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#006 Fireside Fridays - Coffee & Performance, Your Magic Number & One Night Travel Adventure

Let's play the leverage game

The stories I'll share in this and the upcoming newsletters pick up where my book, School Dropout, Chimney Sweep, Investment Banker:The Art of Pursuing Goals That Seem Unattainable at First Glance, ends. It's the epilogue that didn't get printed but happened in the chapters of real life.

I was sitting at my desk at home, wondering how I could solve the dilemma of coming up with $10,000.

But how?

I did some back-of-the-napkin calculations and realized it would take me almost a year if I wanted to save that much.

That's not an option.

Unfortunately, I hadn't developed an entrepreneurial mindset yet, so I didn't even think about making money from a side hustle. The only way I saw was saving from my chimney sweep salary.

However, my impatience made me creative, but also a bit crazy.

What if I just financed $1,000 from my credit card and treated it like a hypothetical $10,000? I would adhere to all the trading rules, including the 1% rule - never put more than 1% of your trading budget at risk for any single trade - for my fictional $10,000.

Worst case, I lose my $1,000 and pay it off next month; best case, it works and I don't need to wait a year. The last couple of weeks went well with my demo account, so I was confident transferring the success into live-trading with real money on the line.

My strategy was simple: with my fictional budget of $10,000, I would be allowed to put up to $100 per trade at risk. To lose it all, I'd have to be wrong 10 times in a row. That never happened so far.

Every trade had a risk-reward profit of at least 1:3; that meant if I risked losing $100 on a trade, it would have the potential to make $300 in profit. Most of the time, it was even 1:5. Hence, should I be wrong and lose 5 times in a row, a single trade would be enough to get me back to my initial capital.

Furthermore, considering the 1:3 ratio, I only needed to be right with 30% of my trades to make a 20% profit on my initial capital of $1,000. Losing $100 for 7 out of 10 trades leaves me with a $700 loss. Making $300 profit with the remaining 3 trades leaves me with $900 in profits, and I end up with a positive balance of $1,200.

As I'm writing these lines, it sounds even more insane to me. However, no risk, no fun. I put in my credit card details and let the games begin...

You are curious what happened so far?

1. Level Up Your Career Game: Coffee & Performance

We need to have a tough conversation about coffee.

I know you probably love this black gold that makes you feel cozy and safe while giving you a fresh boost of energy every morning. However, there's a dark side to it.

Coffee is borrowed energy.

It's like swiping your credit card every day without sparing a thought for your account balance, and not paying the bill at the end of the month. Instead, you accumulate debt and pay a ton of interest on it.

You get a hit every morning, and by the time you arrive at the office, you already need your second one. Then, of course, after the lunchtime low, you need one to get started for the afternoon and maybe another casual one during a client meeting.

This isn't coffee-bashing; I'm a coffee lover myself. However, I also love peak performance and, over the past few years, have experimented a lot with coffee.

From my experience, switching coffee for herbal tea helped boost my energy immensely and had other beneficial "side effects":

  • Improved sleep

  • Fewer emotional ups and downs

  • Easier to wake up in the morning

  • Better performance throughout my day.

  • More consistent and higher energy levels

I know coffee is a quite emotional topic, but give it a try and go 6 weeks without it. Chances are good you won't go back. If you do return to it, try to stick to one espresso a day upon arriving at the office. That was the optimal performance booster for me.

2. Retire Early: What's Your Magic Number?

Knowing your magic number makes the difference between being rich and being wealthy.

You can be rich, having a ton of money, driving fancy cars, and wearing shiny watches...

...however, your mortgage haunts you at night, your cars are leased, and your watch only shows you the end of your lunchtime.

You are rich but not wealthy.

Your magic number is the amount of capital you need to finance your desired lifestyle through passive income.

Let's say you need $10k a month to live your desired lifestyle.

Assuming a 4% payout ratio, you need $3,000,000 in invested capital to have it all:

  • Financial freedom

  • Location freedom

  • Time freedom

Knowing your magic number is your "enough".

It guides you from being rich to being wealthy.

You stop chasing and start living.

It's clarity.

I know $3,000,000 is a ton of money, but it's probably way less than you thought.

When I did the calculation for myself the first time, it blew my mind. I thought I needed at least USD 20,000,000 to live my dream life, but that's simply not the case.

Let's stick to the example above: $10k a month in passive income means absolute financial freedom. You don't have to work a single day in your life ever again.

You can further break this concept down and apply it to replacing your current salary or covering your monthly fixed costs. Let's assume you are earning $3,000 a month. With a payout ratio of 4% a year, you only need $900,000 to replace your current salary.

Imagine living your life as you do now, but nobody bothers you – no meetings, no phone calls, no worries. Just enjoying life and doing what you want.

What's your magic number?

This calculation changed my life, and chances are, it will change yours too.

3. Travel The World: The One Night Travel Adventure

In Summer 2018, Angelika and I made a one-week trip to Peloponnese. We have always been the package tour guys. In recent years, we did some individual trips here and there, but always with a suitcase and only one hotel booked in advance.

This time was different, though. We would arrive in Athens and had booked just one night in a small guesthouse half an hour out of town. The idea was to ask at the reception the next morning where to head next. We picked a guesthouse on purpose because chances are good a local is working at the front desk. Our plan worked out, and the lady at the reception even put together a complete itinerary for the first few days, including all the bells and whistles.

What we absolutely had to see, what we should avoid, where the great restaurants are, and where the most beautiful sunsets are. She even recommended accommodations for us and called the owners there to negotiate a discount for us. It was absolutely incredible.

This trip remains one of the most beautiful ones we've taken to date. When you're planning your next trip, try just booking the first night and let the locals take you on a beautiful adventure.

Adventure Awaits,

Kevin Schwarzinger

Founder, ChimneyCapital

Author, World Explorer & Solopreneur

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