Financial freedom is what you make it. That’s why it’s imperative to find a smart investment strategy that fits your goals.
Here at Liberty Through Wealth, we are dedicated to helping our readers discover how to plan, save and invest for a wealthy future – because, as Alexander Green states in today’s article, “Wealth is the great equalizer.”
And longtime Member of The Oxford Club Bill O’Reilly agrees.
Alex reveals his #1 stock in America right now – a great addition to position your portfolio for success and establish the cornerstone of your retirement.
Click here to see how to be one step closer to living out the American Dream.
– Assistant Managing Editor, Madeline St.Clair
In my last column, I offered that it is entirely possible for everyday Americans to earn a seven- or eight-figure net worth.
Over the course of the next several columns, in fact, I’ll explain exactly how.
The American Dream means different things to different people.
Whatever yours happens to be, it’s a safe bet that it requires some level of financial freedom.
Money provides real independence. It liberates you from want, from work that is drudgery, from relationships that confine you.
No one is truly free who is at the mercy of his job, his creditors, his circumstances or his overhead.
It doesn’t matter if you’re a man or woman, Black or white, young or old, educated or not. If you have money, you have power… in the best sense.
Wealth is freedom, security and peace of mind.
It allows you to do and be what you want. It enables you to follow your dreams, to spend your life the way you choose.
That’s why successful investing is a serious matter.
Getting it right is the difference between a retirement spent in comfort (or luxury) and spending your golden years counting nickels, worrying about whether you’ll have enough.
The difference could hardly be starker.
But here’s the part some folks don’t like to hear: Financial freedom – like all freedoms – requires personal responsibility.
Taking Personal Responsibility With the Right Strategy
Surveys show that nearly half of all workers believe their retirement costs are the responsibility of their employers or the federal government.
That mindset is not conducive to generating wealth.
But if you are willing to take responsibility for your financial situation, I have good news.
All you need is to follow a smart investment strategy – and be patient.
For example, let’s say you are the typical American who earns little and saves nothing up to the age of 25.
One day you realize that with a net worth of approximately zero – and government entitlement programs headed for long-term insolvency – you had better do something. But what?
You can resolve this problem with a bit of math. If you are 25 and have 40 years until you retire, how much should you save every month?
That will depend, of course, on your rate of return.
If you earn nothing more or less than what a diversified portfolio of blue chip stocks has delivered over the last two centuries, that would be about 10% a year.
Plug the numbers into a calculator and you’ll see that you need to save $190 a month. That much compounded at 10% a year will turn into $1,017,710 in 40 years.
Make those investments in a Roth IRA and that sum is tax-free as well.
Is it possible for most Americans to save $190 a month – or $2,280 a year? With a little belt-tightening, of course it is.
According to the Census Bureau, the median U.S. household income is $67,521.
That means the average household needs to save just 3% of its annual income.
Alas, not only have most Americans not done this – I routinely hear from readers who insist it isn’t possible.
These folks would benefit from reading The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley.
Stanley, who died a few years ago, was the country’s foremost authority on the habits and characteristics of America’s wealthy.
Many of his findings were counterintuitive.
For example, he found the majority of millionaires – individuals with a net worth of $1 million or more – enjoy a fairly modest lifestyle. The vast majority…
- Live in a house that cost less than $400,000
- Do not own a second home
- Have never owned a boat
- Are more likely to wear a Timex than a Rolex
- Do not collect wine and generally pay less than $25 for a bottle
- Are far more likely to drive a Toyota than a BMW
- Spend very little on prestige brands and luxury items.
This is certainly not the traditional image of millionaires.
And it makes you wonder, who the heck is buying all those Mercedes convertibles, Louis Vuitton purses and $70 bottles of Grey Goose vodka?
The answer, according to Stanley, is the highly affluent – those with a net worth of $5 million and up – and “aspirationals,” people who want to appear rich but really aren’t rich.
Stanley discovered that the vast majority of American millionaires achieved their wealth not by hitting the lottery, founding a Fortune 500 company or gaining an inheritance, but by patiently and persistently maximizing their income, living within their means, and religiously saving and investing.
Most Americans could do this.
But what if you are closer to retirement and don’t have 30 or 40 years to compound your money?
Then your plan of action boils down to some combination of these factors:
- Increase your annual income.
- Reduce your monthly expenses.
- Save a greater proportion of your income.
- Increase your rate of return.
This is the nuts and bolts of achieving the American Dream – or at least the financial part of it.
It’s a shame that basic financial literacy like this isn’t taught in our public schools.
But then it’s never too late to learn… or to start saving, investing and compounding your money.
But I don’t want to talk in generalities. I want to get specific.
In my next column, I’ll reveal the quickest and easiest ways to increase your income.
Then we’ll turn to the essentials of saving and investing.
P.S. Meet Me in Italy…
You’re invited to a private dinner at a Venetian palazzo (grab a jacket; the gondola arrives at 8 p.m.)… an exclusive tour of Milan’s art treasures that will take you to the roof of the Duomo itself… a cruise on Lake Como worthy of a Hollywood star… a performance of Verdi’s Aida in an ancient Roman amphitheater… and a series of financial seminars that will give you the tools you need to take on a tumultuous market.
It’s all happening at The Oxford Club’s Wealth, Wine & Wander Retreat in northern Italy this June 11-22. You’ll be joined on this extraordinary trip by me, European travel expert Fritz Satran and Daniel H. Weiss, the president and CEO of the storied Metropolitan Museum of Art in New York City and a renowned historian of medieval art.
This is a once-in-a-lifetime opportunity…
You don’t want to miss it. More details are available here.
Click here to watch Alex’s latest video update.