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Creating Freedom Through Financial Independence

Beginners Content

New to the FI scene? Not sure where to start?
You’re in the right place!

Here you’ll find content to help get your personal finances moving in the right
direction.

You’ll also learn how to optimise your savings and get started investing.

Let your financial independence journey begin!

Getting Started Saving

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Getting Started Investing

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Getting Started Saving

So you want to get started saving? Excellent!

Saving money is really quite simple. You can start building wealth right now, just by keeping more of your income.

And the truth is, saving is what powers your investment portfolio (especially in the beginning). On this page you’ll find articles and podcasts explaining the ideas and strategies that helped us save over 70% of our income.

If you want a summarised version of my top 10 savings tips, I created a special guide which you can download below.

General FAQs about FIRE and Personal Finance +
What is FIRE?
Financial Independence Retire Early (FIRE). See here for more info.
How do I know if I can become financially independent?
If you can save money and put it into sensible investments, you can become FI.

It's really that simple. Most people don't realise that if you consistently save and invest, at some point you become wealthy enough for work to be optional.
How long will it take to reach Financial Independence?
It depends on your savings rate. A higher savings rate means you can reach FI sooner. My favourite online calculator is this one. Try it for yourself. See how different levels of spending and saving affect your FI date.
How do I calculate my savings rate?
Figure out your household income after tax. And figure out how much you're spending. Start tracking your spending using an app, a simple spreadsheet (or even pen and paper!) so you get a good idea of where your money goes.

Then it's simple. If you earn $100,000 per year, and you spend $80,000 per year, then you're currently saving $20,000 per year. That's a savings rate of 20%.
Which is better - earning more or spending less?
Both are useful. But if you already have a decent income - say $70k and above - spending less is more powerful for three reasons.

1. Tax. Any extra income you earn is taxed (possibly at a high rate). Earning $1 more might leave you with 60 cents. Spending $1 less, leaves you with $1.

2. Temporary. Earning more increases your savings in the short term. But spending less comes with a permanent benefit. Because you need 25x your annual spending to retire, every dollar less you spend means $25 less in investments needed to reach FI.

3. Time. You'll need to invest extra time, energy, and maybe further training to earn more money. It's not like flicking a switch. It's likely you're on this FI journey for more free time, not less. So that's another trade-off to consider.
I don’t earn a big income, is it still achievable?
Yes. I wrote a detailed article dedicated to achieving FI on a low income. You can read it here. It may just take longer if you aren't able to save as much, but it's still an achievable and worthwhile goal.
Do I have to sacrifice a lot?
No, not necessarily. You can probably save more than you think while having a great quality of life. Often, it's about deciding what we value most and simply prioritising.

There's no need for extreme sacrifice. Making better decisions across each area of our lives makes a huge overall difference.
I’m only saving small amounts. Should I even bother?
Yes! If you're starting small, it matters even more! The difference it'll make to your life will be bigger than someone who already has wealth or savings.

A large amount of money is simply lots of small amounts bundled together. Don't be afraid of starting small. The numbers will naturally get bigger over time.
But if I spend less, won’t I be less happy?
I highly doubt it. Try and see. Most people actually feel better once they're making financial progress and have control of their lives. I'm happier today, even though our spending is less than 10 years ago.

Our quality of life does not rise with the amount we spend. Plus, as humans, we're often terrible at predicting what will make us happy. Having more freedom, better health, and being in a strong financial position will bring us higher life satisfaction than spending will.
Is this possible if you have kids?
Yes, absolutely. With higher spending, it may just take longer. But there's nothing magical about kids which prevents you from building wealth.

As you spend more time around FI blogs and reading comments, you'll notice many readers have families and are well on their way to freedom. I've heard from many parents who tell me it can cost a fortune, or not that much at all. Because like everything else, choices are involved.
You only live once (YOLO), so shouldn’t we enjoy life as much as possible right now?
Here's how my conversations go with people like this...

Them: "You only live once!"

Me: "Yeah, I agree... so why would you want to spend most of that one life at work?"

The point is, chances are we're going to live for a very, very long time. We definitely want to enjoy each day, but we have to think of the future too. The better you get at managing money, the more time and wealth you'll have to enjoy life.
Okay, I’m on board. But how do I convince my spouse?
You'll have to communicate and try to get on the same page. It's common for one partner to be more financially motivated than the other (or one saver and one spender).

