1. Defining financial freedom — We can think about financial freedom in terms of the amount of savings we need to provide the income to pay our expenses. We learned a rule of thumb that if we withdraw no more than 4% of our savings per year, we’re likely to never run out of money. Based on that rule, and our annual needs, we can determine the level of savings corresponding to our own personal financial freedom.

  2. The power of compounding returns — We learned that the math of compounding returns provides the power to turn small savings, over time, into surprisingly large sums. This power is available to everyone.

  3. The tyranny of costs — We learned that the same math turns seemingly small costs into large costs over time. We need to minimize the cost of investing.

  4. The importance of earning a good return — We learned that compounding math is very sensitive to the annual rate of return. Earning 8% annually makes a huge difference over time, compared to 3%. We should be investing, not keeping our savings in a bank account.

  5. Risk and return are related — We learned that in seeking a higher return, we must be willing to take on risk, and that this is a fundamental, inescapable truth.

  6. The importance of time — We learned that holding a risky investment for a long period of time reduces the chances of a poor outcome.

  7. The benefits of diversification — We learned that mixing unrelated investments—i.e. diversifying—both reduces overall volatility (riskiness) and increases return.

  8. Long term performance is driven by asset allocation — We learned that our choice of asset allocation will be the dominant influence in long term returns. We also learned that it’s far more important to stick to an asset allocation than to have chosen the perfect one in the first place. We saw two examples of conservative allocations.

  9. The benefits of rebalancing — We learned that rebalancing involves selling what has done well and buying more of what hasn’t, in order to maintain our target asset allocation. We learned that this keeps our risk exposure consistent over time and increases returns.

  10. Nobody can beat the market — We learned that in the long term, few can beat the market, and so we should invest passively in entire markets.

  11. Implement your plan with ETFs — Pulling it all together, we learned that Exchange Traded Funds (ETFs) are convenient and economical investment products, purchasable through a common brokerage account allowing us to implement a long term, passive, low cost investment plan.

  12. Stay the course — Don’t be your own worst enemy. Ignore the market noise. Remember you’re in it for the long-term. Stay the course!