We all wish for more comfort and happiness, to earn more money and a comfortable retirement, as goals are almost common to all of us, but these goals may not be achieved without achieving financial freedom.
So what is financial freedom?
Some may think that achieving financial freedom is by collecting money only until reaching the retirement age, but money loses its value due to inflation that raises the prices of goods,
If you have a sum of money and you spend it on buying goods and services constantly, the money will run out and you will not be financially free.
Financial freedom means owning assets and investments that bring in financial returns higher than your annual expenses, but achieving financial freedom is not easy with the face of increasing debts, medical problems, and excessive spending.
How do you achieve financial freedom?
There are some steps that enable you to achieve financial freedom,
Every person who has a desire to achieve this freedom has to set a goal, and this goal varies from person to person, and know that the more specific your goals, the more likely you are to achieve them.
Here break your goal down into small goals like how much your lifestyle requires, how much you must have in your bank account to make your goal feasible, what is the age or deadline for achieving that amount.
Accordingly, spend less than you earn and invest the difference, by dividing the income into 3 main categories: 50% for needs, 30% for desires, 20% for investment savings, which aims to build investable capital capable of generating money, thus achieving financial freedom and cash abundance.
So which investments can generate money?
There are long-term investments capable of earning more money, such as real estate, gold, and stocks. Real estate is one of the most important investment methods that generate returns in the long run.
For example, American house prices have achieved a compound annual growth rate of 4.5% from 1991 to July 2022, and although they witnessed some declines during these years, as happened in 2008 during the global financial crisis, but they were able to rebalance and rise again.
Gold is also a safe haven against volatility.
Gold has achieved increases of up to 10% annually on average since 1971, and during those years the price of the yellow metal developed and rose from about $ 35 per ounce, which weighs 31.1 grams, to reach the highest level of $ 1,600 per ounce in October 2022.
Also, stocks are one of the assets that may generate high returns despite the stocks being classified as high-risk assets.
However, in the long run, it may enable you to earn more money with awareness and knowledge of investment methods in the financial markets
For example, American stocks have developed since the beginning of the seventies, and after the Dow Jones Industrial Average was at the level of 881 points, it exceeded the level of 31,499 thousand points on October 25, 2022,
The "S&P 500" index jumped from a level of 89 points to a level above 3797 thousand points.
It can also promote practices that preserve your money, as caring for the maintenance of your possessions costs you less than buying new ones
Taking care of your physical health avoids early retirement.
It is important to avoid debts such as credit cards, which are a type of consumer loan that are high in interest and kill your ability to save.
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