Retire early/financial independence from passive income, including dividend paying stocks | Ep. 25

This video describes the model I used to retire early, achieving personal freedom through financial independence. If you desire to retire early, you won’t want to miss this video!

Almost a year ago i achieved personal freedom through financial independence i was able to retire if you want to see the model that i used and how that actually came to pass for me stay tuned hey welcome back kevin burgess again with yet another video this one is going to be a little different than my others and i’m going to focus on the model and the process

That i used to retire early and achieve financial independence leading to personal freedom so as you know i’m not a financial advisor all this video is is me sharing my story with you so that if some of it can be used in your story you’re welcome to it and hopefully it will inspire you and get you to a place where you are ready to make a decision and to keep

Persistent in your goal toward personal freedom i’m recording this video a little bit ahead of time my wife and i are heading to guatemala this weekend to carry out some work down there for those who are neglected and abused and we look forward to doing those kinds of things and that’s what personal freedom helps us to achieve so without further ado let’s go ahead

And get started so personal freedom to me is about doing what you want when you want it doesn’t mean that you stop working it means that you do the work that is fulfilling to you and you make a difference in people’s lives and so at least for me that’s the motivation behind personal freedom so i want to walk through some slides with you about personal freedom

That’s actually based off of financial independence and some people use a variation of that called financial independence retire early or what they call fire so i’d like to talk about both of those and i’ll share with you which one that i did and give you some cautions around both of them and you know at the end you’ve got to make up your own mind and make your

Own decision but whatever you decide stay persistent and see it through to the end so the first principle i’d like to share with you is that personal freedom is powered by good choices this information came from an ameritrade slide but it’s really good it has to do with the habits that you embrace versus the habits that you avoid what you embrace is that you

Have uh you and you embrace learning financial advice and education uh warren buffett has said the more you learn the more you earn and so as you walk through this journey embrace financial education second is saving and investing at a young age and we’ll look at a few minutes on what time how time impacts our investments it suggests that we have a variety of

Investments and one thing it leaves off is real estate because ameritrade doesn’t deal in real estate so they’re looking for you know just to to carry their own brand here but then lastly is uh dividend paying uh assets and and low fees so those are things that we want to to embrace what we want to avoid is high interest debt high interest debt is a deterrent to

Your financial independence do whatever you can to get out of consumer debt as quickly as possible it does nothing to add to your personal freedom or to your financial independence secondly overspending particularly on housing you live below your means is the way that we always thought about it we had the means to live higher but we chose not to and we chose not

To because we were putting money away for the time when i was able to retire early and you don’t want to rely solely on your income from your employment because you know at the end of the day you want to have different streams of income coming in so i thought that was a pretty good slide but those are about good choices right it’s about making the choices that are

Necessary to achieve personal freedom through financial independence this next slide that i found is a comparison of financial independence versus financial independence retire early and they have a subtle difference and i think it’s important for all of us to understand those uh whichever you choose is up to you but it’s important to understand both of them under

Financial independence you’re looking for retirement early not necessarily in you know your 30s but you’re looking to retire early which is very similar to what i did but you’re looking for passive income and that income is going to cover your expenses during retirement on the flip side you have fire which is financial independence retire early and you’re looking

To accumulate enough assets to cover you for the rest of your life and at the end of the day the uh financial independent person likely will have their net worth increasing over time as well as their passive income where the fire individual begins to utilize this accumulated asset because there’s not that they have a lot of life left to live and they don’t have as

Big of a nest egg so they will need to at some point tear into the nest egg and be and ultimately hopefully have enough at the end of their life to live a fulfilling life financial independence is about cash flow where financial independence retire early is about accumulation so i think of and i think this is a great picture that i found online that if you think

About financial independence you think about the goose that lays the golden eggs and so you’re investing in the goose and you’re looking for more and more golden eggs to be laid by that goose however on the fire side you’re accumulating the golden eggs and you know the analogy breaks down a little bit because you you will have uh some golden geese there but at

Some point you’re going to need to tear away at the geese because you’re going to actually work down your your portfolio to me from a financial independence perspective makes much more sense than financial independence retire early but each of us have to make our own conclusions there and whichever one you make just make sure you’ve taken precautions uh around

Your the the end of life aspects so steps to personal freedom our first step is to set your personal freedom budget so the way to do this is to get in a quiet room and picture yourself at let’s say my age where you have gotten to the place where you are ready to retire maybe you’ve just retired and what does that look like what financial goals do you have for

That what financial expenses are you going to occur during that time are you going to travel are you going to live a frugal lifestyle and not do anything just be miserly are you going to you know go out to eat a lot are you going to you know what does that look like for you so that you can set your budget for that time in your life the second step is to eliminate

Consumer debt and we talked about this a little bit earlier but it will destroy your plans to retire early so step number three is setting your passive income trajectory how much do you want to contribute to assets who are going to provide passive income for you and you know you need to track that you need to make sure and hold yourself accountable that you are