But if you need a bit of help, check out the following two articles. The first one discusses how to get on the same page. In the second article, my partner shares how I was able to get her on board.

How Can You Get Your Spouse On Board for FIRE?.
Interview with Mrs SMA - Insights from the Better Half.
Should I buy a house or invest?
Those are very different things. If you want the certainty and control of owning a home, then buy. It's no good investing everything in shares if you hate renting or desperately wished you owned a house.

My advice would be: if this sounds like you, buy a house as long as it won't break the bank. Make sure you can still save too. That'll allow you to build investments at the same time as owning your own home.
But it takes so long, and what if I don't want to stop working?
I'll tell you a secret: You can get most of the benefits of FI without actually getting there.

As your savings grow, you'll be in a much stronger position to go through life with. You'll be more comfortable, less stressed, and it allows you to reduce work or spend time on other things and find the nice balance.

This stuff isn't 'all or nothing'. Check out my article Semi-Retirement: Your Shortcut to Freedom for more on this topic.
You started in property, so isn’t that how you retired early? Why should I invest in shares?
Actually, no. Half of our properties were in Perth, which have performed terribly. On average, and after all the costs involved, we've only done 'just okay' from our properties. More in this article.

The real magic was our savings rate.

Starting again, I wouldn't buy a single house, except one to live in. Shares are simpler to buy, easier to manage, more diversified, more hands-off, more flexible, and you can generate a better income stream. No hassles and headaches. Just dividends hitting the bank account!
I want to become FI, but I also want to get married/travel/have kids/have expensive things/etc. I’m scared of missing out. What should I do?
You have to prioritise and be honest with yourself. Maybe FI is not really a priority right now, that's okay. Just remember to consider the benefits you could be missing out on (more freedom, greater life satisfaction, time with your family, and so on).

At the very least, keep saving and make an effort to pay down your mortgage or build up some investments. Regardless of how you spend the rest of your money, you'll be glad later for having made this small commitment.

If you do decide that FI is important to you, some tough decisions might have to be made. You'll want to cut things which aren't really adding value to your life.

It's not an either/or decision. The bottom line is, with higher expenses, your journey will just take a bit longer - that's all :)

Helpful Posts to get started

How to Deal with the Cost of Housing in Australia (Podcast)

A podcast outlining the different ways we can optimise our cost of housing. We discuss renting vs buying, ownership and moving costs, leverage and capital growth, how each of us deals with housing and much more.

Go to the Podcast
7 Business Principles to Master Your Personal Finances

I highlight key strategies that can help us manage our finances like a CEO of a business. Powerful concepts here which can help us make the most of our current income (boost our household profits) and also focus on what’s important.

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Spending, Happiness and FIRE (Podcast)

A podcast outlining the different ways we can optimise our cost of housing. We discuss renting vs buying, ownership and moving costs, leverage and capital growth, how each of us deals with housing and much more.

Go to the Podcast
When Novelty is the New Normal

Despite our growing prosperity, we seem to be less satisfied with every passing year. Everything has to be newer, better, faster, endlessly. In this post, you’ll learn why that’s happened, ways to avoid this trap, and how becoming financially free starts with opting out of this crazy game.

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Driving Your Wealth, with Frugal Car Ownership

One of the biggest money pits in our lives. The average Aussie spends a fortune on vehicles throughout their lives. Luckily, there are plenty of ways to improve this area of spending without driving an unreliable shitbox!

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The Wealth Illusion - Things Often Aren’t What They Seem

Wealthy people and poor people are increasingly hard to tell apart. So many people you see are what I would call “fake rich.” I take a look at a famous study of millionaires and explain what we can learn from this.

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How to Make Better Financial Decisions: My 4-Part Framework

In this post I break down how I make financial decisions. It’s like a mental checklist I go through. And it’s not all about cost. In fact, there are 3 other factors I consider aside from the immediate financial cost, which are actually more important.

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Frugality and Food - The Grocery Strategy

Groceries are one of our biggest household expenses. Yet we manage to spend only a modest amount on our food bill, despite eating plenty of healthy food. I share my best tips for optimising your grocery costs.

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Rent vs Buy - The Aussie Housing Dilemma

Learn the pros and cons of renting vs buying your own house. The numbers change over time, but the important trade-offs of each choice stay the same.

