Quit Like a Millionaire

I finish reading this book Quit Like A Millionaire by Kristy Shen and Bryce Leung. This article is to summarize some of the key learning from the book.

Career Choice

Following your passion is a bad way to pick a career. Instead, you can pick a career based on its Pay-over-Tuition (POT) score. The formula of POT score = Median Salary Above Minimum Wage/ Total Cost of Degree. A high number means money spent on tuition will have a greater effect on your income.


Debt uses the power of compound interest against you rather than for you. Credit card debt is the most dangerous category and should be paid off ASAP. Pay off credit cards with the highest interest rate first. Mortgages are the next type of debt most people encounter. If your mortgage rate is less than 4 percent, pay the minimum and invest the rest.


Spending money is addictive because your brain reset our expectations and we no longer get the same amount of dopamine with repeated spending. There are three types of spending:
– Baseline Costs: Day to day costs that you get used to, like rent or utilities. These don’t increase or decrease your happiness.
– Splurges: An occasional purchase that makes you happier.
– Unexpected Costs: Unexpected costs to fix something that’s gone wrong. These decrease your happiness.
To find a budget that works for you:
Step 1 Eliminate baseline costs that don’t make you happy.
Step 2 Eliminate baseline costs that may hurt to get rid of but that you’ll get used to living without.
Step 3 Eliminate as many unexpected costs as you can by reducing high maintenance things you own.
Step 4 Add splurges back into your life.


Housing is expensive to own. When you factor in the additional costs of buying and owning a house outside of the mortgage, it can eat up the majority of your housing gains. To get a more accurate estimate of your housing costs, use the Rule of 150: Take your monthly mortgage payment and multiply it by 150 percent. If that Rule of 150 monthly cost is higher than rent, rent. Otherwise buy.

Invest in Index Fund

Index Investing allows you to invest in all companies at once rather trying to pick out the winners. Indexes can’t crash to zero, lower fees, beat 85 percent of all actively managed mutual funds after fees.

How Long Does It Take to Retire?

Here, the authors use charts to show the math behind retirement. For those whose saving rates are around 5% – 35%, the difference between a 4% and 6% annualized return on investments could affect their retirement by up to a decade. Conversely, for the super savers (saving rates 60% and above), their performance on investment does not have much impact on retirement date. This is because their ability to save money is so powerful it overwhelms meager returns.

The Scarcity Mindset is a problem when you are no longer in poverty, it is a Hoarding Mindset which causes you to be fearful forever. The Freedom Mindset is how you flip your thinking into realizing that money can buy you time. The 4 Percent rule states that if your living expenses equal 4 percent of investment portfolio, you will be able to retire and not outlive your money with 95% certainty over thirty years.

Following the 4 Percent Rule still has a 5% chance of running out of money due to a phenomenon known as sequence-of-return risk. Your backup plan is to use the Cash Cushion and Yield Shield. Cash Cushion is a reserve fund held in a saving account that you can use to avoid full portfolio withdrawal during down years. Yield Shield is a combination of dividends and interest being paid by your ETFs that is delivered as cash without selling any assets. The Yield Shield consist of Preferred Shares, Real Estate Investment Trusts (REITs), Corporate Bonds and Dividend Stocks. The size of Cash Cushion is determined using the formula : Cash Cushion = (Annual Spending – Annual Yield) x Number of Years.

Different Buckets

To manage your portfolio in retirement, arrange your money into 3 buckets:
– Portfolio bucket: This holds the investment portfolio you are going to live on.
– Current Year Spending bucket: This holds the cash you intend to spend this year.
– Cash Cushion: This holds your reserve fund in a savings account.
At the beginning of each year, fund the Current-Year Spending bucket:
1. First, transfer the cash generated by your Yield Shield
2. If your portfolio is sitting at a gain, sell off some ETFs to make up the difference.
3. If your portfolio is sitting at a loss, make up the difference using your Cash Cushion.
4. Remember to replenish your Cash Cushion when markets have recovered.
5. Have multiple backup plans you can implement in case of an extended market downturn:
Backup plan 1: Use your Yield Shield
Backup plan 2: Use your Cash Cushion
Backup plan 3: Use geographic arbitrage to reduce living expenses
Backup plan 4: Start a side hustle
Backup plan 5: Work part time


This book helps readers to understand money which will make life easy. I will recommend you to buy it from a bookstore or through an online store.

Be the first to comment

Leave a Reply

Your email address will not be published.