Aiming for Financial Freedom is a goal almost everyone has in his life, some of us are just hoping for the big lottery jackpot other trying hard but failing big time because of lack of discipline, impatience and too much greed. Those people who fail have mainly one thing in common a lack of financial education, when it comes to personal finance. As you are probably found out this sounds a lot like Rich Dad Poor Dad. I really like this book a lot as it is telling the truth about the relationship of the majority towards money, as most of us are driven from social habits like having their own house, buying the newest car etc..
But let’s come back to the topic; what is financial freedom for me? Well for me it is simple not being dependent on a job and being able to cover at least my monthly expenses by a passive income stream. But once you have started the snowball getting bigger and bigger you want to create more and more passive income. So my goal is to have at least a passive income which is double my monthly expenses. Right now my monthly passive income is on average about 60 EUR per month compared to an average monthly expenses of 1.100 EUR. Well as you can see there is still a long way to go.
But I am saving very had and keep investing in dividend stocks. Furthermore, I discovered other investing possibilities as well like Bonds, ETF’s, crowdinvesting, p2p lending, buying and renting parking spaces. These are all alternatives I want to keep an eye on, to diversify my investment portfolio. As we all know you shouldn’t put all eggs in one basket.
But where to start? Well first of all you need to know your expenses and where you waste the most of money. Believe me everyone us is wasting money from time to time even I still do. Complete frugal living isn’t possible all the time. So well the first step of investing and building a passive income stream is to save money and then you need to get familiar and very important feeling comfortable with different investment ideas. Yes, it is very important to be comfortable with your investment idea, because you still take a risk of losing money and without feeling comfortable with your investment you will not get happy at all. I started with investing in dividend stocks and will expand my investments to ETF’s and Bonds. Afterwards I will look at riskier investments like crowdinvesting and p2p lending. But first of all I need to build a solid base with high quality stocks mixed with ETF’s and Bonds. Real estate isn’t a topic for me right now as I don’t want to take an extra loan. That leads me to another important part of my investments strategy: Only invest money you don’t urgently need! I always want to keep a relatively high cash rate of 30%. Some of you will not agree with that but it makes me comfortable that even in the worst case ever, I haven’t lost everything.
Considering all this activities and investing constantly and carefully I can reach my target at the age of 45 so still 14 years to go. I am assuming an average yield of 5% throughout my whole investments. I think the 5% are realistic and not to optimistic considering dividend increases and more diversification.
To sum up for being successful on my investment journey I need to be patient, financially educated, disciplined, comfortable with my investments, always curious about finding other alternatives and ew investment ideas and last but not least having a partner who supports you on that journey.
Do you also have other investments alternatives besides dividend stocks? What are the key points of your investment strategy?
Feedback is always welcome!!
Cheers
Andy