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Optimisation Day: The Annual Gift to Your Future Self

In this article, I share why you need to take a day each year to re-evaluate your spending and nail down the best deals. You’ll learn what to focus on and how much difference it makes to your wealth, for very little time invested.

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When Frugality Meets Smartphones

Some easy to follow tips for keeping phone costs low while enjoying all the benefits of smartphones. You might be surprised at how simple it is to master this category.

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How Being Green Makes You A Wealth Building Machine

If there’s one thing that helps reduce consumer desires, it’s when you start caring more about the planet. This article is packed with examples about mindful spending and the double benefit it has to our finances and the Earth.

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The Lost Art of Moderation

Many people get stuck in the all-or-nothing camp. “To retire early, I have to spend no money.” No, this is nonsense. In this article, I explain how the simple concept of moderation is so powerful (yet overlooked) when it comes to improving our finances.

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How to Travel and Enjoy Time Off Without Killing Your Savings

Simple strategies for optimising the cost of your holidays. No tricks with points or credit card hacking. Just a sensible approach to enjoying your free time and seeing new places while keeping your savings up.

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Can You Achieve Financial Independence On A Low Income?

This article lays out scenarios and advice for those on a low income who are seeking FI. There are trade-offs to be made and it may be harder, but retiring early is definitely possible for this group!

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Frugality and Fitness - Boost Your Health and Grow Your Wealth

Great news! You can become healthy and even muscular without needing to spend a fortune in this area. In this post, I discuss the various spending options and give you a flexible guideline to follow.

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The #1 Factor for Financial Independence - Your Savings Rate (Podcast)

This podcast discusses why our savings rate is the most important thing which drives our ability to retire early. We also cover earning more vs spending less, side hustles, emergency funds and how long your journey will take depending on your savings rate.

Go to the Podcast
Why Financial Independence is Getting Easier

The fundamental reasons that explain how we’re able to become FI in the first place. Some very important concepts in here about our economy, wealth and personal finance.

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Insurance: Prudent Protection or Costly Comfort?

Insurance is one of those hard to tackle topics because everyone has different needs. Here, I outline my thoughts on why many types of insurance are either a rip-off or unnecessary and how you’re better off investing that money instead.

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It’s All About the Increments Baby

Most people think small amounts don’t matter. In this article, I lay out why this is completely wrong, and what a difference small changes can make to our finances, and therefore, our freedom.

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The Real Cost of Living - An Inconvenient Truth

A simple (yet controversial) look at how our cost of living has changed over time, and how that compares with our incomes. Most people think life has become insanely expensive. The truth is, our desires have simply grown just as fast (or faster) than our incomes. Plenty of data and examples inside.

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House Hacking - Turn Your Housing Costs Into Profits

I interview a young teacher from Melbourne who uses a strategy called ‘house hacking’. His cost of living is way down as a result, and his savings rate way up. He shares his tips for others who are interested in doing the same.

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Making Big Money from Little Changes

Some simple examples you can use to start building your savings snowball. And how these small changes compound into large amounts of cash.

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Getting Started Investing

Keen to start investing?  Aw yeah!

On this page, you’ll find my best investing content which will give you a good knowledge base to start investing with confidence.

But you’ve probably got questions too.  So feel free to check out the FAQs section below to see my answers to the most commonly asked questions on investing for FI.

I’ve summarised my best investing tips into 10 principles, which I’ve put in a special guide you can download below.

And if you’ve never bought shares before, don’t worry.  I wrote a full article on how to buy shares for the first time (step-by-step, with screenshots!).

FAQs on Investing for Financial Independence +
How much investments do I need to be FI?
About 25 times your annual spending is a good number to aim for. Check out this podcast for more: How Much Do You Need to Retire Early?.
What asset class should I invest in to become FI?
Shares are the most efficient asset for generating passive income. Most of the FI community invests in simple, diversified share funds. Things like low cost index funds and listed investment companies (LICs).

Aussie property is not great for generating passive income. There are too many expenses which eat into your rental income. Trust me, I know from experience!
Should I pay off my mortgage before I invest?
It depends. Paying off your house gives great certainty and security. It also lowers your living costs forever, which is really cool. But investing tends to provide higher long term returns. I prefer investing, but there's a few things to consider. I wrote an article about the trade-offs which might help you decide. Paying Off Your Mortgage vs Investing
I have a big lump of savings. Should I invest all at once or over time?
Research shows that most of the time you're better off investing immediately. But not every time. If you catch a period of bad returns, you'll be full of regret and think you've done the wrong thing.

