Achieving Financial Freedom Before 50 in an AGI Future

Link to video:

https://youtu.be/7WVwD2280ZY?si=LanHSP8OzT4kouKf

Achieving financial freedom before 50 was always a dream for me, and I guess I am not alone. The allure of living a life free from financial constraints, where work becomes optional and time can be spent on passions, family, and personal growth, is a powerful motivator.

However, achieving financial freedom in today's economy is not easy due to numerous challenges, including rising living costs, taxes, fluctuating markets, and unpredictable economic shifts.

But could Artificial General Intelligence (AGI) change the principles of achieving financial freedom quickly? There are factors speaking both for and against this transformative technology's potential impact on our financial future. In this article, we’ll explore these factors and provide insights into how AI and AGI might reshape our approach to personal finance.

Your Shot at Financial Freedom is NOW

To summarize my findings, I believe that advances in AI will impact our chances of achieving financial freedom early. The most accepted rule of thumb is that you can spend 4% of your invested net worth every year without running out of money. Therefore, the amount needed for financial freedom is 25 times your annual expenses.

I believe there is reason to expect that the next 15-25 years will see above-average returns on equities as a result of efficiency gains from AI. Furthermore, AI might effectively automate investments to strike the right individual balance between returns and safety.

As a result, the safe withdrawal rate may increase from 4% to, say, 6-8% due to improved AI. Additionally, AI will offer cost savings as a result of higher efficiencies, meaning a similar lifestyle may cost less in 10 years' time. Finally, even a modest level of Universal Basic Income (UBI) will reduce the amount needed to be financially free.

Factors Favoring AGI's Positive Impact on Financial Freedom

1. Automation of Investment Strategies People are often their own worst enemies when it comes to investing, making emotional decisions that hurt their chances of financial independence. AGI can analyze vast amounts of financial data and predict market trends with unprecedented accuracy. This could lead to more reliable and profitable investment strategies, helping individuals grow their wealth faster and more securely.
2. Reduction in Living Costs With AI-driven efficiency improvements in various industries, the cost of essential goods and services could decrease. From automated farming reducing food prices to AI-enhanced manufacturing lowering the cost of consumer goods, maintaining a comfortable lifestyle might become more affordable.
3. Enhanced Financial Planning Tools AI-powered financial planning tools can provide personalized advice tailored to individual circumstances, helping people make smarter financial decisions. These tools can optimize savings, investment, and spending habits to accelerate the path to financial freedom.
4. Increased Productivity and Income Opportunities AI and AGI can create new job opportunities and enhance productivity in existing roles, potentially leading to higher incomes. Freelancers and remote workers, in particular, might benefit from AI tools that streamline tasks and open up new revenue streams.
5. Stable Inflation and Interest Rates AI's ability to optimize supply chains and manage resources efficiently could lead to lower inflation and more stable interest rates. This economic stability would make long-term financial planning easier and more predictable.
6. UBI as a Safety Net UBI could provide a low but stable base income that, together with income from investments, helps individuals maintain financial stability.

Factors Against AGI's Positive Impact on Financial Freedom

1. Job Displacement and Income Inequality While AI can create new opportunities, it can also displace traditional jobs, leading to unemployment and income inequality. Those unable to adapt quickly to new roles may find it challenging to maintain their financial stability.
2. Delayed Implementation of UBI Universal Basic Income (UBI) could provide a safety net in an AI-dominated economy, but its implementation may be slow and insufficient initially. This delay could leave many people vulnerable during the transition period.
3. Increased Cost of Luxury Goods While everyday essentials might become cheaper, the cost of luxury items and services could rise due to increased demand and limited supply. This could widen the gap between basic financial stability and true financial freedom.
4. Market Volatility AI-driven trading could lead to increased volatility in financial markets. While some investors might benefit from these fluctuations, others could suffer significant losses, complicating the journey to financial independence. Stock picking may become even more difficult, and picking the winners for AGI could be a dangerous strategy.

Conclusion

Achieving financial freedom before 50 is a challenging yet attainable goal, especially with the potential impact of AI and AGI on the horizon. By understanding both the opportunities and risks presented by these technologies, you can better navigate the path to financial independence.

My conclusion is, however, that time is of the essence in terms of saving and investing for financial freedom. If AI automates most jobs away, it may prove difficult to save and invest once dependent on UBI as the main income source.

Watch the video below to gain more insights and share your feedback. Let’s embark on this journey together and prepare for a future shaped by AI.