How We Started Investing: Our Journey into Coast FIRE
12/30/20254 min read
How we started investing
When I started my first real job in 2013, I had no idea how investing or retirement worked. Back then, I had no financial background, no education in money matters, and frankly, little interest. Landing a job with retirement benefits—my very first 401(k) with a company match—was thrilling, but it also left me feeling uncertain. Suddenly, my family's financial future was my responsibility, and I had no clue where to start. I quickly realized that saving cash alone would take forever to build real wealth, so I needed to learn about investing. I was fortunate to learn about retirement accounts and investment options, like target-date funds, through conversations with my mentor at the company.
As I engaged in discussions with my mentor, I began to learn about IRAs in addition to my 401(k). I quickly opened my traditional IRA account in 2013 to take advantage of tax savings, since my 401(k) was not available to me in 2013 due to the company's six-month waiting period policy. We decided to contribute to Roth IRAs starting in 2014, since we could save pretax money in my 401(k) and were in a low tax bracket. My early engagement with this retirement vehicle has been instrumental in laying the groundwork for reaching my long-term financial goals. I also learned about the benefits of 529 accounts for college funding and opened two 529 accounts for our two kids when they were little.
Simple but effective investments: The Index Fund Journey
My investment journey took a big step forward when I discovered the Bogleheads community through their forum, Bogleheads.org. Initially, I was unaware of the wealth of knowledge these dedicated individuals offered; I had thought investing was mysterious and complex. This online platform serves as a treasure trove of insights on investment strategies and personal finance, specifically focusing on the principles of low-cost investing articulated by Jack Bogle, the founder of the Vanguard Group.
The Bogleheads philosophy emphasizes the importance of minimizing costs associated with investing. Unlike many other investment approaches that advocate for frequent trading and high-fee managed funds, the Bogleheads encourage a long-term buy-and-hold strategy utilizing low-cost index funds. This perspective initially surprised me-I found myself wondering whether investing could really be this simple and sufficient. Over time, however, it resonated with me as I learned how difficult it is to beat the market, even for most professional investors on Wall Street, over the long term. I also came to understand that financial independence can be achieved by earning market returns using index funds, provided one stays invested for a long time such as several decades. One key philosophy I learned: time in the market is much more important than timing the market. This convinced me to dollar-cost average into my investment accounts and stay invested regardless of market conditions, including during the COVID-induced market crash in 2020 and in 2022, when both stocks and bonds declined sharply as interest rates rose rapidly to combat high inflation.
Overall, discovering the Bogleheads community significantly impacted my understanding of investment, reinforcing my belief in low-cost strategies as a pathway toward achieving financial goals.
How we hit Coast FIRE while still living for today
Coast FIRE means your investments have grown large enough that compound interest alone will carry you to a full retirement. You no longer need extra contributions because time and market growth do the heavy lifting while you work a job just to pay current bills.
We hit Coast FIRE after about 12 years of consistent saving and investing in index funds on a middle-class income. That being said, we will continue to contribute to our retirement accounts to expedite our early retirement goals. We don't have any real estate investments except our home. Our strategy has been to pay ourselves first by maxing out two IRAs since 2013, gradually increasing my 401(k) contribution from an initial 7% plus a 3% company match to nearly reaching the annual 401(k) contribution limit over the past eight years, and maxing out one HSA account when available. We also contribute to our taxable account whenever possible, using extra funds like tax refunds or yearly bonuses. Although we have two 529 plans, we kept contributions small and paused them during tight budget periods. We’ve chosen to prioritize our retirement accounts first, recognizing that while student loans are available for education, you cannot borrow for retirement.
While we pursue our Coast FIRE journey, we also don't want to sacrifice our life today; the following strategies have greatly improved our savings and our quality of life during this journey.
Buying a Modest House: We purchased our home in a good school district for less than three times our annual salary in 2017—the same year our household salary broke into six figures—and later refinanced during the pandemic at a sub-3% interest rate, with most of the closing costs covered by a timely Amex offer. We don't pay a penny extra toward the principal, as that cash is invested in index funds. Additionally, we aggressively shop for homeowners insurance every year to keep our recurring costs as low as possible; we were able to find lower rates than the brokers could in the past couple of years.
We keep our cars for the long term; we own two modest, debt-free vehicles (9.5 and 14 years old), both of which were purchased new using 0% APR financing. We plan to keep them as long as possible until the wheels fall off and the insurance is affordable at about $100/month for both cars.
We rarely eat out at sit-down restaurants, reserving them mostly for vacations and special occasions such as birthdays. To reduce expenses, we don’t have cable and have canceled most of our subscriptions.
Credit Card Rewards and Smart Points Strategies: This has been a game-changer for our family trips. Since 2015, my wife and I have opened more than 50 credit cards, accumulating millions of miles and points. We’ve strategically used the majority of these rewards for five international family trips-the most recent two were trips to Canada and Asia (Taiwan, China, and Japan)-as well as a trip to Hawaii, two ski trips, and several road trips to Florida and various National Parks. I’ll share the specific experiences and details in a separate post, but these rewards allowed us to travel without putting a huge dent in our savings. By using points/miles to cover most of the flight and hotel expenses, we preserved our cash for investing while still enjoying life today.