Finding financial independence can sometimes seem like a herculean task, but one of the most significant issues that people have is believing that sensible investment is outside of their reach. Almost anyone can chart a path to financial independence regardless of their income, but it’s a matter of setting goals and maintaining them. If you’re looking to start saving money for your future, here’s what you need to do.
Set Practical Goals
It’s easy to say that you want to be a multi-millionaire by the age of 50, but that’s a far harder aspiration to reach in practice. And while you may think you can just eyeball your income and come up with a reasonable monthly or annual goal for how much you need to save, factors like fluctuating markets and interest can greatly complicate that. Use the time value of money formula to determine how much you can expect your investments to appreciate, and either temper your expectations or look for measures to maximize your savings.
Consider Your Values
There are countless asset classes into which you can invest your money, but the option that’s right for you isn’t necessarily concrete. Investments with greater fluctuation can yield higher returns in the future, but you have to ask yourself if the anxiety is worth the stronger return. And while your risk tolerance is a significant factor in what sort of investments you can stomach, you also need to consider your personal ethics. Practical investments are long term investments, and you’ll want to make sure that what type of asset you’re investing in fits comfortably with your personal moral compass.
Be Concise and Consistent
While some early investors may be under the impression that finding success is all about striking it big and cashing out quickly, that couldn’t be further from the truth. The best investors succeed on persistence: setting goals and sticking with them month in and month out over the course of years. There’s no such thing as easy money, and you need to establish your discipline for investment accordingly. Think in terms of what your goals are in monthly terms. If you want your investments to turn into living income, you need a passive income that you can live off of if you were only to withdraw three to four percent of the principal income each year.