Back in 2012, when I left my finance job, I worried I had made a huge mistake. The money was good. The job provided decent status. But I was exhausted by the grind. So I did what any rational person would do when faced with a single, finite life: I chose a better lifestyle.
It would have been completely illogical to keep staying miserable just to collect a paycheck, especially when the long-term health costs were becoming obvious. Still, walking away from a high-paying career without another job lined up is terrifying. Freedom always sounds better in theory than it feels in practice.
So I built contingency plans.
I wrote about creating financial buffers for my financial buffers. The idea was simple: build so many walls that if a tsunami ever hit my finances, it would lose momentum before destroying everything. Only if all those walls failed would I have to put the wetsuit back on and return to the grind.
One of the most important buffers was investing.
With just a chip and a chair, anything is possible. And now, as AI sentinels close in on millions of livelihoods, gatekeepers tighten their grip, and capital increasingly concentrates at the top, learning how to become a competent investor is no longer optional. It is essential for survival.
Why Investing Competence Matters More Than Ever
We know that artificial intelligence will eliminate or compress millions of jobs.
At the same time, the traditional paths to upward mobility are closing. Credentials matter less. Relationships matter more. And the wealthy, rationally acting in their own interests, are not lining up to redistribute their capital to the rest of us.
If labor becomes less valuable, capital becomes more powerful.
You can fight this reality, complain about it, or moralize about it with investor virtue signaling. Or you can adapt. I choose to adapt.
Becoming a competent investor is how you reclaim agency in a world where wages are uncertain, careers are fragile, and loyalty is rarely rewarded. Investing is one of the few skills that scales without asking permission.
A Critical Goal All Competent Investors Should Have
There are countless goals and benchmarks investors can set. Beating the S&P 500. Retiring by 50. Saving enough for college. But while you are still working, there is one goal that is worth pursuing:
Try to have your investment returns regularly match or exceed your day job income.
If you can achieve this goal at least 70% of the time before you FIRE, you are very likely a competent investor. You have developed a skill that gives you optionality. You can lose a job and not panic. You can take risks others cannot. You can wait instead of beg.
Once you FIRE, the goal naturally evolves.
Your next objective may be to regularly earn enough from your investments to pay for your basic living expenses again, even though your passive income already covers them.
This may sound redundant, but it is deliberate. My definition of FIRE, which I proposed back in 2009, is when your passive income covers your basic living expenses. Anything above that is margin of safety.
Protecting Your Retirement By Further Growing Your Wealth
The investor’s goal in retirement is to keep building capital so your margin of safety widens over time, not shrinks.
Goodness knows your expenses can skyrocket due to inflation, kids, and medical expenses. The more capital you have working for you, the lower the probability you will ever need to return to work out of necessity.
If you want a true stretch goal in retirement, try to generate more from your investments than the average income you earned during your last three working years. If you do, you are buying even greater peace of mind.
And if you achieve this, it is probably not because you need to, but because you enjoy the process.
Investing Is Stressful Because You Take It Seriously
When you no longer have a day job, you will naturally find new ways to stay engaged. Since I started investing in 1996, and spent 13 years working in the equities departments of two major investment banks, investing has become a part of me.
Since my son was born in 2017, I set myself a personal challenge: try to earn more from my investments than my peak earnings year in 2007. It gives me a greater sense of purpose as a provider.
I failed to do so in 2018, 2020 (close), 2022, and 2023 (close). But I succeeded in 2019, 2021, 2023, 2024, 2025. A 50% success rate so far isn’t great, but it’s a fun challenge that keeps me sharp. The challenge also gives me endless material to write about, which helps sustain Financial Samurai.
Managing family finances can feel like a full-time job. The downside is emotional volatility.
When markets swing, the mood swings can be sharper than they should be. Ideally, a competent investor should have the calmness of a monk. A bad market day should be undetectable to your spouse and children. Sadly, I am not quite there yet, but I’m working on it.
The upside, however, is meaningful.
