Achieving financial independence might have been a lofty yet unattainable goal all along, but in this day and age, it’s more than necessary. The global economy is in a standstill. There’s uncertainty everywhere. Gold prices have hit historic highs not once but twice. The US-China trade war is causing a massive upheaval, the rippling effects of which can be seen everywhere.
You are in the middle of all this, and you are on your own. Don’t expect government policies to fix all the problems. Policies taken to ease the tension are a stopgap solution at best and totally ineffective at worst. You need to achieve financial independence and be safe.
Is it even possible? To this, my answer would be YES. Here are the steps that could lead to financial independence:
Understand the risk
When you are going to do something challenging, the first step is assessing all the risks involved. A strategy that begins with risk assessment is unlikely to fail. Your odds of being affected by the global financial turmoil or any crisis arising from it as a domino effect are inversely proportional to your age, gender and employment status. For example, the risk is high if you are an unemployed millennial black woman. If you are a white man with a stable job in your mid 30s with no debt, the risk is considerably low.
Millennials and Gen xers are facing significantly more risks than people from the boomer generation. Most people from the boomer generation are retired, which means they are affluent and very few of them have any kind of debt. They had mortgage debt when they were young, which they paid off over all these years.
Remember, assessing risks means having an objective idea of where you stand. It’s the first step. The next step is creating strategies. Here it is:
As described in the preceding paragraph, the risk is minimal for boomers, many of whom have already achieved financial independence. The risk is quite significant for millennials and gen xers. If you belong to any of these demographic categories, aim to retire early.
The more you stay in the 9 to 5 corporate atmosphere, the less are your chances of doing something different in life. By different, I didn’t mean setting up a new tech company and becoming the next Google or Microsoft. What I meant was growing your own food and building your own house without a mortgage. These are baby steps but when you take them you stop leaning on large corporations for survival.
Why is this important? You ask.
Precisely because the large enterprises would be badly affected when worse comes to worst. Downsizing, massive layoffs and pay cuts may be on the cards for people working in those companies. Don’t wanna be one of them? Start investing in physical assets. It’s impossible unless you retire early and amass all your money for this purpose.
Something as simple as buying a few acres of land and farming your own food requires time and effort. Retiring early means you have a lot of time in your hand and can put in a lot of effort.
Invest in appreciating assets
I am not going into the difference between appreciating and depreciating assets as that would be too elementary. After an early retirement, consider investing your money in assets that you are sure would gain value in the near future.
Silver, gold and platinum are among the most sought after appreciating assets. When an economy goes downhill, investors in droves pour their money into these assets because they know these assets would only gain value and never lose it. The problem with precious metals is that even buying them in small quantities will cost you a lot of money. This is why many people invest in gold or silver ETFS and not in actual gold or silver. You can do that as well if you know when to square off all your holdings.
Land is also an appreciating asset. The value of land tends to increase with time unless the land is situated in a remote place or in an abandoned area. Land can be used for several purposes. It can be used for farming, manufacturing or simply as a place to stay.
No new debt
This tip is only for people with outstanding credit score. It might sound like a no-brainer but people whose credit scores are over 700 are at an increased risk of falling into the debt spiral. Let me explain how.
Those with poor credit scores won’t get any loan, at least not from any reputed lender. The upside of this is that if there’s ever a sovereign debt crisis, those people would not factor in. But people with existing debt – especially if their debt amount is huge – would find themselves on a frying pan.
Wondering how all that is related to having a great credit score? Having an excellent FICO score means being approached by various lenders and resisting their tempting offers. If you can flat out say no to them, more power to you. But if you can’t, then I suggest you better start practicing it.
As you can see, the tips here have a survivalist undertone as in following these tips ensures one’s survival in a world where financial matters are becoming increasingly chaotic. As disappointing as it sounds, financial independence in 2019 means being ready for the worst outcome.