Road to Financial Independence

Hello all!

First of all, I would like to thank my new followers and welcome them to my circle! Hope you guys enjoy my writing and do comment below if you have any questions for me.

Secondly, this would be my first post from me that addresses ‘Finance’, where I would be covering the topic of  financial freedom as my personal key goal.

The first time I hear this two words is when my dad talked to me about it around two years ago. I recalled asking him “how much money does one need to have to be considered unlimited. Since everything comes with numbers, there is no such thing as unlimited money right?” His first response was “Any money could be considered unlimited. It’s subjective. It’s just how you look at it, how you spend it, and how you make it grow.” By then, my only thought on how to grow money is a money tree where I had seen a bazillion times in cartoon TVs and movies. It was then, I started getting interested in financial management. Everything changes once one’s mindset changes- My dad had taught me how to be financially independent.

All one need is a penny. And you could grow it to an indefinite amount. A quote from Albert Einstein, the widely regarded genius, that is good enough to speak a thousand words:

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

So how do you start off from scratch and aims to be financially free at the end of the day? It all comes down to getting your first million dollars and reinvesting long-term after your retirement! Think about it for example- investing in an SGS Bond with a 5% Annualized Interest Rate with your one million bucks would already yield you more than $4000 a month. Without working for money, you make money work for you! Now that you understand how important capital is, so how do you exactly get your first million dollar?

It all goes down again to building up your capital early. Building up capital can be done in various ways. However, trust me, the best way is to save up and manage your spending. Every dollar you save in a day could be used to invest in a medium risk level yield or discount instruments. Unsafe you say? But that’s the only way to get your first Million in the shortest possible time.

Think about another example- Saving just $1 a day for one year will give you $365, adding your bank interest of 0.3% at most, will yield you $1.10 interest. However if you invest in a substantial amount of risks such as stable REITS that usually yields 7% a year, the difference will be the interest return of $25.55 .

Now if you think about it again- What if you reinvest the amount of interest as well as yearly savings into the investment fund again and again for 30 years? You could potentially have a capital of $36,892 when you invest in a 7% overall return stock compared to $11,474 with 0.3% bank interest, or just $10,950 if you hide your money in your Milo cans.

Thus all in all, the conclusion would be start early, save more. The earlier you start investing in yield instruments and such, the more it would get compounded in future. The more you have in your savings, the more you can make them work for you. (However do remember to keep emergency funds too)

Are you confused already with all these calculations and logic? Do you have the same financial goal as me then? If not, what’s your goal then? I would love to hear from you below.

If you would like to know more and read more, below are the links I could recommend you and hope you learn something new today from us! 🙂

Till next time!
The Independent Abecedarian

 

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