L2. HOW TO Attain Financial Freedom.
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- Basic but very powerful principles when it comes to personal finance.
- Design YOUR money machine. All it takes is to take a close look at the opportunities and then go for it.
- Attain financial freedom. Very much possible for anyone.
- Become a geek - if you want to. Passive is still perfectly fine.
- Choose what you want and need. Invite it. Allow it to stay.
- Reframe, enjoy the process of acquiring what you need and want.
- Very basic numerical tools.
- It helps if you're a decision maker. Don't be an options collector, please.
- There is an emotional aspect of finance that is often neglected. Don't be indifferent.
Being possessive has always been tricky. It's even more so in our time. On the other hand, it's more possible than ever for common people. Wealth and income are different issues similar to financial freedom or independence. It could mean anything from being a hunter-gatherer to living cosmopolitan life in a luxurious urban penthouse apartment - and anything in between. A basic skill set is presented to make living your life more with ease. Financial planning is a slightly different field that should be said. My first course was a toolbox course. This a how-to course which is different. There are remaining questions since how to live as an Eskimo is different from how to become a billionaire in the future. The whole point is to liberate yourself which could only be achieved by focusing, having the right frame of mind, being creative, take actions from a state of being, have the right expectations, and allowing it to happen. People often allow failures to happen and don't even recognize it. Don't invite gremlins and crunches. Quitting too early is a typical example. It should also be said that the conclusion could also be that you are already liberated enough, or good enough when it comes to both wealth and income. Always ask yourself, then what? I'm not saying that being a billionaire implies miserable or living in a studio apartment implies bliss. Our own experience is always a mental construct meaning we create it; more or less sheer design. What is necessary could always be argued. Right-sizing is complicated. Always be fully accountable when it comes to your success or failure whatever that means. Have ambitious goals and know-how to achieve them. And fully enjoy this wonderful journey. Always learn and correct the path when necessary.
I could guarantee that I would never twist your arm or force you to read one single personal finance book. I'm not going to torture you with seventy hours of video presentations. Neither would I recommend visiting a financial adviser. I'm not going to guarantee financial success, whatever that means. However, I'm going to hand out a certificate of sorts that you are fully prepared to swim with the sharks - whatever that is worth. Always prepare and respond. Don't be reactive when it comes to your personal finance. Always be a realist and relate to the real world as it is. Don't relate to the world as it's described by others. All descriptions are mental constructs to start with. Make your construct how to live a life of financial freedom. Rich or poor is always sheer construct. Starting your day with a few cups of freshly ground Ethiopian coffee beans in the morning means that you are rich by definition; spiced-up oatmeal and a bottle of mineral water is sheer luxury already. Fruits, nuts, berries and other plants are life. You get the picture...
- Beginner or advanced students when it comes to household economics.
- It's not a get-rich-quick scheme. Has more to do with design principles, make the right decisions, and take some hands-on actions.
- Because of the ongoing paradigm shift, this simple toolkit is a way to prepare and respond (or not).
I'm not claiming that achieving a life of bliss and financial freedom is an easy task. However, the principles for attaining financial freedom are pretty easy. Choose what you want and need to start with. Could be achievements but doesn't have to be. Lots of people thrive on possessions. Make sure they are secured. There are some key dimensions and design issues. Time, effort and location are deceptive since they might be thieves of both money and quality of life. Financial freedom according to your choice is thereby a priority. I try to be agnostic in these matters as an educator. Still, means that I have a bias. I'm an essentialist who avoids risks and seek personal responsibility. Hence, risk and reward are one of the key choices. Another preference is right-sizing.
Because of the ongoing paradigm shift, there is a need to prepare and respond. Be accountable, active, proactive and offensive. Make decisions. The disruptive part is the best thing ever happening since it solves all the problems and creates functionality for a change. People below the level of subsistence shouldn't pay income tax. Tax wedges and twenty-five percent VAT are insane. Income support should be a negative tax. There are many states where a hundred dollar per month is all you need to thrive, live a free and fair life. It's referred to as convergence zones and tipped a few years ago. The former convergence is nowadays disrupting. Be on the right side of history. Act with confidence and have absolute faith it will come into fruition. Expect to land on the sunny side unless you're already there.
