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The Importance of Financial Independence for You, AND Those You Work With

In light of the upcoming 4th of July weekend, Tim and Jake walk through the importance of independence, whether that’s regarding the firm you choose to work with or the financial freedoms we all hope to find as investors.


  1. Equity Markets – were mixed this week with U.S. stocks (S&P 500) up 1.67% while international equities (EAFE) fell -0.78%
  2. Fixed Income Markets – were up this week with investment grade bonds (AGG) up 0.58% and high yield bonds (JNK) gaining 0.47%
  3. Recovery Continues – The American economy registered its strongest month of job growth in 10 months with an estimated 850,000 jobs added in June. Labor shortages in certain sectors continue to dampen capacity production, with total nonfarm payrolls still 6.8 million (4.4%) lower than its pre-pandemic level. As a result, average hourly earnings rose 0.3% as companies looked to incentivize workers to come back.
  4. Countries Mixed on Crypto – The U.K. took one of the most significant regulatory steps on the cryptocurrency space after announcing that Binance Markets Ltd. (an affiliate of the largest global crypto exchange Binance) must remove all of its advertising and financial promotions, and must also make clear on their website and social media channels that they are no longer permitted to operate in the U.K. Meanwhile across the pond Mexican Billionaire Ricardo Salinas endorsed the use of Bitcoin and said the nation’s banks are on their way to accepting it.
  5. Key Insight – [VIDEO] In light of the upcoming 4th of July weekend, Tim and Jake walk through the importance of independence, whether that’s regarding the firm you choose to work with or the financial freedoms we all hope to find as investors. [ARTICLE] Ben Klundt discusses the 5 Key Controllable Aspects of One’s Financial Life that can help you find not only financial independence but peace of mind from being liberated from worrying about those things you can’t control.


Intro by Tim Mitrovich

I am excited for you to read the great piece by Ben below, and my hope is you don’t let the simple 5 step list cause you to overlook the importance (and complexity) of truly accepting and implementing what is within your control.

Jordon Peterson said it best when he commented on how people frequently engage in discounting the risks of the familiar. That because you’ve factored in the risks already, they’ve become invisible – BUT they are still present. He stated, “There are risks to all choices, there are no secure paths forward. It’s risk everywhere. Except for two things 1) you get to pick your risk and 2) you are a lot tougher than you think. So even though there’s risk everywhere if you confront it forthrightly what you’ll find is that you can actually handle the risk. And that’s the security.”

Acknowledge the reality of things, embrace uncertainty and as Ben walks you through below only focus on trying to control those things within your control.

The Spiral of “What If’s?!” – by Ben Klundt

There is always something to hold us back: someone telling us NOT to do it, there’s too much risk involved, we can’t control the outcome enough, what if we fail?! The game of “what if’s” can turn into a death spiral if we let it. Learning to control the controllable and ditch the game of “what if’s” will help put you on a path to realizing a happy and successful life.

There’s something at Ten Capital we have mentioned before: the same portion of the brain that lights up when one is in mortal danger also lights up when we lose money. Tim and Jake have both said it: “Running from a bear market is just like running from a bear to your brain!”

I want to highlight some of the areas we as investors can control to a meaningful degree and in so doing help rid ourselves of worrying about the areas we can’t control.

What Investors CAN’T Control

But first, let’s tackle the biggest thing we CAN’T control: MARKET RETURNS. Sure, we can allocate in a manner to take advantage of market moves through rebalancing, while also considering valuations and trends, but ultimately the market is a beast of its own which will inevitably throw investors a curve ball. It could be an unexpected reaction to a macro-economic event or a “black swan” event (i.e. an altogether unexpected event) such as COVID, but surprises are a part of life as an investor which cannot be predicted, but should be planned for.

Prudent money management in the form of diversification, balance, regular rebalancing and staying the course are all absolute musts. History has shown time and time again that patient investors will be rewarded for persevering through short term market volatility. Enough on this point, let’s dig into those items investors can control in order to better help themselves find a sense of peace and “mental” liberation.

What Investors CAN Control

The five areas that we can control are as follows:

Spending- Our lifestyle
Savings- Money dedicated for investment
Timing- When do we want the event to occur
Risk- The level of Volatility we’re willing to accept in our portfolio
Legacy- Assets we want to transfer or leave at death to beneficiaries

We’ve heard of the ‘millionaire next door’ or the person who left $3M to their hometown to build a community pool but had used old zippers as a shoelaces (true story). How did someone like that amass millions of dollars while only making a small annual salary? They lived well below their means. Now don’t get me wrong, I am not an advocate for extreme frugality. I believe we earn money to prudently save, but once we’ve done that, we can spend the rest in the way that gives us the greatest joy.

If your financial plan is on track then spend away, but the big thing is doing it with cash, not debt. If you don’t know how much you spend, I would recommend printing off three months’ worth of statements for your bank or credit card and allocating all expenses on a month basis to get an idea of where you currently spend. I would also recommend doing this over a glass of wine (smile).

We can control how much of our income we put away on a monthly basis to put us on track for financial independence. I get there are phases of life where we’ll be able to put away more than other times and that’s fine, that’s life. You do your best. For recommended savings I shoot for 3-6 months’ worth of expenses liquid (cash) then investing the rest to maximize your wealth creation over time. From a monthly savings standpoint we aim for 10-20% of your gross income over a 30-year period. I know the range is wide, but it’s because we don’t all start saving at the same time. Perhaps, most importantly, we here at TEN believe acknowledging power is realizing you are always buying something! For example, it isn’t just that you’re saving instead of taking a vacation, you are actually buying an earlier retirement, etc. Keep this topic framed positively.

The crazy thing about this one is the more time you give your dollars to grow: the less you need to save, the less risk you need to take on, the greater your opportunity for a legacy is and overall your spending could increase. The biggest reason is because if you start when you’re young, compounding interest will give you a massive tail wind. Check out the chart below, from our partners at JP Morgan. Especially note the difference between “Consistent Chloe” and “Late Lyla”. When you start makes a big difference. The only difference is Lyla started 10 years later and has almost half the amount Chloe does – that’s the power of those extra years of compounding. As Einstein said, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it.”

Side bar: Consider sharing this with recent grads to encourage them to save into their 401ks as they get their new jobs.

How a portfolio is allocated determines how much risk one is taking on. It’s important to realize that volatility is the price we pay for return and it’s temporary. RISK is different: it is the permanent loss of capital. When we’re young our risk tolerance is high. We have a longer time frame to recover and have not hit the point of financial independence. Once we do reach that point of financial independence and start to need an income stream from the portfolio, you’re not able to bear that risk any longer. In response, we take on less risk to lower volatility and reduce “sequence of return risk” which Tim covered in the last couple commentaries.

“Die with the last penny in my hand” or “leave a million dollars” are the two most common ones we hear. Neither is right or wrong and both can be planned for within reason. I will note, dying with your last penny scares me as we have no idea when you’ll actually die, so having a buffer at the end is always prudent. Think about who you want to support and how you want to support them after you’re gone.

I hope you’re able to see that at the end of the day, our team at Ten wants you to enjoy every minute you’re alive. We know it’s not a reality, but a worthy goal and part of that for us, we believe, means controlling those items above that you can with regard to your money, and diching the rest. If you have any questions about how you may improve on any of the five factors above or feel you’re in the spiral of “what if’s,” reach out.

Our team is happy to chat and as always, we’re here, client or not.

Have a wonderful 4th of July weekend!

Ben Klundt and the team at Ten Capital

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