In 2020, during the heart of the COVID pandemic, I remember listening to a FIRE-focused podcast hosted by two people who claimed to be financially independent and retired early. Even though it’s been over 16 years since I first started writing about FIRE, the topic still fascinates me. The journey toward financial independence is full of twists and turns, and people’s real-life experiences are always insightful.

But one particular episode caught me off guard. The two hosts—who built their entire brand on the idea of never needing to work again—asked listeners for financial support to keep their podcast running. Soon after, I saw an email making the same plea.

I remember thinking, Wait a minute. If these folks are truly FIRE, why would they need to ask for money to keep a passion project alive? Just fund it themselves!

I wasn’t judging the need for donations itself. Creative projects cost time and money, and compensation is deserved. But the ask didn’t match the premise. If they were genuinely financially independent, surely they could afford a few thousand dollars a year to sustain their own show, especially one that was meant to showcase the freedom FIRE provides.

How Much Does a Podcast Really Cost To Produce?

I have the Financial Samurai podcast (Apple, Spotify), so I know exactly what goes into production. A decently produced, professional-sounding episode doesn’t have to break the bank. Editing an hour-long episode might cost anywhere from $100 to $600 maximum depending on the level of polish and sound add-ons.

My biggest expense is time. Recording, editing, and uploading a 45-minute show can easily consume four to five hours between my wife (editor) and me.

That’s a significant chunk of time for something that isn’t mission-critical. I’d rather spend that time writing, hanging out with my kids, or playing tennis for exercise.

Not FIRE, But An Entrepreneur Instead

Given the manageable costs and the fact that FIRE is supposed to mean “work is optional,” it struck me as odd that these podcasters were asking for financial help. The more I thought about it, the more I suspected that maybe they weren’t actually financially independent.

Maybe they were simply entrepreneurs running a small business, worried about declining revenue and grasping for ways to keep the lights on during COVID. After all, they’ve never shared their net worth or passive income figures, so we have no idea.

As someone who helped kickstart the modern-day FIRE movement in 2009, I often hear a common criticism: some FIRE influencers haven’t really “retired,” they’ve simply traded a day job for entrepreneurship. There’s a lot of smoke and mirrors due to a lack of transparency.

I totally get it.

Podcasts don’t record themselves and articles don’t magically appear overnight. I spend about 15 hours a week writing, editing, and responding to comments and emails on Financial Samurai. To acknowledge this dynamic, I even wrote a post about being a fake retiree for 10+ years, to hang a lantern on the situation. So for the podcasters to ask money from their audience helps buttress this criticism.

For me, I love writing, connecting, and learning about personal finance. It’s endlessly rewarding to create something from nothing. After working 60+ hours a week for 13 years in banking, there’s no way I could just sit around playing golf or tennis all day in retirement. I need to stay productive and mentally stimulated for a two-to-three hours a day. The rest of the time is for exercise, childcare, travel, and relaxation. That is my sweet spot.

Along the way, Financial Samurai generates supplemental retirement income, which helps keep our safe withdrawal rate low, and both my wife and me out of Corporate America since 2012 and 2015, respectively. We hope the run continues indefinitely.

To not monetize my passion would be completely irrational. Running Financial Samurai costs about $10,000 a year for the dedicated server, email services, and tech support – excluding labor. However, I’d rather not ask my readers for donations because it feels inconsistent with my FIRE philosophy. A share or a review of my podcast or books are enough.

FIRE Will Make You a Terrible Entrepreneur

Although I stopped listening regularly after that episode, the show carried on. About a year later, one of the hosts left – presumably to pursue better opportunities with his time. The remaining host kept grinding, and today the podcast is thriving. I’d bet it now generates at least $150,000 in net profits. Awesome!

And that’s exactly the point. When you’re not truly FIRE—when you still need or strongly want more money—you hustle. You create. You innovate. You do everything possible to keep the revenue flowing. You even ask your audience for donations during a global pandemic, if that’s what it takes.

The hunger to survive and grow is what fuels entrepreneurship. But if you’ve already reached a level of passive income that comfortably covers your living expenses, that hunger fades. Without that pressure, you might not push as hard. You might even, gasp, become a terrible entrepreneur.

