The Best Way To Invest To Have Financial Freedom In 10 Years

Do you want to achieve financial freedom? Most people do. It’s no secret that most of us want to make more and have more money.

Many people strive for it throughout their lives.

However, only a small fraction achieve true financial freedom.

Why?

Because most people lack knowledge or guidance. For the few who do, never take any action.

Everyone wants to have enough money so that they never have to worry about money again. But when there is an opportunity they don’t take advantage of it.

Or don’t know how to.

I see that many people don’t even have a financial plan in place. And it is quite common.

Did you know 34% of Americans say they have not spoken to anyone about financial planning?

And even worse…

Only 30% of Americans prepare a long-term financial plan with investment goals.

If your goal is to improve your personal finances and be truly “free”…

You need to develop a proper investment plan. And then make the right investments.

It’s not as hard as you think. If you know what to do. And if you know the how-to, you will realize it’s easier than ever to achieve it.

Now you may have heard the word “financial freedom” thrown around a lot. Let’s talk about it.

What Is Financial Freedom?

The definition of financial freedom changes from person to person.

Ultimately, it is up to you how you define when you are “financially free”.

Some people might say when your passive income exceeds your personal expense. And you no longer have to work for money. Then you are free.

Or you have a portfolio of investments earning a large sum of money. Then you are financially free.

Some would say you have financial freedom when you control your finances instead of being controlled by them. When you get to make life decisions without being stressed about their financial impacts.

 Some say true financial freedom allows you to change careers as per your wish. Or to start a business without worrying about the investment.

For some, it means to be able to travel the world. Or just to be able to spend time with loved ones as and when they please.

Now all of the above could be true for you. Or maybe only part of it.

When I ask people to define financial freedom for me…

They say:

“Where you can do whatever you want, wherever you want, with whomever you want, for as long as you want. Without having to worry about money.”

So I think…

Financial freedom means you can maintain your desired lifestyle without depending on a regular paycheck.

Whatever your definition might be, we can agree that a financially free person has options to do things they love. And not worry about their finances.

Now if you have followed me for some time, you know I say that financial freedom is a myth.

Yes, I understand the idea behind the words. However, I choose to have different definitions of feeling financially secure or “free”.

Before I go into that, let me tell you about…

The Myth Of Financial Freedom

Let’s look at the word freedom.

And let me ask you a question…

How do you define freedom? What does freedom mean to you?

You may understand freedom in terms of freedom of speech. That is you can say whatever you want.

Well, do you have that right now? You do.

You might think of it in terms of freedom of mobility.

That you can go wherever you want.

Do you have that right now? I am guessing you do.

Chances are you have quite a bit of freedom in your life. You are kind of already free.

Do you see what I am talking about?

You see…

I used to believe in “financial freedom” too.

But here’s what I have learned…

Why?

I will share my story.

Back in the day, I had multiple mini-sites on the internet where I was selling digital products.

There was huge revenue coming through Google Adwords.

And I remember thinking to myself, “Oh wow this is so good. I’ve got a lot of money coming in. I am free.”

After all, I had a lot more passive income coming compared to my expenses.

Until guess what?

Google changed its algorithm. And my ad costs skyrocketed.

What was profitable for me, went away. For every sale that I made, I was losing money.

Free? Not anymore, I wasn’t.

That’s why I define wealth and the pursuit of “financial freedom” differently.

The 6 Levels of Wealth: Where Are You Now?

When it comes to managing your finances the most important thing that you have to do is to figure out:

• Where you are today and
• Where you want to reach

You see…

Before you can reach your destination, you need to understand where you are now.

Only then you can map out a path to your desired goal.

I am going to give you the 6 levels of wealth as I define them.

See which level of wealth do you belong to. Evaluate your current situation.

Then you can chart your path to true “financial freedom”.

Level 1: Financial Dependence

At this stage, you are relying on someone else to provide for you financially.