That's why, psychologically, it's far easier to invest steadily over time. You can invest some each month, knowing that your money is buying more shares if the market drops, helping to improve the outcome. You could also do both - invest half the lump straight away, and invest the rest over the next year or so.
Should I invest in index funds or LICs?
It depends. LICs suit people who value having a more reliable stream of dividends. Being 'companies' LICs are able to smooth out their dividend payments over time. But because they're actively managed funds, the risk is they may underperform the market.

The big advantage of index funds is they own every major listed company. For example, VAS owns the top 300 companies in Australia. As it turns out, most of the market's gains are driven by a small group of massive long term winners (unknowable in advance). Index funds are guaranteed to capture these, active funds are not, and is what often leads to underperformance.

I know many people who are happily invested in one or the other (or both). If you're not sure, go with index funds.
Which index fund is the best?
The best index funds are those which are the lowest cost and own all the major companies in the market. You can find more information on Aussie index funds here. And check out this article on international index funds here.
I'm saving to buy a house in a few years. Should I invest in shares until then?
No, definitely not. The sharemarket is not the place for short term savings. Low returns from a savings account is frustrating. Not being able to buy your house because the sharemarket has dropped is worse.
When is the best time to invest?
Whenever you can afford to. Seriously. Trying to time the market is not an effective or reliable strategy. Investing should be simple and quietly satisfying.

Waiting for the 'best' time to invest will make your investing surprisingly stressful and complicated. It doesn't exist. For more on this, see my article on timing the market and check out this podcast.
What if the market crashes?
It will, at some point. As someone who is saving and building your portfolio, lower prices are a good thing. This means you get to do lots of buying and build your portfolio at lower prices. When the market eventually recovers, you'll own much more shares than if the market didn't drop at all.

Later, when you reach FI, if the market crashes there are plenty of possible backup plans to improve things - use your cash/bonds buffer, spend less, earn some income, rent out a room in your house, and so on.
How much should I invest?
As much as you can, provided you don't need the money anytime soon. The more you save and invest, the more passive income and growth you will get from your investments, growing by itself over time. But saving and building your portfolio comes first.
Should I put more money into super?
It really depends on your age. If you plan to retire in your 30s or 40s, then it's best to focus on investing outside super. However, if you're more likely to retire near your 50s, then making super a decent chunk of your investments makes sense. There's no easy answer as everyone's situation is different.

Check out the this podcast for more: Superannuation and Early Retirement
I'm just starting and want the simplest option possible. What would you do?
To be honest, I'd probably go a one-fund portfolio like DHHF or VDHG. Each is a ready-made portfolio of diversified index funds that's managed for a low fee.

You'll be invested in a huge basket of Aussie and global companies, which you can buy-and-hold forever and benefit from the growth and dividends of these companies over time.
Which broker should I use?
Any low cost Aussie broker will do. My preferred choices are Pearler and Selfwealth. Both charge $9.50 per trade.
Brokerage costs still add up. How often should I invest?
A rough rule of thumb is to make sure brokerage costs are less than 1% of your investment. So if you're paying $10 for each purchase, you want to invest $1,000 or more at a time.

Of course, you could save up and invest once per year. But for multiple reasons, I think regular investing (monthly) is the best balance between brokerage, building the investing habit and keeping your momentum going. If you're a numbers person, check out this calculator for hardcore optimisation!
How do franking credits work?
Franking credits are a tax credit that comes with most Australian dividend payments.
Aussie companies make a profit and pay tax. Then they pay shareholders a dividend, and we pay tax on that dividend. To avoid the same money being taxed twice, we're given a 'credit' for tax the company has already paid.

In practice, we add the dividends and franking credits to our tax return as income. The franking credits also count as 'tax paid'. We then either pay some tax or get a tax refund, depending on our personal tax rate.

Play around with this calculator to see the outcome of different franking amounts and tax rates. But don't worry too much about tax. Focus on building your portfolio!
What about gold and crypto?
I'm not a fan of non-productive assets. Metals and crypto provide no passive income and have no earnings to drive their returns, unlike shares and property. Instead, they're driven by popularity. If you want to include them in your portfolio, that's up to you. But it's not my style.

