People talk about it all the time. Sometimes it manifests itself as a wish: “I’ll travel the world if I win the lottery” or “I’ll retire on the Mediterranean when my luck comes in”. Sometimes it expresses itself through our fears or stress, such as sending our children to higher education or providing a comfortable environment for our families. But I’m here to tell you: financial independence is NOT an unattainable dream.
I strongly believe that we create our own financial reality. In this increasingly global society, we are presented with an abundance of opportunities to carve our own future. It’s simply a matter of asking yourself: “what is my real goal?”
No, I don’t mean accomplishing everything on your weekly to-do checklist. I’m talking about freeing yourself from the 8-5 rat race that most of us (whether self-employed, entrepreneur or employee) put up with to achieve a lukewarm success. I think we all know the answer to this question: financial freedom.
For what it’s worth (and I happen to think it’s worth a lot), here is my recipe for breaking that daisy chain: first define your goal, then determine how much cash you need to achieve that goal.
Sounds too easy, doesn’t it? But it’s logical. Before you can realize your dream, you have to actually know what it consists of. Let’s look at it in more detail: at what point in time will you have enough accumulated passive income to free yourself from the non-stop, stressful obligations you deal with every day?
For instance, your goal (read: your definition of happiness) may be to travel the world for 6 months out of every year, or to be able to focus on your gardening, or to send your children to Harvard, or to retire in a tropical country, or to just simply relax in life and spend more quality time with your family.
Whatever your goal is, decide how much money you will need to reach it. How do you do this? First define how much spending money you need to cover your normal daily obligations (food, household, rent, child expenses, etc). Then determine how much monthly income you will need to fuel your goal.
Stay with me here. Let’s say you need $2500 per month to maintain your expenses and current lifestyle, and an additional $2500 per month to meet your goal to travel 6 months out of every year. That means your monthly passive income is $5000. Now let’s cook this recipe and see how it tastes.
To achieve a $5000 monthly income with any bank, you would need to invest at least $1.5 million dollars at a 4% interest rate (CPG lock for 10 years). What does this mean? On top of the high amount required, you would need to wait 10 years to get your return, as most banks won’t allow access to your income before the end of the term.
Suppose now, you decide instead to invest in a multiplex real estate property that you can leverage with 80% financing. If you were to purchase a $1.5 million property, the necessary capital (down payment) would be $300,000. If you manage to get a $25,000 cash flow rental income per year (which is pretty much an average estimate) you would now be making over 8% return, as opposed to the 4% the bank was going to give you, and with 4 times less money. Not only that, but you could access your rental earnings on a monthly basis, so there would be no need to wait 10 years to achieve your goal. OK, not bad….
However, those of you that are number crunchers will notice that $25,000 represents only $2000 per month, which means you are still $3000 away from your $5000 goal. Those of you that are practical as a rule will note that you also need to manage this property, so the income is not completely hands free and passive. And of course, the majority of you are probably saying, “as if I have $300,000 stashed away under my bed or in the cookie jar”.
But let’s take this a step further. What if you could invest in a property with $30,000 that would give you a $500 per month cash flow? And what if the property you invest in already has a management program in place, along with an A+ tenant that has signed a 5 year rental lease on that property? Then the next step would be to get nine more similarly valued properties to reach your $500 x 10 = $5000 monthly passive income.
Sound intriguing? I know it does. And it’s reality. You just have to know what you want and what to look for in order to get there. As a matter of fact, it’s right here at your fingertips.
Contact me or give me a call at +1 514 486 3219 and tell me what financial independence means to you. I’ll tell you what I did to make my dreams come true, and we’ll create the perfect recipe for realizing your financial freedom.