Investment and Financial Freedom

If you have noticed, I have started off sharing a number of post in my blog pertaining to investments, where to invest and emphasized the importance of understanding investment risks before making the decision to invest. You probably noticed I have not mentioned much on financial freedom and what is the connection between the two. Well, I am sure a number of you have figured this out but let me go back to the raw basics.

To start off with, "financial freedom" simply means a state where a person is able to live a desired lifestyle without having to worry about his or her financial situation. Wouldn't it be like a dream comes true if this happens to you? Most people dream of achieving financial freedom but remains a distant dream in reality. In truth, it is not easy to achieve financial freedom unless you are very disciplined to maintain a set of financial goals, a comprehensive financial planning, TAKE ACTIONS and NEVER GIVE UP! Of course alternatively you could still do it if you were born with a silver spoon....unfortunately most people like myself probably have no such luck or at best, a "plastic" spoon may be! So stop dreaming and be REAL!

Let just say you manage to set the goals (has to be realistic!) and a comprehensive plan, there is still a big missing jigsaw, i.e., how do you achieve it? Invest in a business is a great way to gain wealth and to achieve financial freedom. However, you must have a sound business plan and the sheer persistence to execute the plan, not to forget you are also faced with fierce competition. Essentially what you should look for is an investment that generates at least twice the return of your local bank's fixed or time deposits. More importantly, the returns must be sufficient to meet your financial goals and ultimately achieve financial freedom.

What happens to those who are not so business-savvy, do not have the desire to run their own business or do not have the necessary capital? You can opt for investments in capital markets such as stocks, bonds and mutual funds (unit trust). These investments not only offer potential capital gain, but also dividend and/or interest income. e.g, invest in stocks that generates 6 to 8% annual dividend yield is by itself much better than putting your money into Time Deposits that offer 3% interest. Alternatively you can go for property investment, as properties generally offers the best hedged against inflation, and offers stable potential for capital gains and rental yield.

Most people think that you need a huge capital to invest in order to make money, especially lots of money! To a certain degree, I agree eveyone does need some form of capital to invest, just like starting a business. But do you necessary need huge capital to start off with? The answer is no as the reason being you can always start small, and make your way UP. At the same time, keep a discipline to encourage more savings, and cut down on your expenses.

In my later post i shall explore in more depth some latest ideas achieve financial freedom.