Here are some of the things I could do to make more money:

• Create a YouTube or TikTok channel
• Hire a team of writers to publish more articles and drive more traffic
• Bring on a salesperson to secure more advertising partnerships
• Become a paid speaker at conferences after writing two national bestsellers
• Do more personal finance consulting instead of throttle it to only one a month or when a book comes out
• Publish one or two podcast episodes each week, instead one one every three weeks or so
• Spend at least an hour a day posting on social media to boost engagement and traffic
• Pitch TV producers on shows, like my idea Love Is Money

The thing is, I just can’t be bothered, which is why I’ve kept my cadence since 2009. I didn’t leave a job to create another one in FIRE. Managing people and constantly selling yourself is exhausting. If you want to subscribe to my newsletter and read Financial Samurai. Great! If not, also great!

I’ve found a sweet spot – creating and interacting between 6 am – 7:45 am, then again for an hour after the kids go to bed – where I feel the most fulfilled and happy. Anything much beyond 20 hours starts to feel like a J O B.

I respect the grindcore hustle, but I simply don’t have the same drive at my age. Financial independence has sapped my entrepreneurial edge.

But if I was desperate for money for whatever reason, hell yeah I’d try out these new initiatives! I’m not too proud to work a minimum wage service job to provide for my family. I’ll do whatever it takes to ensure they are secure.

The Enthusiasm to Grind At Work Naturally Fades

Once you’ve reached the Minimum Investment Threshold where work becomes optional, the thrill of going above and beyond at a day job starts to wane. Coming in early or staying late feels pointless. Meetings get skipped, after-work drinks declined, and weekend boondoggles replaced with family time. Even that once-exciting business trip to New York loses its shine.

For entrepreneurs, the drop in motivation can be even steeper. Unlike employees, there’s no boss dictating the day. You have to be a relentless self-starter while wearing every hat—creator, marketer, accountant, PR rep, and business development lead.

Forcing yourself to build and grow a business when you already have enough passive income is a tall order. Entrepreneurship is way harder than being an employee.

As a result, you may have to resort to mind games to help keep that motivation to create alive.

When My Desire to Earn Returned

My drive to earn spiked twice recently: when my daughter was born in December 2019 and after buying a new house in 2023.

Lockdowns made entrepreneurship from home a logical focus. If the government was going to take away my freedom, I sure as hell was going to make the most of being online! Then the house purchase cut my passive income enough to reignite the urge to rebuild it.

But after two strong years of stock market gains and a rebound in San Francisco home prices, I’m back to sleeping in and caring less about revenue optimization. Our finances now depend far more on market performance than on entrepreneurial income. Maintaining the right asset allocation matters more than squeezing out extra business profits. Go bull market!

This lull is exactly why parents should never give their kids money for nothing. If they want spending power, they need to earn it. No matter how wealthy we become, showing at least a baseline level of hustle is essential so our kids develop a strong work ethic when they have nothing. Just say no to entitlement mentality!

The Comfortable Path Pays Less

Here lies the paradox of FIRE: you escape the rat race, but you also lose the urgency that drives extraordinary entrepreneurial success. When you no longer need to make money, you’re less inclined to chase every opportunity or sell your business for top dollar.

That’s not necessarily bad. It’s freeing. But to thrive as an entrepreneur without a profit motive, you need to be extremely greedy, deeply mission-driven, or truly love your product. Without that internal fire, long hours and relentless growth simply won’t happen.

Creative Longevity: FIRE’s Hidden Gift

If FIRE makes you a bad entrepreneur, at least it can also make you a longer-lasting one. Because I’m not burning out chasing revenue, Financial Samurai has endured since 2009, a lifetime in internet years. Many flashier sites scaled fast, burned hot, and disappeared when founders lost interest or ad dollars dried up.

My slower, steadier approach may never produce a headline-grabbing exit, but it delivers something equally valuable: staying power. I can keep writing, podcasting, and engaging for years because I genuinely enjoy the work. Enjoyment, not maximization, is what keeps a project alive.

Financial independence has made me a less aggressive entrepreneur but a happier human. It also gives me time to set an example for my kids. I want them to see the value of curiosity and discipline, and if I can keep this site running until 2040, maybe I can even provide a form of career insurance if they struggle after college.

For now, I’m content not to maximize revenue because we already have enough. But if the day comes when my family needs me to earn more, I will. That responsibility as a father never goes away, even if the urgency to chase dollars does.

