The Other Portfolio You Need to Focus On

The Other Portfolio You Need to Focus On

Since you read this site, you likely have a good handle on your investment portfolio.

If you’re like me, you spend a lot of time each month adding numbers to your FI Spreadsheet, analyzing your asset allocation in Personal Capital, and charting your progress to financial independence in the FI Laboratory.

What if I told you there’s another portfolio you should also be managing?

This other portfolio is even better than your normal investment portfolio because…

  1. You can build up this portfolio for free
  2. The currency stored in the portfolio isn’t taxed at all
  3. It reduces the amount you need to withdraw from your investment portfolio during early retirement

Sounds great, right? It definitely is.

The portfolio I’m talking about is your travel miles/points portfolio.

Value of Travel Hacking

You may be a bit skeptical of the value of travel hacking but I can tell you that even though I’m quite conservative compared to most travel hackers, I’ve still accumulated millions of miles/points and saved tens of thousands of dollars with minimal effort!

I actually have over $18,000 worth of miles/points still sitting in my accounts that I can use for future travel.

In addition to the monetary value of points/miles, there are also fringe benefits that are worth exploring.

Options

Having a stockpile of miles and points increases your options, which allows you to potentially save a lot of money.

What do you do if you need a flight on a certain date but prices are extortionate? If you don’t have any frequent flyer miles, you probably just have to bite the bullet and pay the high prices.

If instead you have hundreds of thousands of miles in various airline programs, you have many more options and will likely find a way to get where you need to go without spending a fortune.

Perks

There are also many minor perks that travel hacking provides that help make traveling easier and more enjoyable.

I have obtained status with many programs through the credit cards I’ve applied for over the years so I often get upgraded to better hotel rooms, get to board the plane early, etc. so my travel days end up being much more relaxed.

Fun Experiences

Miles and points also allow you to do exciting things you’d never actually pay money to do but are enjoyable nonetheless.

The picture at the top of this post is a picture of me drinking ~$200/bottle Krug champagne at 5:10am in Doha, Qatar (all thanks to an American Airlines award redemption).

Would I ever pay that much for a drink? No way!

Was it ridiculously delicious and am I glad I had the chance to try it for free? Absolutely!

How to Build Your Portfolio

The benefits of putting just a small amount of effort into this hobby are plentiful so let’s talk about the best way to grow your “other” portfolio.

Credit Cards

The single best way to get points and miles as cheaply and quickly as possible is to sign up for credit card offers.

Since most Americans are idiots with money, credit card companies offer incredibly generous signup bonuses because they think you’ll rack up a big balance and will spend many years paying them a lot of interest.

You obviously won’t do that though and will instead pay off your balances in full every month but that doesn’t mean you shouldn’t take advantage of the amazing offers that are available.

So how do you find the best signup bonuses?

Mad Travel Cards

I actually wrote a web application back in 2011 that helps you do just that so after dusting off the old code and making some significant improvements, I’m excited to introduce Mad Travel Cards!

This application is a custom credit card search tool I created specifically for travel hackers that allows you to find the very best signup-bonus offers for the programs you want to focus on*.

Since the mile/point landscape is quite confusing and it’s hard to keep track of which points convert into which programs (and at what transfer ratios), it’s hard to determine the best cards to get. This tool solves that problem.

Here’s a quick intro video I created that shows why it’s the best credit card search tool for travelers:

Strategy

So now that you have a way to easily find the best cards, it’s time to decide which programs to focus on.

There are a few things to consider when deciding which points/miles to get.

Specific Trip Planned?

If you have a specific trip coming up you want to use miles for, it makes sense to research the best points to get where you want to go.

If you’re planning to travel to Europe, for example, you should Google, “Best miles to get from USA to Europe”.

Take a look at which miles the various travel bloggers recommend for your trip and if you see any posts from the travel blog, Travel Is Free, click those articles first because he’s the best when it comes to maximizing the value of miles/points.

Flexible Points

If you don’t have a specific trip coming up, I’d recommend accumulating flexible points.

Flexible points can be transfered to multiple airline and hotel programs so they give you more options and they also reduce the risk that a devaluation will decimate the value of your miles/points before you use them.

You can easily find the best flexible points cards with my credit-card search tool by clicking the buttons in the Flexible Points section at the top of the page.

Before proceeding with an application though, there are a few other things to keep in mind when deciding which card to get…

Spend Requirements

Most cards make you spend a certain amount within the first x months to get the signup bonus so you need to make sure you’ll be able to hit that amount without spending more than you normally would.

It doesn’t make sense to buy things you don’t need just so you can get free miles so make sure you can meet the spend requirement with ordinary spending.

I usually prepay my bills when I have a big spend requirement I’m trying to hit so that way, I’m just front-loading my expenses rather than increasing them.

Bank Relationships

Another thing to keep in mind is your relationship with the various banks. You don’t want to apply for and cancel a bunch of cards every year because the banks will stop approving you for new cards.

The card companies are starting to crack down on excessive applications so now it’s more important than ever to have an intelligent strategy going in so you don’t anger the banks and miss out on the best deals.

This is one of the main reasons you should build up your balances gradually over time, rather than try to frantically get a lot of points right before you go travelling.

My Approach

As I mentioned before, my approach is quite conservative but after doing it for nearly a decade, I’ve accumulated millions of miles/points, I still have an 800+ credit score, and I maintain great relationships with all the big issuers.

Here’s my conservative but lucrative strategy in a nutshell:

  • Apply for a new card every 3-6 months
  • Only apply for cards with spending requirements I can hit with normal spending
  • Accumulate flexible points unless I have a specific trip planned
  • Only pay annual fees when the benefits outweigh the costs
  • Keep at least one card from each issuer at all times

Email Series

Since I now have an incredible new email service provider that allows me to easily create different segments and email sequences, I’ve created a new email series for anyone who would like to implement my approach for accumulating miles and points.

The email series consists of an email once every ~6 months that contains the following:

  • Which card I’d recommend you apply for at that time
  • The reasoning behind the card recommendation
  • Alerts for limited-time signup bonuses and offers

This email series will help you accumulate miles and points in the most efficient manner possible, just as I’ve attempted to do over the years.

If you want to sign up to the Mad Fientist email list and Travel Card series, just enter your details below and you’ll instantly get an email containing the card I recommend you get first and why.

After receiving the first email, you’ll then get another email in roughly 6 months with the second card I’d recommend (and the reasons for that choice), then another ~6 months after that, and so on.

If any exceptional signup bonuses come out in the meantime, I’ll also send you a message to let you know so that you can take advantage of the best limited-time offers when they come along.

Get Started

Miles and points have allowed me to travel to 50 countries while pursuing financial independence and will help me travel to even more now that I’ve stopped working.

Hopefully this post has motivated you to start building your own travel miles/points portfolio so you too will have hundreds of thousands of points ready to use for exciting trips when you eventually leave your job!

*Full disclosure: I could receive a commission if you use some of the credit card links on the Mad Travel Cards page and in this post. However, I will post the highest signup bonuses, regardless of whether I earn a commission or not, so you can be sure you’re clicking on the best offers available.

If you have any feedback on the Mad Travel Cards tool, please let me know in the comments below!

Related Post

Want to Retire Earlier?

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  4. Reduce or eliminate those expenses to achieve financial independence even sooner!

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