How To Become Financially Free With These 2-Steps
By: Rafael Eliassen
Tags: Money, Personal Finance, Wealth Management, Financial Planning, Money Management

Two Investments To Jumpstart Your Financial Life

I have made you aware of the power your decisions hold. Now, I want you to make better decisions. I will list out two ways to invest your money to start becoming financially independent. These are beginner’s steps that I recommend to my clients. If you are uncomfortable with the idea of spending money, then you may skip. You are not yet ready to change your financial life.

1. Apply a Wealth-Tax on Yourself:

To make money from investing, you don’t need to day trade or be an expert in stocks. You only need the basics. I read the book Unshakeable by Tony Robbins. He shares the story of a mail-man who never earned more than $14k/year. But retried as a millionaire. How? He applied a wealth tax on himself. Every month, he took 20% of salary and invested it in an Index Fund.

Index funds are a group of 500-top US companies. Some of them are Apple, Facebook, Alphabet and Amazon. Let’s say you invest $100 in index funds. Portions of $100 will proportionally get invested in all the listed 500 companies. It’s supposed to balance everything out, if one company goes down, others in the list may cover the losses.

I invest in S&P 500 Index Funds. They have given me a return of 10–12% every year. With the power of compound interest, once I have enough money in there, I will be able to live off my dividends.

What is compound interest? If you save $1000/mo for 25 years, you will have $300,000. But if you invest $1000/mo at a 10% compound return for 25 years, you will end up with more than $1,244,159. It’s how the rich get richer. Crazy, right?

Now, if you do the same for 5 years more, you will have $2,080,292.

The more early you start the more you will earn. You can’t beat investing early even with more money in the future. Now, you may think, it’s too good to be true. But it’s basic maths you can calculate it here. And this not only my advice but of the greatest investor himself;

“A low-cost index fund is the most sensible equity investment for the great majority of investors. By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals” — Warren Buffett.

Why aren’t people investing then? Unawareness and Fear. I have taken care of the first. You must take care of the latter. I am not saying to invest right now. Or ever. Keep your fear. But I urge you to research. Read books and understand the basics of this (For Index Funds, I recommend Unshakeable).

And start small. When you invest your first-order consequences may be of doubt and risk. There is a learning curve. You have to stick with it for the long-term. But third-order consequences include, never worrying about money ever again. Don’t trust me, start researching.

2. Invest Money In Your Skills

There is another investment that makes money. This investment is of time, effort and money not on the outside but yourself. It’s a method to increase your earning potential. For most people, increasing their income is a dream. That’s why they fall prey to get-rich-quick schemes because they see no other option. But that’s not how money works.

Money grows but really slowly. As slow as a seed would turn into a forest. When you start, the progress isn’t visible. That’s why people assume it doesn’t exist. When I started on Youtube in 2014, I made 0$ for six-months. But in the next six months, I made my first $10,000. Behind this was me, uploading a daily video. Later, I improved my coaching and business skills and it helped me make six-digits. Job or Business, in the initial phase, be prepared to put in work for no upfront reward.

How can you work on yourself? It comes down to how you earn money. If it’s a job-look at what top-paid professionals in that field do. Where do they learn? Who do they ask? Go there. If it’s business, look at successful businesses. How do they market? What do they sell? How do they improve their products and services? Improve and innovate.

To improve, you can spend money, this can act as a fertilizer and speed up your process. If I didn’t invest in learning more about Youtube, then it would have taken me 2-years to earn my first income. Spending money cuts back your learning curve. Buy that $100 Facebook ads course. Buy that finance book. Hire that coach.

I get paid what I paid in the market because I have learned from the best. I invested in high-end coaches to improve my skill-set. Which helps me grow my client’s businesses. Sometimes, if the coach is right, you can get a 527% ROI on the money you spend. Don’t work with me, but find someone who’s the right fit for you.

Investing money in your education can be tricky. And sometimes scarier. Because unlike Index Funds, you can’t track and calculate your returns. You can’t know the ROI of the $1000 you spent on a business mentor or digital agency. You have to take a blind leap of faith and use your best judgement. In this, the second and third-order sequence can give you clarity.