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The #1 Wealth KILLER

  Albert Einstein once referred to compound interest as the 8th wonder of the world. Saying he who understands it earns it; he who doesn’t pays it. And he couldn’t have been more right. Today we’re going to be looking at the miracle that is compound interest and how can protect my retirement as it relates to the #1 killer of your wealth. Let’s get started. So the #1 wealth killer is debt. Yeah, I know, big shocker. But it’s really true and today we’re going to look at why that is. The truth is, having too much debt can put a limit on your greatest wealth-building tool – your income. While it may be tempting to invest rather than pay off your debt, compound interest is a force to be reckoned with. In fact, I recently dedicated an entire video to its power. Financial advisors often use the example of Jane, who invests $100 per month ($1,200 per year) from the age of 18 to 25 and earns an average of 10% per year on her investments. By the time she stops investing at age 25, her nest egg will be worth just over $15,000. However, before you start investing, it’s important to consider your debt load. Here are some reasons why paying off your debt first may be the smarter choice: High-interest rates: Many forms of debt, such as credit card debt or personal loans, carry high-interest rates that can negate any potential investment gains. Risk: Investing always carries some degree of risk, and if you have high levels of debt, taking on additional risk may not be advisable. Stress: Debt can be a significant source of stress and anxiety, which can have negative impacts on your overall financial well-being. Freedom: Paying off debt can give you a sense of freedom and control over your financial situation, allowing you to make better long-term decisions. That being said, paying off debt doesn’t mean you can’t invest at all. Here are some steps you can take to balance debt repayment and investing: Create a budget: Determine how much money you can allocate towards debt repayment and investing each month. Focus on high-interest debt: Prioritize paying off high-interest debt first, as this will save you the most money in the long run. Consider employer-matched retirement accounts: If your employer offers a retirement plan with a matching contribution, take advantage of it. This is essentially free money that can help you save for the future. Seek professional advice: A financial advisor can help you create a personalized plan that takes your unique financial situation into account. In conclusion, while compound interest is a powerful tool for building wealth, it’s important to consider your debt load before investing. Paying off high-interest debt should be a priority, but that doesn’t mean you can’t invest at all. By creating a budget, focusing on high-interest debt, taking advantage of employer-matched retirement accounts, and seeking professional advice, you can balance debt repayment and investing to achieve your financial goals. Over the course of the next 45 years, those investments will continue to grow. Assuming that it continues to grow at an average annualized rate of 10% per year she will end up with $1.1 million in her portfolio at age 70. That’s all achieved with eight years of investing $100 a month. Jane becomes a millionaire by investing $9,600 of her own money. On the other hand, we have John. John doesn’t start investing at age 18. Instead, he starts at the age of 26 (just after Jane had finished all of her investing). He also invests $100 a month. However, unlike Jane, he does it from the age of 26 all the way until the age of 70. John invests $54,000 of his own money over the course of those years and ends up with a nest egg of just under $950,000. So John ends up with approximately $150,000 less than Jane. This is in spite of the fact that he invested six times more of his own money than she did. It’s no secret that excessive debt can put a damper on your ability to build wealth using your most powerful tool – your income. While the concept of compound interest is widely known to be an effective way to grow your money over time, paying off debt may seem like a counterproductive move. However, it’s important to remember that not all investments are created equal, especially when you’re dealing with debt payments. Let’s take a look at an example: Jane invests $100 a month for 7 years starting at 18 and ends up with a net worth of $1.1 million at the age of 70. Now, let’s say John starts investing $100 a month at the same age and earns an average of 10% per year, just like Jane. Even if John continues to invest until he’s 100 years old, Jane would still have more money than him, and her lead would only increase with time. In fact, at the age of 100, Jane would have $19.2 million to her name, while John would have $16.7 million. This just goes to show the power of compound interest, as famously called by Albert Einstein as the 8th Wonder of the world. However, when it comes to investing, it’s important to consider the context of one’s financial situation. Comparing someone who is debt-free to someone who is not will not provide an accurate comparison. While Jane invested $100 a month for 7 years, John was dealing with debt payments and didn’t invest anything for those first 8 years. But what if John managed to free up an extra $200 a year, or less than $17 a month, by paying off his debts? In that case, he would come out ahead of Jane by the time they’re both 70. And if he freed up more money than that, he would pass Jane even earlier. So, what’s the takeaway? While compound interest is undoubtedly a powerful tool, it’s important to also consider the impact of debt on one’s ability to invest. Paying off debt and freeing up funds for investment can ultimately lead to greater financial success in the long run. And given the state of the average American debt situation, $17 a month in payments is a remarkably conservative estimate. According to articles in business insider, CNBC, and Forbes the average American debt situation looks like this: About $9,000 in credit card debt which is often split between several cards. $30,000 in student loan debt. And assuming a used vehicle was bought a little over $21,000 on a car loan. That’s around $60,000 in total debt. If we assume 18% interest on the credit cards and 4.5% interest on the other loans and terms of 5 and 10 years on the car loan and student loan respectively, the minimum payments could be roughly $900 a month. Freeing up that much cashflow could make a tremendous difference in the previous example. Let’s look back at John’s situation from before and assume that his household’s debt situation was that of the average American. John uses his $100 a month of excess cash flow to pay off these debts.   