How to Retire Early and Wealthy…
- Reveals the only 3 action steps you need to ensure your early retirement goals.
- Uncovers the 2 obstacles that derail most early retirements… and how to avoid them.
- Shows you how to put your financial security on auto-pilot.
Believe it or not, building wealth for a secure, early retirement is actually very simple…
… in theory.
The equation for financial success is a function of just three easy-to-understand principles:
- The amount of money you invest.
- The growth rate of your money.
- The amount of time it has to grow.
Unfortunately, few people succeed in building wealth because it has little to do with understanding simple principles and everything to do with taking effective action.
The challenge isn’t in knowledge, but in translating that knowledge into meaningful results.
Why? Building wealth requires you overcome the following two hurdles:
- You must translate the wealth building principles into actionable rules that will take you to your goal.
- Then, you must actually live according to those rules.
You probably already know the three principles for compounding and building wealth. Most people do; yet, few people actually live according to them.
To know and not do is to not know at all.
This is critical. Most people fail to succeed financially because the rules are easy to understand but surprisingly hard to live by. Living them is the key… and also the problem.
For that reason, don’t judge the quality of the following twelve tips by whether they “rock your boat” with originality and genius. That’s not the point.
If early retirement planning via smart wealth building is as straightforward as I claim, then this shouldn’t be rocket science. In fact, you probably already know most of what’s in this article.
But before you yawn and click away from the page, you may want to consider whether or not you are living in congruence with each of the following wealth building tips. That’s the key!
You may think you know this stuff already. But if you aren’t talking the talk and walking the walk, then it requires revisiting.
Either you are living in integrity with what is taking you toward wealth and an early retirement, or you aren’t. It’s just that simple.
As you read this article, ask yourself, “Are my daily habits honoring each and every one of these financial truths?” Judging by results will tell you what you really know, and an honest assessment should be a little uncomfortable for most.
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Early Retirement Tip #1: Have a Plan
The first mistake most people make is they lack a written plan to build financial security.
You can’t put the formula for financial success to work for you without a plan to accomplish it.
It may be a simple process, but it won’t happen randomly. You make it happen by taking action. A written plan with goals provides the road map and is a necessary first step.
Financial success is a choice. It results from the many small decisions you make each and every day. Without a plan and goals to achieve wealth, your life is like a sailboat without a rudder: it just spins in circles without definite direction.
Plans and goals provide the necessary context to focus each and every decision in your life with purpose.
Related: Why you need a wealth plan, not a financial plan.
Time spent writing goals and building a step-by-step plan to achieve those goals is an investment in your future. It reduces wasted effort, increases efficiency, produces amazing results, and best of all, costs you nothing.
Every research study on goal setting and planning support the same conclusion: it’s a remarkably effective tool.
For example, a 30-year study by Harvard Business School showed how the 3% of participants with written goals produced 10 times the results when compared to the 83% of participants with no clearly defined goals. A 10-fold improvement is a life-changing difference worth planning for.
To get results like that you must create written savings and cash flow goals, and you must formulate a plan complete with specific action steps to achieve those goals.
Your plan can use the investment vehicles of paper assets, business, real estate or any combination thereof.
There is no single right answer to wealth building despite what the latest guru of the day is telling you.
Instead, you must formulate a plan specific to your unique interests, skills, resources and abilities. No two people’s plans should be identical since each person’s situation is unique.
You want to formulate your plan based on three separate financial stages during life:
- Aggressive accumulation during career
- Continued growth of assets during semi-retirement
- Spending down accumulated assets during final retirement when all earned income ceases
How you manage your income and assets will vary with each financial stage of life thus requiring a different plan.
The overall objective of your plan is to utilize your career and semi-retired years to build residual income in business, real estate, and/or paper assets so that your passive income exceeds your living expenses.
When you reach that point you are infinitely wealthy as long as you continue to grow your income and assets in excess of inflation. You will always feel abundant and never outlive your income.
Achieving this goal may sound nice, but results like this only occur when you build a plan and take the necessary action steps to achieve the result.
Are you doing that?
Ensure you are working toward that goal with the following action steps to financial success.
Early Retirement Tip #2: Lifestyle Lags Income
Most people prefer the trappings and illusion of wealth over the freedom of actual wealth. They want to look wealthy rather than be wealthy.
Don’t believe it?
Just look around you and see how many people are in debt compared to how many people are wealthy. Most people choose lifestyle over financial freedom and violate the first principle in the wealth building equation: accumulate assets.
They spend instead.
The problem is you will never become rich by spending money. You must control your spending so that your lifestyle lags behind your income. This will create available capital for your investment activities.
If you know how to spend less than you get, you have the philosopher’s stone.
– Benjamin Franklin
The life cycle of building wealth dictates the most important factor early in your wealth cycle is your rate of savings or asset accumulation.
At some point in the wealth building process, you cross a threshold where the return on your assets is more significant than how much you add to them, but that is much later in the equation.
However, in the early stages you must build the assets so that you have something to grow. For most people that starting point is to save money.
Whether you own your business or work as an employee, you must think of each dollar as a little soldier on the battlefield of your wealth. Every time you spend that dollar on consumption instead of investment, the soldier dies.
But when the soldier is invested he produces…