The Roadmap to Early Retirement
One of the main reasons of this blog is to study and develop strategies for Financial Independence/Retire Early (FIRE). This concept is well developed in the United States due to several reasons. Unfortunately in Europe and other regions of the world, the community is still in its early moments (my personal opinion).
My key objective is, through this blog, to give a small contribution to the continuous development of this community all over the world. To help and change the mindset in order to achieve financial freedom sooner, rather than later.
When I talk with others about this concept, I would say that the reactions normally go from considering total unrealistic to somewhat unconviced.
The skepticism like the force is strong.
One of the paths to success is to run your personal finances like a business. Thinking seriously in terms of efficiency and maximizing value for money. The money that you can save at the end of the month is your profit. Thus needs to be preserved but at the same time invested in order to create other sources of income.
The good old: “Let your money work for you” mindset.
Roadmap to Financial Independence / Early Retirement
- Save money. The majority of books and blogs that I’ve read, recommend 15% as a rate for saving money. For me this should be the bare minimum. Your lifestyle should be according to your income. Frugality should be your orientation. If you really want an early retirement, you should increase the rate described above to the maximum possible;
- Build multiple sources of income. Do you know what makes it really easy to save? Having other sources of income. The majority of early retirees that I know focus at least in one (or more) of these sources: Stock market investments, Real estate investments and/or Business ownership;
- Start a website. I believe that every single person should have a blog, or website. The costs are really small, and you can start from zero, with a very low investment compared to others. Also you can see this as a part-time or later a full time job. If you write in well-known language, you can reach millions. Or even billions of readers depending on the subject and success. I have a free tutorial on how to start a blog if you want to know more;
- Teach something online. Never before was so easy to start an online business. One thing that I recommend is starting an online course. For this I would say that Teachable is perfect as a platform both for beginners and advanced users.
How to Set a Goal in order to Achieve Financial Freedom
First you will need to know your expenses number. Because you will need to know what your target post-retirement monthly income needs to be in order to meet those expenses.
One way to determine that number is to create a potential post-retirement budget. Write down every expense you’ll need to cover, including basics such as housing costs and extras like travel and entertainment. Also, don’t forget saving for future and unexpected emergencies such as health issues, car or home repairs, a bear market – if you invest in the stock market, or any other event that could temporarily reduce your passive income when retired.
Achieving Financial Freedom is being prepared for the good and bad times. Specially the unexpected and bad times.
Exactly How Much?
This really depends on your lifestyle. One of the examples that I find reasonable is to have at least 25x your annual expenses saved.
Some will be fine with less. Others will want more due to their lifestyle.
Let’s see the numbers. If you need for example $75,000 for your annual expenses, this means that you will need at least $1,875,000 to retire. So if you follow this rule, this means from this value on you will be financially free.
However don’t forget of the longevity risk: the risk that the money runs out before you… well you know…die. I would say that for all this to work out smoothly you should invest your money wisely, and continue to build passive sources of income.
Let’s explore more of this in the future.
See you soon!
And you reader? What do you think about the Financial Independence / Early Retire (FIRE) community? What strategies are you using to achieve financial freedom? Leave your ideas on the comment section.
If you need more, check out the GrowBig Plan or the GoGeek Plan. SiteGround is full of solutions both for beginners and advanced users.