Achieving financial independence IRL

[The Cursed]

So basically, this means that you can retire and live off your savings and investments. I discovered this thing while browsing the internet and now I have decided to dedicate my 20s and early 30s to chase this dream.

 

What financial independence means is that once you have enough money saved up, you can retire early and enjoy your life without working a single day again. How is it calculated? Assuming you will live till 85, take that minus the age you plan to retire, multiply that by the cost of living. 

 

EX, if I am currently 23, and I spend 40k USD per year, and I plan to retire at 35, I need to save 2m USD.  

 

Obviously this is not realistic for most people. But it's not impossible. In fact you don't need to make 2m at all. If you are a college graduate and make 60k+ a year and invest 20k a year. According to S&P 500's performance averaging 10-11% growth annually. You will have 1.15m to 1.3m USD in 20 years. And over 2m in 25 years.

 

Also, some stocks pays dividends. Enough investing into stocks that yield dividends can last you a life time. Assuming you put 1m into a stock that pays 5% dividend, that means every year you will receive 50k cash.

 

PS, if you know a foreign language and can move to a lesser developed country. You can retire earlier and still live like a king. 

 

I'm chinese, and I plan to move back to China once I invested enough. 500k investment with 5% dividend yield 25k USD per year, convert that to Yuan is 162k yuan per year which is upper class life outside mega cities. 

 

Let me know your thoughts on this. If there is any financial experts in this clan, I could use some professional insights.

 

 

Edited February 8, 2021 by The Cursed

[O o g a]

My girlfriend wants to do something similar (retire early and work part time). Involves something like moving out of Toronto and to a cheaper area like Nova Scotia or something

 

I myself am not a financial expert. I'm happy to trudge along and 'work' (play osrs) and get paid every 2 weeks. We've just moved into a detached house last fall and although we still got a bit to go on our mortgage (under 400k CAD left) it's not like we have a ton of other expenses.

 

Dunno! It's scary to think about retirement and stuff this early (I'm turning 30 this year) but apparently I should've started thinking about it like 5 years ago

 

 

[XaNnY_NaNnY]

Chasing the same dream man. My parents initially planned that when they moved to United States. Plan was to build up a self sustaning Commercial RE portfolio. WHile this isn't S&P or NASDAQ, i feel like it is a similar concept. the money you put in, helps your investment grow. 

 

For me, I mainly use the stock market as short term gain (most people would advise against that and rather you do long term investments years down the line). But I see it as a way to hold my liquidity that gives a better return than a savings account would. When needed, I can easily transfer it to other investments. Main goal my dad always wants me to keep in mind is double net worth, and invest in as much as you can. The plan is to have trying not idle cash since thats how money it all gets spent. 

Some things I currently do are invest in commercial real estae with the family business and dable in the stock market. One good tactic that I feel like is over looked (especially with people my age or atleast people that I grew up around) is that owing a home. For example, most people in my area in Dallas spend $2k/month for a standard 2bed 2 bath apartment. During the market decline in March 2020, my brother and I invested in a home for $350k. Mortgage is similar to that of our apartment. It averages about $2.4-2.5k/month. We plan on living here for a about 5 years, pay off as much as possible while working on improving the house. Once the value is appreciated, we'll sell it, pay off the loans and have a good profit. It'll be a big initial investment, but rather than paying rent, we pay "rent" to ourselves which pays off the mortgage. Once we sell the house and pay off the loans, we'll at the least get our money back for 5 years of rent. So basically living for free for 5 years at the end of they day. 

I kinda went on and on but let me know if this makes sense! I read this book called "Rich Dad Poor Dad" by Robert Kiyosaki which is pretty inspirenational in itself. Fairly easy to read. Y'all should take a look at it!

Edited February 11, 2021 by XaNnY_NaNnY

[Mini Horse]

I retired at the age of 25 it takes a lot of hard work and planning to retire early the trick it to always live with in your means and get a hobby or else you will go mad doing nothing all day. Also you hold value and gain by long term investments if you are ok with taking a gamble set a small portion of money aside to play in high risk short term investments be prepared to lose this amount if you mess up.Also if you get into flipping homes remember to alway reinvest it into a similar property so you do not need to pay  gains taxes

[Groedius]

Retiring at 25 sounds insane to me lol. Ill be 30 this year and my finances are honestly a mess lol. This does sound like a great idea though if you're able to do it. 

[Rattatat]

This is a really cool post.

 

It definitely pays to have an ear to the ground in terms of new innovations in industry. Warren Buffet once said that his investing strategy is based off investing in things that will change peoples way of life. Think companies like Netflix, as soon as they made the pivot to digital streaming I think we all knew deep down that this was going to have a chance to be really big one day, it was changing our lives. If I had taken some money that I set aside to simply buy shares, I'd be sitting great right now. My investing strategy is based off of this and I've done really well for myself over the years. I plan to retire in my upper 40's and am on track to do exactly that.

[EdenFigueroa]

Hey, it's great that you're thinking about financial independence early on! I remember when I first stumbled upon the concept of backdoor Roth IRA 2023. It's a strategy I found while exploring ways to build wealth for the future. Your plan sounds solid, especially with the potential of dividend stocks and exploring opportunities abroad.

Edited April 25 by K1W1
Removed link

[schmiiiited]

Did not see this topic until now But i am on the Stock market. I target only dividends paying stocks which i re-invest. My main strategy was and is big companies which is more «safe» and paid dividends for years and most likely will for a lifetime. Past year i started with some more volatile within shipping and gas/oil that Pay Good In Good times but hella more risk, now i try to increase my portfolio and safeing it up a bit. 
Im In for longterm 10+ years, and i avoid trying to time market (always gone bad). Goal is to be able to live of it someday. Rn i Get aprox 2 «extra month sallary» a year that gets reinvested.

[OwnageReaper]

Lovely topic! I've been working on this for a few years now and gave up Law as a career to get into trading. I day trade forex/commodities and do short-term swings in stocks, which I later convert into effective mid to long-term positions, based on my system with systematic exits. This let's me make short term gains while creating a portfolio that delivers returns over the long term as well. If you want to achieve financial independence faster with this, it's best to learn the basics of risk management, position sizing and trading (if you have the time) as you will beat the market average and compounded returns will help you achieve your dollar goal faster. 

You could look at higher timeframe trading/investing, which will help generate higher returns and if you keep your liabilities to zero or extremely low (most difficult part of financial independence), you should be able to sustain yourself. Hit me up if you need to have a conversation!