Can You Afford Not To Be Financially Free?

Seriously. I mean it. 

There is no better time to become financially free than today.

You don’t have to be a financial expert, love finance, be good with numbers, spend a lot of time in front of screens…

All you need is patience and discipline.

How to become financially free?

Follow this journey, reduce your stress, and boost your career.

Have you heard about the F.I.R.E movement?

Based on Wikipedia:

“The objective is to accumulate assets until the resulting passive income provides enough money for living expenses in perpetuity.”

This movement started to grow in 2010 and quickly became accessible through online communities, blogs, and podcasts. 

But long before knowing about F.I.R.E, I remember thinking about retiring at 40. Every year, often around summer, I saw financial money magazines publishing headlines such as “Stop working at 40, is it possible?” (I did it at 46, my story here Financial Independence. I’m Retiring From Corporate Life At 46.)

So, F.I.R.E. is not new. The big difference is that information and financial products have become more accessible. Retiring early has become a real option for anyone who wants to.  

And the method is deceptively easy on paper: 

1. Earn: The more, the better;

2. Save: Live under what you can afford;

3. Invest: As soon as possible to benefit from the compound effect.

Earn.

As a reader of this blog, I assume you are interested in growing your career. By doing so, you regularly increase your income.

With a “growth mindset,” you can enjoy your actual job and build your next opportunity. What Rubik’s cube can teach you in business (and in life)?

If you don’t find an opportunity internally, use your new skills stack and check your market value.

I worked for the same company for over 20 years and got 8 promotions. That moved me from a low-level salary to a very comfortable 6 figure paycheck.
I’m a big believer in developing yourself in your company. But when you feel the context is not there, check outside. Just remember that most of the time, it won’t be easier.

Save.

Marketers are good. They create needs we do not have: bigger cars, houses, garden materials, sports outfits, furniture, luxury travel—you name it. 

Most of the time, we adapt our expenses to our earnings, known as “lifestyle inflation.” That’s why so many people have debt on a low or high salary. You can make less and be richer than a higher-wage person who spends too much.

I approach this point intentionally. I believe in infinite growth in everything, which is not material: my emotions, spirituality, intellect, health. Earn more, spend less, live more. Don’t live on a budget, live on your frame.

For the material, I notice that, apart from a short boost of excitement, materials do not make me happier in the long run.

I am close to the minimalism model, trying to make my life as decluttered as possible. This philosophy allows my family to live comfortably and has helped us save and invest more than 60% of our gains.

Despite the three main investment mistakes you will read below, we became financially independent on one salary. Not adapting our expenses was a critical element of our success.  

Invest.

The financial industry tries to make it as complicated as possible to have a chance to advise and sell us financial products. The truth: investments can be simple.

My 3 main mistakes.

I made three main mistakes while investing in the market. I’ve lost a lot of productive years. The encouraging part is that you do not need to make everything right to succeed.  

“You only have to do a very few things right in your life so long as you don’t do too many things wrong.- Warren Buffett

1. I first invested in stock picking during the internet bubble time. Guess what? I lost money. 
2. I then switched to fund management until I discovered that I was covering all the risks. In the good years, when the stocks were up, the fund was earning money. In the bad years, when the shares were down, they were still making money. I was losing. I concluded that (quite) no one could beat the market sustainably. So, there were no reasons for me to pay high fees.
   Investment fees hidden in many investment products are killing financial independence targets. 
3. I kept too much un-invested cash. As I hadn’t found the right methodology, I was afraid and played it securely.  

My solution: Exchange Trade Fund (ETF)

I finally discovered the indexing path through Exchange Trade Fund (ETF) in 2017. A passive investment methodology where you do not try to beat or time the market, but just follow it. You buy and hold. It’s easy and efficient in the long term. The fees are low, so you optimize your earnings. 

When I was working, I was in the accumulation phase. I didn’t need the money, so I invested as much and as fast as I could to take advantage of compound interest.

My path to financial independence

I invest mostly in one ETF. The Vanguard FTSE All-World UCITS ETF Distributing. It tracks stocks from developed and emerging countries worldwide.

If you want to learn more, I encourage you to read J.L. Collins’s “Stock Series” or his book, “The Simple Path to Wealth.” (My summary is here.) His philosophy and experience gave me much confidence in pursuing my path to wealth. 

Financial independence brings you much more than money

Not being obliged to work is a great feeling, it was also a booster for my career and can accelerate yours for at least three reasons : 

• Build new options: The intellectual path to financial independence broadens your perspective. You don’t have to rely solely on your job. 
• Take more risks: It helps you to take more risks when opportunities arise.
  People often overthink opportunities. They try to secure every aspect. It’s not possible.
  You need to be willing to accept the unknown linked to the change. 
  Throughout my career, I quite always say yes, even to the most difficult challenges. I’ve learned a lot, developed new skills, and increased my earnings dramatically.
• Lead with integrity: We often hear people being frustrated in the corporate world. They have to execute strategies they do not believe or feel awkward about a situation that does not fit their value. However, they execute. The frustration grows, and it creates a lot of issues. “The 7 Habits of Highly Effective People”. How it has transformed my life, and why it can change yours

Conclusion

Financial independence is more than money. It’s the ultimate freedom.
Pursuing it helps us be the best versions of ourselves and can even boost our careers.

Have you started your journey to financial independence? If not, today is the right day to start. Enjoy the path. 

Your view?

Thank you for reading.
Dror

Disclaimer: I’m not a financial advisor. All information posted is merely for informational purposes. It is not intended as a substitute for professional advice. Should you decide to act upon any information on this website, you do so at your own risk.