Helpful Posts to get started

Equity Rich, Cashflow Poor

This article looks at two contrasting people - one with a multi-million-dollar property portfolio, the other a modest but still respectable share portfolio. The cashflow-poor property investor is wealthier on paper, but the share investor can retire faster because he has passive income and no debt.

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How Much Do You Need to Retire Early (Podcast)

A deep dive into how much investments you need to retire early. You'll also learn how to live off your portfolio in practice and the importance of having flexibility and using a good dose of common sense around your early retirement goals.

Go to the Podcast
Investing vs Paying Off Your Mortgage

The age-old question. I look at how to decide between investing and paying off your mortgage, including the trade-offs of each. I also share six strategies for minimising your mortgage and maximising your cashflow in retirement.

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Why Invest in Index Funds? (Podcast)

In this podcast you'll learn why index funds are an ideal choice for those pursuing FI (including factors that are less spoken about). We break down the reasons why index funds are recommended so much in the FI community.

Go to the Podcast
Key Lessons to Making Money in Shares

This post discusses some of the important concepts to absorb as a sharemarket investor. Things like staying focused on the long term, learning to deal with downturns, buying more when prices fall, among others.

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Investing for Early Retirement

A simple post from the early days of this blog. I explain how focusing on the income your assets produce can be a more enjoyable and less stressful experience than looking at the price or value of your investments.

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My Open Letter to Sharemarket Newbies and Property Investors

You'll learn why property is not 'safer' than shares, and everything newbies need to know to feel comfortable investing in shares. What I wish I knew when I was getting started!

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Long Term Investing & Shrugging Off Sharemarket Falls

I share my thoughts on what long term investing really is, and how we can deal with the bumpy ride that is the sharemarket. You can come back and re-read this post when the market is having one of its famous tantrums.

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Compound Interest: Your New Best Friend

A simple post about the power of compound interest, which is the magic of multiplying your money over time. When I learned about compound interest, it blew my mind and forever changed the way I think about money.

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Property vs Shares - A Closer Look at the Major Asset Classes (Podcast)

The great debate - should you invest in shares or property? We cover the pros and cons of each option and discuss why we've both decided that shares are the best choice for most Aussies who want to retire early.

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Timing the Market: Silly or Sensible?

I explain why timing the market sounds great in theory, but is a complete nightmare in practice. I look at the different strategies for timing the market and show you why long term buy-and-hold investing is the most sensible approach.

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Superannuation and Early Retirement (Podcast)

How should you approach super if you want to retire early? Some say go all-in, some say ignore it. How should you invest your super? We explain what we think is the best approach in this podcast.

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How to Implement Peter Thornhill's Investment Strategy in 2020 and Beyond

Peter Thornhill is a well-known Aussie investor and sharemarket educator. In this post, I break down step-by-step exactly how to use his strategy to create long term wealth and growing dividend income from shares.

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Asset Allocation for Aussies Pursuing Financial Independence (Podcast)

In this podcast we discuss how Aussies should think about investing and diversification. We go through the different options for building a portfolio (including what we do ourselves) and how you might put it all together.

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Mortgage, Investing or Super - Where Should You Put Your Money?

Sometimes it's hard to know if we should pay down debt, invest, or put money into super. It really depends on our age, our goals, and our risk tolerance. This post will help you decide what's right for you.

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The Relentless Progress of a Dividend Investor

In this article I explain how focusing on dividends can be an incredibly motivating way to measure your progress. You'll learn the importance of adding to your investments, reinvesting your dividends, and how your portfolio will probably grow quicker than you think!

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A Guide to Investing in International Index Funds

I break down in simple terms the most common ways you can invest in international shares, and share my thoughts on each. I also explain which option I choose to invest in and why.

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Fees, Fees Everywhere (Podcast)

You might've heard that fees are bad for your returns. But do you know how bad? We chat about the different fees in our financial lives and the difference they make to our wealth and passive income over time.

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Automated Investing - Your Hidden Helper

Learn about the importance of 'paying yourself first' and setting up an automatic payment to your investment account. Once you build an investment habit, your portfolio will take off and it'll start growing every month.

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My Latest Thoughts on Dividends and Diversification

I'm always learning and re-evaluating how we manage our finances and investments. This post dives into how I'm thinking about our investment strategy going forward.

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Everything You Need to Know About High Yield Investments

Going for investments which pay a really high income sounds like a great idea at first. I explain why this is dangerous and usually comes with more risk, leading you into some really terrible investments.

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