We’ve all seen those financial projections that tell us that if we religiously invest in an index fund, in 50 years we’ll be millionaires. It sounds great on paper, but there are two problems:
First, we don’t know if we have 50 years ahead of us. Second, even if we do, what’s the point of accumulating millions to spend them at age 90?
Long-term goals are unrealistic. We don’t work that way. Our brain needs goals that we can envision, even if they’re far away. Not a castle in the sky, but a peak in the distance that we can see and walk toward. And more importantly, the plan to get there must be flexible, able to adjust to reality, not just mathematical models.
The Poor Man’s Strategy: Save and Wait
Let’s look at a real case.
On January 1, 2025, someone has $10 k in savings. They earn $5,000 per month and their expenses are around $3,000 per month, about $100 per day. A quick calculation tells us that in five years they will have earned $305,000 and spent $182,700, leaving them with $132,300 on January 1, 2030. Without accounting for inflation, this looks solid.
But this is where traditional financial articles would say they’re being foolish. Why not invest what’s left over in an index fund? With an average 5% annual return and a little patience, their money would grow significantly.
The Classic Strategy: Invest in the Fund
After Christmas, inspired by their New Year’s resolutions, they decide to invest half of the initial $10 k in an index fund. Between researching, asking their brother-in-law, choosing, and setting it up, they have their fund ready by Friday, January 31, 2025.
The calculations aren’t simple here, but in Financial Transurfing, besides mental models and philosophy, we have tools to handle the hard numbers. If the fund yields 5% annually, compounds daily, and they apply a dollar-cost averaging (DCA) strategy by investing $1 k per month, by January 1, 2030, they’ll have $74.4 k in the fund, plus $67.2 k in their account.
But let’s not get lost in numbers. In rough figures:
- 5 years saving, about $132 k.
- 5 years saving and investing a portion in an index fund, about $141 k.
- A $9 k difference that could pay for a home renovation or a nice vacation.
The choice seems obvious, right?
—Why doesn’t this work for me? Am I special? Do the numbers not add up? Does the universe hate me?
No, the problem is that this model is too simplistic. A model shouldn’t be too complex either. It doesn’t make sense to create a model so detailed that you need to spend two hours a day feeding it data, logging every coffee, every purchase, and every quarter found in a vending machine.
But it also doesn’t make sense to model life as just earning, spending, saving, and investing. That’s too simple. Although the useful point is much closer to the ultra-simple model than the ultra-complex one, we need a bit more flexibility. And this is where Financial Transurfing comes in—to help us mentally surf between different scenarios.
A Risky Idea: Buying a Car
Let’s buy a car. We need it for work, to take the kids places. Have we talked about vacations? A car helps.
Any financial blog will tell you that buying a car is one of the worst financial decisions you can make. But unless you live in the center of a big city, it’s advantageous and often necessary.
What if we use some of our savings to buy a car? In our example, they have $2,000 available per month.
They visit a dealership on Monday, January 10, 2025, and find a great car for $50 k. They only need to pay $5 k upfront and take out a loan at 7.5% interest for 8 years, driving away in their new car.
They accept. They will pay $416.67 each month for the next 8 years, but they get to enjoy their car. That Friday, January 31, after a week of uncertainty and anticipation, they finally drive their car, heading into the weekend.
This might bring new expenses (gas, repairs, insurance) but also new opportunities (job offers, family activities). Life isn’t just an Excel sheet. But it’s true that cars depreciate. It’s said that a car loses 10% of its value just by leaving the dealership.
And then it depreciates another 10% per year. That’s life; that’s the price you pay for freedom of movement.
By January 1, 2030, our balance sheet looks like this:
- A 5-year-old car that could be sold for about $20 k.
- $89 k in the account.
- $20 k still owed on the car loan.
Total net: $89 k. Much worse than the $132 k if we hadn’t bought the car, and far worse than the $141 k if we had just invested.
The Best of Both Worlds
But are there other alternatives?
Let’s get a little creative. What if we buy the car—because we need it—and still invest in the index fund?
With Financial Transurfing, we can run these calculations. If, out of the $2,000 available per month, we use $1,000 to invest in the fund and cover the car payment, by January 1, 2030, our balance sheet will be:
- A 5-year-old car that could be sold for $20 k.
- $74 k in the index fund.
- $25 k in the checking account.
- $20 k in car loan debt
Total net: $99 k and 5 years of enjoying the freedom of movement, and several more ahead.
Not bad.
Visualizing Variations
Have you seen these amazing diagrams?
This is one of the tools used in the Financial Transurfing method, allowing you to easily explore different realities.
Each branch represents a life track you can choose. Some will be more accessible, easier to reach, while others will be more difficult. But if you don’t visualize them first, if you can’t picture what they will be like, you will hardly be able to choose them.
The white dots are variations, specific possibilities within the space of variations. There are many, but only some materialize in reality.
Since all the possibilities we’ve explored here are quite similar, we could group them into a sector. If, in addition to investing in index funds, buying a car, or saving, we had considered liquidating everything and moving to Southeast Asia, that variation might not belong to this sector, as it is completely different.
Transurfing also studies other concepts such as pendulums, which can pull you away from making your chosen branch a reality, the wave of luck, and balance…
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