Financial freedom is simply the ability to have a choice in your life, about how you live and what you do, without having to be dependent on a specific Job or the way your boss or the company you work for feels about you and your achievements.
When the income from your investments, can pay for your mortgage, your bills and your food, you start working because you want to not because you have to.
For me the biggest change is that it has given me more time to focus on the people and things around me that really matter. Having the ability to help others in the world and make a difference is one of the things that truly make you happy. Financial freedom is an enabler that allows you to do it.
It doesn’t mean that you have a super high net worth or that you are debt free it just means that you are playing the game the right way and are not falling for the common traps that the financial system has led people to believe is the right thing to do. In many cases they are the right thing for the major financial institutions just not for you.
The simplest way to achieve it is to take a small piece of what you earn and compound it e.g. 20%. This is a principal that has been around for a very long time. If you believe George C Clason who wrote the richest man in Babylon the principal was even around in the time of the Babylonian empire (everyone should read this book).
The big question is why many people don’t achieve it?
Most people don’t understand how the money machine works and they rely on other people to tell them what to do. If you read 1 book a month on investing, after 5 years those 60 books would have taught you more, than any adviser could. However people need to understand the forces that are stacked against them and take control of their own lives.
On average the S&P 500 increases by 5.9% per year since 1950(dividends excluded compounded monthly) but most people think it’s around 8.5%. When you factor in the true cost of inflation including housing, gas, medical & education it is at least 4% and probably higher. The true growth even if you got 8.5% would only be 4.5% , if you got those gains by investing in an average mutual fund you would pay 3% in fees (most of the fees are hidden deep in the prospectus and people don’t realize) that would leave you with an average growth of 1.5% in real terms. The when you factor in volatility and the fact that 98% of funds don’t even do as well as the S&P 500 & most people are in negative territory in real terms with a lot of hidden risk.
i.e. 8.5 – 4 – 3 = 1.5% growth in real terms.
Over the course of this blog I will explain how I achieved the freedom in my 40’s and some of the things people should know.
After living in 3 countries and experiencing different financial systems, I found myself questioning things that a lot of people took for granted. My uncle, who was an international currency trader in London, reinforced this by sharing stories of how a few individuals where able to change the forces of governments-take them on and win. In the process I became an unintentional economist. Thus, I have an alternative view of financial forces and headwinds that affect people’s lives such as the power of debt for good and bad, the true risks associated with different types of investing, and how different people hack the system. To do well today most people need to overcome the financial headwinds they are burdened with. By applying this knowledge it has allowed me to gain time back in my life to spend it on things that create meaning not just the daily grind of trading time for money. I have a great desire to share what I have learned along the way, mentoring others and helping them find their path and devising creative ways to capitalize on various market and economic events. Nowadays, having fun, presenting at conferences on economics and other financial topics, and building a coalition of the willing to take on the world, is my passion; I hope you can join me on this journey.
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