you're reading...

Millionaire Mind

How To Retire Young – part 2

In the last article I wrote about how to retire in 77, 38 and 22 years. I understand that may not seem like ‘Retiring Young’ but consider how many people are going to retire with nothing!

Lets do another quick summary of what it means to be retired. The definition I like is this: when your passive income overtakes your expenses, you are officially retired.

Did you catch the important part of that phrase? It’s PASSIVE INCOME. Regular income above your expenses is not retirement although it does mean you’re smarter than the average person (net disposable income is -$0.01 – meaning the average person is spending more than they make.)

So what types of income count as passive income?
Here’s a quick list:

  • Real Estate income
  • Portfolio income
  • Cash flow from businesses

Basically, if you can make money from an asset without actively managing it, you are making passive income.

How To Retire in 10 Years

OK, here’s where it starts to get tougher. 10 years goes by in a flash so if you haven’t planned out your income streams and know what you’re investing, you probably won’t make it. Set your goals and follow them.

To achieve this goal, you need to be a little more aggressive in your investing both through additional education and achieving higher returns. That being said, the basics will still stay the same.

1. Real Estate Investment
Here is a sure way to create the income you need for retirement and keep the assets for the same income level for years to come.

The strategy comes down to 1. Buying for cash flow and 2. Duplicate your success.
Keeping with the same assumptions in part 1 on increases in cash flow and appreciation, you would still need to increase your level of commitment and leverage your ongoing purchases more effectively.

This means that you need to withdraw equity when rates are favorable to further invest in additional properties. You also need to hire a property manager (or multiple managers) because you’re no longer dealing with only 3 or 4 properties. This also means that you need to follow Rich Uncle Moneybag’s advice and trade up some of those green houses and purchase the read hotel (or other multi-unit properties).

What does this mean for you? Again, it means staying educated. Learning new ways to generate cash flow from real estate (ie. coin laundry, video games, parking spaces, rent guarantees) and keeping your money in the most optimized assets.

2. Portfolio
This is a little more difficult to achieve without a base level of invested income to begin with. With real estate, you can start with a few thousand dollars or some OPM (Other People’s Money.) With a portfolio, you pretty much need to create it yourself. Even with $100,000 in stock or equivalents, a 25% return each year still only nets 25,000 income. After 10 years you would have a portfolio worth about $1,000,000.

I know, getting 25% is very difficult right? Well there are tools that you can use once you have larger amounts of money that allow you to achieve those returns.

How To Retire in 5 or Less

If you thought retiring in 10 years took a lot of work, not try to think about how much planning and thought it will take to cut that time in half!

Retiring in 5 years is beyond the simple use of real estate or portfolio income. To retire in this time-line, you need to create a business that will generate cash flow for you and integrate that cash flow with numerous other avenues of investment.

Basically, in order to generate this type of income you are going to be putting in some long hours in the beginning but, over time, you will be able to reduce it and eventually work yourself out of the system all together.

**Note to reader – my internet connection was cut prior to the auto-save on this section. Hopefully I’ve learned something since last night! Oh the joys of high speed.

I began to think about my own online businesses. A couple of them were started a few years ago and, while they haven’t put me into the realm of the elite, there has been some income and it has grown over the years. In 2 to 3 more (hitting the end of the 5th year) I hope it will be making a significant contribution to my overall income streams. The nice thing about them is that I really don’t need to check them at all. On one, I didn’t even look at it for a month and the income continued to come in.

You need to think of your own businesses in this same way. Remember, if you can find (or create) and niche you’ve got 6 Billion people on the planet as an overall market. There’s a good chance that even a few 100,000 people may be interested in what you’ve got.

That being said, just because the internet is huge these days doesn’t mean that there are not huge opportunities to create businesses offline. Think outside the box and aim high.

How To Retire Tomorrow

So you jumped ahead did you? Wouldn’t it be nice if it was possible to retire tomorrow without the necessary cash flow or paper wealth? Here’s how you can still do it: Change your definition of ‘retirement’. Instead of thinking of retirement as having $1,000,000 in the bank or residual income (cash flow from assets) greater than your annual expenses, perhaps you should choose volunteering in Africa or a religious life. Other than that (and winning the lottery) I can’t offer a solid way to retire tomorrow. Too bad you slackers. Thanks to

If I just added 20 years of retirement to your life, consider my Full Feed RSS.
Already signed up? Suggest this post to a social network that you’re a part of.