Do you dream of working because you enjoy your job, not because you rely on it for a steady income? If so, you may want to consider establishing financial independence and retiring early (FIRE) as your personal financial goal.
Table of Contents - Real Estate Investing is the Fastest Way to Unlock FIRE
Achieving FIRE allows savvy people to make the most of the best years of their life. If you’re financially independent, you can travel at will. You can work in a field that allows you to pursue your passions and invest time and money in your hobbies. Also, with FIRE you can do more of the things that bring you the most pleasure out of life.
Reaching FIRE is a challenging endeavour. It consists of careful budgeting, lifestyle changes and savvy investment decisions. With the right amount of preparation, however, you can reach FIRE.
Using real estate to get FIRE
Investing in real estate is one of the fastest ways to generate passive income and achieve FIRE. Savvy investors know that even a small collection of rental properties, when managed correctly, can be an integral part of their path toward FIRE.
It’s important to realize there’s no one, single investment or lifestyle change that will help you achieve FIRE. Investing in real estate, however, is likely one of the most significant steps you can take toward FIRE. Making a series of well-planned real estate purchases could help you take meaningful steps toward early retirement.
If you want to make real estate investment a component of your FIRE strategy, there are a few things to bear in mind:
Find your target investments
Firstly, identify the combination of passive income and savings necessary to help you achieve FIRE. It’s important to set a realistic, attainable goal for your target. This number looks different for everyone, depending on your lifestyle, expenses and retirement plan.
If you’re hoping to find an affordable cabin to spend your days in after quitting your job, then you won’t need as much passive income as you would if you were planning to travel the world.
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Identify the necessary amount of real estate
Once you know how much passive income you’ll need, you have to identify the amount of real estate you’ll need to help you achieve FIRE. You should plan on holding your real estate assets long-term and renting them out to generate income as part of your FIRE plan. While it may be tempting to purchase one or two pieces of high-value real estate assets, it may make more sense to diversify your assets across several properties.
Make lifestyle changes
Next, you’ll have to consider making lifestyle changes to help you maximize your savings and investment potential. Making strategic choices, like purchasing used cars rather than new ones, will help you ensure that you’re able to save the most money. Reducing travel, and using credit card benefits to travel when necessary, will help you free up the capital necessary to invest in your future. Cutting grocery bills, using cheaper cell phone service and cutting other household expenses will allow you to trim the fat in your budget and get you closer to FIRE.
Establish other investment opportunities
While real estate investment should be a core component of your FIRE strategy, it’s important to realize that it shouldn’t be your only passive income stream. You should establish other passive income streams through stock and bond investments. Index fund investments are an extremely reliable way to increase the value of your investments. Additionally, you should place as much money as possible in high-interest, tax-exempt savings programs, like retirement pension funds.
Going beyond real estate
Many other steps are necessary to achieving FIRE that you should keep in mind. The 4 percent rule states you should only withdraw 4 percent or less from your nest egg each year. This will help you ensure you remain on-track towards FIRE.
Carefully following these recommendations can help you achieve FIRE, and set you up for long-term independence and stability moving forward. Fiscal freedom may seem like it’s a long way off, but, when you establish strategic goals and make savvy investment decisions, you can bring yourself closer to FIRE.
Regardless of what your journey toward FIRE may look like, real estate must play a critical role in your financial independence strategy. Investing in rental properties can help you grow your passive income and free up the capital necessary to make other long-term investments. Every smart financial move you make today will help you achieve your FIRE goals.
Passive Income to Retire Early for Life | Get Rich | Retired Fast | FIRE
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