Stacking papers – The slow but sure way - prt 2

Well what’s stopping you from achieving financial freedom? Could it be that you believe you must have lots of money to start? Well if that is your belief you are wrong. The first thing you must do is build an investment plan. Start with saving $5 a day, if that is to much start with less. The important thing here is to get into the habit of following a daily savings plan. Once you get use to saving money on a daily, weekly or monthly basis you will find ways to increase your daily savings.

What does financial freedom mean to you? For me it means that I am not financially dependant on any one for money to allow me to live the life I want. This mean that if my yearly income is $50 000, I can generate this solely from my investments.

So what kind of investment would I need to generate $50 000 per year? I would need $416 667.00 with a return rate of 12% annually. So that’s 50000/12 = 416666.67.

In the previous article we said that compound interest was our friend. Using compound interest we can grow our saving over a period in time. The more time we have the more interest we make. However just leaving our money in the bank really earns us little return. To increase our rate of return we need to invest our money in something that will gives us better performance. Luckily there are some options available to us that’s not to risky but will perform better than a bank account.

One of the best investments you have available is a Mutual Fund. Many institutions offer Mutual Funds you can join for as little as $100. Mutual Funds are made up of pools of money from many investors. There are many different kinds of mutual funds that invest in different areas. The important thing to know about buying Mutual Funds is to only invest in funds with low management fees.

So if you have a savings plan, you can build up capital to invest in Mutual Funds which offer higher returns than a bank account will. Take it on yourself to investigate all the available investment opportunities available to you. It your money so be active in making it work for you.