When you’re in your twenties, that beer and that bikini on that college chick you’ve been obsessed with, look pretty awesome. What will suck though is that in ten years, there’s a strong chance these girls will be with guys that are twenty years past their current age, willingly, that is.. Call them gold diggers or whatever you may, but the truth is that every person craves and needs stability. Working a 40 hour work week and waiting for your social security income to come to your rescue is like operating on a fatal wound. Do yourself a favor and think about sipping margaritas by the beach from 30-75 as opposed to doing that during 18-28 because if you take the latter of the two approaches, there’s a strong chance you’ll be seeing your desk everyday until your 65.
Here is a step by step guide to retiring by 35 if you start your working career at 22-24. The preconditions are that you earn atleast $35,000/year and have a stable paycheck on W2 or 1099.
- A) Take the first 5 % of your monthly income and stash it away from the very moment you have taken up a full time job. After a year, make an appointment with your financial advisor. Create yourself a diverse portfolio – your financial advisor should be able to set this up. When deciding which financial advisor to select, be sure to ask him the following questions/areas of concern:
1) How much you are comfortable investing
2) What would be a moderately risky portfolio
3) What is my ROI (Return on Ivestment) for the portfolio I currently have
4) Monitor your Portfolio and keep up with your advisor every 60 days or so.
- B) Then, take the next 5% of your income and stash is away for real estate every month. Once that account hits a 24 month maturity level, you are ready to start for the purchase of your first property. You do not need to be financial whiz or a real estate guru to understand this. First, identify p and coming neighborhoods with high demand along with easy access to transportation. Narrow your search further by factoring in your budget and voila! You have the opportunity to buy $200,000 properties with a down payment as little as $10,000 which is barely breaking a sweat. Be mindful of the fact that properties that need minor TLC (paint, flooring changes) are reasonably cheaper and are more preferable to buy because of the bargaining chip you have. (See Home Purchasing 411 for full details on the step by step procedure). When you have gone through the purchase process, get ready to furnish your apartment from your local furniture shop or Bob’s discount furniture. Find reasonably priced ($750 & under) bedroom sets, TV’s & couches. Fill your place with a lower end speaker, an accessible wi-fi and invest in proper lighting.(See Airbnb 411 & Home Purchasing 411) Once you’ve done so, get ready to rent the house out on Airbnb or Home away from home.
- C) Save the money you get for each reservation on Airbnb and put that money into a separate account. On average, if the place is clean and well furnished you can see returns of $12,000-$20,000 a year. Do this for the next 2 years.
- D) At the end of your fourth year, take the money that you saved from the earnings of your primary home and repeat steps B & C. Your residual income has basically doubled.
- E) In addition, starting from year 3 of your career, take either of the following two steps:
IF You’re investment knowledge is astute, take a larger risk (15% of your current salary) and invest in mid-range stocks whose returns have been stable as a company and after reviewing their technical charts OR start investing into the foreign exchange market. (See Stocks & Forex 411)
IF you are not financially savvy as most of us aren’t, start to take advantage of your employers 401k plan in order to start receiving double the money you save. (See 401k 411) As most of us know, most employers who offer a full time job provide a match upto a certain percent on every dollar you wish to save for retirement. Using this method will prove to be invaluable in years 5 through 10.
- F) By year 6, you should be able to repeat Steps B & C again.
- G) By year 7, see how your portfolio & 401k is doing. If the proceeds are well in both departments, proceed to take out half of your savings from these two sources. Purchase 2-4 more properties under the assumption that the market conditions are favorable and that the properties have not astronomically risen in price.
- H) By year 8, you should easily start to see $100,000-$130,000 in residual income from properties under the assumption that you didn’t save anything else from your full time job.
- I) You now have successfully earned a full 6 figure salary without working for an employer. You can choose to take the earnings you currently have and build on other projects such as a small business, pursue your hobby or for an entrepreneur, start to look into promising franchises that require no more than $150000 in startup capital.
By the time you are married or have your first child, you can be ::drum rolls:: RETIRED!