What are your thoughts on how being truly FIRE affects an entrepreneur’s path? Could it be that when you no longer need money to survive, you’re actually free to become a better entrepreneur because you can focus entirely on creating the best product possible? And do you find it strange when a FIRE influencer asks their audience for donations?

Subscribe To Financial Samurai 

Pick up a copy of my USA TODAY national bestseller, Millionaire Milestones: Simple Steps to Seven Figures. I’ve distilled over 30 years of financial experience to help you build more wealth than 94% of the population—and break free sooner.

Listen and subscribe to The Financial Samurai podcast on Apple or Spotify. I interview experts in their respective fields and discuss some of the most interesting topics on this site. Your shares, ratings, and reviews are appreciated.

To expedite your journey to financial freedom, join over 60,000 others and subscribe to the free Financial Samurai newsletter. You can also get my posts in your e-mail inbox as soon as they come out by signing up here. My goal is to help you achieve financial freedom sooner, rather than later.

If you want to FIRE, one of my regrets was pulling the ripcord too early at age 34 in 2012. Even though I started writing about FIRE in 2009 with the launch of Financial Samurai—trying to uncover as many blind spots as possible before taking the leap—I still feel like I made a mistake. In hindsight, I should have worked at least five more years until age 39, or even 40 before retiring.

At the time, I didn’t know I’d have a kid five years later, let alone two. Fast forward more than a decade, and with tremendous inflation, skyrocketing college costs, and never-ending healthcare expenses, the squeeze is real. If I had worked a few more years, I probably could have generated at least $60,000 more in passive income into perpetuity.

Although I’m confident I’ll build enough wealth so my two children will never go hungry, I’m not certain I’ll ever reach true multi-generational wealth. To me, that means having enough so that three generations—my family, my children’s families, and my grandchildren’s families—would never have to work soul-sucking jobs to survive.

Multi-Generational Wealth Is Not Necessary (But It’s Nice To Have)

Of course, multi-generational wealth isn’t a necessity. Neither is the need to Fat FIRE. Our baseline expectation should be that our children grow up, achieve financial independence, and learn to take care of themselves.

But after living in San Francisco for 25 years, I’ve seen the opposite play out repeatedly. Every single neighbor I’ve ever had either still has an adult son living at home, or the son lives in a house purchased by his parents.

I’ve gotten to know many of these families. The sons all went to college and worked hard. Yet, despite their education, none of them could land jobs that paid enough to live independently with middle-class comfort. Instead, they’ve relied on ongoing financial support from their parents to make life in San Francisco work.

Given this reality, I’m pragmatic enough to expect that the same dynamic could affect my kids. The world is only getting more competitive, with AI threatening jobs and international students filling up top university spots at the expense of Americans. Getting ahead will become increasingly difficult for the next generation.

Hence, the solution: attempt to build multi-generational wealth.

If my children don’t end up needing financial support because they find well-paying jobs, build businesses, or otherwise thrive, then great. The extra wealth will simply serve as a cushion or be redirected to charity. But if they do need help, I’d rather already have that “insurance policy” in place than scramble later.

Other Reasons To Amass Multi-Generational Wealth

Here are some reasons why you may want to build multi-generational wealth beyond simply wanting to give your kids and grandkids a head start:

• Severe disability or health challenges. You, your spouse, or your child may require extraordinary financial resources to maintain a decent quality of life—think 24/7 caretakers, modified vehicles for mobility, custom housing, or lifelong occupational therapy. A responsible parent’s worry is never ending.
• Genetic risks. If you or your spouse carry recessive genes that could appear in future generations—causing loss of mobility, senses, or cognitive functioning—you might want to build a bigger financial safety net.
• Historical inequities. You may come from a community that has been historically marginalized and denied equal opportunities. Even though progress has been made, you may not trust that your children and grandchildren will ever be given a fully fair shake. Generational wealth becomes both protection and empowerment.
• The loud “provider’s clock.” Some people feel an unusually strong responsibility to take care of their family members. Maybe you were the first in your family to attend college, or you lucked into a life-changing opportunity like joining a startup before it IPO’d. Whatever the case, you feel compelled to leverage your luck into a lasting legacy.
• Volatility of opportunity. Opportunities come and go, and not every generation will be fortunate enough to catch a financial tailwind. Future generations may face bigger systemic risks than we did. By building more than you personally need, you’re smoothing the path for your heirs when they face tougher times.
• Philanthropic leverage. For some, it’s not just about family. A dynasty-level fortune allows you to create family foundations, endow scholarships, or shape institutions that last long after you’re gone.

