My honest advice to someone who wants financial freedom
Short Summary:
This video provides a roadmap to achieving financial freedom, based on the speaker's personal journey from a low-wage job to millionaire status. Key points include calculating a "freedom figure" (the amount needed for passive income to support one's lifestyle), investing in the S&P 500 (using apps like Trading212 and dollar-cost averaging), and implementing various money-saving hacks (car hacking, brand hacking, property hacking). The video emphasizes building multiple income streams and using money for expansion rather than just consumption, mentioning crypto and real estate as investment options. Detailed methods are provided for calculating the freedom figure and implementing specific money-saving strategies.
Detailed Summary:
The video is structured around five main steps to achieve financial freedom:
Step 1: Find Your Freedom Figure: This section focuses on calculating the annual cost of your desired lifestyle and multiplying it by 25 (the Rule of 25) to determine the investment capital needed to generate passive income sufficient to cover those expenses. The speaker provides example costs for housing, car, vacations, bills, food, insurance, and leisure, based on typical aspirations of people in their 20s. He emphasizes that financial freedom is subjective and encourages viewers to personalize the calculations. The 4% rule is explained, suggesting a safe withdrawal rate from investments. Investing in S&P 500 ETFs via apps like Trading212 is recommended, along with fractional shares and dollar-cost averaging. A sponsorship for Trading212 is included, offering a free fractional share.
Step 2: Act Your Age: This section focuses on practical money-saving strategies. "Car hacking" (buying used cars to avoid high loan payments) and "brand hacking" (choosing generic brands over name brands) are highlighted with examples. The speaker also suggests "property hacking," such as renting out extra rooms in a duplex or using Airbnb to offset housing costs. "Tax hacking" (legally minimizing tax burden through deductions and tax-advantaged accounts) is briefly discussed. "Deal hacking" (negotiating better prices) is explained with the example of car purchases.
Step 3: Get a Credit Card: This section challenges the common misconception that credit cards are inherently bad. The speaker emphasizes the importance of building a good credit score for better loan terms in the future, particularly for mortgages. Responsible credit card use, maintaining low balances, and paying off the balance monthly are stressed.
Step 4: Create an Additional Income Stream: This section highlights the importance of diversifying income beyond a single job. The speaker argues that secure jobs are less common and advocates for creating multiple income streams (side hustles, investments) to improve financial resilience. He dismisses common excuses for not starting a side hustle, emphasizing the availability of free time. Examples of side hustles include affiliate marketing, freelancing, e-commerce, and traditional gigs.
Step 5: Use Money for Its True Function: This section focuses on the concept of financial expansion—using money to make more money. The speaker contrasts the mindset of poor and middle-class people (using money for bills and loans) with that of rich people (using money for investment and growth). He advocates for passive income streams, mentioning the stock market (S&P 500 index funds), cryptocurrencies (Bitcoin and Ethereum, with a caution about risk), and real estate as investment options. He shares his personal experience of transitioning from high-hour work to focusing on investments that grow passively. The speaker concludes by encouraging viewers to subscribe for more detailed investment guidance.