Thread by @BrianFeroldi

1/ From mountains of debt to financial freedom in 21 years

A 🧵 about a normal guy named Lennie ⬇️

2/ The Motley Fool has a thriving discussion board that has been filled with wisdom over the last 20+ years

I recently came across a post by a Canadian named Lennie and was inspired to share

3/ In 1998, Lennie was 27 years-old

He and his wife "felt trapped" by student loan debt that consumed 30% of their income

They had "no visible path to financial health. Our finances were maxed out."

They could afford the basics, but nothing else

4/ With their back against the wall, they "took a big swing"

They quit their jobs and took a position in Saudi Arabia

A big, risky move, but the upside was no taxes, no rent, and no utility bills

They went for it

5/ With their expenses cut to the bone, they got to work

Within a year they paid off all of their student loan debt

6/ After that, they had some money to save & invest

Lennie got interested in the stock market

This was December 1999, near the peak of the dot-com craze

7/ Lennie didn't know much about investing

He bought popular hype stocks of the day like JDS Uniphase, Nortel, and Infosys

He used margin to "supercharge my gains"

In 3 months, he had $50,000 and felt like a genius

"I was the poster boy for the Dunning-Kruger effect"

8/ 1 month later was the stock market peak

All the high-flyers started to crash

Lennie got a margin call that "essentially wiped me out"

He sold in April with just $2,000 left

A $48,000 loss -- 96% of his stock market wealth -- in just 6 weeks!

(why I avoid margin)

9/ Lennie swore off the stock market

Extra money was used to save for a down payment and to build his wife's online business

In 2003, they moved back to Canada with no loans and a house down payment

"We were definitely not rich, but our finances were secure"

10/ The new plan was to work for 30 years, pay off the mortgage, save for college (they had 2 kids), and collect a pension in 2035 at age 65

"The path was long and boring, but at least it was navigable."

11/ In 2004, Lennie got over his fear of individual stocks and subscribed to @TMFStockAdvisor

He contributed money every 2 weeks to an RRSP (Canadian IRA), investing ~$5,000/year

He slowly built a portfolio of ~80 stocks, avoided margin, added to his winners, and sold rarely

12/ After 14 years of consistency, at age 48, Lennie was able to retire

"Considering where we stood in 1998, this seems nothing short of a financial miracle, but it’s not. It’s predictable and reproducible."

Here are Lennie's top5⃣lessons

13/1⃣Be Frugal

"You need to pay off debt and spend less than you make"

Lennie & his wife averaged just $52k/year from 2003-2018

"The only way that we could save to invest was to live frugally"

14/ 2⃣Be Patient

"Compounding really is the 8th wonder of the world, especially when you’re beating the market over a very long period of time,

but the first decade or so is not all that impressive."

15/ 3⃣Rarely sell

"Every one of my biggest mistakes over the last decade is related to selling"

Lennie sold $BKNG at $100 (now $2,350)

I've made tons of selling mistakes myself!

15/4⃣Invest with a long-term mindset

"steer your mind away from all short-term price changes.

Many stocks you own will do poorly – it’s unavoidable.

But the multi-baggers will carry the day."

16/5⃣Don’t be afraid to take big swings on stocks (and in life)

Taking the job in the Middle East was a "big swing" that paid off

"Similarly, our greatest stock returns have come from the big swings taken on the little rule breakers"

17/ You don't have to buy individual stocks if you don't want to

You can do great financially through regular savings & index funds

18/ Stock picking can be fun & financially rewarding

but make sure you get your financial house in order first

https://twitter.com/BrianFeroldi/status/1337050556628656129?s=20

19/ Thanks for sharing, Lennie!

If you like these financial graphics, I email them daily for free

brianferoldi.substack.com