Ultimately, the drive to build multi-generational wealth is usually not about greed. It’s often about love, protection, and creating optionality for the people who matter most.

The Math Behind Multi-Generational Wealth

Imagine a upper middle-class lifestyle for a family of four today costing $350,000 a year before taxes. In expensive cities like San Francisco, New York, Los Angeles, Settle, or Honolulu, this level of spending provides comfort, but it’s hardly extravagant once you factor in taxes, housing, childcare, education, and healthcare.

If you happen to live in a lower-cost city, feel free to adjust the numbers to better fit your situation. The country is vast, and the cost of living varies dramatically. This is simply a theoretical exercise to illustrate how much wealth might be needed to support three generations.

Supporting One Family Of Four Today

Using the 4% safe withdrawal rate, here’s how much capital is required: $350,000 ÷ 0.04 = $8,750,000

That means one family of four today needs $8.75 million in investable assets (not including primary residence) today to generate $350,000 in annual gross spending without depleting principal. If you want to build multi-generational wealth, the decumulation of principal is not the way.

In 20 Years (Next Generation)

Let’s assume each of this family’s two kids grows up, starts a family with two kids, and wants to maintain this same lifestyle. Using 3% annual inflation for 20 years: $350,000 × (1.03)˄20 ≈ $632,000

So what costs $350,000 today will cost about $632,000 a year in two decades.

At a 4% withdrawal rate: $632,000 ÷ 0.04 = $15,800,000

Each child will need about $15.8 million in invested capital to sustain a family of four in 20 years.

Total Required For This Family Of Four And Their Two Children’s Families Of Four

• This family of four today: $8.75 million in investable assets
• Child #1 in 20 years: $15.8 million in investable assets (assuming they are a family of four)
• Child #2 in 20 years: $15.8 million in investable assets (assuming they are a family of four)

Grand total = $40.35 million.

And that’s assuming steady markets, no major financial shocks, and no lifestyle creep. To be safe, you’d want a 20–30% buffer, meaning the real target is closer to $50 million+.

In 40 Years (Grandchildren’s Families)

Now that we’ve got the two children’s families and the current family taken care of, it’s now time to think multi-generational and figure how how much we need to save and invest to take care of their grandchildren’s families. Let us assume each grandchild has two kids and a spouse of their own.

Using the same assumptions:

• Base annual spending today: $350,000
• Inflation: 3% per year
• Timeline: 40 years

$350,000 × (1.03) ˄ 40 = $1,141,000

So by the time the grandchildren are adults, an upper middle-class family of four lifestyle could cost $1.14 million per year. Sounds kind of nuts! But the math doesn’t lie.

At a 4% withdrawal rate: $1,141,000 ÷ 0.04 = $28,525,000

Each grandchild’s family of four would therefore require $28.5 million in capital in the future to sustain themselves.

With four grandchildren, the total comes to: $28.5M × 4= $114 million.

The All-In Generational Number

• Family today: $8.75M
• 2 kids in 20 years: $31.6M
• 4 grandchildren in 40 years: $114M

Grand total = $154.35 million.

Add a 20–30% safety buffer for market volatility, higher-than-expected inflation, or health/education shocks, and the real number pushes closer to $200 million.

Holy moly! Coming up with $154 – $200 million is a crazy amount of money. No wonder some high-income earning parents feel the angst of not being rich enough. Only CEOs, unicorn-startup founders, top athletes, or elite hedge fund managers or venture capitalists can amass that type of fortune.

So the sad reality is, even if you don’t FIRE and grind yourself into dust, you still probably won’t amass multi-generational wealth anyway. Hence, think carefully about sacrificing your life to try and achieve an unlikely goal.

Calculating The Amount Needed In Today’s Dollars

But here’s the good news: In this example, you don’t need to save and invest $154 – $200 million today. That figure represents the inflated future capital required to sustain everyone’s lifestyles. What really matters is how much you’d need to set aside in today’s dollars.

• Family today: $8.75M to generate $350,000 a year in gross investment income at a 4% rate of return
• Kids in 20 years (discounted back at 3%): $17.5M instead of $31.6M in the future
• Grandkids in 40 years (discounted back at 3%): $35M instead of $114M in the future
• Grand total = $61.25M instead of $154M in the future

Now, $61 million is still a monster sum, but it feels a lot more approachable than $154+ million. And that’s using a conservative 3% discount rate (equal to the assumed inflation rate).

