This first-person essay has been carefully adapted from a series of in-depth conversations with Katie and Alan Donegan — a British couple who chose to retire remarkably young, at the ages of thirty-five and forty respectively. Originally hailing from the United Kingdom, the Donegans have embraced an entirely nomadic lifestyle since 2020, living and traveling across countries as they teach others the principles that allowed them to reach financial freedom. To improve readability and flow, the narrative below has been refined for both length and clarity, while preserving the couple’s authentic voice and insights.
Alan says that he and Katie officially retired in 2019 after years of disciplined saving and intentional planning. Since then, their lives have revolved around teaching others how to achieve similar independence. One of their major yearly commitments — both time-consuming and deeply fulfilling — is a free, ten-week educational program they conduct while traveling around the world. Through this course, they introduce learners to the core concepts of budgeting, saving, and investing, offering a practical roadmap to financial stability and eventual independence.
Katie reflects on the process of pursuing financial freedom, emphasizing that the journey is filled with subtle traps and carefully disguised pitfalls. Some of these obstacles are created by large corporations intending to profit from consumers’ inexperience, while others are social in nature — deeply embedded in how society encourages spending, debt, and dependence. Together, Katie and Alan have experienced many of these missteps firsthand and have witnessed countless others fall into the same patterns. They’ve distilled these lessons into five key traps that people pursuing financial independence commonly encounter.
1. Hiring professional advisors
Katie explains that one of the most frequent mistakes aspiring investors make is delegating all financial decision-making to paid advisors rather than developing their own understanding. This tendency is often rooted in fear — the persistent feeling that one lacks the necessary knowledge or might make an irreversible mistake. Instead of confronting this anxiety through learning, many outsource the responsibility to so-called experts who often charge steep fees and, worse, place their clients’ money into cautious, low-yield vehicles such as government bonds.
Alan elaborates that even apparently small fees, such as one percent annually, can accumulate into staggering sums over time — the silent erosion of wealth through compounding costs. This incremental loss can delay or even derail one’s progress toward financial independence. He recounts that Katie once invested through an advisor who imposed extremely high fees; when they later analyzed the numbers, they realized that sticking with that advisor’s portfolio strategy would have left them more than one million British pounds poorer compared to investing in low-cost index funds. Their experience demonstrates how mastering one’s financial literacy can be worth an enormous fortune over a lifetime.
2. Speculating instead of investing
Alan observes a widespread misunderstanding between genuine investing and speculation. Investing, he explains, means acquiring assets that generate measurable returns — for instance, purchasing shares in a business that produces goods or services, or buying a rental property that produces steady income. Speculation, by contrast, is closer to gambling: buying something solely in the hope that someone else will eventually pay more for it, without any inherent creation of value.
He points to modern examples of this trend — individuals purchasing luxury whiskeys, collectible toys, or other fashionable goods, convinced that their prices will rise indefinitely. However, such items not only fail to yield income but also require costs for storage and maintenance, making them liabilities rather than productive assets. Alan contrasts these with truly functioning investments like owning Apple stock: behind every share there are thousands of employees, active stores, manufacturing lines, and consumers purchasing products. That structure creates lasting economic value — something that dusty bottles of whiskey or unopened boxes of Lego can never replicate.
3. Trying to time the market
Katie notes that many would-be investors fall victim to the illusion that they can predict market peaks and troughs. She often hears people say, “The stock market is too high right now — I’ll wait,” or conversely, “It’s fallen too far — it’s too risky to enter.” This thinking perpetually delays investing. Alan adds that the result of this hesitation is simple but costly: money sitting idle loses the opportunity to compound. People become fixated on frightening headlines about market crashes, neglecting the underlying truth that the economy continues to operate — companies keep producing, selling, and earning revenue, because people still need groceries, utilities, and other necessities irrespective of market volatility.
Katie reiterates the essential mantra shared among long-term investors: “Time in the market beats timing the market.” While some individuals may occasionally get lucky by entering or exiting at the perfect moment, no one can consistently achieve that precision. The couple encourages investors to resist chasing fleeting opportunities and instead cultivate patience, allowing compounding and consistency to build wealth steadily over many years.
4. Not knowing how to wait
Katie emphasizes that investing should not be treated as a source of entertainment. Once a person has already chosen diversified, low-cost index funds and automated their recurring investments, the wisest step is to step back — to redirect one’s energy toward living a meaningful and fulfilling life. In the community centered around financial independence, this phase is known as “the boring middle.” It represents the long period after the foundational work is done but before the ultimate goal is achieved.
Many individuals struggle during this stage because progress feels slow or imperceptible. They are tempted to check portfolio values daily, react to market swings, and lose sleep over temporary declines. However, Katie reminds them that this period is when the real benefits occur — where growth happens quietly in the background. It’s also the time to focus on health, relationships, and personal happiness, building emotional resilience so that once financial freedom finally arrives, one can enjoy it as a balanced, purposeful human being rather than a stressed-out investor.
5. Chasing outperformance
Alan points out another psychological trap: people’s discomfort with being “average.” Many investors are told that index funds deliver median or typical results, and they find the idea of settling for “average” unappealing. However, he argues that consistent average returns are actually superior to the vast majority of active strategies. Achieving those steady returns over time already places an investor ahead of nearly ninety percent of their peers. Nonetheless, the desire to appear exceptional drives some to chase market outperformance — pursuing complex metrics like alpha and beta or engaging in endless stock picking. Ironically, these efforts more often lead to underperformance, proving that patience and simplicity tend to triumph over ego and experimentation.
Katie adds that this urge to take big swings is particularly strong among individuals who discover financial independence later in life — perhaps in their forties or fifties — and feel a sense of urgency to recover lost time. In their desperation, they may pour their savings into volatile meme stocks, speculative cryptocurrencies, or other high-risk ventures that promise extraordinary returns but usually deliver disappointment. The Donegans’ final lesson, therefore, is to appreciate the quiet power of average results. As Alan succinctly phrases it, “Average is extraordinary.” In the long run, steady progress compounded over time will always outperform erratic bursts of risk-fueled optimism.
Sourse: https://www.businessinsider.com/financial-independence-traps-people-fall-into-constantly-alan-katie-donegan-2025-10