Based on the numbers it would take him roughly six years to become debt-free. This is assuming he did not work any extra hours or sell anything to get out of debt faster. Once he was debt-free he would have almost $1,000 a month left over to invest. If he starts the process of becoming debt-free at the age of 18 when Jane was starting to invest he would have become debt-free by his 24th birthday. If he then turned around and started investing the full $1,000 a month he would actually be further along in his investments by his 25th birthday then Jane was. Granted this is largely because he has invested more money than Jane has at this point. Jane by her 25th birthday had only invested $8,400. That’s quite a bit less than John’s $12,000 but think of the potential payoff of this down the road if John keepS investing that money.   He’ll also likely be able to lead a much better lifestyle than Jane in the present due to his lower monthly expenses. Jane may eventually equal him in that regard if she gets her debts paid off, but for those first several years after John is debt-free, it is worth noting. Remember, compound interest is an incredibly powerful mathematical force. But it can work just as hard against you as it can for you. So it’s important to make sure that compound interest is your ally in your finances, not your enemy. So with that being said how do we avoid this killer of wealth? First, if you’re lucky enough to not have any debt right now research some ways to ensure that you keep it that way.   If you’re planning to go to college look into ESA or 529 plans. They are ways to start saving for college while lowering your tax burden (which is always a nice perk). Also, look into scholarship opportunities or PSEO. Don’t be afraid to have a summer job and work during the school year part-time. For the record, this can also be a good option in high school to give yourself a head start financially so long as it doesn’t take away from your studies too much. Make sure that you always have an emergency fund. It should contain three to six months worth of expenses so that you don’t have to take on debt for those moments when life happens. Make sure you have insurance for those catastrophes that you wouldn’t be able to cover with your savings. Catastrophic health emergencies are a good candidate for this.   If you’re already in debt, learn about how people have paid off their debts. Then choose the strategy that is most likely to get you (and keep you) completely out of debt. Three of the most popular strategies are the debt snowball, debt avalanche, and debt tsunami. I have done videos on all three of those and they will be linked in the description. The debt snowball is the one made famous by financial personalities such as Dave Ramsey. It has you order your debts from smallest to largest balance and pay them off in that order regardless of the interest rates on those debts. The plus side is the momentum you can build up for yourself by quickly wiping out those bills. The downside is it isn’t the most mathematically efficient way to get out of debt, all else being equal.   The debt avalanche is the more mathematically efficient option if you can stick to it. It has you order your debts from highest to lowest interest rate and pay them off in that order. This is regardless of the size of the loan itself. The upside is the fact that you’ll be paying less in interest. The downside is in some situations it may take quite a while to get rid of that first bill. For those who are more motivated by seeing the balances of the debts themselves going down this may not be much of an issue.   For those that are more motivated by the lowering of bills, this could be an issue in some situations. The debt tsunami has you order your debts from the most emotionally stressful to the least emotionally stressful and pay them off in that order. In some cases, this could mean paying off the largest balance that also has the lowest interest rate first. However in my experience that is not commonly how it goes. Most of the people that I’ve seen use this strategy tend to use it because there are personal loans between family or friends that are causing a lot of stress in the relationship. The person with the debt uses the tsunami to get rid of that loan first and then often switches to a different strategy such as the snowball or avalanche. Which is another viable option for many people. There’s nothing stopping you from starting with one strategy that will help get you going and then switching to another that will work for you longer-term.   I know a lot of people who have started with the snowball to get themselves some momentum and then switched to the avalanche once they were on a roll so that they could save on interest. Another thing I would recommend looking into is the power of the debt snowflake. If you haven’t heard, the debt snowflake is a strategy where you find ways to free up money (or just happened to find the money) that you can put towards your debt payoff strategy. The nice thing about it is it works well with any of the other three strategies I mentioned. While by itself it isn’t game-changing it does help your primary strategy do its job a little better. And as we know every little bit helps. If you need more motivation make sure to check out Dave Ramsey’s YouTube channel and their debt-free screams playlist.   It’s filled with a lot of amazing stories of people paying off loads of debt on various levels of income and getting to see their relief when they are finally debt-free is very inspiring. You might also find their Turning Points playlist interesting. It is essentially interviews of people who have become debt-free talking about what made them decide to go through that process and achieve that lifestyle. I’ll leave a link to both playlists in the description as well.. As found on YouTube Retire Wealthy

