The elusive Nut, this is the key to Financial Independence, early retirement, peace of mind… the Holy Grail of Finance! The Nut is the core of assets required to generate sufficient positive cash flow for a person to switch away from the rat race job of the the 9-5 and start living the life of your dreams.
This week I have been considering how to visualize and define ‘The Nut’ and therefore be able to craft a plan to get build it and create that lifestyle. I think I went through the process in not the most scientific manner initially, but as it builds and takes shape the numbers are getting drilled down upon nicely. The entire point of ‘The Nut’ is that it is an arbitrary number anyway, so you might as well pull something out of the air and then start looking to see what your lifestyle would be like once you achieve it.
My plan is for Financial Independence by 40 (only 4 more years to go eeek!) and I have a long road to travel to get there. Here is what I would like to have build as an asset portfolio by 40:
Checking/Savings of $5K/$20K as an Emergency Fund
Real Estate Investment Portfolio Valued at $1M generating approximately 10% per annum in rental income
Retirement Savings Account – Tax Deferred $250K
CD Ladder $50K (5 year 5 x $10K)
Taxable Brokerage Account – Taxable $300K 60% Indexed Funds/ETF 40% Stocks
Here is where I am today
Checking/Savings of $2K/$2K
No Real Estate Investment
Retirement Savings Account $30K
CD $500
Taxable Brokerage Account $25K
Clearly, to get ‘The Nut’ I have to a lot of Earning and a lot of Saving, the real secret to success will be knowing when and how to leverage investment products and good debt to gain that Financial Independence as quickly as possible. It really is a time game. Next I’ll be planning the route and the income levels required to achieve this.
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