Book Notes: Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required by Kristy Shen and Bryce Leung

Reading Time: 16 minutes

Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required by Kristy Shen and Bryce Leung

Publisher : TarcherPerigee (2018)

ISBN-13 : 978-0525538691

Rating: ⭐⭐⭐

3 Main Ideas

  1. Retirement is not an age. It’s a number. The 4% rule states that when 4 percent of your investment portfolio matches your living expenses, you can retire and you’ll have a 95% chance of making it 30 years without running out of money. This is simply a mathematical formula that’s not dependent on your age, but rather, on your savings and investment rate.
  2. Real wealth is rarely built instantly. Getting rich isn’t fast or easy. It is, however, simple and repeatable. The three forces of finance are money coming in (income), money going out (expenses), and money generated from money (investments).These forces dictate the three main ways to become wealthy. Hence, there are 3 main types of (self-made) millionaires: entrepreneurs, investors, and optimizers.

    Entrepreneurs have an exceptional ability to see opportunities to make money. They excel at making money, and are very comfortable risking everything to build a business. (e.g. Elon Musk)

    The investor is an expert at turning money into even more money. They typically prefer investments with returns of at least 20% or more. They have the skills needed to spot a good investment that others can’t, and are skilled at using debt and leverage to maximize their returns. Consistently successful investors are extremely rare. (e.g. Warren Buffet)

    The most common type of millionaire is the optimizer, and is the approach that is most mathematically reproducible for just about anyone. No unique skills or talents required. Optimizers have regular jobs, make decent (but not insane) salaries, and lead fairly regular lives. They are, however, exceptional at saving. Essentially, optimizers obsessively control their spending, and have exceptional savings rates that allow them to take advantage of compound interest to invest their way to wealth.

    Knowing your personality, your strengths, and your weaknesses enables you to pick the path to attaining wealth that best suits your personality. The optimizer approach is simple and reproducible, and anyone who follows that approach is nearly guaranteed to achieve financial independence.

  3. At the end of the day, it isn’t about money, it’s about time – and how to use it wisely to live the best life possible. Once your basic needs are met, and survival is no longer at stake, money becomes a tool that gives you options and buys you freedom. Financial independence gives you the time to do what you want, with who you want, and on your own schedule. It provides you with freedom, to get your time back, and to live your life on your own terms.

Five Key Takeaways

  • The 4% Rule of Financial Independence. Financial independence (FI) is a number, not an age. The 4% rule states that when 4 percent of your portfolio matches your living expenses, you can retire and you will have a 95 percent chance of making it thirty years without running out of money. You can retire at any age, as long as you hit your financial independence (FI) number. You don’t need to wait until the traditional retirement age of 65 to be financially independent.
  • Savings Rate. The single biggest determinant of when you can retire is your savings rate, not your income. The more you save, the earlier you can retire. Retirement is not a function of your age, or your salary. It’s simply a mathematical formula based on how much of your income you are able to save and invest.

When you increase your savings rate, you’re doing 2 things:

    • reducing your living expenses, which reduces your target portfolio size,
    • increasing the amount of money going into that portfolio each year.

Saving more enables you to need less money in retirement while also putting more money away and speeding up your ability to retire. Increasing your savings (and investing) can shave off years from your time to retirement. If you save 0% of your income, you’ll never be able to retire. If you save 100% of your income, you could retire immediately.

  • The Importance of Mindset. FI is easy, attainable, and reproducible for most people, provided they have the right mindset. The two most important ones are:
    • Scarcity Mindset: instills the discipline needed to prioritize financial independence. Scarcity imposes constraints, and can be helpful in instilling discipline and focus, so as to secure what you lack.
    • Freedom Mindset: It’s a way of living that prioritizes freedom and autonomy. Once your needs are met, the freedom mindset helps you shift into realizing that money is simply a tool that can buy you time and freedom to do whatever you want, when you want, and with who you want.
  • Choose your Degree Wisely. Not all college degrees are worth it. Pick a degree and career with a high POT (Pay over Tuition) score, and follow your passions later when you achieve financial independence. An expensive degree that doesn’t provide you a well-paying career is extremely dangerous, especially if you take on debt to acquire the degree.
  • Yield Shield and Cash Cushion. These are complementary strategies that help you to not become the 5% of people who run out of money during retirement due to the misfortune of having retired right before a recession.A cash cushion is a cash reserve, held in a high-yield savings account, and contains enough cash to help you withstand a 5-year downturn (the conservative/worst case scenario length of time for a stock market recovery).

