Financial Independence
• Why Become Financially Independent? • Financial Freedom: more choice on how to spend your money
• Employment Freedom and Job Freedom
• Reduction of Stress and Healthier Lifestyle
• More Time To Pursue What You Love
• Become a Humanitarian!
• Retire!
Employment Independence
• Financial Independence leads to Employment Independence• You can choose the job that you want!
• You can choose a more fulfilling job!
• You can work more on solving humanity’s problems!
• You can quit!
Retirement
• Financial Independence contributes to your ability to pursue retirement how and when you want it
• Retirement as state of mind; financial independence as state of being• During retirement you can still work or choose whatever you wish
to do.
• Financial independence grants you that ability to ease your mind to pursue what you want
Two (Combinable) Ways For Financial Independence
Asset Accumulation Expense Reduction
• Gather revenue generating assets until the generated revenue surpasses living/liability expenses.
• Gather enough liquid assets to then sustain all future living/liability expenses
• Another approach to financial independence is to reduce regular expenses while accumulating assets, to reduce the amount of assets required for financial independence.
Compounding
• Why save? Because of compounding!
• Save early, live below your means,
• 401K/Roth IRA/Other Tax Deferred Accounts: Good Candidates for Compounding
Active Management
• For people who like to actively trade or pick stocks
• For people who have a lot of wealth and has the desire/ability to make more money.
• For people whom understand risk and are better risk takers.
• For people who believe they (or another money manager) can beat current indexes of returns
Passive Management
• For people with busy lives• Raising children
• Working hard jobs
• For people who aren’t good with picking stocks or analyzing the market
• For those whom are hyper-emotional and swing too far with the market
Lazy Portfolios: Good Examples of Passively Managed Portfolios
4-Core Funds 3 Fund Portfolio David Swinson’s Yale Portfolio