Putting the money aside every week every month however you determine to do it that you are setting aside what you plan to set aside and that you’re investing it for passive income moving forward step number four is to then track your passive income and this is where it really gets exciting right because as your passive income grows you get closer and closer to

That goal of personal freedom step number five is once your passive income passes your expenses that you would incur in your retirement you can make the decision to retire doesn’t mean you have to but you can and there’s a lot of freedom in having the choice so this next chart shows graphically how how your uh portfolio and your passive income will grow over

Time so if you invest a hundred dollars a month you’ll see that on the blue line and at a return of seven percent per year annualized then you’ll end up with some number in the future and if you put in 150 dollars a month it grows to something even bigger and so uh the next slide then is what i taught what i call the trajectory and you’ll notice that the red lines

Are the trajectories for these particular models so if you if you think about this hundred dollars a month uh you’ll see that the blue line actually is a curve and the trajectory is a straight line so whatever you decide to do in terms of saving money think about the fact that early on you may not see the trajectory that you’re expecting but in the long run

You’re going to get a lot more near the end than you got at the beginning so don’t lose heart stay diligent stay consistent and you will see the trajectory that you’ve put in place in this particular example there’s twenty six thousand dollars of difference if you invest a hundred fifty dollars per month versus a hundred dollars per month so that’s a pretty big

Difference i then took the liberty of changing that instead of 150 dollars per month it’s 300 dollars per month and you see the difference now is a hundred and four thousand dollars over a 20-year period so time is important to your investment strategy the earlier you start the better doesn’t mean you can’t start late because there’s no better time to start than

Now but the earlier you start the better your plan will be achieved in the long run so some takeaways from the trajectory just remember your trajectory is a curve and not a line it is time sensitive it requires a personal decision to start it is up to you to get started and it then it requires resolve and perseverance to finish the race it’s a marathon not a

Sprint so get ready for a long-term marathon to achieve your ultimate long-range goals so i’ll share with you the model that i used on the left hand side is the portfolio on the right hand side you’ll see a box that represents income passive income and then you’ll also see a box that represents the costs which is the budget for your personal freedom there are

Things that impact the portfolio before early retirement one of those is growth also savings and then time so your growth will be the growth that your portfolio experiences the savings are the the money that you put in personally into your plan and time gives it the ability to compound and and work its way through the curve over a 20-year period to be something

Much bigger than it ever started out to be this portfolio then supplies your passive income which once it achieves the amount of your budget then you are in a position to early retire some things not to forget especially if you choose the fire path is that if you have parents who may need assistance as they get older then don’t forget those expenses because

If you don’t count those into your plan you will not achieve the objective that you have also don’t forget that health care for you later in life may be much more expensive than you anticipate so make sure that you cover those expenses in your plan and secondly every year there will likely be inflation that inflation will drive the costs that you are incurring

Higher so now let’s look at what it looks like after retirement this is where i am you can see that the time it’s pretty much over so it’s not that time is completely over but i have am shifting investments into more yield producing investments which means that there’s also not as much growth over time savings i’ve put a question mark by because as time goes

On if my passive income exceeds my expenses gives me the ability to continue to save into my portfolio the thing that continues forward is that my portfolio will grow it’ll grow based on the investments that i’ve chosen it’ll grow if i for instance i have some real estate investments that will grow over time so that means that the rental income the net rental

Income coming into my passive income will grow over time so the growth will continue moving forward as long as i’m picking dividend stocks who are continually increasing their dividends every year even if it’s small to keep up with and even exceed the amount of inflation that we’re experiencing the other thing that continues is inflation so your costs will go up

By inflation your passive income will go up by the amount of passive income increases and therefore you want the growth in your portfolio to at least match up with what you expect inflation to do over time so this is the model that i’ve used it’s been very helpful to me i’ve obviously been successful using it and i’m looking forward to the future as we do the

Things that we want to do when we want to do them and achieve the things in life that we find fulfilling so just some takeaways that i want to share with you so being intentional and persistent are keys to personal freedom it’s your choice to get started and it’s your choice every month to carry out your plan secondly small changes early on have bigger impacts

Over time the third thing i’d like to leave you with is you can do it you have the ability to do this it’s about your resolve and then lastly it is absolutely worth it so with that if you uh have any comments on this and want to share any of your experiences in your pursuit of financial independence and personal freedom leave them in the comments below i’d love

To see those if you like videos like this then if you could give me a thumbs up on the video it would help the channel and i would really appreciate it and if you uh want to continue hearing things like this from me then you can subscribe to the channel and um you’ll be alerted for videos that i that i post uh moving forward so with that i’ll see you on the next video you

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Retire early/financial independence from passive income, including dividend paying stocks | Ep. 25 By Kevin Burgess