To achieve financial freedom, we must have certain assets.
When you have no assets but only a job, it is relatively easy to convert your work income into asset income, such as buying stocks, funds or other income-generating assets, with a fixed monthly investment of 1 1,000 yuan.
Financial freedom is not getting rich overnight, but by accumulating money, experience, ability and knowledge, making your money work for you, not just making money through your own work.
How to realize it will give you some reference ideas:
The first step: know what is the most important investment, look forward to the life you want in the future, find what you think you must do according to your life values, and work hard for it. This is the investment in your life.
Step 2: Re-recognize time and compound interest (sustainability)
Time is the biggest capital and cost, and compound interest (persistence) is the biggest motivation.
Time is a fair capital for all, and the difference between people lies in the differences in several time points and time periods-
The sooner the concept awakens and starts to act, the longer the continuous action and deep concentration, the faster the financial freedom can be realized.
We must attach importance to the power of compound interest.
If you are lazy 1% every day, your ability will be only 2% after one year. If you work hard 1% every day, you will be 37 times better after one year.
This amazing set of figures tells us that efforts to make ourselves better are slow, but there will be gains!
Step 3: delay enjoyment.
Ordinary people's financial habits: income-expenditure = savings (investment)
More scientific financial habits: income-savings (investment) = expenditure
People who often eat dirt can think back, do they want to keep part of their income as savings every month, but they can't help but overspend? The reason is that you still regard the money you want to save as consumable wealth, so only by putting savings in the first place and treating the wealth after going out to save as consumable wealth can you ensure a fixed savings every month.
Step 4: reconfirm assets and liabilities.
Maybe you think that all the houses and cars in your name are your assets, but if these assets need to be repaid every month, they will become your liabilities. Only after re-understanding can we make more scientific decisions in the process of financial management.
Step 5: Understand the trend of cash flow under different thinking.
In the cash flow of the poor and the middle class, they will become a "moonlight family" in a state of balance, and when they buy liabilities that they think are assets, that is, failed investments, they can't make ends meet and will only become poorer and poorer.
The difference in cash flow of the rich is that they will use part of their income to buy assets that can bring positive cash flow, and they can buy high-quality assets in the form of debt.
In this case, the non-wage income brought by assets can be added to the income, and when the non-wage income is greater than the expenditure, financial freedom can be realized.
Step 6: Understand the road to freedom.
Divide most social groups into four quadrants, and you will find that there are generally two ways to realize financial freedom:
The first type: when migrant workers accumulate experience, funds and customer groups, they start their own businesses after a period of time and work for themselves. In the process of the growth of small and micro enterprises, they began to develop in the direction of entrepreneurs, supported the development of enterprises with a complete personnel system, and reduced the burden on founders. With the accumulation of capital, they will start to invest and finally achieve financial freedom.
The second type: migrant workers use their spare time to study and invest, make valuable investments and generate certain non-wage income. After a period of investment practice, they will directly enter the investment quadrant and realize financial freedom.
Step 7: Conduct scientific asset allocation.
Before asset allocation, we must first correctly understand the different characteristics of different assets:
Bonds: The yield is not high, but during the financial crisis and the stock market crash, bonds can be a good hedging tool.
Residential real estate: We can get 100% of the property by paying 30% down payment in the form of loan, but the appreciation of the property is to increase the house price on the basis of 100%, which means that the increased house price is the income of your investment.
Commercial real estate: Under normal circumstances, the real estate income of merchants will be higher than that of residential real estate, and the income will be considerable, but the requirements for the professionalism and investment cost of investors will be higher. If the choice is wrong, the investment will become a bubble.
Equity funds: considerable returns and high risks.
Trust asset management: the initial capital is high, but the safety factor is large and the stability is strong.
Insurance: It can help us avoid risks in the event of an accident, and only in this case can it bring us benefits.
After understanding the characteristics of these assets, we can invest more scientifically and reduce the possibility of investment failure.
Step 8: Remember the equation of financial freedom.
The requirement of realizing financial freedom is non-wage income > daily living expenses, and to know how much our daily living expenses are, we need to have the habit of keeping accounts and counting assets. Interest-bearing assets refer to assets that can bring stable income, and the compound income after asset allocation is the amount of income MINUS the losses caused by different assets.
You know, achieving "financial freedom" is more important than simply increasing the value of assets!
All roads lead to Rome, and there are many roads leading to wealth freedom and financial freedom. You should find the one that suits you best.
Recommended books include Rich Dad Series, Qian Qian the Snowball Dog, The Value of Wang Bide, and Lynch's Successful Investment.