It gets better when you assume a higher rate of return (discount rate):

Base amount needed today: $8.75 million (no need to discount this number)

Amount needed today based on various discount rates to take care of two more generations, 20 and 40 years in the future:

• 3% (inflation only, base case): ~$52.5M ($61.25M total minus the $8.75M you need today)
• 4% (inflation + 1% real growth): ~$44.7M
• 5% (inflation + 2% real growth): ~$31.9M
• 6% (inflation + 3% real growth): ~$27.6M
• 7% (inflation + 4% real growth): ~$21.6M
• 8% (inflation + 5% real growth): ~$18.9M
• 9% (inflation + 6% real growth): ~$15.5M
• 10% (inflation + 7% real growth): ~$13.8M
• 11% (inflation + 8% real growth): ~$12.1M
• 12% (inflation + 9% real growth): ~$11.3M

Although $20.05 ($11.3 + $8.75 needed today) to $61 ($52.5 + 8.75 needed today) million is still an enormous sum, it’s far easier to wrap your head around than $154 million.

Generating a 5%–8% annual rate of return is quite reasonable. 20-year Treasury bonds yield about 5% risk-free, while stocks have historically returned around 10% per year. My venture capital investments in private AI companies could potentially generate even higher returns.

Working Obviously Helps Increase Your Chances

If you want to build multi-generational wealth by continuing to work, each year of saving and investing will further strengthen your returns. For instance, saving and investing $87,500 in a single year would raise a base of $8.75 million by 1%. That 1% boost can either accelerate your path to the target or provide a valuable buffer during downturns.

Think about this type of calculation as a Coast FIRE calculation for multi-generational wealth creation. You don’t need all the money today. Instead, you need enough money to grow at a reasonable rate of return beyond your consumption rate to support your future indefinitely.

How To Run Your Own Multi-Generational Wealth Calculation

If you’d like to stress-test your own plan, here’s a framework:

1. Start with your desired annual household expenses today.
   Example: $X per year for your current family size.
2. Estimate your children’s timeline to adulthood.
   How many years until your kids have families of their own? Call this N years.
3. Apply an inflation assumption.
   Multiply today’s expenses by (1+i)N(1+i)N, where i = inflation rate.
   • Conservative: 2%
   • Realistic: 3%
   • Pessimistic: 4%+
4. Apply the safe withdrawal rate.
   Divide the inflated annual expense by 0.04 (or your preferred rate). This gives the capital required for one family.
5. Multiply by the number of families you want to support.
   For example, two kids who each have two kids = six families total (including your own).
6. Discount back to today’s dollars.
   Use a discount rate that blends inflation and expected returns:
   • 3% = inflation only (very conservative, “real dollars”)
   • 5% = inflation + 2% real return (reasonable base case)
   • 7–9% = higher real returns (optimistic, but still possible)
7. Add a buffer.
   Because nothing ever goes perfectly, tack on 20–30% to your target.
8. Come up with a realistic number more years you’re willing to work.

This framework lets you plug in your own numbers. If your annual expenses are $80,000 in a lower-cost city, your target will be much smaller. If you think inflation will run hotter than 3%, your target will balloon.

The Most Realistic Way To Build Multi-Generational Wealth

Now that we’ve run the numbers, let me share the most straightforward way of building multi-generational wealth: real estate.

Once you’ve gone “neutral real estate” by owning your primary residence, aim to buy at least one rental property per child. Ideally, you purchase one when they’re born or even years before, giving yourself more time to pay down the mortgage and let the property appreciate as your child grows into adulthood.

The next step is to acquire additional rental properties based on the realistic number of grandchildren you expect. Since the average family has about two children, you can multiply the number of kids you have by two to set this new goal.

With affordable housing locked in, life gets much easier. If you can reduce your housing expense to 10% or less of your income, financial freedom becomes almost inevitable. After all, food, clothing, and shelter are relatively inexpensive compared to housing costs. Here’s my housing expense guideline for financial independence if you want to get more in the details.

Over a lifetime of saving, investing in other risk assets like stocks, and paying off multiple mortgages with leveraged gains, you’ll give yourself a strong chance of creating multi-generational wealth. And even if you fall short, you’ll still leave behind the most important foundation: paid-off shelter so your children and grandchildren will always have a roof over their heads.

