Canadian blogger Peter Adeney, known as Mr. Money Mustache, writes about financial freedom, which he achieved at age 30.
“The concept is genius,” Oliver Noelting thought when he heard about the blog from a friend. He missed the freedom he had when he was a student; after he started to work, that seemed totally over.
But thanks to frugalism, which he writes about on his own blog, he will be able to retire early. “Then it’s just about expenses,” he says.
But not everyone can save such a high percentage of their income and and plan on an early retirement. For low earners, saving 70% of your income is unlikely to be feasible.
Florian Wagner was also inspired by Mr. Money Mustache and started a blog about it, called Geldschnurrbart – essentially the name translated into German. He believes that saving shouldn’t be equated with sacrifice.
“Through saving, I’m building myself more independence from work and more freedom,” he says. “This only works because I question my habits, and I enjoy it.”
For him, making conscious spending decisions has a great return on quality of life. He always keeps an eye on his income and expenditure. Noelting saves 70% of his income.
Generally, frugalists don’t see saving itself as the goal, rather it’s a method of questioning all expenditures now to have more fun later.
But how do they invest? Noelting advocates passive investment strategy, but Wagner also focuses on riskier products: “I enjoy taking risks,” he says. “Risk and return are connected. If I want more return, I always have more risk.”
Niels Nauhauser, a financial expert with a German Consumer Advice Centre, advises a broadly diversified, passive investment strategy.
“Research clearly indicates that diverse holdings on the stock market with a ‘buy and hold’ approach is a sound investment strategy,” he says. But all investors – frugalists or not – must be prepared to ride out fluctuations in value.
Exchange-traded funds, or ETFs, on global stock indices are a good choice “because they spread the risk on the stock market widely,” Nauhauser says. Focusing your investment on individual stocks is more risky. – dpa