It could be your parents or grandparents. Maybe you have to depend on your spouse for your finances.

If you are older and want to get out of this stage, consider upgrading your skillset.

Level 2: Financial Survival

If you are in this stage, you are living paycheck to paycheck. You are relying on a job to provide for you.

Maybe you have debt or a student loan. You could even have a mortgage that you are barely able to pay off. 

You’re just surviving month after month. Again, I suggest you add some high-income skills to your skillset.

Level 3: Financial Stability

I define that you are financially stable when:

• Your income is greater than your expense
• You have at least six months worth of your monthly expense in a saving account

So let’s say your monthly expense is $3000. Then you need to have at least $18,000 in your savings account.

Level 4: Financial Comfort

If you are at this level chances are maybe you have a stock portfolio. Maybe a couple of income-producing properties too.

You have several long term investments in place. The power of compound interest is at work for you.

You are one of the top earners in your industry. A lot of income has been set aside towards your retirement account.

You should have at least two years of living expenses put aside as well.

So if we take the previous example of a monthly expense of $3000. You should have a minimum of $72,000 put aside in a savings account.

If you’re at this stage you probably have a couple of insurance policies too. So your family is protected in the case of emergencies.

Level 5: Financial Independence

At this stage, your investments are working for you.

You are collecting dividends from your stocks. Or maybe getting rental income from your real estate investments.

Your investments are producing cash i.e. Money is making you money.

Most importantly, in this stage, your expenses can be paid by the income from your dividends. Let’s say from the interest from your rental income.

In other words, your investment alone can pay for your expenses.

Let’s look at the previous example again.

In this stage, your $3000 monthly expenses are covered by returns on your investments alone.

Level 6: Financial Abundance

I believe this is the level that you should aspire to be.

When you are financially abundant your investments are throwing off way more cash flow than what you’re earning right now.

I’m gonna use the $3,000 monthly expense example again.

In this stage, your investments alone could be producing $30,000 or $60,000 or even $100,000 a month.

Multiple times than your expenses.

It doesn’t matter whether you lose the job. Or your business takes a hit.

You are not concerned with the economy or the market fluctuations.

You don’t have to do anything that you don’t want to do because you don’t really need anything from anybody.

This is what I would call true financial freedom.

Develop An Investment Mindset

Now you know which level you currently belong to.

And you know you have to strive for level 6 of financial abundance or “financial freedom”.

So what do you have to do?

Well, you have to start investing. Period.

It doesn’t matter if you are at level 2. You have to start saving up and invest your money. 

Most importantly, develop the habit of managing money in your mind.

At the very least I suggest people invest 10% of their income. But it’s the bare minimum.

That is if you want to be comfortable in 20-30 years.

However, if you want to get there on a fast-track, 10% is too low. And too slow.

Here are some guidelines based on how much you are making per annum:

• Less than 50k, 10% is good.
• 50 to 200k, your investment needs to be at 15%.
• 200 to 500k, 25% is good.
• A million or more, 35% at least.

If you can’t do the 10% investment right now, do 2%. Maybe even 1%.

Because you need to have the habit in place.

Even if you’re completely new to investing, it doesn’t matter. You have to start.

You have to develop the habit of investment early on in life. The sooner the better.

Is there a specific amount of money you should have saved up to make investments?

There is no specific number.

It doesn’t matter how much you invest. It matters that you do.

Select an appropriate property investment strategy that fits with your cash flow and risk profile.

Now the question is what are the best types of investments for you?

Here’s what I think…

Make High Return Investments With Low Risk

You already know that not all investments are equal.

And if you want to achieve true financial freedom in 10 years, you want high returns.

High return investments mean 8%-10%, at least.

When people think of high-return investing, they think of high risks.

But, high return doesn’t have to mean high risk.

You’ve probably heard the following…

“If there’s no risk – there’s no reward.”

But this is not how the people who have achieved true financial freedom invest.

