Stuart Zadel talks about the three levels of wealth. And he’s discussing the third and final level: financial freedom.
You want the next level which is for total complete financial what…? Freedom!
Financial Freedom is subjective. I can’t tell what your figure is, but here’s the scope. How much money do you need, coming into your life, indefinitely, without working, per year, to live the lifestyle you desire? Not the current lifestyle, but the lifestyle you desire. You know what, that takes some thinking. A lot of people don’t know. They just have a guess. “I should get $1M a year.” Well, that’s pretty big. But if it was, you would then need to multiply that by 20. You would need $20M invested assets in 5% return to live your dream lifestyle. Does that make sense?
HOW MUCH DO YOU NEED TO BE FINANCIALLY FREE?
I’ll just give you a rough idea here. If you said “$150K would do me nice,” the challenge is that we have tax in this country. So you’re up in the 49% tax bracket. It’s not completely double, but you have to earn about $250K before tax to get that, and that’s roughly at the 49% tax rate, whatever the top margin of rate is. You’re looking at $250K, you then need to multiply that by 20, what do we get? We get $5M.
It gets more interesting. You need $5M in investable assets, and that’s not including where you live — this is in investable assets. That might be covering your rent, it might be a whole other thing. The reason I’m doing this is just to get your brain thinking in terms of if you want true wealth where you don’t have to work for it — we mean investable assets that return a rate high enough — there’s some variables in there.
What can we do to change that? The rate. So yeah, if you had a way of getting a rate of return that was higher, you can have less money. If it was lower, then you need more assets. Does that make sense? I’m just picking on some figures to get your brain thinking. Now, going back to financial independence, that figure that you had written down, what does that become now? That becomes your goal, your target, your objective. That figure becomes your goal — now that’s if we go traditional and the blue pill.
WAYS TO MAKE MONEY
Now we’ll talk about different ways to make money and stuff in the moment. The other option, then, is to think that you don’t necessarily need assets and investors at that rate, because you can do it through other ways as well. What if you had 50 websites around the world, and each of them was making you $1K a month? I’m not saying it’s either-or, I’m saying it’s both. I do believe you should have an automatic acquisition or investment plan of some sort, but I believe you should also be investing the quick or faster way, or what we call the ‘active way’ as well—and they should be combined. Out of every 4 renovations you do, maybe keep one, or two—you don’t have to sell everything just for cashflow. But, it depends on your view, I’m just giving you some ideas.