Asset classes are stunning in our time. It still takes an edge of some kind if you want to be active. On the other hand, some conclusions are relatively obvious. US stock is a good bet similar to non-US, or non-western stocks. Passive is a fantastic option. I'm personally as passive as possible. I always recommend an emergency account with dollar cash on a debit or prepaid card (doesn't have to be a CD), and one worldwide equity fund as a starting package. That's all you need. I'm a real quantum physicist who doesn't consider anything fancy like leverage etc. Real estate takes a discretionary approach. If there are busts, there are also booms that are ripe. If you prefer to stay away from the gyrations, there are safe options. I also want to comment on the X:s and pension. If you're like Warren or Charlie you probably go for 5X as a good-enough level. A financially savvy wild camper needs around $25k as a silly example. I'm not going to tell you what you're goal ought to be. The standard recommendation used to be 25X which is probably going to be considered obsolete. My suggestion is 20X. It's simple to force the prognosis towards a certain amount and adjust savings as you go. It usually makes sense to break it down. Probably five or ten-year plans. There are workarounds in terms of the future value of money like two percent inflation per year for USD - probably on the conservative side. Use the future value and the standard calculation tools. In my case, 2031 dollars. I consider other currencies on a case by case basis. Some will need to be reset which is normal if you know anything about fiat money and inflation. They have always been weaponized. As I mentioned, super-interesting times. Don't worry, be grateful for our privileged times with automation and all that. Seek and find opportunities.
In our time, assets and classes are stunning. First of all, there is awesome abundance. Second, there are whole new classes of assets because of the information and communication age. Who doesn't want a cluster of quantum computers and robots working for them? Ignore the doomsday prophets. Our times are incredible. A leapfrog better than anything the world has ever seen before. There are other fantastic aspects like an equal opportunity.
It's impossible to say which are the right assets for you. However, consider capital costs and opportunity costs. Certain assets have sentimental value should be remembered. I used to be a super touring biker; a typical example to show my point. Cars are sometimes great investments and sometimes less so. Owning your home is usually a great investment unless you seek to become a nomad as I do. Don't make it three times larger than you need. A studio apartment is practically always agreeable. Consider your lifestyle with an open mind. Sometimes assets are just clutter. Essentialism often makes us feel a lot better.
There is no obligation to become a geek. Passive is fine. However, the specifics are intriguing. The currency exchange rate of the SFR, GBP, EUR, RUB, CNY, INR or YEN as compared to latest figures of annual nominal GDP in USD might be the most exciting happening of the whole year. It goes both ways. The American nominal GDP in various foreign exchange rates is super interesting. Worth considering when you make decisions in terms of your CD(s). Also worth considering in terms of liabilities. My suggestion is to discharge all liabilities and make life as uncomplicated as possible. So-called purchasing power is stunning in the times we're living in. Current accounts, currency exchange rates, purchasing power, interest rates, inflation, etc are most interesting. As I mentioned, passive is OK too.
Moreover, I want to comment on a fixed income. Corporate and government bonds and debentures are sometimes a fantastic opportunity gap or vice versa. Make sure you know a whole lot about fiscal policy and structural fallacies (or how to fix them rather) that the market doesn't before entering. There are always overlooked economies in really good order. However, it's often tricky and there are plenty of determinants such as inflation and currency exchange rate. A negative interest rate in combination with a surge of currency might still be very profitable. A pile of cash is, of course, better than negative interest rates. There are also stock-based annuities should be mentioned. Stocks usually pay dividends in domestic currency. Take a close look at each state. You will find fantastic gems and vice versa. Usually, the most convenient way is to quite simply go there, open a bank account, and a bond fund. Seek to diversify. Very few people should have a substantial part of their portfolio in one government bond. Seek and find a quality policy and gain from this circumstance. Seeking to gain from a low-quality policy is another possibility such as liabilities in one currency and assets in another. Don't neglect to always consider the quality of the jurisdiction. There is a simple logic that gives substantial leverage. A computer could easily sort out these ratios if you leverage the dataset. You could perform it in a simple spreadsheet. You'll be surprised. As an educator, I don't want to present a huge list even if I could. I just train your vision for these matters. It's an overlooked opportunity.
