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Each of us probably has such a dream that we can live a life with money and leisure and do the work we are interested in. In fact, this is the highest realm of wealth freedom that we often talk about.
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So, how much money is wealth freedom?
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This problem should be considered from three dimensions. The first dimension is a family’s monthly expenditure, the second dimension is total household savings, and the third dimension is capital gains, that is, your ability to generate money. First of all, we should make it clear that the long-term annualized rate of return of the stock market is a constant 10%, which is not obtained without deducting inflation. This can be taken as a basic knowledge of investment and financing, and should be borne in mind. As long as the above three dimensions are clear, it is easy to calculate how much you need to achieve financial freedom.
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For example, if the monthly expenditure is 10000 yuan, the savings is 1.2 million yuan, and the financial return rate of 1.2 million yuan is at an annual level of 10%, then the annual financial return can cover the monthly expenditure of each month throughout the year. At this time, you will realize the wealth freedom of spending 10000 yuan a month. Similarly, if you want to live on 40 million yuan a month, you need at least 4.8 million yuan of savings. If calculated in the most conservative way, the annual yield of bonds is about 5%, and the risk is basically low and can be ignored. If you want to live a life of 40000 months, you need to save 10 million yuan of wealth. So the essence of financial freedom is to create an automatic money printing machine. The ability to print money can cover our living costs, so that even if we don’t work, we won’t worry about basic food and clothing.
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In the first impression of many people, to achieve wealth freedom, it will cost at least hundreds of millions of yuan. For a person who can’t manage money, it really needs hundreds of millions of yuan to wear luxury clothes, ride a famous car, wear a famous watch, private yacht, and private aircraft every day. However, we should start from the actual consumption demand, meet the needs of normal life, make more money, accumulate more assets, and reasonably combine consumption, investment and savings, so that we can move towards wealth freedom slowly and happily.
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Generally, financial freedom is achieved in three steps. The first step is called the financial security stage. In this stage, you need to have a minimum living cost of 12 months to ensure your total living expenses. For example, if your family’s monthly expenditure is 10000 yuan, you should ensure that your monetary fund account has at least 120000 yuan available for withdrawal at any time. If you don’t save enough money for financial security now, you can either make more money or spend less. Smart people must start from both sides at the same time to make themselves enter the financial security stage as soon as possible.
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The second step is called the financial security stage. The goal of this stage is to raise a goose that can lay golden eggs. The golden eggs laid by the goose can meet our basic living requirements, so that you won’t worry about the middle age crisis, even if you suddenly lose your job, you won’t be anxious. So how much does this goose really need? As we said earlier, the long-term annualized yield of the stock market is 10%, excluding the inflation rate of 3.4%, and the actual annualized yield is 6.6%. Let’s be more conservative and set this figure at 4%. In fact, the low-risk financial management or bond investment of banks can reach this level. We also calculate the annual household expenditure of 120000 yuan, dividing 120000 yuan by 4%=3 million yuan. The meaning of this 3 million yuan is that on the premise that you learn to invest, it can support you to spend 10000 yuan a month to live indefinitely, and can also pass on this goose to the next generation, or even to thousands of generations. So the stock market is a money tree, a goose that can lay golden eggs. We can use it to realize wealth freedom if we learn to invest. If we don’t invest, it will become your wealth harvester instead.
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For ordinary people, basic financial security can be achieved through personal efforts and real estate investment. The third step is the real wealth freedom stage. In this stage, we can not only eat, drink, and provide for the elderly, but also freely indulge in aircraft, yachts, and luxury goods. At this stage, our goal is to realize our dreams, such as villas, luxury cars and luxury consumption. At this time, money has really become your slave, and you no longer work for money. How much money do we need to reach this stage? If we spend 30000 or 50000 yuan a month and calculate it at a 4% return rate, it will cost about 9 million or 15 million yuan. Of course, people’s perceptions of happiness are different, even with great deviation. Some people feel that they are satisfied with spending 5000 yuan a month. Then, it is easier for such people to achieve financial freedom, and 1.5 million yuan is enough.
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What is happiness? Some people have a wealth of more than 100 million and fly around all day. They are not very healthy. Some people are full of fire and smoke. What kind of life do you envy? In any case, we should do our best to save money, learn to invest and manage money correctly, and live the life we want. The purpose of sharing this article is to teach readers to realize their own investment and financing, and to obtain a stable annual rate of return. So we need to learn patiently. Before learning moves, we need to learn mental skills. There are no mental skills moves, just fancy moves, and we can’t stand actual combat.
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