How to Make a Plan to Achieve Financial Freedom, Part 2
Last week, I post the first part of how to make a plan to achieve financial freedom. Inside there, I share some of steps that you can test and find out what your current financial status is. You will have an overall picture on your current finance and hence know the main problem that you must take care at this moment. This will be your first steps to achieve financial freedom too. There is another biggest decision you have to make where you must decide whether you should pay off your debts before doing anything to achieve financial freedom. In order to help you on this, I shared some tips inside the first part of this series that you should read through.
Anyway I wish you have a good idea over your current financial status and let us move on to the next part of this series, how much Passive income we need to achieve financial freedom?
How much Passive income you really need?
Passive income is an income you get without any physical hard works or spending most of your time on it. For those who don’t know, in order to achieve financial freedom, you must build some kinds of passive income which can support or exceed your monthly expenses. After financial free, you don’t really have to bother about your job and you can spend most of your time to do whatever you want to. This is an ultimate lifestyle that a lot of people dream about for their life.
However, the question is how much passive income you must build in order to be financial free?
Right now, as you read this article, we actually on our way to make a plan to achieve financial freedom. In this plan to achieve financial freedom, the amount of passive income will be the biggest goal for you. Without a goal, it is hard for us to come out a plan and then take action to achieve it. So first we must set a goal on how much of passive income we need.
There are a lot of factors that you must consider in order to decide how much passive income you need. I have listed down some of the most important factors that you must consider below:
- Decide the living style that you want after financial free. First you must decide what kind of living style you want to. Maybe you prefer to live frugally or live like a “millionaire next door” whose lifestyle is just like a normal people even though they are wealthy. Or maybe you want to travel around the world after this and spend your days leisurely. There will be different level of expenses and requirements with different life style you opt for.
- Decide what you want to buy after financial free. I believe most of us have a dream to buy something. Maybe you want to buy a Ferrari for your life or you want to buy a bungalow with personal garden and swimming pool in it. Whatever you want, just decide and write it down in this plan.
- Decide what you want to contribute back to the society. If you are financial free, you are really free in terms of time and financial. So at this time, you really can do something for our society. You have plenty of time to help people and you also can leverage on your wealth to do this too. I believe if you want to get more from your life then you must contribute more to the society. This will balance your life and you also will live happily and wealthy.
- Decide and plan for the future of your family. Yes, it is easy to achieve financial freedom if you are alone and without any family or financial burdens. However, the story will be different if you are married and you have your own family to support or maybe you want to prepare some income as your children’s education fund. You must very clear what you and your family need in future. This is part of plan for your most of the retirement planning.
- Decide your investment plan after financial free. Financial free is not the end of your personal finance. Instead it just a stepping stone for you to retire rich and wealthy. So even you achieve financial freedom, your job is still have to look for profitable investments, assets and businesses to build up your wealth. Besides that they also will be your tools to generate money for your retirement and future. So write an investment plan is very important.
PS: You may feel like you cannot afford most of your dreams. Maybe your inner voice keeps telling you that stop dreaming and you are hard to writing down your dream. Don’t bother about it and just decide and write it down. Write down your goal will not spend you millions of dollar, so don’t limit your dream. Just write down what you dream about all the time.
What is next?
Now, I bet you have a list of dreams and goals that you want to do and fulfill after you achieve financial freedom. Next, you have to do some research to find out what is the true cost to own everything you want. I found that the first problem people make in their plan to achieve financial freedom is they never know the price of their goals or dreams. For example, I heard from my friend that he wants buy his dream car in future. But when I ask him how much the car is, he just keeps quiet because he never do any homework for his dream car.
do some research about your dream and get the figure or price for them. Now what you have to do is just set the level of passive income which can afford your dreams and goals.
For example, I will be financial free if I can make a passive income of $3000 per month. This money will help me to support my family which currently has 5 members in it. I’m not married and I know my family burden is slightly lower than others. Besides that, I have a dream to travel around the world. Of course, this amount of passive income is not enough for luxuries travel. But for budget or middle-class style of travelling, this amount of money is enough. But anyway this is not a problem as I always have a plan to shoot up my passive income by owning more profitable investments and assets. I believe one day I can afford more.
I have a budget plan to use my passive income and I set a ratio of 50:20:20:10. 50% of my passive income will be used to cover my family’s living expenses and also others funds such as emergency funds. First 20% will be my investment modal then the other 20% will be my travel fund and last but not least 10% will be my charity fund.
Conclusion
You know what you want, you set a goal and you must do some research about it. From my experience, the more you know about your dream, the higher motivation you will get. Trust me, this is my own experience. This is also a way to train your mind about your goal. The more you know, the better your goal and dream accepted by our subconscious mind. Then you will believe it and your body will take action to achieve it.
So spend some time, maybe in your spare time, do some research about your dreams. Then open a text file in your PC or take out a piece of paper and write them down. 1 more thing that I want to remind you is revising your goal every 5-10 years. Well, everything in this world is changing and so as your dream. So revise it and change your plan accordingly.
Coming up next: Since you know what you have right now and set what you want in future. Next, I will talk about the actions plan that will bring you to your dream – financial freedom.
