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The Importance of Financial Independence For Software Developers

Ilona Codes on July 10, 2020

If you read this post, chances that you are a software developer who is seeking financial advice for smart money-saving or investment or early reti...
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Nathan

It's crazy how similar your journey has been to my own..

I likewise lost confidence in the social security system as a means of retirement as I looked at long-term forecasts.

My first investment happened two years ago. $13,000 was sitting in our account, and we kept getting nervous that the markets would crash immediately after we invested it. We finally pulled the trigger and jumped into two of Vanguard's Admiral index funds.

It's been a surprisingly good windfall year, as the lockdown has made it so fully remote positions are the norm, so I'm seeing higher salaries available for lower cost of living areas.

We follow Mr. Money moustache, and FIRE generally.

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Matthieu Cneude • Edited

That's a good article. If you're interested in passive income, you should come by on the Indie Hackers community. Many developers and creator there try to go independent.

I'll follow your journey since I'm am expat developer in Berlin, too. Like many :D

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Mohammad Fazel

So impressive post, actually what I was looking for!

We developers miss investing and as a result after years of working hard we still get nothing to do with money.

I would like to appreciate if you suggest books, blog posts or special videos for watching about investment and learning economics.

Peace,.

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ilonacodes profile image
Ilona Codes

This! 💯

"We developers miss investing and as a result after years of working hard we still get nothing to do with money."

I am excited about finances and learning a metric ton about them every single day. I will gladly share informative materials and resources about this topic in my upcoming blog posts and newsletters: ilonacodes.com/financial-tips-for-...

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Kamran Ayub • Edited

This is excellent, I need to spend more time writing about finance for developers. I got turned onto FI over a year ago.

I highly recommend listening to ChooseFI.com podcast to learn more about personal finance topics.

If people are new to tracking their savings rate, I made a free app, a PWA actually that works offline you can use on your phone or other devices!

reachfi.app

It helps you track your savings rate and contributions. For example, I can see how well I am doing with the overview and I can even hide exact numbers for sharing screenshots 😁

savings

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Maxim Firsov

My 5 cents:

  • Don't play on FOREX
  • Don't use brokers leverages.
  • Don't use complex financial actives at the beginning.
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yuripredborskiy profile image
Yuri Predborskiy

"Myth #1 You should be a math genius"
I hope you're not working with leverage. I REALLY hope you're not using a leverage. By leverage I mean brokerage accounts that allow you to invest more money than your deposit would normally allow, and gain an ability to generate increased (proportionally to your leverage) income. The hidden side is it also emphasizes your potential loss and can easily wipe your account.
Source: 15 years of experience trading, investing and developing automation tools for FOREX (I started as a trader and got out as a software developer).

"You should have significant capital to start"
Let me rephrase it for you. If you don't have AT LEAST 10 million US dollars, you're not trading in FOREX. You're playing the "lets see who's the fool" game with "FOREX brokers". They are the companies giving you access to foreign exchange market with minimal fees.

How to tell they're ripping you off? Its easy. Small deposit, 30%+ income etc.
Your money will be gone in a single bad deal or a few "unlucky" ones.

"You can do it only from a developed country"
I'm from Ukraine and there is absolutely no way the government (laws, courts etc) protect you from shady "business". But hell yeah, you can do this from Ukraine! As in, you can "invest" money from Ukraine, just be ready for the moment your money's gone.

If you're looking for a little bit more stable investment:
Invest in yourself. Keep reading, watching, learning. It takes years to get it right.
You may consider investing in real estate in booming cities. Thanks to coronavirus you may be able to find a good deal or two - buying cheap apartments or houses in poor condition, getting them fixed and hopefully finding someone to rent them to. But could be affected by aforementioned coronavirus. The hard part is finding good deals on good property in good location and getting good financing. Then finding good contractors to do the repairs. Then finding good renters. And hiring accountant, lawyer etc. Its not a passive income, it's an active business.
You may want to consider investing in stocks. But I'm not an expert, so consult an expert before you do. The basic idea: invest in indexes instead of individual stocks. May be risky in the next few years, though.
Other than these two I can only recommend having a decent job.
If you love being on camera, you can monetize a youtube channel.
If you love writing, you may want to try blogging.
You can try making courses on programming or something, I hear they can make good income if done right.

Whatever you decide - take care and have a good time!

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ilonacodes profile image
Ilona Codes

Thank you for the great write-up about problems with forex and trading with leverage.

I’m not even interested at this point in these. I’m intrigued the most and excited about the common stock, active funds, ETF, REITs, value investments, and so on. Long-term stuff—no trading or speculating.

I feel you and can understand your frustration. This answer will be useful for folks who want to try leveraged trading—they probably shouldn’t (unless they know exactly what they are doing, and also depends on the country).

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yuripredborskiy profile image
Yuri Predborskiy

As long as you understand what you're doing, you should be fine.

I think I forgot to mention something: the fact you're calculating your future retirement is awesome. Working towards building your own future is even more awesome. I wish you success!

I'm working on the same thing, but I figured out I want to spread my investments into real estate and stocks. Having experience with leveraged speculation I highly recommend everyone to be extremely careful with that as the risk of losing lots of money very quickly is extremely high. One can work in FOREX successfully, but, according to statistics, that one is one percent of all people who try.
It is said to be easier with stocks, but as long as you use a high leverage, small volatility can lead to catastrophic results. At the same time, stocks should be fine with no leverage and long-term investments (probably). But under stocks I mean stock indexes or index funds since otherwise it is less of an investment and more of a job.

I am thinking of adding other types of investment outside of real estate and stocks at some point, but not right away. Real estate offers a similar leverage stocks do via mortgage, and, if used properly, it can increase your profits. But it will also amplify a bad deal, making it lose more money. The hard part about real estate - if you don't have a ton of cash, it may be hard to start. Although there are ways to start with $0.

If you ever get interested in real estate I recommend checking out bigger pockets podcasts, there's a ton of information. And then there's Samuel Leeds and his youtube videos, also very informative. The difference is Samuel works in UK, while Bigger Pockets members mostly operate in the US.

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spiritupbro

love this bookmarked

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Keagan Van Rooyen

Great post! I'm not a developer yet (well, it's not my job) but I am trying to get into finance and how I can use it to my benefit in the future.

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Uchena Miller

Developers are lucky. I believe in financial independence.
And in terms of living, a cheaper cost of living is the right choice; train your self, be discipline, manage your time and dont plan too much. It takes time but it's definitely not impossible. We developers are possible✊🏾

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Ilona Codes

Thank you! Yes, you are moving in the right direction and with the right mindset 🚀

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Marco Damaceno

I agree 100% with you! About the retirement, you described exactly how Brazilian retirement system is. It's a scam too.

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KarthikNayak

Good one