5 Core Things Needed To Retire Early

It was a casual saturday and I’d normally stop by my favourite bookstore to top up my family’s weekly groceries.

It was then that I come across this amazing book called “Your Way to Financial Independence”, authored by Yap Ming Hui. He’s been helping a lot of people planning out their life and achieve financial independence – his company (Whitman Independent Advisors Sdn Bhd) helps people to achieve this. Check their page out if you are keen to restructure your life plans at https://whitman.com.my/.

I only imagine the idea of financial independence and retire early in life so that I can do things that I deem much more important than working around the clock and have no time to do the things I’m really passionate or care about in life such as spending time with my loved ones.

Hence, I believe it is vital for me to get my notes into other people’s notes. Knowing key knowledge in life earlier in life will help reduce your stress in future to come. Just like Jim Rohn said, ignorance is not bliss – ignorance is pain and tragedy.

In this article, we’ll be going through 5 very simple cores to take note if you plan to become the master of your money. I believe this will pose as an important turn around in reader’s life if people know these infos early in life.

1. Spending

Knowing where you stand in life is important. This is the same in spending, knowing how much you spend every day or every month determines your financial standings for that period.

An important note from the book, very simple –

The more you spend, the less savings you have.

The more you spend, the more money will be needed to maintain your lifestyle.

Spending relates very closely to our wants and needs, being aware of your wants and needs will help you steer your way to a more controlled spending life.

2. Return on investments (ROI)

The main idea here is that wealth will work for you better when your ROI is higher.

How do you get high ROI?

Well…

There’s ROI from properties, stocks, bonds, businesses, dividends, compounded bank interest and so on – we only need to get a good research before getting our hands on those investments.

But be alert to get ROI that is above the inflation rate. Otherwise, your money will lose its value across time. It’s as if we didn’t invest at all.

Read more at the links below to know a little more about investments you can start!

3 Surprisingly Creative Ways To Make Money From Properties

Stock Trading For Beginners

Making money while you sleep – the compounding bank account (ASB)

Now let’s continue..

3. Savings

Savings and spending are like yin and yang – they are closely associated with one another.

Just like mentioned previously, the more you spend means the lesser you save.

When we retire, the money we saved will be utilise for our daily wants and needs. But the best way to use that big chunk of money upon retirement is that we invest it and earn dividends in return.

This is where big savings are important so that we only need lower “Return on Investments (ROI)” to sustain our daily life after retirement.

Take an example,

Josh who saves $16,000 a year would need to achieve ROI of 18.3% to accumulate $1million in 15 years time compared to the same Josh who saves $36,000 a year that needs only 8.3% ROI to accumulate $1million in 15 years.

Which Josh do we choose to be?

The point is that saving money consistently bears high result financially and save you more time to buy your financial freedom in the future.

Have a read at…

How You Can Save $1300 A Month With $3000 Salary

and find ways how you can save your money better!

4. Time

When it comes to time, it means to forecast the period where certain of our wants and needs will appear in the foreseeable future.

For example, the time when:

1. We send our child into their tertiary education

2. We drawdown our retirement funds

3. We will marry or our children get married

And so on.

It could be a cash inflow or cash outflow depending on our needs and wants but normally big events in life. This is so that you can roughly estimate how many savings you must have or maybe a certain ROI you need to have to ensure your financial independence goals are still in check when the time comes.

5. Inflation

When it comes to investing, always take into account inflation rate.

Why?

Because your ROI might be lower than the inflation rate. This will result in your investments losing out money whether short term or long term – and we don’t want that.

We expected a return on the money we put to work – what if after 5 years you discovered that your financial status is still the same?!

That’s a nightmare.

Hence, make an effort to check the current inflation rate and which investments whether individually or aggregately are able to beat the inflation rate.

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How To Achieve Financial Independence

Now that you have clicked on this title, you must have been wondering what is financial freedom? Or…

You have already set yourself up for financial freedom in future to come but you haven’t figured out how.

That’s great! It means you have successfully gotten out of the rat race way of thinking – at least from a state of mind.

Now it’s time for action. Now it’s time to see how you will set your new life direction so that you can arrive at a new destination.

Before we start, know that different people have different meanings for financial freedom.

Does it mean being debt-free? Does it interpret as being able to travel other countries twice a year? Does it mean living your daily life without worrying that your money might run out one day or another? That depends.

What is your meaning of financial freedom?

To cut things short, this is the general outline that I learned from attending financial seminars and meet people who already obtained financial freedom and those who are already charted to that destination.

Assume we are doing this in order of sequence:

1. Work

Yup! That’s the reality of it – you have to work and by saying work it means the job you earn your main income. It’s the job you work to pay your monthly living expenses like utility bills (electricity, water or phone), housing and car installments, as well as other monthly legal obligations.

This is where it all starts – it is the first stage.

The key to this stage is when your salary comes in, who do you pay first?

Yourself!

That’s right, yourself.