There are at least two main issues in this matter. Quantity of sources is one of the issues. There are also functionality, sustainability, reliability, etc. Always consider secure revenues. Try to avoid income-loss insurances since they are always fraud one way or the other. At least very fraudulent. Social, cultural, and emotional intelligence should always be considered. I'm personally a realist. I respond, adapt and overcome. Certainly opposed to cleptocracy. Always choose what I want and need. Reject what you don't want and need. I'm not saying that multiple revenue streams are underrated but it could be compensated elsewhere such as minimizing capital costs or diminishing expenditures. People often have a lot of stuff they don't need.
The problem with concepts like earned, passive and portfolio income is that they are highly misleading. A fair amount of creativity is usually needed. A super simple capital logistics scheme is very beneficial. You probably figure out the game changer pretty soon. Boosting revenues might be cumbersome. It might be good enough already meaning there are other considerations. As an instructor, I'm not going to specify the savings rate. Both revenue and savings rate are key design issues. Soon attaches to a certain preferred lifestyle. You have to design, build, operate and maintain your money machine.
This is another area where it makes sense to have a passive, neutral approach. If you want to become a geek like me, that is OK too. You probably want your revenues to be secured in one or the other currency. There are currently huge opportunity gaps since lots of currencies are undervalued. There are lots of very solid and poorly understood economies out there. There is no reason for concern or alarm at the other end of the spectrum. Two or three decades in la la land isn't a disaster.
Being an employee offers a lot of liberty from anxiety or distress aka fears, concerns, and discomfort. Could be convenient and a state of bliss. Perform it with all your heart and enjoy financial freedom. Always take a close look at your intentions and your creative outlet. Seek and find flow at work. Choose what you want and need. Consider what you feed both your body and mind with. Feed it with the most high quality and functional stuff you could find. You quit and fail real desire. If there is a mismatch, it's just a redirection which is no big deal. Avoid taking matters personally.
However, real-life is often complicated. Right place, effort, intentions, and livelihood might be tricky. Always be conservative when it comes to costs, time and effort. I would recommend starting with the place. Consider nomad as an option. Also, consider location independence as an option. A certain intention probably conditions place to some degree. Another twist to that matter is to consider location-independent income. Don't settle with loops of drudgery. Get rid of all conditioning. Don't internalize the madness of the externality. Yes, the world is, of course, an insane and often seriously unhealthy place. So what!? All blessings in disguise happen for a reason.
In terms of employees, there are some obvious traps. Modern work life isn't more demanding than it used to. Mobility leaves a lot more options. Being stuck only means your mindset is stuck. An open mind and seeking to reframe makes all the difference. There are other traps such as drudgery and not being able to sleep well. That's a vicious cycle in terms of health. If you're in an uncomfortable workplace, add physical exercise, and don't get full recovery might even trigger a heart attack. View these matters as an integrated ecosystem where all parts must deliver to you. Trading time for money is a mutual agreement. If you don't want or need it - seek and find an alternative source of revenue. Take a close look at what is possible.
Being an entrepreneur also offers a lot of freedom from stress. Being an employee might, or might not, be a source of distress. If being an entrepreneur is your intention, do it with all your heart while as enjoy financial freedom. Having social support is always paramount. The ideal situation is a squad of four people rather or at least a couple.
There is often a certain way that it should be implemented according to the local customs. Getting started is a key moment. Both crises and growth are normal. Cash flow is an obvious issue for most startups. It should also be said that it's possible to send invoices as an individual - that is no corporation at all. Individuals don't pay payroll taxes. The VAT is complicated. Civilians can register for VAT. Hence, lots of considerations.
