Friday, November 16, 2007

Our Journey To Financial Freedom #7 - How Luck Played A Role

In early October, 2007, I announced that I had retired in my forties. As promised, I am writing a Friday series on "How We Did It," of which this is segment #7. ( #1 is about our childhood , #2 is about education, #3 is about working, #4 is about lifestyle , #5 is about goals, #6 is about staying on track.) While our planned actions significantly contributed to success, there was also a degree of luck, good fortune, or serendipity, without which we would not have made it. Here are the three areas where I think luck contributed the most.

Career luck. In school, sports or work, I have always been most successful when working with the right leader, manager or organization combined with the right situation that enabled me to to best leverage of my strengths and skills. At work, this happened in the middle of my career. I transferred to a team where the individuals complemented each other strengths and worked well together. In addition, due to the geographical dispersion of the work, we were given more decision latitude than other project leaders. It was during this time, I felt I did my best and most significant work for the company. Apparently, the company also thought so, as I was promoted twice during this time frame.

I consider it great luck that I was transferred into this organization. No assignment before or after was as good as the ones from those years. Also, the additional total compensation from the promotions enabled us to put significantly more into retirement savings. I'm pretty sure if I had not been promoted, I would still have at least a decade more of work before retirement.

Retirement plan luck. My retirement plan is based primarily on company stock. As many of you know, it can be very high risk when one's retirement account is dependent on the performance of one stock. On the other hand if that stock is Microsoft, Wal-Mart or Google, one would be very lucky:-)

Count me on the luckier side since our company stock has outperformed the S&P index during my participation, returning about 16% annually versus 9.6% for the S&P index . If the retirement plan had just match the S&P returns, I'd still be working.

Investing luck. This one is more about avoiding bad luck. I did not invest heavily in tech stocks during the late nineties and I completely avoided speculating during the real estate bubble. Thus, in both cases I avoided losing significant amount of savings when the bubbles burst.

I admit it was hard to avoid participating when colleagues, neighbors and acquaintances were making significant amounts of money in the early stages of each bubble. In hindsight, I am glad (and lucky) that I didn't invest in these bubbles and avoided the eventual large declines.

Here's the series:
  1. Our Childhood Preparation
  2. The Value Of Higher Education
  3. Making The Most Of My Job
  4. Lifestyle and Spending Choices
  5. Setting Goals, Developing Plans and Tracking Process
  6. Staying The Course
  7. How Luck Played A Role
  8. My Personal Finance Mind Tricks
  9. The Professionals We Used
  10. When Preparation Met Opportunity
For more on Reaping the Rewards, check back every Friday for a new segment.

Photo Credit:, Clara Natoli

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC


Fiscal Musings said...

It goes to show that there are many different ways to get there, if you know where you're going at least. I also like that you recognize that there was a little luck involved.

living off dividends said...

I had a friend who once told me 'its better to be lucky than rich'.

since he was rich and i wasn't i didn't really understand the meaning of that.