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Are Gold IRAs Worth It?


are gold iras worth it a gold ira can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers against other financial assets like paper currency and stocks many financial experts recommend keeping five percent to ten percent of a portfolio in gold how to invest in a gold ira if you want to hold physical gold in an ira the first step is to open a self-directed ira styra one that you manage directly with a custodian the custodian is an irs approved financial institution bank trust company brokerage but many financial services and mutual fund companies who handle regular iras don't do the self-directed version you also need to select a precious metals dealer that will make the actual gold purchases for your ira your custodian may be able to recommend one keep in mind that not every self-directed ira custodian offers the same investment choices so make sure physical gold is one of their offerings before you open an account you can set up the stira as either a traditional ira tax-deductible contributions or a roth ira tax-free distributions the next step is to fund the account with a contribution subject to contribution limits of course a transfer or a rollover from a qualified plan such as 401k 403b or 457 plan after that you can select investments for the account and your custodian and metals dealer will complete the transactions on your behalf what's the difference between gold iras and physical gold gold iras enable investment in physical gold as an asset class rather than physical gold in the investors direct possession is a gold ira for seniors worth it if you're looking to invest your funds in a safe low-risk way gold iras can be a great way to do it not only can they protect your retirement savings from market swings seen with stocks and other common investments but they can offer the chance at a slow and steady growth too how does a gold ira for seniors work for seniors gold iras work much as they do for younger investors the only difference you can contribute more annually as a senior or anyone over the age of 50 you can contribute 1 000 more than those on the younger end for a comparison of the best gold ira companies visit https colon slash slash www.buldera401convesting.com gold ira company slash click link in the description below




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What is a precious metals IRA

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Why Retirement Income is so Important


