Here’s a huge life hack for you: font-load your effort and life will become easy.
Do you know why successful people seem to be cruising through life and become more successful with time? I guarantee you they front-loaded the hard work early on to get to where they are.
I’m a big believer that you should put in as much effort as you can as early as possible for three reasons:
- Physical aging (our bodies slow down)
- Increased responsibilities (aging parents and raising a family)
- More time to allow our efforts to compound into exponential results
It takes a lot of effort to get rich, but it’s infinitely easier to stay rich. Likewise, it takes a lot of effort to get in shape, but it’s infinitely easier to stay in shape.
The front-loading hack is all about working hard today so you don’t have to tomorrow.
In this post, I want to share some ideas and strategies to front-load your effort in key aspects of your life.
Yes, front-loading requires sacrifice, but the rewards down the road are definitely worth it.
Front-Load Your Wealth To Achieve Financial Freedom Faster
The idea here is simple: front-load your investments as early as possible and take advantage of the power of time and compound interest.
Over time your investment portfolio will provide a huge tailwind for your progress towards financial freedom and your ideal early retirement life.
Tame Lifestyle Inflation
When do you think it’s easiest to live like a broke college student? When you were just recently one!
Lifestyle inflation is easiest to control when you are young and your expectations are the lowest they will ever be. Remember sharing a dorm with 3 roommates and living off leftover pizza?
Lifestyle inflation is a one-way street. It’s easy to inflate your lifestyle, but painful to go back down.
Most HENRYs living in HCOL areas quickly adapt to their high incomes. What was once a luxury over time becomes a necessity as they adapt to having certain things and living a certain lifestyle. Being intentional about spending early on when you don’t have a lot of money will teach you perspective and skills to live well spending less, even as you become wealthier.
As you get older, you will naturally lose the desire to find creative ways to save money especially once you have a family. It’s natural to improve your standard of living as you make more money, but do it sustainably. Tame lifestyle inflation while you’re young with no expectations!
Let Compound Interest Earn You Millions
One of the most powerful tools in personal finance is compound interest.
The earlier you begin investing, the more time will supercharge your progress toward financial freedom. With enough time your investment portfolio will grow to astronomical amounts.
“Compound interest is the eighth wonder of the world.”
Albert Einstein
The Magic Penny
If you had a magic penny that doubled itself every day for 30 days, how much money do you think you would have at the end of the month?
Over $5 million dollars.
A Penny Doubling Over 30 Days – Incredible!
While there is no magic penny in real life, understanding the concept of compound interest and the importance of investing early is priceless and will earn you millions over the course of an investing lifetime.
I noticed that once your portfolio hits around $300,000, you really start feeling the momentum of your efforts.
A $300,000 portfolio does not make you rich, but it does give you a sense of hope and motivates you to continue aggressively investing because you can see a clear path to financial freedom as your portfolio begins to experience compounding growth due to your past efforts.
For example, with a $300,000 portfolio, an 8% return will provide you with $24,000 in growth, more than your current maximum 401K contribution.
When you combine aggressive saving and the power of compounding, your portfolio will quickly reach $400,000, then $500,000, and $1 million+ won’t be very far down the road.
The time it takes for your investments to grow from $500,000 to $1 million will be a fraction of the time it takes to get from $0 to $500,000.
Can you imagine what happens after hitting a $1 million portfolio?
Rule of 72
A simple trick to calculate how long it takes to double your initial investment is using the Rule of 72.
Divide 72 by the expected annual rate of return on your investment and the answer is roughly the number of years it takes to double your money.
In the previous example, assuming 8% annual returns it will take roughly 9 years (72 / 8 = 9) to double your $300,000 investment to $600,000.
Likewise, it also takes the same 9 years to double a $1 million investment to $2 million and $100 million to $200 million!
Some food for thought…
- Note: this doesn’t take into account any additional contributions to your initial investment over that 9-year period which can only speed up the timeline to double your money.
Lump-sum Investing Vs. Dollar Cost Averaging
The S&P 500 has on average risen over 10% annually since 1957. While that ride hasn’t been smooth, the stock market goes up a majority of the time. This is why time in the market beats timing the market.
Investing earlier in time is always better than later since you capture more days on average for the market to move higher.
Source: Google Finance
If I gave you $1 million to invest all at once in 1983 (lump-sum investing) or spread out the investments by putting in $25k a year over a 40-year period (dollar-cost averaging), which would you choose? It’s obvious, you would be far richer if you had invested all your money in 1983!
- Note: dollar-cost averaging in this case assumes you already have the money to invest and choose to spread it out over a period of time. If you are investing a portion of your paycheck every month, that is still lump-sum investing because you are choosing to invest all the money at once.
