Do you need luck to retire early?

This is one of my strangest title but it bears examining. Some people attribute good fortunes with being lucky. However, I think the phase “creating your own luck” is a wonderful way of saying your fate is in your hands. You don’t need to be lucky to retire early. You just need to create your own luck!

What is luck?

Being lucky means being able to achieve an outcome that seems unlikely. If we break this down, let’s assume that the ability to achieve an outcome is dependent on:

  • A person’s capability (x)
  • A person’s opportunities to use that capability (y)
  • The importance of having that capability to achieve the outcome (z)

When an outcome is achieve, it is the interaction of thee 3 factors. In math terms, it can be calculated by x*y*z where each of the integer is less than 1.

Let’s apply this to buying lottery.

When I buy a lottery, x and z are very close to zero. The only thing one can change is y i.e. the more you buy, the more opportunities you have to use that capability. So

x = 0.0001
y = 0.8
z = 0.0001

When you multiple these 3 numbers, you get a very low number, which is why it is so hard to win the lottery unless you are well…..very lucky!

However, in most of the life’s events, we can influence x and z as well, which increase our chances of being successfully, i.e. we make our own luck.

How to be lucky in getting the money to retire early

Let’s try this exercise again but this time, I apply them on the various options that I have listed in my early retirement plan.

One of the options I have is buying a condo and selling it when it reaches $2.5M. If it really reaches that outcome, you can say I am very lucky. However, what can I do to make more of my own luck in such instance? Going back to the formula:

  • A person’s capability (x)
  • A person’s opportunities to use that capability (y)
  • The importance of having that capability to achieve the outcome (z)

In the case of buying a property, it will be:

  • A person’s ability to analyse trends and data, and spot good investments (x)
  • A person must save enough to have the cash to exploit the opportunity when it is presented (y)
  • Having the ability to buy good investment is a critcal factor in achieving the desired outcome of selling it at $2.5M  (z)

In all three factors, one has a influence on each.

  • For (x), I study historical trends, future population growth and developmental plans. All these creates a high score for (x).
  • For (y), I spend my money carefully so that I always have savings each month to take advantage of any good investment. Again, a high value for (y)
  • For (z), having both (x) and (y) is a necessary condition to achieve a $2.5M sale so a high value for (z) as well.

Combining all 3 values, we get a high number, meaning there is a high chance that I will be lucky and sell my condo for the price I want.

Am I lucky?

Let’s say a few years from now, I do retire early. If you are an outsider who don’t know me, you might say that I got lucky and sold my condo, which is why I can retire early. However, for readers for this post, you will know that I have created my own luck by doing (x) and (y) well.

You can create your own luck as well if you start doing something today.


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