Canada is getting older in 1980 less than 2 A5  million Canadians were over the age of 65 around   9% of the Canadian population recently that  number was over 7.3 million almost 19% of the   population in 1980 the average 65-year-old could  expect to reach 81 now the average 65-year-old can   expect to reach 86 and there are almost 50% more  Canadians aged 100 or older than there was two   decades ago basically more Canadians are getting  older and living longer which poses a significant   challenge for retirement funding traditional  retirement savings have relied on withdrawing   from a fixed amount of capital with some cash  flow from CPP OAS and fixed income Investments   like bonds and gic's however as Canadians live  longer they may expect significant costs down   the road such as long-term care at the same  time most of these fixed income Investments   are paying at rates below current inflation  levels and what about running out of capital   some Canadians are faced with the difficult  and complex choice of delaying retirement or   going back to work compromising the retirement  lifestyle dreams or passing on the cost of care   to the Next Generation attractive and steady  monthly income can help simplify things for   retirees Harvest Equity income and enhanced Equity  income ETFs pay consistent monthly income at rates   above inflation they are RSP and riff eligible  they hold portfolios of established companies   that remain exposed to market growth High income  from Harvest Equity income ETFs can help retirees   offset their Rift payments supplement income  and Live Well into retirement visit our website   for more information on harvest income ETFs for  retirement Harvest income happens [Music] here




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Retirement Planning Home

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Warren Buffett: How To Turn $10,000 Into Millions (Simple Investment Strategy)


you can't really fail at it unless you buy the wrong stock or just get excited at the wrong time and i would like to just spend just a couple of minutes uh giving you a little perspective uh on how you might think about about uh investments as opposed to the uh tendency to focus on what's happening today or even this minute as you go through and to help me in doing that i'd like to go back through a little personal history and uh and we will start i have here up here in new york times of march 12 1942 and i'm a little behind on my reading and if you go back to that time it it was about what just about three months um since we got involved in a war which uh we were losing at that point uh the newspaper headlines were filled with bad news from the pacific and i've taken just a couple of the headlines from the days preceding march 11th which i'll explain it's kind of a momentous day for me and so you can see these headlines we've got slide 2 up there i believe and uh we were in trouble big trouble in the pacific uh it was only going to be a couple months later that the philippines fell but here we were getting bad news we might go to slide three for march 9th uh uh i hope you can read the headlines anyway the price of the paper is three cents incidentally um the uh and uh uh let's see we've got march 10th up there a slide i'm i want to get to where there's advanced technology of slides i want to make sure i'm showing you the same thing that i'm seeing in front of me so anyway on march 10th uh when again the news was bad full clearing path to australia and it was like it the stock market had been reflecting this and i'd been watching a stock called city service preferred stock which had sold at 84 dollars the previous year it had sold at 55 the year before early in the in january two months earlier and now it was down to forty dollars on march 10th so that night despite these headlines i said to my dad i said i think i'd like to pull the trigger and i'd like you to uh buy me three three shares of city certified the next day and that was all i had i mean that was my capital accumulated uh uh over the previous five years or thereabouts and so my dad the next morning um bought three shares well let's take a look at what happened the next day let's go to the next slide please and it was not a good day the stock market the dow jones industrials broke 100 on the downside now they were down 2.28 as you see but that was the equivalent of about a 500 point drop now so i'm in school wondering what is going on of course uh incidentally you'll see on the left side of the chart the new york times put the dow jones industrial average below all the averages they calculated they had their own averages which have since disappeared but the dow jones has continued so the next day uh we can go to the next slide and you will see what happened the stock that was in 39 my dad bought my stock right away in the morning because i'd asked him to my three shares and uh so i paid the high for the day that 38 and a quarter uh was my tick which is the high for day and by the end of the day it was down to 37 uh which was really kind of characteristic of my timing in stocks that was going to appear in future years uh um but uh uh it was on the what was then called the new york curb exchange then became the american stock exchange but things even though the war until the battle of midway looked very bad and if you'll turn to the next slide please you'll see that the stock did rather well you can see where i bought at 38 and a quarter and then the stock went on actually to eventually be called by the city service company for over 200 dollars a share but this is not a happy story because if you go to the next page you will see that i well as they always say it seemed like a good idea at the time you know uh so i sold those i made five dollars on it it was it was again typical of behavior but when you watch you go down to 27 uh you know it looked pretty good to get that profit well what's the point of all this well we can leave behind the city service story and i would like you to again imagine yourself back on march 11th of 1942 and as i say things were looking bad in the european theater as well as what was going on in in the pacific but everybody in this country knew uh america was going to win the war i mean it it was you know we'd gotten blindsided but but we were we were going to win the war and and we knew that the american system had been working well since 1776.