You can potentially make far more money. And the more money you have, the less you should worry – at least in theory – about running out of money. Once you become a parent, the pressure to make more money increases. If you do not have a day job, that pressure simply shifts onto your investments.
What gives me peace is knowing that even if something goes wrong, I have a realistic chance of recovering through investing.
What Makes a Competent Investor
Being competent does not mean being brilliant. It means having the ability to do something well enough, consistently enough, and to be trusted with responsibility over time.
A competent investor does not need to hit home runs. They need to avoid strikeouts so they can keep growing their wealth in a consistent manner.
Here are the core traits of a competent investor:
1) They understand risk before chasing return.
Competent investors know exactly how much they can lose without panicking or being forced to sell. They size positions accordingly. They survive first, then grow. Improper risk management is the biggest error I see in DIY investors.
Competent investors do not have major blowups with their own money. Because if you end up losing a lot of money, you end up losing a lot of time. And time is the most valuable commodity of all.
2) They have a repeatable framework.
They do not invest based on vibes, headlines, or social media noise. They have a process for evaluating opportunities, allocating capital, and exiting when the thesis breaks.
3) They diversify intelligently, not blindly.
Competent investors diversify across asset classes, income streams, and time. But they also understand correlation and concentration. Diversification is a tool, not a religion.
4) They control behavior better than most.
They do not panic sell near bottoms or chase near tops. They know that emotional mistakes cost far more than analytical ones.
5) They measure results honestly.
They track performance against meaningful benchmarks, after fees, after taxes, and after inflation. They do not lie to themselves like Coast FIRE followers sometimes do.
This is where most people fall short. Rising balances create the illusion of success, but few investors know their true returns after fees, taxes, inflation, or overlapping exposure.
That’s why I use the free financial dashboard from Empower. It puts every account in one place – net worth, allocation, fees, and performance – so the truth is unavoidable. You can’t improve what you refuse to measure.
6) They are always learning.
Markets evolve. Technology evolves. So must investors. Competence is not a destination; it is a maintained skill.
I didn’t spend three hours researching and writing a post about how different fund structures trade for fun. Sleeping in on a Sunday morning after having the kids to myself for two days would have been preferable.
I wrote the post because I needed to fully understand what to do and what to expect with my $700,000 position in the Fundrise Innovation Fund.
If You Don’t Want to Become a Competent Investor, Outsource the Job
Not everyone wants to spend years learning how markets work, tracking portfolios, or thinking deeply about asset allocation and risk. That’s fine. And I understand.
But what’s not fine is doing nothing and hoping things magically work out. Decades from now, you could either end up with a fortune, or wonder longingly where all your money went.
If you’re too busy, disinterested, or honest enough to admit you don’t enjoy investing, the rational move is to outsource your money management that does take it seriously. Just like you wouldn’t perform your own surgery or represent yourself in a complex legal case, you shouldn’t half-ass something as important as your family’s financial future.
The key is intentional delegation.
You want to work with professionals who have systems, incentives, and experience aligned with helping you make steady, long-term progress, not just selling products or chasing hot trends.
Outsourcing doesn’t mean abdicating responsibility. It means choosing a higher-probability outcome when you know your own limitations. I’m not getting on my roof to clean my gutters, so I hire a professional to do so.
A competent investor understands themselves first. If your edge is earning, building, or creating, let someone else focus on optimizing your capital.
Investing as a Form of Self-Defense And Offense
In a world where job security is declining, income inequality is rising, and institutions move slowly, investing is no longer just about wealth creation. It is about self-defense.
It is how you reduce dependence on any single employer, industry, or system. It is how you buy time when things go wrong. It is how you preserve dignity when circumstances change.
You do not need to be exceptional.
But you do need to be competent.
Because as the future becomes more uncertain, the ability to make your money work for you may be one of the most important skills you ever master.
Readers, how important do you think becoming a competent investor will be for financial independence in the future? And do you believe this is a skill most people can realistically develop, or one they should outsource? Do you think investing will be an even more essential life skill for our children than it was for us?
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