Reconciling FIRE With Legacy Building

This is the hard truth: FIRE and multi-generational wealth are competing goals. FIRE is about quitting early to maximize your time. Multi-generational wealth is about working longer and compounding capital across decades.

You can’t maximize both at once unless you’re an ultra-high earner or build a billion-dollar company. For the rest of us, the trade-off is clear:

• Retire early, and you cap your wealth potential.
• Work longer, and you expand your wealth potential but sacrifice time freedom.

I’ve made peace with the fact that I may never hit multi-generational wealth to fully fund my grandchildren’s futures. And that’s OK.

My first job is to provide for my kids and raise them to be financially independent. If I can also build a cushion for my grandchildren, wonderful. If not, I’ll leave behind values like hard work, frugality, and investing – traits that may end up being more valuable than money itself.

After going through this exercise, I’ve realized there’s no way I’d be willing to work another 20 to 30 years just to build multi-generational wealth for my grandchildren’s family. I’ll leave that responsibility for my kids, if that’s what they want to do.

Final Takeaway

FIRE may make building multi-generational wealth impossible. But that doesn’t mean FIRE is a mistake. It just means you need to be clear-eyed about the trade-offs. Retiring too early cuts off the compounding engine that dynasties rely on.

The best we can do is strike a balance: build enough wealth to enjoy freedom today, while still setting up a foundation for the next generation. Anything beyond that is gravy.

Readers, what assumptions do you use for inflation, investment returns, and spending in your financial independence calculations? Do you think about building multi-generational wealth, or do you believe kids should be fully on their own? Why do you think people get upset at others for running financial simulations to see how much wealth they can build over a lifetime?

If you see any math or logic errors with my above calculations, please feel free to point them out and I’ll correct them.

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Subscribe To Financial Samurai 

You can learn how to build multi-generational wealth by reading my USA TODAY national bestseller, Millionaire Milestones: Simple Steps to Seven Figures. I’ve distilled over 30 years of financial experience to help you build more wealth than 94% of the population—and break free sooner.

Listen and subscribe to The Financial Samurai podcast on Apple or Spotify. I interview experts in their respective fields and discuss some of the most interesting topics on this site. Your shares, ratings, and reviews are appreciated.

To expedite your journey to financial freedom, join over 60,000 others and subscribe to the free Financial Samurai newsletter. You can also get my posts in your e-mail inbox as soon as they come out by signing up here.

Financial Samurai is among the largest independently-owned personal finance websites, established in 2009. Everything is written based on firsthand experience and expertise.

Since writing about FIRE in 2009, I’ve favored investing in growth stocks over value stocks. As someone who wanted to retire early from finance, my goal was to build as large a capital base as quickly as possible. Once I retired, I could convert these gains into dividend-paying stocks or other income-generating assets to cover my living expenses if so desired.

Although more volatile, you’ll likely generate more wealth faster by investing in growth stocks. By definition, growth stocks are expanding at a rate above average, which means shareholder equity also tends to compound faster. As equity investors, that’s exactly what we want. Instead of receiving a small dividend, I’d rather have the company reinvest capital into high-return opportunities.

Once a company starts paying a dividend or hikes its payout ratio, it’s signaling it can’t find better uses for its capital. If it could generate a higher return internally—say, improving operating profits by 50% annually through tech CAPEX—it would choose that instead. Think like a CEO: if you can reinvest for outsized returns, you do it. You don’t hand out cash unless you’ve run out of high-ROI projects.

The whole purpose of FIRE is to achieve financial independence sooner so you can do what you want. Growth stocks align with this goal; value stocks generally don’t.

My Growth Stock Bias

I’m sure some of you, especially “dividend growth investors,” which I consider a total misnomer, will disagree with my view. But after 29 years of investing in public equities, working in the equities divisions at Goldman Sachs and Credit Suisse, retiring from finance in 2012 at age 34, and relying on my investments to fund our FIRE lifestyle, I’m speaking from firsthand experience.

Without a steady paycheck, I can’t afford to be too wrong. I’ve only got one shot at getting this right. Same with you.

Given my preference, my 401(k), rollover IRA, and taxable accounts have been heavily weighted toward tech stocks since I started Financial Samurai. Some of my growth holdings—Meta, Tesla, Google, Netflix, and Apple—have certainly taken hits in 2018, briefly in 2020, and again in 2022. But overall, they’ve performed well. Technology was clearly the future, and I wanted to own as much of it as I could comfortably afford.

