: Cosmo P. DeStefano
: Wealth Your Way A Simple Path to Financial Freedom
: Houndstooth Press
: 9781544529851
: 1
: CHF 7.30
:
: Recht, Beruf, Finanzen
: English
: 236
: kein Kopierschutz
: PC/MAC/eReader/Tablet
: ePUB
Journey through your Life's Complete Financial Arc with Wealth Your Way. Accumulate wealth, achieve the pinnacle of financial independence, and then comfortably spend your wealth as you retire on your own terms. Financial independence buys you the most valuable asset on the planet-freedom. The freedom to spend your money, and more importantly, your time, however you see fit. Still, reaching financial independence requires more than mere investing. Unlike other books that try to tell you what to think, Wealth Your Way teaches you how to think about growing your wealth, with real-life examples of the pitfalls you might encounter and strategies to avoid them. As with most things in life, the more carefully you plan for financial independence, making course corrections along the way, the less you'll need to worry about the outcome. Live your best life today with the satisfaction and comfort of knowing your financial future is in good hands-your own.

2

Charting Your Course

“You cannot escape the responsibility of tomorrow by evading it today.”

—Abraham Lincoln

“What’s your number?” If you ever have more than a casual FI conversation with friends or acquaintances, one of you is very likely to ask or be asked the somewhat intrusive question, “What’s your number?” The questioner is trying to assess the total FI Portfolio balance needed to achieve financial independence. As we’ve discussed, the answer is individual-specific, but that doesn’t stop the inquisitiveness. Twenty-five years ago, I asked the question of a friend, call him Billy Bob, and the response was “$2.5 to $3 million.” Years later, toward the end of Billy’s very successful career, I again asked the question, and this time Billy Bob responded, “$12,000.” Huh?

You will spend your entire career accumulating wealth to get to your number. And someday along the way, hopefully no later than today, you are going to come to the critical realization that getting to your number (i.e., the desired total balance in your portfolio) is only halfway on your FI journey. You then need to take withdrawals from your FI Portfolio to meet your spending needs for the remainder of your life. Billy Bob realized that having a $3 million portfolio is all well and good, but it’s ultimately the monthly cash withdrawals that will pay for his living expenses. And how much can be safely withdrawn without running out?

Just as you plan your monthly contributions, you need to project and plan those withdrawals. You will build your FI Portfolio monthly and then you will withdraw from it monthly. Those withdrawals will be your version of Billy Bob’s $12,000per month.

“Liberty means responsibility. That is why most men dread it.”

—George Bernard Shaw

There are two basic ways to approach planning and managing your FI Portfolio. On one hand, you can simply start investing, hopefully accumulating wealth for a bunch of years until one day you proclaim, “I have enough and I’ve had enough!” You then quit your job and start withdrawing every month, hoping the money doesn’t expire before you do. (Can you hear Doris Day singing “Que Sera, Sera”?) I’m not sure about you, but this approach would most certainly leave me with some sleepless nights.

On the other hand, you can start investing while also projecting out what your FI Portfolio balance might look like on your FI date. You then take the additional step of projecting how to withdraw a monthly amount and how long those withdrawals might last. You effectively map out your projected cash flows over your entire life (both the accumulation and the withdrawal stages)—your Life’s Complete Financial Arc. What is the biggest advantage of doing this full lifecycle analysis now over the “whatever” approach? If you don’t like the projected answers, you have time to course-correct.

We know our ultimate goal is financial independence,