Ep. 275 — Board Games and War Games

Most people think their risk tolerance is fixed — until their portfolio drops 30% and they realize they had no idea what they were actually comfortable losing.

Understanding your financial risk tolerance and re-evaluating your investment strategy are crucial components of achieving financial independence. Brad and Jonathan explore "war gaming" your finances by assessing personal variables that influence financial decisions. They explore the analogy between life and board games, where knowing the rules can lead to better outcomes. The hosts discuss practical tools, like price-tracking websites, to save money on purchases, particularly the dramatic price fluctuations in everyday items. They share personal experiences and insights on how external events can impact financial stability. Through different investment perspectives, the episode illustrates the importance of adapting one's strategy to changing life circumstances while keeping control over expenses and risk management.

Key Takeaways

• Periodically assess your risk tolerance considering unique personal variables 00:01:04
• Tools like camelcamelcamel.com can help monitor products and save money by buying items when prices drop 00:02:07
• Life operates like a board game; understanding the rules leads to better financial outcomes 00:09:23
• As life situations change, regularly assess and adjust your investment strategies 00:24:03
• War gaming involves considering various financial scenarios to reinforce your investment and spending strategies 00:30:25

Chapters

• 00:00:00 Introduction to the Concept
• 00:01:04 Understanding Risk Tolerance
• 00:01:41 Using Price Tracking Tools
• 00:06:15 The Board Game Analogy
• 00:08:59 Strategizing Your Finances
• 00:30:25 Evaluating Investments
• 00:46:26 Community Wins and Announcements

Action Items

• Set up price alerts for items you want to buy using camelcamelcamel.com 00:02:07
• Reflect on and document your risk tolerance and how it has changed over the years 00:12:30
• Analyze your monthly living costs to identify areas for potential savings 00:12:30

Notable Quotes

• "Knowing the rules is the key to winning at life." 00:06:23
• "Analyze your finances before you find yourself on tilt." 00:46:43
• "Not every financial move is a good move." 00:08:34
• "Life operates like a board game; understanding this can guide your path." 00:09:23

Related Resources

• CamelCamelCamel - Price tracking tool 00:02:07
• The Simple Path to Wealth by J.L. Collins 00:41:41

Community Announcement

Year-end wins event on December 8th at 7:30 PM EST where community members can share their accomplishments. For more details, visit chooseFI.com/2020wins.

Listener Win

Abby's achievements celebrated 00:50:34