    The yield shield harvests the dividends and interest from your index-fund portfolio and withdraws it into your checking or savings account to pay for your living expenses in a downturn. It enables you to use your portfolio without having to sell assets in a recession.

    The only way to permanently lose money would be to sell during a dip and miss out on the recovery. When the stock market goes up, use the Yield Shield and harvest capital gains to fund your current year spending. When the stock market dips, use the Yield Shield and your Cash Cushion.


Top Quotes

  • When you don’t have enough of something, it becomes the most important thing in your life. Everything else is secondary. (14)
  • When you’re poor, money is the most important thing in the world, because money is survival. You don’t make careless mistakes because if you do, people go hungry, or even die. (17)
  • Some, or even most, of what you’re buying isn’t making you happy. Some of your spending is waste, plain and simple. (25)
  • Sometimes your entire life turns upside down through no fault of your own, and you have to learn how to tough it out and survive. No one is coming to save you. (54)
  • Successful people … don’t spend time on what-ifs. They spend that time finding a solution. Don’t worry about how far you’ve fallen. Keep climbing. (62)
  • The only thing you can control is what you do now. There is always a way out. The key is to remember: The past doesn’t matter. What do we do now? (64)
  • The more stuff people owned, the unhappier and more stressed they tended to be. Conversely, the less stuff people owned and the more they spent on experiences like travel or learning new skills, the happier and more content they were. (69)
  • If you understand money, life is incredibly easy. If you don’t understand money, life is incredibly hard. (290)
  • For me, poverty gave me creativity, resilience, adaptability, and perseverance. For others, it inspired them to reach for the stars in ways their parents never could have dreamed of. And for others, it gave them a fear of being without that they never want to experience again. Any which way, though, poverty gave us the spark that drove us to do whatever it took to break out. …I wasn’t born with a silver spoon in my mouth, and neither were many other self-made millionaires. That’s not weakness. That’s strength. (289)


Kristy Shen and her husband Bryce Leung are Canadians who achieved financial independence at the age of 31 and 32, respectively, with a net worth of USD $1M. In 2015, they quit their jobs, and have spent the last few years traveling the world. And, since retiring, their portfolio and networth has actually increased.

Kristy came from a poverty stricken background. When she was eight, she and her family immigrated to Canada from rural China, where her entire family (father, mother, and Kristy) lived on the equivalent of 44 American cents per day.

Her father nearly starved to death during one of China’s famines, and he was also forced to spend some time in one of China’s reeducation camps. At one point in China, Kristy was sourcing toys to play with from a medical waste garbage dump.

That background of poverty instilled resilience and discipline in Shen. She talks about the Chinese concept of “chi ku” which translates into “eat bitterness”

Eating bitterness is seen as a strength in our culture. Accepting and pushing through pain without complaining is how you build character. (53)

So, poverty taught Kristy valuable skills, what she calls CRAP (creativity, resilience, adaptability, perseverance). It forged a scarcity mindset in Kristy that has played a huge role in shaping her personality.

My family started off in the bottom 1 percent, which rewired my brain to make it hyper-focused on what we lacked. That Scarcity Mind-set made me prioritize financial security above everything else—and it is precisely that Scarcity Mind-set that got me to where I am today, in the top 1 percent. (17)

Shen is an advocate for FIRE (Financial Independence, Retire Early), which states that by following a particular financial plan, ie. by reducing expenses, saving, and investing, it is possible to acquire enough money to retire early, and to spend the rest of your life doing what you love.

She states that retirement is a number, not an age. The traditional narrative is to work hard for 40 years, retire at 65, and live out the remainder of our lives collecting our pensions and investments. Shen states that you don’t necessarily have to follow that narrative.

Kristy and her husband, Bryce retired at age 31 & 32, with a million dollars, and did it at fairly normal (high but not insane) salaries.

What’s more, she says the process is simple, easy, and reproducible, if you understand money. And understanding money is not difficult. It boils down to being disciplined, saving, and investing. Shen says this process is so simple and reproducible that nearly everyone who follows the formula that she did can retire decades before the traditional retirement age of 65.

