How to Invest for Financial Independence
This post is about how to invest for financial independence.
I will highlight four key steps for you on how to achieve financial independence for your life.
What exactly does “financial independence,” mean?
Financial independence is the status of having enough money/income from investments, businesses, real estate and so on.
Also, the income that comes in pays for the living expenses without having to rely on a job.
So, in amazingly simple terms, being financial independent is having money work for you, rather than you work for money.
If you currently are going to a dreadful soul destroying 9-5 office job to make ends meet, you are working for money.
Whereas if you have your money spread in different assets that pay you a return on investment every month or year, then money is working for you.
You see the difference?
A person can work their entire life and be exactly where they were when they started, maybe just slightly higher up the ladder.
They put all their money into a retirement fund, and when that day eventually arrives, they realize that slowly but surely that fund no matter how big or small will run out.
And that is why people end up dying poor without realizing how it happened?!
On the contrary there is the people who invested their money in real estate and stocks and shares and have a retirement fund.
And when they do retire their assets are working for them producing them an income whilst retiring and enjoying their lives.
I knew an estate agent who was one of the smartest guys, because what he would do is save up for 2-3 years and buy through the agents he worked for.
Over the course of 10 years he built up his own real estate portfolio of around 3-4 great investments.
With that he quit his job and now travels living off the rents he gets from the investments he gets.
This former agent managed to accomplish his own financial independence in JUST ten years, whereas most people never accomplish it in their entire lives.
How is it possible?
Well unlike the fake gurus trying to sell you a course or get rich quick scheme, I can assure you that it will take a lot of work, a lot of patience and a lot of discipline.
There is no quick way to wealth, I can assure you.
But there is a quick way to independence financially, and here are the four ways to invest to achieve it.
#1 – Plan
So, you have decided you want to become financially independent?
Congratulations, not a lot of people would want to do that, so pat yourself on the back for sure!
Most people lack the confidence, the education and desire to become financially independent of their jobs, their parents, etc.
Well the first and most important step to invest for this goal is to plan.
What do I mean by plan?
I mean you need to go into detail of what you need to do to reach this goal.
Financial independence is your goal, and you need to decide and figure out how you are going to get there.
A good first step is to total up all your necessary expenses, which may include:
Food & Drink
Home & Life Insurance
Once you have totalled it all up you will have a figure in mind for you to realize what you need to do to reach that target.
Let me use an example that your total necessary expenses are $2000 a month.
That is your target then, to make $2000 passively to be financially independent!
Or maybe you want to be conservative and double it to $4000?
Once you are aware of what you need to “survive” then you are well on your way to your financial independence.
Most people just throw figures around in their heads e.g. “oh I want $100 a day etc,” whereas you want to be crystal clear and specific of the target in mind.
Now knowing this how are you going to reach this figure passively?
Are you going to start doing some side hustles to increase your capital to invest?
Are you going to sell unnecessary junk?
Are you going to clear your debt first?
Are you going to make a saving plan for an emergency fund?
My point being is plan everything, get on top of your finances as soon as possible, otherwise this is not going to work or happen for you.
By doing this you are working more clearly on your goal, and you will know the exact target to aim for.
“Not having a clear goal leads to death by a thousand compromises.”
#2 – Invest in What You Know
When I was a kid, I was utterly obsessed with Pokémon cards, and comic books.
However, before the internet I still knew through research and word of mouth what things were worth if I wanted to buy or trade.
The same goes for the real world and life as an adult.
Now you know roughly what it will take for you to be financially independent e.g. $2000 per month, it is time for you to start investing to make money work for you.
But what will you invest in?
Simple = invest in what you know.
Do not invest in fads, trends, or get rich quick things.
Here are some examples of things I would NOT recommend investing in:
Real Estate you CANNOT afford
Real Estate abroad
Here are some investments I WOULD recommend:
401k and the Stock Market
Real Estate you CAN afford
Passive Income Businesses (YouTube, Blogging, Affiliate Marketing)
Now what if you are saying “but SCG I do not know anything about this stuff, so how can I invest in something I know nothing about?”
Simple = DON’T!
Start using the internet for more than just browsing videos of cats and hot people on Instagram and TikTok and use it for research.
All the answers to your queries are FREE on the web.
Do NOT pay for courses telling you how to be financially free.
Do NOT pay for gurus claiming to make your rich.
Use your own initiative, read books, watch YouTube videos, sign up to forums, constantly ask questions.
Remember this is YOUR financial future, but if real estate is for you, invest in as much as you can over the course of 10-20 years, so you hit that target of $2000 a month passively.
I myself have been a successful investor for over 12 years.
And I have made some mistakes who has not but if you really are not sure what to do, always seek the advice of a professional financial advisor.
But again, research, question everything, and always invest in WHAT you know.
#3 – Think 30-40 Years Plus!
I know you are going to hate this, but you got to start thinking long term when it comes to your financial independence.
No, you will not be quitting your job tomorrow.
No, you will not be living in a huge mansion tomorrow.
This is NOT one of those type of posts, this is how to invest in your financial independence not how to become a millionaire overnight!
I came across an amazing story of a janitor who died with a net-worth of $8,000,000!
Ronald Read a USA based janitor and gas station attendant died at the age of 92 in 2014 and quietly amassed an $8 million fortune, thanks to smart spending and investing habits.
Read was a frugal man, he never spent money unless he had to, drove a second-hand Toyota Yaris and even used safety pins to hold his coat together well into his 90s.
But Read was a smart stock picker and had the control to hold onto stocks for the long haul, which is what billionaire Warren buffet has always recommended.
And by long haul we are talking 30-40 years.
So when Read invested in something he would not even look at it for almost 4 decades!
Most people when they invest in ANYTHING these days cannot even last 4 minutes without feeling the need to cash out!
It is THAT type of investing that makes you rich.
My grandmother (who wasn’t a millionaire) always used to say “if you don’t need to sell, do not sell!”
What could be said of you?
Can you invest in something and hold onto it in 30 years?
How about 20?
By thinking long term like Mr Read, you can safely say that you are going to become not only financially independent but also extremely wealthy too.
And education, or your background has nothing to do with it either!
Mr Read was a janitor and look at the fortune he managed to amass!
What I am trying to emphasize here is THINK LONG TERM!
Buy or invest in something and sit on it for as long as you can.
Do not get antsy, do not feel the need to cash out no matter how much it goes up.
Think long term, sit tight, invest in what you know and enjoy the ride.
Use Ronald Read as your inspiration.
#4 – Live Below Your Means
Now I am not suggesting you to drive a second hand Yaris and have safety pins on your clothing like Ronald Read the millionaire janitor, but if you want to successfully invest in your financial independence you need to live below your means.
Here are some great tips for you to really get on top of your finances and live below your means aka manage your money better:
Create a Budget – eliminate unnecessary expenses
Track your spending – do you really need that $10 coffee daily?
Eliminate Credit Cards – just do not bother with these
Reduce Meaningless Spending – why do you pay so much for a gym you never go to?
Negotiate your bills down – get on the phone and haggle them down
Second form of income – do a side hustle to bring in extra cash that go toward investing
Downsize your property – do you really need 3 bathrooms?
I know living below your means may seem like a poor person’s strategy to some, but if you think about it long term it works.
What you will do with the more money you have saved is go towards investing for a better and more prosperous future.
I sincerely hope you do obtain your financial independence, because you can really live a happier, healthier, and less stressful live by doing so.
And remember it does not matter how smart or stupid you think you are, because if a janitor can die with an $8,000,000 net worth, just think what YOU can achieve!