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My Critique of Ali Abdaal’s Guide to Financial Freedom

YouTuber Ali Abdaal started being known for making videos about productivity and got really big.

Recently, he made a video about how to retire early, a guide to financial freedom. Ali Abdaal got so big because he has a way of digesting and summarizing a subject in a way that is very useful for his audience, and I thought Investment Moats readers would appreciate his perspective on the subject:

Ali went through the following three sections in his video:

The three levels of retirement

  1. Traditional Retirement – Otto Von Bismarck
  2. Mini-Retirement – Tim Ferris
  3. Perpetual Retirement – Naval Ravikant

The three methods to retiring early

  1. Can you make loads of money
  2. Reduce your expenses (a lot)
  3. Love Your Work

How to make a plan to retire early

  1. Make money
  2. Reduce costs
  3. Love my work

I feel that our interpretation of a subject is a mixture of the depth we learn about the subject and the phase of life and experience we went through.

How I would interpret early retirement would be very different from how you or Ali interpret it. Ali said, “My understanding of retirement has evolved over time.”

And I think your understanding of retirement would also be recalibrated over time as you understand more about the technical part and learn more about yourself.

Your Success Heavily influences your Magic Retire Early Formula

Ali said he got energized after reading Tim Ferris’s concept of working multiple side hustles, which will supplement his income to live a mini-retirement lifestyle. That may not be your influence.

Ali successfully made his YouTube channel a thriving business and derived great residual income from it. I am sure this impacts his three methods of retiring early. He phrased the first part as, “Can you make loads of money.”. That phrase is very general and can include doing well in a consultant or investment banking career where you can make an above-average salary compared to other people.

However, I felt that you would only term it that way if you ponder how to make a vast sum of money in a concise time, and that might be the thing that many of us think about when we have nothing.

If you become financial independent mainly from your above-average income compared to your peers, you would phrase the three methods to retiring early differently.

You can contrast Ali’s formula against my wealthy formula here. I never got rich fast, and the way I phrased my formula tends not to show those elements, even though generally, Ali and I speak almost the same thing.

Some readers would be alienated because they have never seen glimpses of a high-income or a successful business cash flow and would not connect with the concept. This may be one reason why we see negative comments whenever a news article with a comment section discusses F.I.R.E.

It does show that there are limits to videos like what Ali produced. It has to be a series of content that discusses the subject extensively. For example, reducing expenses (a lot) and loving your work can be drowned out if we don’t present well enough to trigger you to think deeper.

Loving Your Work

Naval Ravikant’s The Almanack of Naval Ravikant is a book I would like to get into, but I just don’t have the time for it.

I can see Naval dishing out something about work and life along these lines:

This is generally true because lucrative work may not be work that energizes you, and the ideal life for you may be very different from the work that you are doing today.

We often sacrifice something to “save up” so that we can spend in an ideal future. This is a way to view your money. It has to be spent. Just today, in the past or in the future.

We retire from something into something else. When there is nothing else to retire into, what you currently live is your permanent “retirement”.

This philosophy is not about just money but your state of well-being. Money enables things, but… even if you have lots of it but you still struggle with your transition to totally not working, that may not be the ideal retirement state.

Ali brings up some good questions to ponder:

“Enjoy the journey of making money, doing the work you would be doing even if you are not being paid.”

“If I have $100 million in the bank, how would I spend my time?”

“What are the activities in my calendar that drain my energy, and what are those that give me energy?”

Ali’s Interpretation of the 4% Withdrawal Rate is Wrong.

I felt that he had butchered the safe withdrawal rate.

I usually ask people: “What is your interpretation of the safe withdrawal rate?” because many people interpret it very differently.

And how you interpret it has an impact on how safe or realistic you see this income spending down strategy.

Here is my comprehensive guide to the safe withdrawal rate: Why the Safe Withdrawal Rate (SWR) is Important for Your Financial Independence

You can read more about my thoughts and the money aspect of financial independence and retirement planning in my Retirement Planning, Financial Independence and Spending down Money section below:

I invested in a diversified portfolio of exchange-traded funds (ETF) and stocks listed in the US, Hong Kong and London.

My preferred broker to trade and custodize my investments is Interactive Brokers. Interactive Brokers allow you to trade in the US, UK, Europe, Singapore, Hong Kong and many other markets. Options as well. There are no minimum monthly charges, very low forex fees for currency exchange, very low commissions for various markets.

To find out more visit Interactive Brokers today.

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  1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
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  6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
  7. Providend – Where I used to work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works
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Sunday 9th of October 2022

I think you have done very well for yourself by quitting your IT job and now doing this blog, which I am sure, you love doing and would do it anyway even if you are not paid for it. Plus you found an advisor job which is your area of interest. I think you are the best example of the perfect early retiree especially here in Singapore. You should promote yourself a bit more via Youtube videos and probably even write a book yourself :)


Saturday 8th of October 2022

Hi Kyith,

Have you tried buying UST from ibkr yet? Curious to know what you have learnt.


Monday 10th of October 2022

Hi Aaron, not yet


Saturday 8th of October 2022

Given that FIRE needs money, you obviously have to make money before you FIRE. I wonder why increasing your wealth by increasing your salary gets so little attention from the FIRE crowd. Instead it seems that in SG, the recommended way on the internet (judging by some SG bloggers/youtubers) to increase wealth is to buy Tesla calls and Crypto

Getting career coaching, improving your job skills, learning how to network, are all easy ways to getting opportunities to find jobs and opportunities within your job that interest you. You are most likely to do well in a job you find interesting, and this will lead to salary & career advancement.


Monday 10th of October 2022

Hi lim, i think more people directly realize that they got to earn more to make it more achievable.

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