Survivor Bias

Photo by Shirley Şerban from https://freeimages.com

I am constantly reading and trying to absorb the knowledge that can help me when I look at my finances and my journey to FI. While the vast majority of that information digs into the complications of the current financial structure, on occasion a broader concept comes into place that puts my information in a new light and that is always a good thing. New points of view are always helpful in giving me a better insight into my own ways of thinking.

Survivor Bias: What is it?

Survivor Bias is the idea that when we get information we normally get the information from those that "made it". Think about American Football for instance. For every star player on your favorite team, there are hundreds of people who worked really hard and were never picked up by a professional team.

The same can be said of finances. For every amazing stock trader who made a fortune or person who made it to FI by age 30 there are literally thousands of people who struck out or did not make it to their goals by the time they planned.

Why Survivor Bias is Good

Survivor Bias can be a good thing. If someone made it big, maybe they have useful insights. These are things we can take from those who succeeded before us. If the path is paved before you, it is useful to look over the trail and see what you can take from it.

Why Survivor Bias is Bad

That said, the point of this post is that Survivor Bias is not always a good thing. One person's path will rarely be the same as another's and there are so many variables that affect your path to FI. This is the point I want to make about Survivor Bias. Do not let someone else's amazing story or circumstances get you down about your own journey to FI.

Some people can live on $10k a year. Some people land that dream job making several hundred thousand dollars a year. Me, I am what I would consider pretty normal. I am great at my job but I do not have (to my knowledge) a hidden talent that will propel me to stardom or riches and I am a creature of comfort, $10k a year would not be enough to sustain what I would consider a comfortable living.

I read the extraordinary stories of the big names in FI and learn what I can. My bottom line here is to make sure that when you read about those that fly to the top, do not get discouraged. Take what you can from them but try to get a deeper understanding of yourself and what your goals are. Everyone's journey to FI is unique. My suggestion is to not stick too closely to what anyone else has done, use their knowledge but blaze your own path. Happy Investing.