6 Ways to achieve Financially Independent

Financial independence is the ability to afford a comfortable lifestyle with no debt or whatsoever, but it’s not a walk in the park to become financially stable.  It’s not an overnight process, or something you can wish on a falling star. Financial indecency requires hard work and a lot of sacrifices. It a decision that you have to make every day, it is an action that you should consistently perform till you hit that mark.

People don’t need to suffer to become financially stable. It depends on how we define financial stability – after all, we define our own success and happiness. For many, having a mansion in Tuscany, and owning a private jet in order to travel the world is the peak of their financial success.  While others just want to have a simple, yet comfortable life where they could send their children to a prestigious university.  To say, we define our own financial success, but how can you reach this goal? It all starts with a plan, as they said, “failing to plan is planning to fail”, you really must have a healthy self-discipline and solid foundation to reach your goal.  Below are solid financial guidelines you employ to start with you plan to a financial independent life.

1.      Have a vision, then plan your action.  Whatever the mind can believe, the body can achieve.  Begin by believing that your vision will work and act on some budgetary goals.  Your road to financial independency maybe different when you are at age 20 compare at the age of 50.   The more time you have means more opportunities of growing your wealth.  Bear in mind, that in the game of investment time can do so much. However, whatever age you might start, always begin with a realistic vision of yourself in the future.

2.      Do not over spend.  We often failed on this rule, since its dimension covers your financial behaviors. It is one of toughest to execute since most of us felt that we are entitled to spend our hard earn money.  As solution, make it a habit to put 10-15% of your gross income to your saving account or invest every payday.  You can also opt for an auto deduct so that you don’t have to worry anymore.  You could also lower your lifestyle and adopt to budgeting by buying things that you only need.  This will not come easy, but this is proven to be the best remedy!

3.      Budget.  Budgeting is the toughest part of the process.  This includes tracking, measuring, and calculating your expenses in order to meet your financial goals.  It is the most challenging part yet the most rewarding when you find your own pacing.  They key is persistent and self-discipline.

4.      Be smart by building emergency funds.  Insurance and emergency funds are essential parts in the planning. However, most of us, overlooked them thinking they are not important.  We should realize that building one’s emergency fund or insurance will save you from spending much when the inevitable happens.  In fact, it is an effective way in dealing with your financial emergencies.

5.      Re-examine your career path. There’s a saying “Find out what you like doing best and get someone to pay you for doing it”, this is a good insight to consider without quitting on a career you love. However, you can’t just rely on a single income when you are serving two masters. You have to understand that serving your need to save and invest requires sacrifice or at least another source of income. If you can’t decide you can ask help to a qualified financial and tax expert to evaluating your current career income and other benefits. Always remember that when you reach the age of 50, the Internal Revenue Service will let you make up with your contribution to both 401(k) and IRA accounts.  

6.      Avoid Debt – There’s a saying “A man in debt is a man in chains”.  If your goal is to become financially stable, then you should eliminate debt in your system. Given a fact consumer debt generally goes low since the 2008 financial crisis. However, as per reports from the Federal Reserve Bank of New York, a significant increase in student loans, home loans, non-home loans, credit cards, and auto loan began to rise in 2014.  With that, it is important that you free yourself from debt so that you can save your money for investment.

How to Make Money in Stocks?

- Three reasons to keep you from investing your money -

The highest return you can gain when investing in the stock market is the soaring average of 10% annually, still better than those in banks and other account bonds. This makes it for investors to track the market like of the S$P 500 index fund.

So what makes a lot of people hesitant in investing in the stock market, despite the 10% earning annually? Sad to say, it is fear and greed that hinder people from investing their hard earn money.

Most people don’t realize that the key to gain profit in stock is the length of time you are willing to stay in the market.  This improves your overall performance. So, it is important that you are in control of your emotions specifically – your fears and greed. Letting these emotions will just trigger you to move in and out in your game.  The worst case is losing the opportunity in getting higher annual returns.

It’s given that it’s hard to get your feet to get wet easily when doing stock investment. Time won’t just let you win in a critical market.  If you heard “time is the market” this refers to the number of years you are willing to wait to get most of your investment.  More time equates to a more opportunity for your investment to grow. If you are lucky enough, some companies increase their profit gain over time.  This means greater earnings for investors and a higher stock price.  In fact, time indicates improvement and increase in the value of earnings.

In addition, more time allows you to get more cash dividend.  If the company where you put your investment trade in and out on a daily, or weekly basis, better not expect for dividends for it is surely hard to take control of your payouts at the critical points of each month. To simplify, let’s consider this.  For the expand of 15 years through 2017, the stock market returned goes high as 9.9% annually to investors who continued their investment.

However, you can earn twice of your investment as long as you keep your investment. Not even an expert investor can predict which hours or days you’ll gain or loss.  That is why the longer you invest your money the bigger the chances you get that 10% return.  Since it is fear of loss and greed of winning that keep investors to trade in and out, which eventually lessen their chance of gaining that 10% of the annual return.  Here are tricks to keep you optimistic in investing.

Three reasons to keep you from investing your money

1. ‘I’ll wait until the stock market is safe again. This is a perfect consolation to console yourself to keep investing after stocks have declined when things aren’t fine it is when you should stay into the market. Just think that this is temporary and stocks will change in a few days. So when investors are waiting for it to be safe, this means they are optimistic that prices are soon to climb. So staying at the verge of slowing down will eventually pave your way to higher prices, and it is merely an insight of protection that shareholders are paying for.

Let’s decipher the things that drive investors to feel this kind of behavior. Fear is weak but it’s a strong emotion, psychologist denote this behavior as “myopic loss aversion”. In a practical sense, investors are more likely to accept the loss in a shorter term but hard to accept in long term. So to stop the hurt they don’t buy or sell stocks even when prices are at its lowest rate.

2. ‘I will invest back when it’s cheap.’ This plea is common to “would-be buyers” as they are willing to wait until the stock drop. However, as per Putnam Investment, no one knows which day stocks will move up or down, especially when investing short term. The stock could just rise or fall within a given day or week. Experienced investors tend to buy stocks when cheap and hold them for a long time till market stabilize.

Let’s decipher the things that drive investors to feel this kind of behavior.  This can be trigger by both fear and greed.  Investors tend to think a lot on the rise and fall of stock over the week but wait, while greed is shown on how investors anticipate a fall but plan to buy on a better price the next day.

3. Bored so I’m selling my stocks. You will hear this plea from investors who just want nothing but excitement for their investments, like a poker player in a casino. However, the ugly truth is that smart investing is boring, or it can be boring depending on how stocks work for each year. In fact, investing is not an instant win game.  When investing, earning comes while you wait, it is not a quick trade in and out of the market.

Let’s decipher the things that drive investors to feel this kind of behavior.  The predominant behavior is excitement.  Ultimately, guided by the desire to get most of the investment within a given trading day or week.  For some investors, it’s all excitement that drives them to invest, and not making money in a long period of time.