So if you'll turn to the next slide i'd like you to imagine that at that time uh you had invested ten thousand dollars and you put that money in an index fund we didn't have index funds then but but you in effect bought the s p 500 now i would like you to think a while and don't do not change the slide here for a minute i'd like you to think about how much that 10 000 would now be worth if you just had one basic premise just like in buying a farm you buy it to hold throughout your lifetime an independent and you look to the output of the farm to determine whether you made a wise investment you look to the output of the apartment house to decide whether you made a wise investment if you buy an apartment small apartment house to hold for your life and let's say instead you decided to put the ten thousand dollars in and hold a piece of american business uh and never look at another stock quote never listen to another person give you advice or anything of the sort i want you to think how much money you might have now and now that you've got a number in your head let's go to the next slide and we'll get the answer you'd have 51 million dollars and you wouldn't have had to do anything you wouldn't have to understand accounting you wouldn't have to look at your quotations every day like i did that first day i'd already lost 3.75 by the time i came home from school uh all you had to do was figure that america was going to do well over time that we would overcome the current difficulties and that if america did well american business would do well you didn't have to pick out winning stocks you didn't have to pick out a winning time or anything of the sort you basically just had to make one investment decision in your life and that wasn't the only time to do it i mean i could go back and pick other times that uh would work out even greater gains but as you listen to the questions and answers we give today just remember that the over the overriding question is how is american business going to do over your investing lifetime uh i would like to make one other comment because it's it's a little bit interesting let's let's say you're taking that ten thousand dollars and you listen to the profits of doom and gloom around you and and you'll get that constantly throughout your life and instead you use the ten thousand dollars to buy gold now for your ten thousand dollars you would have been able to buy about 300 ounces of gold and while the businesses were reinvesting uh in more plants and new inventions came along you would go down every year into your look in your safe deposit box and you'd have your three ounce 100 ounces of gold and you could look at it and you could fondle it and you could i mean whatever you wanted to do with it but it didn't produce anything it was never going to produce anything and what would you have today you would have 300 ounces of gold just like you had in march of 1942 and it would be worth approximately four hundred thousand dollars so if you decided to go with a non-productive asset goal instead of a productive asset which actually was earning more money and reinvesting and paying dividends and maybe purchasing stock whatever it might be you would now have over 100 times uh the value of what you would have had with a non-productive asset in other words for every dollar you have made in american business you'd have less than a penny by of gain by buying in the store value which people tell you to run to every time you get scared by the headlines or something disorder it's it's just remarkable uh to me that we have operated in this country with the greatest tailwind at our back that you can imagine it's an investor's i mean you can't really fail at it unless you buy the wrong stock or just get excited at the wrong time but if you if you owned a cross-section of america and you put your money in consistently over the years there's just there's no comparison against owning something that's going to produce nothing and there frankly there's no comparison with trying to jump in and out of stocks and and pay investment advisors if you'd followed my advice incidentally or this retrospective advice which is always so easy to give uh if you'd follow that of course you're there's one problem buddy your your friendly stock broker would have starved to death i mean you know and you could have gone to the funeral to atone for their fate but the truth is you would have been better off doing this than than a very very very high percentage of investment professionals have done or people have done that are active that it's it's very hard to move around successfully and beat really what can be done uh with a very relaxed philosophy and you do not have to be you do not have to be you do not have to know as much about accounting or stock market terminology or whatever else it may be or what the fed is going to do next time and whether it's going to raise rates three times or four times or two times none of that counts at all really in a lifetime of investing what what counts is is having a a philosophy that you've that you stick with that you understand why you're in it and then you forget about doing things that you don't know how to do



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401K to Gold IRA Rollover

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Day in the Life of a Wealth Management Analyst | JPMorgan Chase & Co.