You will have to allocate a certain portion of your salary aside for yourself. This leads to the next stage…

2. Savings

This is where the warm up begins – you will have to be disciplined and set your goals.

You will have to save every month until that money accumulate into a huge pile of resource. You need to calculate how much you need to save before you believe that huge resource can help you achieve that freedom.

Have a read at 5 Simple Ways To Save Money and How You Can Save $1300 A Month With $3000 Salary to get wider ideas of how you can save better!

When we already have that huge chunk of money, you might asked what happens next?

This is the point where you make money work for you.

When the time comes, when you believe you are ready to get to the next stage – whamm!!

You invest that money!

And that leads to the next big part which is investing.

But before we go any further, we’ll have to consider another important part to achieve financial freedom and this is applicable to the massive people out there.

This is simply because having a single income from a single work may not be enough to accumulate that huge chunk of money. You will need a second source of income or maybe a third or fourth.

And that leads to our 3rd step….

3. Side hustle income

Many times we’ve heard people working 2 jobs at a time to sustain their life – well you are probably right.

But the idea is that the money used from your main work to pay your loving expenses. Your daily work is used to settle your daily expenses such as basic bills (electricity, water and phone) and other recurring expenses like rents and daily foods.

On the other hand, your second job is what you use to build your fortune.

It can be any jobs, you can start by selling stuffs online, become an insurance agent, open a business, become a beekeeper or even a painter – anything that you love.

Then you save your money and build that huge chunk of money that you can invest and in return, get you that recurring income.

Or…

Without investing, you can simply get recurring income from the people’s demand provided that your service to the society gives value.

Value. This is one of the secrets that Jim Rohn, a great motivational speaker once shared – to attract the world’s wealth, we must become the people that can create and give value to the society.

And I think that’s wonderful information.

Now that you know how to accumulate the huge chunk of money, step 4 plays an even vital role.

Step 4. Invest

Invest – It’s a big meaning for a short word.

Money will lose it’s value in time to come. Things like inflation will inevitably be one of the major cause. Money will not grow unless we put it to work, now that we have worked hard enough to get money.

This is why we need to invest.

We invest to sustain our wealth. To make sure that the money grows more while we are occupied with other matters.

We have traded our time much enough that it is now time that the money will work for us and saves us more time to do the things we really want to do in life.

I always like to invest in things I already know well, and not invest into blurry confusing things. I still prefer the traditional way of investing.

This brings us to step 5.

Step 5. Passive Income

While there are many other forms of investments in this world, I will highlight the most common yet effective investing instruments that are still relevant till today.

It’s none other than by investing in properties. With this, you’ll get recurring income from renting. Imagine if you have 10 houses that each gives you $800 a month – that’s $8,000!

Can you live off with that? I know I can.

You might wonder how to start investing in properties – have an overall understanding by reading 5 traits of a good property to invest and get good rental and 7 steps guide to buy a house – the complete guide. This should help you get that booster understanding about real estates in general.

If you are still young and having fun in your 20s but are getting prepared to settle down – you’ll be ahead of your time by knowing the top 5 tips to buy a house in your 20s.

Better yet, boost your investment income by knowing the 4 unbelievable ways you can maximize your rental income!

Imagine you get yearly dividends from 20 types of stocks that each gives you $200 a month – that’s $4,000 a month!

You might be wondering how you would begin this great journey through freedom by learning stock trading. Have a brief understanding here!

Wow…

How about making that monthly commitment to save a portion of your income into the compounding bank account. Let’s say you save $600 a month for 35 years – that may grow to around $1 million after 35 years.

This is where you will be able to see how to make money works for you! Even when you are sleeping.

It’s just amazing. You can either use that money yearly – though you might lose the benefits of compounding or you can just wait for it to grow big. If you can’t benefit from it then maybe your family can!

We’ve already worked hard to get that big chunk if money and we should not risk it by investing in things we do not know – in things that may not exist 10 years to come.

And that brings us to the final step.

Step 6. Dream

Now that you have worked your ass off, you can now live your life without worrying about money!

Your debt is settled and no one have any claims on you every single day because now you are free.

Free to do what you want and free to live how you want it to be.

This is where you can do the really significant things in life because you have solved the money problem.

This is where you can buy your dream.

It can be anything.

Spending time with your wife and kids. Innovate something creative and beneficial to the society or even as simple as helping/coach other people become financially free – just like you did.

You can also opt to help poor people when you are free. Help them escape poverty and coach them the ways of attracting wealth. In return, you will feel what it means to truly live. You will only gain more when you give more because giving to charity makes you richer.

a quote by Tony Robbins from one of his greatest books, “Money: Master The Game” –

The secret to living is giving.

It’s a noble cause.

This is why financial freedom is important. You’ll be able to chase matters beyond any money concerns because you are now free. Upon achieving financial freedom, you can now chase a life purpose that is bigger than just making money and meeting ends meet – with financial freedom, you will be able to create a more meaningful life.