You don’t need to be earning millions of dollars, or day trading on the stock market, or founding a hot new startup. Not everyone has the skills to be a genius investor or brilliant founder. But, everyone, with time, patience, diligence and persistence, can learn to live within their means, cut down on unnecessary expenses (without lowering their quality of life), invest, grow their net worth, and attain financial independence that allows them to live life on their own terms.

It’s a useful book, especially the chapters around how to strategically draw down your portfolio every year, in retirement. It’s also helpful in providing useful tax optimization strategies and helping you to figure out the best way to shock-proof your investments in retirement, especially during economic downturns. Some of the later chapters – around insurance, and traveling with children, aren’t as rigorous as I would have hoped. But, overall, it’s a very helpful book that questions some of the assumptions we have around financial independence, travel, retirement, and so on.


  1. 4% Rule. Financial independence (FI) is a number, not an age. You can retire at any age, as long as you hit your financial independence (FI) number. You don’t need to wait until the traditional age of 65 to attain financial independence.To figure out your “FI number”, or how much money you need to have before you can achieve financial independence, use the 4% rule. The rule is to take your yearly expenses and multiply by 25.

    So, for instance, let’s say that your yearly expense is $60,000. That means your FI number is 60,000 x 25 = $1.5 million.

    Once your invested portfolio hits that target amount of $1.5M, you can safely withdraw 4% out of your accumulated money every year, (if it’s invested through index funds), and have that money last for the rest of your life.

    This gives you a goal that you can reach for, rather than hoarding money endlessly with no real purpose. Once your survival is no longer at stake, financial freedom becomes the goal. You now have something valuable and meaningful to work towards.

    The problem with the Scarcity Mind-set is that it doesn’t have an end goal. Once survival is no longer in jeopardy, there’s no off switch. You continue to sacrifice needlessly, forever (ie. hoarding mindset). (155)

    The Freedom Mind-set shifts your thinking, from money being the most important to freedom being the most important. (157)

  2. Choose Your Degree Wisely. Education has the power to change your life, and can play an important role in attaining financial freedom. Education increases your earning power, improves your ability to process and understand information, helps you to become more curious and self-sufficient and teaches you how to trade short-term pain for long-term gain.But, not all college degrees are created equal. It’s important to pick the right major in college. When choosing a major and a job, you have to figure out how much that particular field pays you, over the minimum wage, and then divide that by your tuition. That figure gives you the degree’s POT score: Pay over Tuition (POT), and provides guidance as to whether a degree is worth it. Basically, you need to figure out how much a degree costs and weigh that against income statistics in the industry you decide to work in.

    The POT score is calculated as: Median Salary Above Minimum Wage / Total Cost of Degree.

    A high POT score means money spent on tuition will have a greater effect on your income. Following your passion, and hoping for money to follow is risky. Follow the money first, and you can do what you love later.

    If you believe that you’re special, and all you have to do is find your singular passion and turn it into a perfect job, that’s a recipe for disaster. The reality is that the world owes you nothing. You only become “special” by developing skills that are in demand, which takes focus, grit, and long-term work. (56)

  3. Saving and Investing. Attaining financial independence doesn’t require you to earn huge amounts of money or invent the hottest startup. The time it takes you to reach FI depends on your savings rate, and not your salary. If you save only 10% of your salary, it will take you about 46 years to retire. If you save 50 to 60% of your salary, you can probably retire within the next 12 to 16 years. If you never save any money, you’ll never be able to retire.The more you save, the faster you can achieve financial independence. And, you can’t just keep your savings in cash or in a savings account. You need to invest those savings (preferably, in a low cost index fund) so that it grows and compounds and generates a financially independent portfolio.

    Forget about any bad financial habits you might have had in the past. Don’t let yourself be defined by your past. All that matters is what you do now, going forward. Focus on minimizing your expenses, paying off any high-interest debts you may have, save and invest.

    The only thing you can control is what you do now. There is always a way out. The key is to remember: The past doesn’t matter. What do we do now? (64)

  4. The Power of Index Investing (and Compound Interest). Index investing is less about picking individual stocks, and more about betting on the future economic growth of the entire stock market (and health of the economy). Picking and choosing individual stocks is risky. You need to spend a lot of time researching your picks, and it is possible for a single stock to go to zero. So, it’s possible to lose your entire investment if you’re in the stock selection business. Only 15% of professional active money managers beat their benchmark market indexes after fees. And, those are the professionals!Index investing is placing a bet on the entire stock market, not picking individual companies, through index funds. With index investing, your investments can’t go to zero (unless every single company in the economy goes bankrupt at the same time, at which point you have bigger problems than the stock market).