[Music] hi i'm marcela i am currently a banker analyst in the jpmorgan private bank brazil team in the new york city office i work in the private banking team we help manage our clients wealth when we do like the most basic things that you know credit cards and helping with their daily needs as well as to section planning um structure and like complex lending operations what i like the most about my role clients recognize me they call me and you can have a conversation as if you've known them for years my manager is constantly giving me feedback being our voice giving us plenty of opportunities i did a presentation on my summer internship and this slide went to mary erdos the ceo of acid and wealth management she emailed me saying it was like a great deck and like i still have that email saved in my folder my day is intense busy and unpredictable practicing yoga helps you deal with these emotions in the sense of try to stay calm born and raised in sao paulo brazil i studied economics in the university of michigan in ann arbor i feel like i'm a really like extrovert individual advice i've been giving is feedback is always good even if it's bad networking is your number one tool are we good thank you [Music]




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Retire Wealthy Home

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Kevin O’Leary: Why Early Retirement Doesn’t Work


This whole idea of financial independence retire early doesn't work. Let me tell you why. It happened to me. On the sale of my first company, I achieved great liquidity and I thought to myself, "Hey. I'm 36. I can retire now." I retired for three years. I was bored out of my mind. Working is not just about money. People don't understand this very often until they stop working.


Work defines who you are. It provides a place where you're social with people. It gives you interaction with people all day long in an interesting way. It even helps you live longer and is very, very good for brain health. Staying stimulated is how people live into their 90s. I'm not kidding. So when am I retiring? Never. Never. I don't know where I'm going after I'm dead, but I'll be working when I get there too..



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Retirement Planning Home

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10 Levels of Financial Independence And Early Retirement | How to Retire Early


Long-term financial goals can sometimes seem so big that they feel almost unattainable especially when we’re just getting started on our road to financial independence. I and many others like me in the financially independent, retired early community have found it helpful to break down the goal of becoming financially independent into smaller and more manageable levels of financial independence. Not only because it makes it easier for us to track our progress, which in turns helps us to stay motivated throughout the process, but also because it helps us get over that initial hurdle of starting to chip away at this mountain of a task. In today’s video, I’m going to take you through what I consider to be the 10 levels of financial independence as well as give an example on how to go from the first level to the top level in your lifetime. Hey everyone Daniel here and welcome to Next Level Life a channel where you can learn about Investing, debt, retirement, and many other general financial education videos because the school's aren't going to do it for us.


So if any of those topics sound interesting to you or if you want to learn how to better handle your money and have more financial freedom be sure to hit that subscribe button and the bell next to my name to be notified every time I upload a video. And if you want to further support the growth of this channel you can check out some of the links I’ve left down in the description below which includes a 30-day free trial of Audible and 2 free audiobooks of your choice as well as a list of some books on money I’d recommend checking out, or you can share this video with a friend, and leave a comment below letting me know what topics you’d like me to cover in future videos.


Now obviously these ideas of the levels of financial independence are not solely my own nor are they very new as there are many articles and blog posts that have covered this topic already and have done so for many years. So consider this more of a summary of many of the ideas expressed in those articles and if you want to learn more about the topic feel free to check out some of the articles for yourself. I’ve left some links in the description. With that out of the way, let’s get started. Okay so real quick the 10 levels of financial Independence are Level 0 Financial dependence, level 1 Financial solvency, level 2 Financial stability, level 3 debt Freedom, level four coasting Financial Independence (also sometimes known as freedom from employer), level 5 Financial Security, level six Financial flexibility, level 7 Financial independence, level eight Financial Freedom, and finally level 9 Financial abundance. The levels are usually defined as something like the following: Level 0 – Financial dependency is when your debt payments and other living expenses are greater than your own income.


