Now I feel that the pursuit of money in of itself can be a bad thing, but conversely having enough money does allow particular freedom(s).
I may only be in my late 20's but I do consider retirement or at least, what I want out of retirement and the overwhelming thought that comes to mind is that of financial freedom. Which I would define as not being constrained by my finances.
Obviously their are many different paths to achieve this, but the simplest method that I'm know is passive income(s) or put simply, income that you can earn without you having to actively work at it...
There are different forms of passive income each with their pros and cons
- Rent returns from Investment Property(s)
- Dividends from a Share portfolio
- Interest from bank deposits/cash assets
I'm sure that there are some other passive forms of income that I've missed, but for the most part these 3 are the main ones...
Now to link this back to my original retirement thoughts, the idea is that when you retire you have enough income/savings to allow you to live comfortably in the last parts of your life.
The difficult part is that $50,000.00 in 2010 won't be "worth" $50,000.00 by the time you retire (thanks largely in part to inflation and rises in living standards, which I believe Accountants calculate at around 4-5% per year). So $50,000 in 2010 would be equivalent to $25,000 in 2020 (in buying power) (at least thats how I think it works)...
As you can see obtaining financial freedom isn't exactly straight forward, hence why most people will pay someone else to work it all out for them (financial advisors,Accountants etc)...
I'll post more tomorrow, but if anyone has any questions/suggestions please leave a comment below...
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