Financial Independence is the status of having enough passive income to pay for all your living expenses for the rest of your life, without depending on any paying job or work. Passive income is generated by your assets such as a rental property, a business you own, or an investment portfolio, without the need for you to trade your time and effort for money.
“Financial Independence is not about retiring early or retiring at all really. It’s all about having the freedom and flexibility to design your life in alignment with your values. Financial Independence gives you the power to decide.”Choose Financial Independence, Chris Mamula
3 Building Blocks of Financial Independence
The 3 building blocks of Financial Independence are:
- Spend less…
- Earn more…
- Invest the difference!
How to Build Simple Investment Principles?
Successful investing is not complicated and can be accomplished by anyone with a small amount of effort. Moreover, it does not require that you become a financial expert, nor do you need to follow the economy, financial news or analysts.
Follow these core principles:
- Develop a workable plan.
- Invest early and often.
- Never bear too much or too little risk.
- Never try to time the market.
- Use wise investment options.
- Keep costs low.
- Minimize taxes.
- Keep it simple.
- Stay the course.
How to Define a Plan to Start Investing?
To start investing for the long term, you need to follow the following simple framework:
- Pay off your consumer debt first.
- Set up an emergency fund.
- Develop an investment plan.
- Open a segregated investment account.
- Transfer money to your segregated investment account in a automated way.
- Buy your diversify assets.
- Re-balance your portfolio.
- Avoid common mistakes.
- Ignore the financial news.
Behavioral Mistakes in the Financial Independence Path
Make sure to be aware when you commit one among the 10 behavioral mistakes that undermine your success towards Financial Independence:
- Fear of Regret
- Loss & Risk Aversion
- Anchoring to familiar reference points
- Recency Bias
- Confirmation Bias
- Negativity Bias
- Action Bias
Hopefully over time each particular section will be developed within the blog. Cannot wait for it!
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