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🔍❓How much you need for Financial Freedom—the RIGHT answer! 💸🔑
Unbroken Investing
May 25, 2024 • Estimated Reading Time: 4 minutes
Main Article Preview (Unbroken Insights): "How much you need for Financial Freedom—the RIGHT answer!”
Newsletter Content
Here’s How The Market Has Been Performing*
Name | Current Value | 1 Week Return | 1 Month Return | 1 Year Return |
|---|---|---|---|---|
DJIA | $40,003.59 | -2.33% | 1.58% | 19.11% |
S&P 500 | $5303.27 | 0.02% | 4.59% | 28.90% |
NASDAQ | $16,685.97 | 1.40% | 7.68% | 35.53% |
Bitcoin | $66877.47 | 3.13% | 7.31% | 154.32% |
Ethereum | $3089.91 | 21.14% | 19.21% | 107.94% |
*As of Close of Current Market Week
Our Favorite Unbroken Investments
Name | 1 Month Return | Monthly Average Return |
|---|---|---|
Fund 1 | 3.04% | 12.62% |
Fund 2 | 12.37% | 14.54% |
Fund 3 | 16.04% | 10.51% |
Fund 4 | 10.12% | 8.20% |
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Unbroken Insights
How much you need for Financial Freedom—the RIGHT answer!
The traditional way of answering that question is “Broken.” Perhaps you have seen them too…every financial advisor investment blog, or newsletter seems to have some “Magic Number” for how much you need to have for Financial Freedom.
Every one of them is WRONG!!
I am not saying I am smarter than all of them…I am just saying that they are asking the wrong question. They all look at the size of your portfolio as the single most important factor. Most financial advisors get paid based on a percentage of your portfolio, so the size of your portfolio is the most important number to them.
Keep in mind…I was a Certified Financial Planner for many years (disclosure: I voluntarily gave that up many years ago and am no longer licensed to advise on stocks or securities) and I was trained on exactly how to make these calculations.
Anyway, they start with the size of your portfolio and try to estimate how big that portfolio needs to be in order for you to retire. They calculate their estimates based on: —What they think inflation will be over the next 20 years (these are guesses) —What your expenses budget will be in 20 years or so (these are guesses) and —How much you should withdraw annually from your “pile” for expenses (these are guesses).
But here is why their approach is wrong…How do you pay your bills?
Mortgage or rent…monthly
Car payment…monthly
Car insurance…monthly
Utilities…monthly
Subscription services…monthly
Notice a pattern here?
Whether you are retiring at a normal age, retiring early, or just seeking the ability to not be tied to a traditional job…your expenses will continue to be incurred monthly.
What is the best way to know you have financial freedom? Simple…to have enough passive cash flow coming in every month to cover those expenses.
The “Magic Number” should not be some daunting pile of assets…like $1.46 Million (based on the 2024 survey from Northwestern Mutual) or $3 Million (Fortune Magazine) or 10-14 times your gross income or something like that.
The amount you need for retirement is the amount of monthly passive cash flow that will comfortably cover your budget, increase with inflation, and last as long as you do. Once you have achieved that—whether the “value” of those assets is $300K or $3 Million—then you have achieved financial freedom.
That leads me to the fun and exciting part. Growing a portfolio to $1.46 Million or $3.0 Million can take many years…decades. However, growing monthly passive cash flow to cover your expenses can often be done in 5 years or less.
That is what we help investors do. If you want to approach your financial independence differently—and get there sooner—learn more about this topic in our member’s area at UnbrokenInvesting.com.