The Fastest Way to FIRE: Buy a Business or Invest in Index Funds?

Episode #462
Want to reach FIRE long before you’re sixty-five? If you make a decent income, invest diligently, and watch your spending, you STILL could fall into the “trap” most FIRE-chasers find themselves in. By making one BIG mistake, you could be accidentally forcing yourself to work for years or decades longer to finally retire, even if you’ve reached your FIRE number! What “trap” are we referring to, and how do you ensure you’ll hit FIRE on your schedule? Stick around to find out!
Today, we talk to Chris, who works in medical sales and makes an income anyone would be happy to have. He lives in a high-cost-of-living area with a million-dollar home, expensive property and state taxes, and high expenses. But he still saves a solid amount of income every month. What’s he doing with his extra cash? Investing in index funds, generously donating, and…saving to buy into a franchise?
This franchise investment could make Chris millions, but there are a few red flags that Mindy and Scott can’t ignore. With a substantial initial investment and a partnership that could be tested at any point, Chris wants to know the best place to deploy his ample capital. Does he go head-first into the franchise, stick with index funds, or build robust retirement accounts? And with a FIRE timeline of ten years or less, how does he ensure he'll have enough money to support his lifestyle?
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00:00 Intro
01:16 Money Moment
02:07 FI as Fast as Possible!
04:58 Money Snapshot
10:09 A HUGE Housing Payment
15:57 Accessing Retirement Funds Early
20:33 The Seven-Figure Franchise
39:37 The Perfect FIRE Portfolio
51:58 Final Franchise Questions
55:58 The FIRE "Trap"

[@lbslott]

I admire him for not wanting to reduce his tithe! I think he can’t go wrong.

[@JessicaT10118]

Personally, I'd throw the money in an index until I had at least 1.5 in outside of 401k in this case.. Partnerships are scary especially in the scenario of still having a mortgage, young family, lack of free cash, etc. Not worth the risk until you can afford the hit.

[@Daniel-Ray]

As a PT of almost 20 years and a manager of therapy facilities I'm telling you that there's no way those number expectations are real...and in the small chance that they are you're definitely significantly sacrificing quality of care for profits which will eventually catch up to you in either insurance denials, law suits, etc. IMO, avoid this "opportunity" at all cost!

[@kimurasquirrel]

I am a physical therapist. Yeah...thats one tough business, lots of turn around. This sounds like ATI...

[@rogerlaisiuwakk]

Would be great if you can make extract videos (5-7min) to answer just on your video title. Can’t watch the whole hour long video just to look for the answer u put as title. Thanks

[@BrianSchoedel]

Most healthcare practices are run by non physicians. Not as big of a risk but just need enough PTs.

[@jasonhaile4921]

I would have to agree. The faster he can pay off the house the faster he will get to FIRE. But trapping that much equity in the house I would focus on the wife’s income. If they could live off his income and invest/bank wife’s income. They will be perfectly fine in 5 yrs.

[@MrCleanOC]

A business partnership doesn't look like a smart move, especially at a distance.....

[@josephstephan]

Also you have to know how to bill insurance to get paid which is another business itself

[@Monkey-oy1us]

Sounds like his heart is in FTSAX. It’s what I would do too. I don’t like the involvement and the lack of control bc of reliance on partner. Who knows what can happen in life w partner. He could get married and go through terrible divorce and forced to sell…

[@fiscalandphysicalfitness8611]

Yeah the PT world is interesting right now. From my 7 years experience, there's certainly plenty of work to go around, so the sheer volume makes it potentially lucrative. Simultaneously, there aren't enough PTs to service the patients and the pipeline isn't replenishing quickly enough. So then the ones that are in the business are overworked, get burned out, and switch to a different PT setting or leave the profession altogether. If he were a PT, I'd say go for it, but like Mindy said, he can't just step in to fill a spot if they've got a shortage or if someone's sick. Index funds for the win!

[@Kornheiser10]

There is a off-smell with that franchise path, particularly when he originally mentioned more than one in the future, because he's investing and his partner isn't going to be happy with an hourly he he's doing all the hard work and dealing with the problems of a small business. In a bacon and eggs breakfast, Chris is the chicken, his partner is the pig.....

[@irenesdiary6943]

Honestly, I would not take this risk for this business. I would invest in index fund or buy a property out of state and collect rental. 😂

[@munchkinshah]

You mention $2M in stocks & $1.5M in house equity and people can’t make that work. But why not. 4% rule works there and honestly that seems like a lot…?

[@patrickdrewello4196]

Wow... 35years old... I'm in the wrong job...

[@Roninbuilt]

I just can’t. Made it only halfway, cringe.