I no longer consider Apple a growth stock given its innovation slowdown and entrenched market position. But it was once a core compounder in my portfolio.

My Occasional Value Stock Detours (and Regrets)

Despite my beliefs, I sometimes can’t resist the lure of value stocks. In the past, I bought AT&T for its then-8% yield—only to watch the stock sink. I bought Nike when it looked cheap relative to its historical P/E after the Olympics, but it didn’t outperform the index either.

My latest blunder: UnitedHealthcare (UNH). I mentioned how I was losing $6,000 in UNH in my post, The Sad Reality Of Needing To Invest Big Money To Make Life-Changing Money. Hooray for another case study!

After UnitedHealthCare (UNH) plummeted from $599.47 to $312, I started buying the stock. I was amazed that a company this large, with such pricing power, could lose half its value in just a month. Surely, I thought, the market was overreacting to the latest earnings report and would soon realize the operational picture didn’t justify a 50% drop.

But the stock kept sliding, hitting $274. I bought more. For several weeks, UNH clawed back above $300, and I felt vindicated. Then it tanked again—this time to $240—after another disappointing earnings report. I added some shares, but by then, I had already reached my comfortable position limit of about $46,000.

To be thorough, value stocks are shares of companies that investors believe are trading below their intrinsic or fair value, usually based on fundamentals like earnings, cash flow, or book value. The idea is that the stock is “cheap” relative to its fundamentals, and the market will eventually recognize this, leading to price appreciation.

I Really Don’t Like UnitedHealthCare

I have a hate, hate, acceptance relationship with UnitedHealthcare. Ever since I had to buy my own health insurance in 2015, my view of the company soured. Back then, our monthly UNH premium was $1,680 for two healthy thirtysomethings who rarely used the medical system. Outrageous.

But what were we supposed to do, manipulate our income down to qualify for subsidies? I know many multi-millionaire FIRE folks who do, but it feels wrong so we haven’t. Medical costs in America are so high that going without insurance is financial Russian roulette. We had no choice but to pay.

Since 2012, we’ve paid over $260,000 in health insurance premiums. Then we finally had a legitimate emergency—our daughter had a severe allergic reaction. We called 911, took an ambulance to the ER, and got her stabilized. We were grateful for the care, but not for the bill: over $1,000 for the ER visit and $3,500 for a 15-minute ambulance ride.

And what did UnitedHealthcare do? Denied coverage. My wife spent a year fighting the usurious ambulance charge before we finally got partial relief. We were furious.

Today, we begrudgingly pay $2,600 a month for a silver plan for our family of four and still have little confidence UNH will do the right thing when the next big medical bill arrives.

So when the stock collapsed by 50%, I figured: if the company is going to keep ripping us off, I might as well try to profit from it. Big mistake so far.

Why Chasing Value Stocks Slows Your FIRE Journey

Now, let me explain three reasons why buying value stocks over growth stocks is usually a suboptimal move for FIRE seekers.

1) Impossible to bottom tick a value stock

Whenever a stock collapses, it can appear deceptively attractive. The instinct is to see tremendous value, but if the stock falls 50% and earnings per share (EPS) also drop 50%, the valuation hasn’t actually improved—it’s just as expensive as before.

The trap many value investors fall into is buying too much too soon. This is how you end up “catching a falling knife”—and getting bloodied. I was down about $10,000 at one point, or 17% from my initial purchase.

After investing since 1996, I know better than to go all-in early. Yet I still bought my largest tranche—about $24,000 worth—when UNH was around $310–$312 a share. As it continued to slide, I added in smaller amounts. By the time the stock fell to $240, I was mentally waving the red flag once I’m down about 20% on a new position. So I only nibbled instead of gorged, much like buying the dip in the S&P 500 overall.

The point: You have a far better chance of making money buying a growth stock with positive momentum than a value stock with negative momentum. Don’t kid yourself into thinking a turnaround will magically begin the moment you hit “buy.” It’s the same way with buying real estate or any other risk asset. Do not buy too much of the initial dip too soon.

2) Tremendous Opportunity Cost While You Wait for a Turnaround

Stocks collapse for a reason: competitive pressures, disappointing earnings and revenue forecasts, corporate malfeasance, or unfavorable macroeconomic and political headwinds.

