By William Tan
Simple Steps to Financial Freedom and Wealth Building
STEP 2: Achieve Financial Freedom – Choosing Your EscapeVehicle
Do you want to achieve financial freedom? For most people,this is constantly on their mind. If you are readingCashFlow Avenue’s 7 Simple Steps to Financial Freedom andWealth Building, chances you are looking for ways to getout of the rat race and to achieve financial freedom.Unfortunately, it isn't always as easy as it sounds.
With your Financial Goals firmly defined in Step 1, youwould now have to choose your “escape” investmentvehicle. There are plenty of investment vehicles in theworld. Let’s name a few most common form of investment –fixed deposits, gold, bonds, real estate, stocks, stockoptions, mutual funds, starting a business on your own, etc.
From experience, you might probably be able to tell thatevery one of the above contains risk, except for fixeddeposits. Profit, simply defined, is your reward forplacing taking risk on your assets.
On surface, fixed deposits, look the safest form ofinvestment but are probably the most risky becauseinflation rates are consistently higher that what the bankwould pay you – slowly eating away your purchasing power inyears to come. So, in truth, while your bank account isgrowing in numbers, you are actually becoming poorer. Ifthere is no inflation (which will never happen in the longrun), fixed deposits are still not the best escape vehiclebecause it takes just too long to appreciate. Who wouldwant to wait 30 years before they can be rich?
Without getting involved into too much detail, let’s jumpstraight into action. When choosing an escape vehicle, youprobably would want to set a few criterions to screen outwhat will and will not work for you. The ideal escapevehicle or business should provide:
Liquidity – allows you to cash out within a few days.
Leverage on Your Capital – using only your capital can beslow. Select a vehicle that provides leverage thatmagnifies only returns but not losses.
Fast Results – should see return on investment within the 1st month.
Easy to Set Up – should take no longer than 1 month tostart.
Predictable Monthly Return on Investment (ROI) – be able toforecast accurately your monthly
Low Risk – consistent and provides a high percentage forsuccess
Profit with Time – with each tick of the clock, you shouldbe making money.
Utilizes The Power of Compound Interest – snowball yourreturns to accelerate your wealth building process.
After running these criterions over the choices ofinvestment available, most vehicles don’t make the cut. Ofall, only 2 investment vehicles would make the cut.
Stay tuned for Step 3 for the Best Escape Vehicle.
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