It's July 4th, Independance day this day we celebrate our independence as a country... Whether it be personal Independance (Travelling, Etc) But what do we all strive for ?! FINANCIAL INDEPENDENCE !!!
By saving and investing now, you allow your money to make more money !!!
“Without moral and intellectual independence, there is no anchor for national independence.” – David Ben-Gurion
Today is a great time to look at your own financial situation and make sure that you are on the road to financial independence.
What is financial independence? While some might think that it’s jet-setting around the world in your private jet, I am going to stick to the definition used by Wikipedia: “Financial independence is having sufficient personal wealth to live indefinitely without having to work actively for basic necessities. In the case of many individuals whose financial circumstances fit this description, their assets generate income that is greater than their expenses. Under such circumstances, a person is financially independent.”
Here are three tips that can help get you on the path to financial independence.
What’s your goal?
I am a firm believer that people need to set goals to achieve desired milestones. If you want to effectively lose weight, you set a goal of how much you want to lose. If you say to yourself that you want to “just lose weight” without any goal of how much, you are primed to achieve minimal weight loss (if any at all). This is speaking from experience.
It’s important to set a realistic date for when you’d like to be financially independent. As a guide for how much money you will need in the future, I like to tell clients that they need about 20 years’ worth of this year’s expenses to make it. For example, if you spend $30,000 a year, you will need $600,000. Keep in mind that any pension, Bituach Leumi or Social Security income that you will receive will lower the overall amount that you need. If you receive $20,000 a year in retirement income, then you will need another $10,000 as supplemental income, which means you would only need about $250,000 in savings to be independent.
Money makes money
You need to invest. Make saving and investing a priority. By saving and investing now, you allow your money to make more money. Start “paying yourself first” every month. Whether you invest in real estate (where you get a monthly rent check) or you invest in dividend-paying stocks, focus on a slow and steady approach to building wealth.
While it’s quite tempting to try and find a “home run” stock that will make you an instant fortune, far more often than not, investors end up striking out. While it may not fit with today’s remote-control generation, where if you don’t like something you just click away to something else, when it comes to building assets, slow and steady rules the day.
Now is the time
I always hear individuals say they don’t invest because they don’t have enough money to start. They think if they don’t have hundreds of thousands of dollars, there is no point investing. I recently met with a couple that has been married for a few years and between some savings and wedding money had accumulated $28,000. They basically took the money and stuck it into a savings account at their bank, which is earning zero interest. When I asked why they never invested the money, they said they figured it was such a small amount that it wasn’t worth it. By delaying investing, you are doing yourself a big disservice.
With a strategy and measured investing approach, that $28,000 can be a really good starting point to get you on your way to financial independence.