For UNH, the drop was a perfect storm: bad publicity, rising medical costs, disappointing earnings, and a Department of Justice investigation into Medicare fraud. After the tragic shooting of a UNH executive by Luigi Mangione, thousands of stories surfaced about denied coverage and reimbursements. Suddenly, the hate spotlight was firmly on UNH.

During the two months I was buying the stock, the S&P 500 kept grinding higher. Not only was I losing money on my value stock position, I was missing out on gains I could’ve had simply by buying the index. Opportunity cost! Another great reason to be an index fund fanatic. If I had allocated the $46,000 I spent on UNH to Meta—one of the growth stocks I was buying at the same time (~$41,000 worth)—I would have made far more.

Turnarounds take time. Senior management often needs to be replaced, which can take months. If macroeconomic headwinds, such as surging input costs, are the issue, improvement can take 12 months or longer. If cost-cutting is required via mass layoffs, the company will take a large one-time charge and suffer from lost productivity for several quarters.

By the time your value stock recovers—if it recovers—the S&P 500 and many growth stocks may have already climbed by double-digit percentages. Unless you have tremendous patience or are already a multi-millionaire, waiting for a turnaround can feel like watching paint dry while everyone else is sprinting ahead.

3) Emotional Drain, Frustration, and Behavioral Risk

Value traps often force you to watch your capital stagnate for months or even years. For FIRE seekers, that is not just a financial hit, it is a psychological one.

Watching dead money sit in a losing position can push you into making emotional, suboptimal decisions, such as swearing off investing altogether. Growth stocks are volatile, but at least you are riding a wave of forward momentum instead of waiting for a turnaround that may never come.

It is like buying a house in a declining neighborhood. You keep telling yourself things will improve. The new park will attract families. The school district will turn around. The city government will stop being so corrupt. But year after year, nothing changes.

Meanwhile, a neighborhood across town is booming. Its home values are doubling, and you are stuck wishing you had bought there instead. That opportunity cost is not just financial. It is mental wear and tear that can drain your energy and cloud your decision making.

Not only do you risk growing regret over tying up hard earned capital in a value stock that never recovers, but you also face the sting of rising investment FOMO. That is a toxic combination for anyone trying to stay disciplined on the path to FIRE.

You might end up doing something extremely reckless to catch up, like go all in on margin at the top of the market. After all, investing is all relative to how you are doing against an index or your peers.

FIRE Seekers Don’t Have Time to Invest in Value Stocks

If you’re pursuing FIRE, you don’t have time for “deep value” stories to play out. Every year you spend waiting for a turnaround is a year you’re not compounding at a faster rate elsewhere. Growth stocks, while more volatile, give you a far better chance of building your capital base quickly so you can reach financial independence sooner.

Just look at the private AI companies that are doubling every six months or even faster. I’m kicking myself for even bothering to invest in a turnaround story like UNH. Life-changing wealth is being created in only a few years with AI. There has never been a period in history where so much money has been built this quickly.

Remember, the FIRE clock is always ticking. The goal isn’t just to make money, it’s to make it fast enough to buy back your time while you’re still young, healthy, and able to enjoy it.

Chasing value traps can lock up your capital in underperforming assets, drain your energy, and delay the day you get to walk away from mandatory work. In the journey to FIRE, momentum and compounding are your greatest allies, and growth stocks tend to provide both.

Post Script: UnitedHealthcare May Finally Rebound

There’s another explanation for my stance on being negative toward value stocks. I may simply be a bad value stock investor who lacks the ability to pick the winners and the patience to hold these turnaround stories for long enough to reap the rewards. Fair enough.

With UnitedHealthcare, though, it seems like the cavalry might be riding in to rescue my poor investment decision. After I wrote this post, it appears Warren Buffett, several large hedge funds like Appaloosa and Renaissance, and Saudi Arabia’s Public Investment Fund are all buying billions of dollars worth of UNH alongside me.

Will this renewed interest from some of the world’s most powerful investors be enough to get Wall Street and the public excited again? We’ll just have to wait and see. Just don’t rely on the calvary to wake up and realize what you’re seeing and save you.

Questions for Readers:

Would you rather own a struggling industry leader with a chance of recovery, or a high-growth disruptor with momentum?

Have you ever owned a value stock that turned around in a big way? How long did you have to wait?

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