it seems my last post struck a chord - I received more than two dozen e-mails from readers who wanted to share their financial plans with me. Most were in the form of questions - so I will offer this generalized answer here that may be of help to others who are wondering the same kinds of things.
Financial independence - in my view - means that I have enough money to do what I want, when I want and do not need to undertake work that I dislike. I also think that if you are living a fiscally intelligent lifestyle, you will always have some income coming in from effort you have done once - or from effort that you really enjoy putting in. So the old model of 'retiring' doesn't really apply. it's not as if yo do the job you dislike, until such time you have saved enough money - then you retire (meaning sit back) to live out the remainder of your days trying to make the money you put aside last until your death. I don't like - or agree - with that model.
1. Pay off your credit card debt. No regular investments will give you a better return on your money than the saving you will make by eliminating credit card debt.
2. get into the property market; there are lots of creative ways to do this- and more often than not, your property will increase in value over time - even if you are just paying interest on the home loan. This will give you 'equity' in the property without having to do much. I had to be creative when I got my first home; I couldn't afford it - in fact, I was unemployed. I bought the house with $100 deposit - and fanangled my way into a loan - and then had to get several renters in there to cover my payments for the first 24 months. After that - as rents and house prices went up - the rent seemed affordable - so I was able to oust one of the renters and still make rent easily - a year later, I ousted the other and the payments I needed to make to the bank were roughly equal to the rent I would pay on a single bedroom unit. By that time, the house had doubled in value. getting in can be a difficult step - but it's usually more of a psychological hurdle than anything else.
3. Start paying something into Superannuation. With the new legislation in place, it's a pretty good bet in the long term. Especially with you being able to draw down an income stream (tax free once you hit 60 years of age). That's a long way off - but as I am fond of saying with training - TIME GOES BY - the day will come. And 'tax free' is VERY VERY good. The difficulty that younger people have, is that they find it very hard to look 15 or 20 years down the track. And as that's where the superannuation pay-off happens - it becomes difficult to have them commit. But seriously - it is very worth it.
Bottom line is that, for most of us, financial independence will come from developing a number of varied income streams. This way, if one dries up (or slows down) the others will keep you drinking. A mix of shares, property, superannuation, product sales, etc is a good idea. No one thing I do gives me the money I need to live the way I want to - but everything combined provides me with a great lifestyle. DIVERSITY rules!
I am certainly no financial advisor - but a good one (hard to come by because many of them are selling you something and so are not really giving you independent advice) can set you up with a long-term plan.
I went in and paid two of them $500 about ten years ago, letting each know that I will not do anything with them and that they will never see me again. That way I got (at least I hope I did) truly independant advice. I talked to two so i could compare what they said.
What did they say? pretty much exactly what I have alerady outlined here for all of you.
I trust it helped.