The term is thereby often misplaced. Lots of entrepreneurs are as unentrepreneurial as they come. Lots of civilians are extremely entrepreneurial. There are basic considerations like taking a close look at the market. Don't enter unless there is a market in the first place. Electronic commerce is very special. It's a new opportunity. Doesn't replace the old markets. Selling legumes or veggies at the local market is still a brilliant strategy. Everybody wants and need a decent bun of bread, good vegan peanut butter, freshly ground coffee, etc. Taking a close look at how to add value and logistics are always a necessity. Don't export tea to Asia or India. Hiring quantum computers, robots, and avatars don't have to be the smartest idea unless there is an actual market. Inventing a biocomputer is probably a success. Insourcing people is probably also a success similar to just hiring women - particularly women past menopause. Always take a close look at the opportunity gaps.
Don't neglect the health aspect. Your workplace is probably comfortable already. Make sure you sleep well. Exercise is needed. There is a difference between intense, anaerobic training as opposed to lighter aerobic training like walking. In case you're stressed, you might not be able to perform more than one training pass per week with higher intensity. Don't exercise at all if you don't sleep well. Address that issue first of all.
If neither employee nor entrepreneur is an option, being a retiree is the obvious solution. Perform it with all your heart and love every moment. I personally really enjoy being a de facto retiree. Don't perform it my way. I was forced to retire because of a cluster of lethal illness. I just wish I'd considered it much earlier. It's an option for middle-schoolers. Tell your teachers that you need to take care of your life rather than wasting your time listening to them. Financial freedom is very much possible for everybody. Takes some basic considerations. It should be said that there are hybrids. I recommend my fourteen hours per week of work retirement.
The most important aspect of retirement is intentionality and expectations. Retirement could be a perfect storm but doesn't have to be of course. All reason to start planning. The financial aspect really shouldn't be an issue. Health and lifestyle should be the main concerns. Or rather, retirement should and could practically always be sheer hedonism.
Taxes should also be considered. I'm not the best case-in-point since I'm de facto and de jure retired while as don't pay any income tax, and have a nineteen percent cashback on income. However, no income tax is decent enough. Always an option.
I don't have anything to brag about. However, I recommend five categories of pensions or nine sources of income for people who have overlooked the great opportunity to save enough for retirement. Passive income might be very unprotected against the gremlins. Always prepare for the upcoming rainy days. My current savings rate is eighty-one percent because of deplorable circumstances. I would claim that fifty percent is the minimum level until you have a secured situation. Always expect the best and prepare for the worst. Consider who could pull the rug under your feet. Don't invite problems down the road.
Intentions and matching desires with actions are most important. Always enjoy what you perform. Take actions from a state of being. Always start with we are - full stop. Then have positive emotions. Then comes preparation for whatever is supposed to take place. Analysis, planning, implementation, and a decent design loop are just the icing of the cake. The proof of the pudding is in the eating.
Two considerations are always paramount. The first one is what we have, and not-yet-have. The second matter is how grateful we are for what we already have. Don't neglect to be grateful for achievements. It could be anything. Seek to focus on gratitude for what already is. Striving towards a certain asset or achievement should be an agreeable process. Once you're already there should make you grateful. Another twist to the matter is that we usually don't really need some of those assets and achievements. Broken windows issues are different.
I'm a huge fan of both goal-based lifestyle and essentialism. Minimalism is often synonymous. It usually means maximalism. Having a timeline and chunking it down is the normal approach. Consider what you want and need. Start from the final goal and break it down. Also, consider then what!? This is where financial freedom becomes most interesting. It should work for everyone.
There are key aspects such as CD (or a replacement), mutual fund, real estate, vehicles, hobbies, etc. In our time there are also digital assets which could mean a lot. My suggestion is to consider blockchain technology but it's also OK to ignore it altogether. I'm not going to be more specific than that. I definitely support free speed. If you want ten cars or motorbikes, a hundred million dollar castle, a few building blocks for rentals, a trillion-dollar portfolio, or whatever, I totally wish you all the best. If you want a kayak and a pet also makes a lot of sense. Family, pets, and plants aren't the easiest dimensions should be said. It used to be a one-size-fits-all and still is to some extent.
Rich and successful is for everybody. Choose what you want and need. Always way more revenues than expenditures. General abundance. Sustainability. Thoughts, emotions, perceptions, and actions meeting desires. Have absolute faith it will come into fruition etc. To have A, you need to perform B. Always excel and enjoy what you perform.