After yesterdays post on "How Much Should You Be Saving Annually" you probably realize how much you underestimated the amount of money needed to invest to live in retirement. As I see it, three options arise:
- Increase current income – if you are going to be a passive investor, you are bound by the economic factors of 8% annual return, 3% inflation, and 4% withdrawal rate, you simply must earn more money to allow for today’s requirements and tomorrow’s future
- Become an active investor – if 8% won’t get you there, you must learn different strategies for netting a higher return. Real estate or investing in businesses could be an option.
- Build a business – one of the great advantages of being self-employed is the autonomy you have to build something of residual value. When you are an employee, in most cases, you work for today’s wages and the day you retire your income stops. By building a business, you open the door to producing an asset that could be sold at retirement for a lump sum payment or residual income.
What you should not do is:
- keep doing what you are doing
- keep hanging out with the same people who are also not on track
- keep reading the same things you have been reading
- keep watching the same things you have been watching
- keep spending your time doing the same things you have been doing
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