    Since the index owns all companies, it’s impossible for it to crash to zero. Individual companies may go bankrupt, but unless every single company goes bankrupt at the same time, the index never hits zero. (93)

    The stock market suffers through daily gyrations, various highs and lows. But, over time, the stock market always goes up. Index investing takes advantage of time, in which you contribute small amounts of money over a long period of time (years, not weeks or months), and make money gradually.

    Index investing takes advantage of time and compound interest to produce spectacular returns over extremely long periods of time. So, it’s important to start investing as early as possible so that your money has a long enough amount of time to compound. The earlier you start to invest, the more money you will end up with.

  5. The Magic of Reproducibility. The process of attaining financial independence is simple; it boils down to math and self discipline. And anyone who follows the formula can achieve it. You don’t need to earn six figures to retire early. Even with an average salary, you can still retire early. The most common type of millionaire is the optimizer, people with regular jobs, making average salaries, leading normal lives, who saved and invested their way over time into million-plus dollar portfolios.Unlike being a skilled investor, or entrepreneur, the optimizer approach to financial independence is mathematically repeatable.

    Unlike the other approaches, the Optimizer’s is mathematically reproducible ….Optimizers can all do essentially the same thing and it’ll work each time. (288-9)

    Anyone who follows the prescription – work hard, reduce expenses (especially in housing, transportation, food), save and invest in low-cost index funds – is nearly guaranteed to wind up with wealth and financial independence. Getting rich isn’t fast or easy, but it is simple and reproducible.

  6. Cash Cushion & Yield Shield. The 4 Percent Rule is not a guarantee. Following the 4 Percent Rule still gives you a 5% chance of running out of money at some point during your retirement, due to a phenomenon known as sequence-of-return risk. The sequence of return risk occurs if you have the bad luck to retire right before a recession. When that happens, your investment portfolio crashes in value at the same time when you also need to withdraw from it for living expenses in retirement. It is a worst-case scenario.

    Unlike individual stocks, index funds won’t go to zero, so when a drop happens, the correct thing to do is wait (or buy more). The absolute wrong thing to do is sell. But when you’re retired, you have to sell at some point, which depletes your portfolio so much that when the rebound happens it can’t recover. You end up being in the dreaded 5 percent club of broke-ass retirees. (167)

    To fix this problem, you can use a complementary system called the cash cushion and the yield shield.

    The cash cushion is a reserve of cash stored in a high-interest savings account. In retirement, and in the event of a stock market downturn, this cash serves as a reserve fund (or cushion) so you don’t have to rely on selling assets to pay for your living expenses.

    The median length for the stock market to recover from a big crash is about two years (5 years, after the Great Depression, which remains the worst-case example). So a five-year cash cushion should be sufficient to weather financial downturns without having to draw down your investment portfolio.

    But, that doesn’t mean you need to hold 5 years worth of spending in cash. That’s where the yield shield comes into play.

    The yield shield is the process of harvesting the combination of dividends and interest that’s paid by your ETFs (index funds) as a result of ownership. These dividends and interest are delivered as cash, without the need to sell any assets, and are generated regardless of whether the stock market is rising or falling.

    Pairing the cash cushion with the yield shield strategy enables you to weather the first five years of retirement successfully, even in times of economic recessions and stock market crashes, reducing your need for portfolio withdrawals in a downturn to pay for your living expenses. And it allows you to do this while keeping a relatively small amount of cash sitting on the sidelines not being invested. Once you successfully withstand those first five years of retirement, you can be very reasonably sure that you won’t run out of money at some point in your retirement.

    Over the long term, a yield shield portfolio will underperform a pure indexing portfolio. But since the first 5 years of retirement are the most dangerous due to sequence-of-return risk, you only need the yield shield for those first five years. Afterwards, you should pivot back to a regular pure indexing portfolio.