- Investing periodically over time in the stock market should really be called “lump-sum dollar-cost averaging” (which is a great investment strategy!) but is often shortened to just “dollar-cost averaging” by mainstream finance media. Now you know the difference.
Understanding this, we should maximize our investments as early in the year as possible, including 401K contributions (and earn a free company match!), and allow time in the market to supercharge our savings.
Front-Load Your Health To Enjoy Decades To Come
By front-loading the effort to improve your health early on, it’s much easier to build the foundation for a healthy lifestyle. Health is your most important asset and you need it to maximize your enjoyment of life.
With great health, not only will you improve your quality of life forever but you will also become richer by being able to work longer and harder while saving hundreds of thousands in medical bills.
Don’t fall into the trap of thinking you will be as energetic, strong, and sharp when you’re in your 20s and 30s as you will be in your 40s and 50s. You will never be as healthy as you are today.
In your 20s and less so in your 30s, your body can handle immense amounts of pain and suffering. This is why you are able to get away with injuries, poor diet, and lack of sleep. Try doing the same in your 40s and beyond and you will be in a world of pain.
If you are still in your 20s or early 30s, you should use your body’s extreme durability to push hard and front-load your effort since your energy tank refills so quickly there is no such thing as “overtraining.” Down the road when you get older you will have built the physical foundation to slow down the inevitable decline and reap the rewards for the rest of your life.
Stay Strong
Sarcopenia is the loss of muscle and strength when you get older.
These losses begin as early as your 30s and speed up over time, but you can combat this decline early on with strength training. Without strength training, you can lose up to 30% of your muscle mass between ages 50 and 70.
Believe it or not, strength training actually benefits the elderly the most. After 70 years old, the rate of muscle loss accelerates (health does not change linearly) and the elderly have a significantly increased risk for osteoporosis, falls, and injuries… ouch.
The Power Of Muscle Memory
Although it’s unrealistic to expect your body to stay in its prime forever, you can absolutely mitigate the decline. Research shows that strength training can improve anyone’s muscle mass and strength at any age.
However, after a certain age, those who didn’t start early will have a more difficult time fighting the decline, as your body’s limits will be capped based on its peak condition in the past. Let me explain.
Muscle memory is your body’s ability to regain muscle mass and strength from previously trained muscles, at a much quicker rate than the first time. Your body remembers this previous training experience throughout your life, making it easier to sustain higher levels of fitness even as you age. This applies not only to physical strength but mental strength as well since you can raise your Maximum Stress Tolerance in the same way you train your physical body.
Professional athletes (i.e. basketball players, football players, and bodybuilders) are great examples. After a severe injury, they can build back their strength, speed, and endurance in just a few months whereas it might have taken them years or decades to do it the first time.
They are also able to maintain a portion of their athletic abilities for the rest of their life through the training they did in the past. Look at Arnold Schwarzenegger, how many people do you know at his age that have a similar physique with no physical limitations?
You do not have to be a professional athlete or even a fitness enthusiast to benefit from your body’s incredible natural abilities. The bottom line is to start early, build your body to its peak condition while you still can, slow down the decline as you age, and maintain a free and mobile lifestyle when you’re old.
It’s never too late to start strength training, but it’s best to start today. Your body will remember the workouts you did in the past.
Front-Load Your Earnings To Make Life Easy Down The Road
The best time to push yourself to make money is when you’re young, energetic, and have little to no responsibilities.
This is the best time to break into a high-paying career, start a side business, and leverage your energy and hustle to build your investment nest egg.
Putting in the effort early on will allow you to gain some momentum and shift your focus to maintaining that pace for as long as possible before your energy inevitably begins to decline.
You know it will be much harder to maintain a money-making, hustle mindset once you become older, more comfortable, and have responsibilities like raising a family. Why not take advantage while you can?
Leverage your energy while young and front-load your earnings. Life will be much easier down the road!
Best Time To Plant Your Seed Is Now
In life, it’s always easier to do the hard things now and enjoy the benefits of an easier tomorrow.
“The best time to plant a tree was 20 years ago, the second-best time is now.”
Confucius
While it’s best to start hitting your optimal saving rate in your 20s, even if you are in your 30s and feel financially behind, it’s still better to start investing today than in your 40s and 50s. Use your money system to put your financial progress on autopilot.
Similarly, while it’s best to start working out and eating a healthy diet as a teenager, even if you are in your 30s and not satisfied with your physical health, it’s still better to start building a healthy lifestyle today than in your 40s and 50s. Don’t forget that the healthier you are the wealthier you are.
Now that you know this life hack, how will you take advantage of front-loading effort in your life?