You wouldn’t abandon your motorcycle on the open road, yet so many of us are abandoning our financial future without even realizing it. I'm sharing a story of the time I accidentally made $900 in investment dividends and how it made me realize that investing equals freedom: for my bank account, my time, and my future. Investing and motorcycles have a lot in common, surprisingly, so I'm putting this conversation in that context to make it more fun and interesting. Discovering $900 in dividends was like when you take a new route on your motorcycle and discover an incredible new place you want to go back to again and again - you just need to figure out the route first. And at the end of the episode I'll share with you a house and packing update and the manifestation principle that is giving me freedom this week.
Here's how we're investing for financial independence:
1. Look at your bank account and figure out what you can afford to set aside on a monthly basis. If you can do $20 - great. If you can do $20 a week, even better. It's less about how much money, and more about time in market. The sooner you invest the more you can take advantage of compounding and increase your investments over time.
2. Open a brokerage account. Something like Fidelity - check what is appropriate for your country. Set up automatic deposits from your bank to this brokerage account. Make sure the transfer hits within a day or two of getting paid. Pay yourself FIRST by investing.
3. Pick your investments - Warren Buffet recommends low-cost S&P 500 index funds for beginners - which means by buying one stock you actually buy the market and get dividends automatically. But remember to reinvest those dividends!
4. Next thing, keep doing it - rain, hail or shine. Monthly investing no matter the economic conditions is called Dollar cost averaging (another strategy recommended by Warren Buffet). Slow and steady investing ain't glamorous but neither are motorcycle helmets.