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After my first blog was published, I’ve got comments and feedback and I greatly appreciate that! It is such a good confirmation for me that I'm heading to a right direction.
Everyone has their own way of learning. When I read PF books or articles, I usually understand main concepts, and determine how they can be applied into my daily life. In my blog, I will focus more on insight, idea or personal stories instead of digging into all those technical details. Hopefully, this information can be motivated materials to get you start. But, if you really want to know more detail information related to certain topics, feel free to treat me a coffee at my favorite place and we can have a discussion.
So, let’s step into the goal topic - have you ever think about setting one goal that you want to achieve in 10/20/30 years later. Few years ago, I set a goal that I want to have financial freedom when I retire. You can challenge yourself with this similar goal. What define as "financial freedom" and how much of money do I need to reach that stage? At what age do you want to retire? That's why I always tell my wife I am a "FUTURE" millionaire. haha...
For some people, becoming millionaire is a mission impossible. They think what they are earning now is too little to achieve that “goal.” I read a book called ‘Millionaire Teacher” by Andrew Hallam - he is a typical teacher who doesn't earn a high salary. Yet, he became a millionaire at age of 30. Hallam was able to achieve this goal because he allocated his money to invest once he started working when he was in his 20s. Also, he was living an extreme frugal life which his staffs thought that he was a homeless!
On Hallam’s book, he also emphasizes the choices between "financial freedom" and "comfortable lifestyle" - which choice would people rather to make first? If people choose to work on the goal of getting financial freedom in their early stage of life, they will get both the freedom and comfortable life in their retirement. Vice Versa, people who choose to enjoy life first and ignore to build up their portfolio. They are most likely ended up getting nothing later on to their life.
Some people put their cash into bank saving or CD, with a little interest rate. Currently, U.S. inflation is around 3%, which mean their saving will lose value over lifetime. In order to protect against inflation, one of a solution is to allocate your earning to a long term investment account. For age of 25, they contribute $286 per month and invest in mutual funds or ETFs (assume 8% average return). Their accounts will reach one million by age of 65, thanks to compound interest. Moreover, setting money aside into an emergency account that’s a MUST DO! Everyone needs some “cushion” in case of an emergency! I will go over this topic "What are your priorities of money to go" as well as what is an “emergency account.”
Anyway, here is an article on how to become a millionaire when retire.
http://www.kiplinger.com/article/retirement/T047-C000-S001-retire-a-millionaire.html
Question: What is your goal that you want to achieve in the next 5/15/30 years?