Free Trading Simulator – Play the Game and Learn the Skills
I involved in Forex trading last 2 years. At that time I was told by my friend that Forex is another kind trading investment just like stock where I can make some easy money. Easy money? Really that easy? I doubt. I was not 100% believe what my friend said but I still want to give it a try and test it on my own.
So I looked around for some free trading simulators over the internet. Like what I said in my article, 3 steps to train yourself become great stock investor, I emphasize that a trading simulator is really important to train up your skill in stock or Forex market. Well, I know that I will definitely loss a lot of money in starting because I’m lack of skill and experience. I need something that can let me trade in the real market without using my money.
My predication really came true and I lost almost 10 demo accounts before I start making some profit. If I really using my money to trade, I think I have lost several bungalows. At the same time, my friend, who introduced Forex to me, end up losing a lot of money as he plays with his true money.
So now you know how important a trading simulator is for you to profit from trading. So below are some of the Free Trading Simulators that I collected from the internet which you may consider to play around and gain the skills.
Stocks Simulator
Our stock market game is like a fantasy sports pool for investing - it simulates the experience of trading in the stock market. Our system connects to a real-life datafeed, allowing you to invest just like you would with an online trading account at any discount broker, but with $100,000 of virtual cash, you can trade without fear of losing real money!
Sign up for the Zacks $100,000 Challenge and you could WIN a $100,000 contract with Zacks. We're conducting a nationwide talent search to find the very best traders. If you can find winning stocks and write about them, you could win a stock-picker's dream job.
Compete in the eInvesting.com Stock Market Simulator competition! Buy Stocks, track your progress, view your trade history and see how you stack up compared to other members. Register once and access both the forum and the stock sim, it just takes a minute. Plus, it's free!
The MyStocks page is the one-stop place where you can trade stocks with virtual money. The Global Stock Game (GSG) is the world's most realistic stock market simulation, where you can have fun and learn the stock market at no cost. Yes, it is 100% FREE. In addition, it's is easy enough to use even if you know little or nothing about the stock market. Even seasoned investors use this Web site to test their investing strategies before placing real orders in the stock market.
Forex Simulator
MoneyForex Financial Ltd. is one of the world leading online currency trading broker offering low pips and commission-free online forex trading. Founded by Wall Street veterans, MoneyForex's vision is to service individual and corporate investors such as money managers, banks, and financial institutions in easing the complexity in dealing with forex trading. Our dealing software which specialized in forex dealing is rated second to none for it user friendly environment. Lightning speed and efficient execution is one of its many benefits.
Because the Forex market is an over the counter market with no centralized exchange, not everyone receives access to the same prices or quality of execution. The worlds largest banks tend to provide better prices and execution to institutions with the largest trade volume and the most solid financials. $200,000,000,000 ($200 billion) in notional volume per month is traded via FXCM's trading platform, and FXCM is one of the most well-capitalized Forex Dealer Members. According to the financial data posted on the CFTC website, as one of the oldest and largest high-volume retail online Forex brokers, FXCM has built strong execution relationships with many of the world's largest international banks. FXCM receives and is able to pass on the benefits of size, better prices, and better execution to our clients.
GCI Financial Ltd ("GCI") is one of the world's largest online foreign exchange and Share CFD brokers, executing billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference ("CFDs") on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements for securities brokers and futures dealers.
Conclusion
Trading Simulator is really important for a newbie to get started in stock and forex market. Besides that, it is also important for us to test our trading strategy using trading simulator before dumping any money inside the market. Anyway most of them are free of charge. So why not play the game and learn the skills of trading?
PS: Are you using any stimulator? You may share it here too.
How to build wealth from Real Estate in any market trends
Did you hear any news about an investor goes bankrupt because of real estate? I didn’t hear any, how about you?
I frequently hear people made their fortune from stock market, but I also hear about investor lost their shirt playing in the same game. However, I don’t hear about any real estate investors go bankrupt. This is because it doesn’t happen often. But on the other hand, I always hear investors are building assets empire that worth millions of dollar from real estate.
So today, I want to share with you some of the “how to” that I learnt from successful real estate investors.
How to Build Wealth from Real estate in any market Trends
- When properties prices appreciate fast, you can “fix and flip” for a quick profits.
- Doing cash-out refinance when your properties prices appreciate which will let your having another capital to get more properties. The good news is this money is tax-free.
- When interest rate falls, you can refinance your rental property and get a lower monthly payment and increase your cash return.
- There are a lot of foreclosures, motivated sellers and bargain-priced properties on the depressed markets. You will have a lot of chances to get below market value properties at this time. You have plenty of good deal to look for!
- High rates of inflation will drive up market interest rates and cut down the short-term demand. This will be the perfect time to look for seller financing lease options, and low interest rate mortgages that you can take over from the sellers.
Yes you can really make money from real estate if you do the right things. However, there are no shortcuts or quick ways to invest in real estate and start making money. Everything in this world needs your hard works, time and efforts to make it success. You have to deal with a lot of people such as your tenants, real estate brokers, bankers and others. Just like a business, you also need to handle all the operation expenses such as maintenance fees, fixing expenses and also renovation costs. Besides that you also need to train your brain to accept and read about the market trend, information and figures which will help you plan your strategy accordingly.
Don’t worry, if you pay the enough hard works, you will be success. It only time matter. But if you don’t take any actions today, it is just a dream for you to make money from real estate.
Good luck,
Harrison