Look at what happened to Blackberry stock in 2008… 

Thousands had their portfolios decimated as Blackberry plunged from $138 dollars all the way down to a measly $7.50.

Yet at the time, no one would have thought twice about their investments.

Talk about risk.

Let me clear some common myths about High-Return Investing:

• You don’t need a lot of capital (start with just a few hundred dollars).
• Can be done from anywhere in the world
• You don’t need to have a good credit record
• You don’t need to borrow money
• And you do not (and definitely shouldn’t) be taking on a lot of risks

Therefore, look for high return investments with low risk.

Take real estate for example.

Real estate is a hard asset. It has the potential to perform well even when the financial markets are fluctuating.

Investing in real estate has to be part of your long term investment plan to achieve financial freedom.

After all, the first property that you buy is essential for your future wealth creation.

Why?

Well, that first property will act as the springboard for your future portfolio.

Now if you are at level 4 or 5, you already have experience in real estate.

But if you are level 2 or 3 you may want to know about…

Low Capital Investments In Real Estate For High Returns

Not everyone can buy real estate. Maybe you are just starting out in the world of investing. 

Maybe you don’t have enough capital to buy a property.

Or you may not have the desire to take on the work of a landlord.

But that doesn’t mean you can’t invest in real estate.

Now you may be wondering…

How can you make investments in real estate with small capital?

Here are two lucrative options that can set the foundation for true “financial freedom”:

1.Real Estate Investment Trusts (REIT)

REITs give you the chance to invest in real estate without the hands-on work.

Sites like Fundrise allow you to collectively invest in real estate properties.

It’s like crowdsourcing for real estate investing.

You can choose to invest in a single property or in various real estate developments.

What’s more…

Often you get better returns over the long-term. Think of REITs as mutual funds that invest in real estate.

You can even do it with a small investment (say $1,000).

Returns can be in excess of 10%. Hence, REITs can be excellent high-return investments with low-risk.

Because they pay dividends and receive special tax treatment.

REITs tend to have more stable values than stocks. And like dividend-paying stocks, they add the potential for capital appreciation to regular dividend income.

They pay at least 90% of its revenue in dividends to its shareholders. Those dividends are tax-deductible, enabling the REIT to minimize or even eliminate income taxes.

Therefore, making them a great source of regular income.

You can invest in REITs directly, or trade on major exchanges. Like exchange-traded funds (ETFs) which hold positions in several REITs at a time.

You can buy and sell positions when you decide it is appropriate for you.

2.Tax Lien Certificates

When you buy a Tax Lien Certificate, you are in effect paying someone else’s property taxes for them.

You see…

In several counties and municipalities in the United States, local governments have millions of dollars outstanding in overdue property taxes.

These overdue taxes are from property owners who will not or cannot pay their property taxes.

And to fund the daily services of police, fire, hospitals, schools, roads, etc., the local governments need this money.

When you pay these taxes, the government gives you the right to receive all of the outstanding tax money due. Along with the fees, high interest, and penalties.

In a sense, it’s like a mortgage.

These Tax Lien Certificates are secured by the real estate they’re attached to. 

So you are not actually buying the real estate. You are just buying the government’s lien on the real estate.

Basically, to encourage taxpayers to pay their property taxes on time…

The government charges high-interest rates which are passed directly to you.

To pay you back, you receive government-guaranteed checks of 16%, 18%, up to 36% interest. And these are paid directly to you.

Think of it this way…

You are receiving a continual, high-rate income from the government.

You can buy Tax Lien Certificates secured by different properties. And in different locations in the same state, or in different states.

There are thousands of these available at different price points. It could be a low as $50 and as much as $1,000 or much more.

An investor friend achieved true financial freedom with the tax lien certificate investments.

He even calls them “The Wealth Builders of the 21st Century”.

Most of the rich people invest in these tax lien certificates to amass wealth.

In fact, he believes these are…

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*** To learn more, connect with me here on LinkedIn.

What do you think?