  7. The Importance of Mindset. FI is simple, attainable, and reproducible for most people, provided they have the right mindset.
    1. Scarcity Mindset: instills the discipline needed to prioritize financial independence. Scarcity imposes constraints, and can be helpful in instilling discipline and focus, so as to secure what you lack.
    2. Freedom Mindset: It’s a way of living that prioritizes freedom and autonomy. Once your needs are met, the freedom mindset helps you shift into realizing that money is simply a tool that can buy you time and freedom to do whatever you want, when you want, and with who you want.
    3. Entitled Mindset. Many middle class people in developed countries have little to no ingrained fear of failure. In the event they fail, they know they’ll either be supported by their parents, by a social safety net, or that things will somehow eventually all work out in their favor. It’s useful, but it also creates a sense of entitlement and dependency. In contrast, growing up in a developing country usually means there is no government-provided safety net, and that things can always get worse. It instills the realization that no one is coming to save you, and so you need to learn how to save yourself.

    The two most important ones in attaining FI are the scarcity mindset and the freedom mindset.

    Scarcity isn’t always a bad thing. It can even be constructive. (18)

    When you’re poor in the developing world, there is no safety net. But here, there are systems in place to help you get on your feet. That’s a great thing – but when it runs up against that Entitlement Mind-set, people can become dependent on that assistance, which often comes in the form of Mom and Dad. (56)

  8. Travel can Accelerate Financial Independence. By engaging in geographic arbitrage, you can reduce your living expenses and put more money into savings and investing.This is especially true if you’re able to work remotely. By decoupling your work location from your living location, you can design your life so that you’re earning money from a country with a strong currency (such as the dollar), and spending it in a country with a weak currency (e.g. pesos, baht, kroner). This can significantly accelerate your journey to financial independence.

    You can also choose to retire in a low-cost location that dramatically reduces your cost of living, and hence the total amount of money you need to save in order to be financially independent.

    By alternating the time spent in higher-cost locations like Western Europe with time in lower-cost places like Eastern Europe and Southeast Asia, it’s possible to “design” a travel budget. (203)

  9. Experiences vs. Possessions. The Hedonic Treadmill is the process where we return to our normal baseline level of happiness even after experiencing a positive change in our life. We can get used to almost anything. So, when we buy something new, or get a raise, or something positive happens, after the initial surge of joy, over time, we return to our normal baseline level of happiness.Spending money on things is addictive because our brains reset our expectations, and we no longer get the same amount of joy with repeated spending. In addition, having a lot of things creates stress because you now have to maintain and protect it. Houses, cars, jewelry, clothes, etc all need to be maintained, upgraded, and protected.

    Spending increases your happiness when it brings something new to your life, whether that’s a possession or an experience. These are splurges. However, that happiness is temporary for possessions but not for experiences. (69)

    Spend money on experiences, not stuff. Because every experience is different, we experience happiness whenever we engage in a new experience.

    People who spend on experiences get way more bang for their buck. (69)

    Since every experience is different, your happiness spikes each time. Not only that, once the experience is over, you don’t own anything, and as a result you don’t need to protect it. (70)


  10. Tax Optimization. Tax optimization is the process of putting your assets into the right accounts so you reduce (or eliminate) taxes post-retirement. Certain income is more tax-efficient than other income. Employment income and interest income are taxed at the worst rates, while investment income (qualified dividends and capital gains) is the most tax efficient.Put assets that pay interest or non-qualified dividends in your tax-deferred or tax-sheltered accounts. Put assets that pay qualified dividends in your normal investment account.

    The more money you have, the more loopholes are available to you. And as a result, the less taxes you pay. Take advantage of tax shelters (like the Roth IRA or HSA) and tax deferment structures (like 401K) to significantly reduce your tax liability.

    With strategic withdrawals from your brokerage, and via using legal loopholes such as 5-year Roth conversion ladders, you can both minimize your tax obligations and also have access to your retirement accounts before the age of 59.5 without paying the 10% early withdrawal penalty.

    If you were to stop working, your employment income would drop to $0. And if you were to structure your portfolio such that it earned money as dividends and capital gains, you could end up never paying taxes again. (138)

    Wealthy people tend to hold the majority of their wealth in investments. Specifically, they hold investments that return money to them as dividends or capital gains. (This is also why you see many founders take a $1 nominal salary, and earn the vast majority of their income via equity/stock holdings)

    Recommended Reading

    The Simple Path to Wealth by J.L. Collins


Have you read this book? What did you think? Share your thoughts and ideas with me!

If you found this summary helpful, just  click here  to share it