To state the obvious: you need income! Most people work traditional jobs for decades, socking a little away each year. Eventually hoping to save up enough in an investment account so they can stop working. That’s the traditional method, and it can be effective to get to the good life and financial freedom. It just takes sooooo long!
Conventional methods suggest saving up a million, or two, or more (depending on the lifestyle you want to live) in a retirement account and then living off the annual interest it makes. Even with compounding interest, saving that much is an incredibly daunting task! It will take decades upon decades to get there! You can plan to save less than the recommended targets and use the principle balance to support you as well. If you do that you had better have incredibly solid calculations. And hope you don’t outlive it! Oh, and also hope you don’t lose a huge chunk in a bad market. How many people were close to retiring in 2008 only to see HALF of their life savings wiped away in one fell swoop, and with it their hopes of retirement vanish? Too many.
WHAT IF THERE WAS ANOTHER WAY?
The key to living the good life, financially free, sooner than later is finding ways to generate passive income. Create enough cash flow to meet or surpass the amount needed for your desired lifestyle and you are set. This eliminates the need to save up one, giant, unpredictable amount of money. It also lessens the risk that money will run out if you haven’t planned appropriately. Simply find out what you would need to cover your monthly expenses and build a stream of income to cover that amount. If you don’t know what that amount is, take a minute and do this little exercise here: Lifestlye and Numbers – Calculating Your Passive Income Goal. I’ll give you some time….. ok, back?
Now that you have your number and solid target to shoot for, it’s time to start working toward it. You need to find ways to invest with a focus of generating steady and consistent cash flows. For me, the clear front-runner for achieving financial freedom was through acquiring rental properties. Rental properties in my opinion are the easiest and fastest way to generate a continuing passive income with amazing returns (see article Why I Love Real Estate). Regardless of what cash flow investments you pursue, investing for annual passive cash flow is the path to living the good life and living financially free in the shortest amount of time.