Achieve your Financial Freedom!

hi what’s up everybody is for today I
will talk about your financial independence and how to stay financially
independent first of all what does it mean to be financially independent
however before we start do not forget to hit the like button it helps YouTube’s
algorithm and do not forget to subscribe the channel just started and my goal is
to get at least 1000 subscribers by the end of August and guys you can help just
subscribe and like the video thank you so much okay to come back to the subject
we can define financial independence as being able to live the life you wish to
have without having to work depending on your lifestyle it can cover very
different realities if you like to have a spot in life not spending your money
on superfluous thing and living in an area was the cost of living is cheap
then the amount you need to save will be way lower than if you are living the
jet-set lifestyle and living in an area where the cost of living is very high
there are different flavours of financial independence do you want or
not take the risk to outlive your capital or do you want to take the
chance to have your money lose its purchasing power or hopefully financial
independence without the risk of outliving your cash no the risk of
inflation eroding your lifestyle I’m afraid that the most given advice on how
to save for retirement combine the two pitfalls by the way I use retirement and
financial independence interchangeably in this video if you want to retire at
40 by being smart in your investments good for you you can also become
financially independent by 40 able to retire if you want but still decide to
continue to work and invest to be even more wealthy when you reach 60 or 65 if
you prefer then good for you too first let’s talk
about how much do you need to save before retirement
it is not a very hard question with the help of a financial calculator or Excel
let’s say you need ten thousand dollars per month for 40 years and let’s assume
you can get a conservative 3% return per year the formula in Excel is PV 3%
divided by 12 the monthly interest rate 40 times 12 the number of months 10,000
the amount you need per month 0 0 you get nearly 2.8 million dollars if you
need only $5,000 per month you can go down to only one point four million
dollars you can quickly calculate how much do you have to save just exact I
did not take into account your Social Security benefit I am only talking about
what you need to have above it I discount the Social Security benefit
hugely since we always hear about entitlement reforms so for myself I am
focused on the number we calculated before to come back to the figures we
calculated earlier I am afraid it is not enough why because first of all there is
a real chance you outlive your money life expectancy in the u.s. is currently
around seventy eight point seven years on average more if you are woman less if
you are a man however this is a life expectancy at birth not your actual life
expectancy what I mean since you are watching this video I can
suppose you are an adult you have passed all childhood sicknesses and all stupid
risky things teenagers do so your actual life expectancy is higher than the life
expectancy at Birth it’s like the older you are so order you can ex
back to live which is nice to hear I suppose what is also great is that you
can expect to live older and healthier than previous generations we have new
drugs new treatments and future looks pretty bright so guys you should
consider the outliving issue in our hypothesis which suppose you will need
to get money for 40 years but what will happen if you leave
41 years after retirement or 50 or 60 will you go back to work at 95 the
second issue with our computation is that money loses its purchasing power
then thousand dollars today will allow you to buy more than the same ten
thousand dollars in ten years with the Hipple status of two percent inflation
your honor ten thousand dollars in ten years is like eight thousand two hundred
today and in 40 years ten thousand dollars will have the same
purchasing power as 4230 today hence even if you live only 39 years after
your retirement not depleting your money you can end up with financial
difficulties which is not a great perspective I am NOT talking about those
issue to scare you on the contrary view it as a challenge to be overcome and you
can avoid those pitfalls with the right approach the classical approach focuses
on savings you need to save for your retirement there is no argument here
the real question is how and where we have to handle the effects of inflation
on your money do you know guys that the answer is straightforward
you need to have assets that grows with the overall growth of the economy
what Rises when the economy improves I see two kinds of assets stocks and real
estate then what about bonds don’t all the
experts you need to switch to bones as you
approach retirement when common rule of thumb is that you invest your age in
bonds and money market if you are 40 40 percent of your portfolio should be in
bonds if you are sixty sixty percent of your portfolio should be involved simple
but probably too simple my opinion is it does not help you to keep your
purchasing power why because the principle of bonds does not grow your
money loses its value everywhere moreover coupons are lower and the
average cost of stocks plus dividend when you invest more and more of your
portfolio in bonds good luck to reach the capital you need now to tackle the
question of out leaving your money the answer is also simple you need to save
even more money to live only from the cash flow it provides I know some will
say well whoa hold your horses I cannot save 1.4 million how can I save ever
more are you insane and I will answer think about real
estate with only a fraction of the price of a house you can control a significant
asset you are using someone else money to build your wealth and another person
is paying the rent paying your mortgage for you in time your mortgages on all
your properties will be paid off and you will have a significant net worth with
the real estate investment you will be able to raise rent as the economy grows
no need to worry about the erosion of the purchasing power of human in my
opinion the best way to be financially independent is to invest in real estate
and stocks and when I say stocks I do not mean necessarily of teaching shares
I mean an ETF on a broad index is enough with enough real estate there is no need
to worry about the up and of stock market so guys what do you
think about my investment philosophy please comment below I am eager to read
your thoughts don’t forget to hit the like button to subscribe and to click on
the bell thank you for watching and see you soon in my next video

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