Three-Year Runway Rule

A discussion between Sam Parr and Shaan Puri about personal finance strategies, focusing on how to manage wealth and take calculated risks while maintaining security.

Core Financial Philosophy

• Keep 2-3 years of expenses in safe investments as a safety net
• This enables freedom to be aggressive with remaining capital
• The person themselves is the ultimate safety net, not the money
• Focus on wealth creation vs wealth preservation based on your stage

Sam's Conservative Approach

• Lives entirely off current income (podcast, other ventures)
• Keeps major assets (from company sale) untouched in conservative investments
• Portfolio breakdown:
  • 79% in VTI (Vanguard Total Index)
  • 15% in short-term treasuries (4.9% yield)
  • 6% in real estate fund (Walgreens properties)

Shaan's Investment Framework

• Money is a tool to enable better lifestyle
• Maintains 2-3 years of expenses as safety net
• Takes more concentrated bets in things he believes in
• Biggest investment mistake: selling too often
• Uses "break glass in emergency" mentality for selling positions

Decision Making Process

• Studies different expert opinions and theses
• Lines up competing arguments
• Evaluates evidence supporting each position
• Creates hedges for scenarios that could play out
• Acknowledges tendency to be drawn to contrarian opinions

Income Management Strategy (from Saeed Balky)

• Don't spend first derivative money (direct business income)
• Only spend second derivative money (income from investments)
• Example: Buy asset that generates cash flow before taking on new expenses
• This approach ensures you never go broke