your state’s Medicaid site to see which type of state you’re in. If you live in the latter, I would recommend moving to one that did expand Medicaid.

  • high-deductible catastrophic care plans: high-deductible health plan (HDHP)

    • Coverage only for catastrophic emergencies with a high coverage limit ($\$$500,000–$\$$1,000,000)
    • A defined maximum out-of-pocket expense limit ($\$$10,000–$\$$20,000)
    • A high deductible
    • Compatibility with a Health Savings Account (or HSA)

    • An HSA is a type of investment account that’s used for health expenses. Unlike a 401(k), it’s not tied to your employer, so you can open one at any bank or brokerage account. Here’s how an HSA works (as of 2019):

      • To be eligible, your health insurance plan must have a deductible of at least $1,350, or $2,700 for a family.
      • You can contribute up to $3,500 per year, or $7,000 for a family.
      • Your contributions are pretax, similar to a 401(k) or a traditional IRA, meaning that you will get a tax deduction.
      • Investment growth is tax-free.
      • You can withdraw your money tax-free for qualified medical expenses.

        An HSA combines the best of the 401(k) and the Roth IRA, in that it allows tax-deductible contributions, tax-free growth, and tax-free withdrawals, but not only for medical expenses.

  • expat insurance: for people who leave their home country and aren’t eligible for their new country’s health care system

    Because health care costs differ by country, there are two geographical zones when it comes to expat insurance coverage: the USA, and everywhere else.

Here’s a snippet from the policy I have:

As part of that commitment, our company offers a Medical Concierge program, an unparalleled service that saves you on out-of-pocket medical expenses. We also offer a cash incentive and to waive 50% of your deductible for choosing to receive treatment from some of the best medical facilities outside the U.S.” (emphasis added).

That’s right. This insurance company will pay you to receive treatment outside the United States.

3 types of millionaires

3 types of money

  1. income: money coming in
  2. expense: money going out
  3. investments: money generated from money

3 types of money => 3 types of millionaires => every finance book can be classified as one of three types.

1. the Hustler: from their ability to earn money

Income Exceptional
Savings Average
Investments Average

entrepreneurial activities

Even with enough money not to work forever, they will still risk everything for the next thrill.

2. the investor

Income Average
Savings Average
Investments Exceptional

3. the optimizer

Income Average
Savings Exceptional
Investments Average

Optimizers make their fortune by obsessively controlling their spending. Optimizers tend to have regular jobs, making decent but not insane salaries, and for the most part lead normal lives.
What’s abnormal is how much time and effort they spend on tracking and accounting for every penny they spend.

The most common type of millionaire, by far, is the Optimizer. This is because unlike the other approaches, the Optimizer’s is mathematically reproducible.

Hustlers and Investors have to discover their own unique path to riches that nobody else has taken—and once they do, it’ll never be an option in exactly that same way again.

  • S: saving rate
  • M: monthly earning
  • r: annual earning rate

25 * spending = portfolio (4 Percent rule)

25 (1-s)M = SM$\frac{1-(1+r)^N}{1-(1+r)}$

25(1-s) = s $\frac{(1+r)^N-1}{r}$

$\frac{25(1-s)r}{s}$ + 1 = $(1+r)^N$

N log(1+r) = log$\frac{25(1-s)r}{s}$ + 1

N = $\frac{log[\frac{25(1-s)r}{s}+1]}{log(1+r)}$

N is a function of 2 variables

  • the savings rate, S
  • the portfolio’s annualized rate of return, r
r <- seq(0.1, 1, by = 0.1)
s <- seq(0.1, 1, by = 0.1)

nyear <- function(r,s) {

nMatrix <- matrix(NA, nrow = length(r), ncol = length(s))
rownames(nMatrix) <- r
colnames(nMatrix) <- s
for(i in 1:length(r)) {
for (j in 1:length(s)) {
nMatrix[i, j] <- nyear(r[i], s[j])


plot(r, nMatrix[,3], xlab = "Annual earning rate", ylab="Year")

save 30% of income

    0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
0.1 33 25 20 16 13 10 8 5 3 0
0.2 21 17 14 12 10 8 6 4 2 0
0.3 16 13 11 10 8 7 5 4 2 0
0.4 13 11 9 8 7 6 5 4 2 0
0.5 12 10 8 7 6 6 5 3 2 0
0.6 10 9 8 7 6 5 4 3 2 0
0.7 10 8 7 6 5 5 4 3 2 0
0.8 9 7 7 6 5 5 4 3 2 0
0.9 8 7 6 6 5 4 4 3 2 0
1 8 7 6 5 5 4 4 3 2 0