This means that you are in one way or another dependent on someone or something else to help you pay for your bills or if you happen to be a kid and don't actually have any bills you need someone else, usually your parents, to pay to put food on the table and keep the lights on and have a roof over your head. This is the level that all of us start out on and it is referred to as level 0 because as a financial dependent you obviously have no Financial Independence. Level 1 – Financial solvency is when you are current on all your debt payments and you can meet your financial commitments and your other living expenses without any outside help. Level 2 – Financial stability is usually defined as when you have built some sort of emergency fund in addition to being financially solvent. Level 3 – Is again debt freedom and it's defined differently depending on who you ask. For some, it is being completely debt-free, mortgage and everything.


For others, it's being just free of the high-interest debts like credit cards but you still might have a mortgage or other debts like student loans. And for some others, it is paying off all of your debts except for the mortgage but your credit cards and student loans or car loans all that stuff is all paid off. Level 4 – Coasting Financial Independence also sometimes known as freedom from the employer, Barista Financial Independence, or Agency in blogs and other mediums. I personally like the idea of it being coasting Financial Independence so that's what I'm going to be using in this video but know that some people refer to it by one of those other titles but the idea is the same. You have reached the level of coasting Financial Independence when you could, if you wanted to, step down from a job that may be higher-paying but may also be either less satisfying or more stressful or both into a new job that is lower paying but more enjoyable or less stressful or both.


This is because in the early years of your career or just thought most recent years you have managed to save a very decent sum of money that would be able to provide for the later years of your retirement after it has grown even if you don't put much more in. Therefore all you need to do is make enough money to get you to age 60 or 65 or 70 or whatever your numbers work out to be when that amount of money you've already invested will be able to fund your lifestyle because it's been given enough time to grow. So in a sense, you've worked really really hard and been very frugal in the first few years so that you can coast into your retirement. I have gone into more detail on the various types of financial Independence in a previous video which I'll leave Linked In the description if you're interested in learning more.


Level 5 – Financial Security is effectively when your cash flow from wealth such as you are investments has grown to large enough that it can provide for your annual basic survival expenses. Now I say survival expenses because I do differentiate that from living expenses survival expenses are just the basic things you need to survive Food, Water, Shelter, some form of transportation, clothing and probably insurance. This does not include things like Netflix subscriptions or cable bills or things like that it is purely survival expenses. So this may not be exactly the ideal spot to retire and I certainly wouldn't want to retire at this point but it is an important level to keep in mind because it does give you… well security. If you were to get fired today and you were on level 5 you would be okay you could survive until you found another job. This is essentially the first level that really gives you I guess that piece of mind even if the lifestyle should you have chosen to live it may not be the most lavish.


Level 6 – Financial flexibility is similar to Financial Security just one step up. It is when you have the ability to live off of your current cash flow from your wealth assuming that you have a flexible spending plan that adjusts for up and downs in the market. So if the markets up 20% one year you're able to spend a little bit more but if the market is down 20% the next year then you don't spend quite as much. I’ve seen it defined many different ways so it could vary depending on who you ask, but the one that I personally like the most is that it is roughly half of your full financial independence goal, or roughly about 12.5x your current annual expenses if you follow the 4% rule to get an idea of how much money you need to retire like I’ve explained in previous videos.


So it isn't quite Financial Independence yet but it's close. Level 7 – Is financial Independence and it's usually based on the 4% rule which I have covered in a previous video. You can follow the 4% rule when you have saved roughly 25x your annual expenses. The vast majority of the time this will be enough money to allow you to maintain your current lifestyle in retirement and as a result, you can be considered financially independent. And some articles end it right there but I think there are a couple of levels that are a bit higher than that that are worth considering even if some of us may decide to not ever try to achieve them because being at level 7 allows them to do what they wanted all along. So let's talk about those other levels. Level 8 – Is Financial Freedom which I've often seen defined as the cash flow from your Investments is greater than financial Independence and a few more life goals.


Life goals, of course, will differ for everybody but this is could be something like taking a trip or two overseas or moving to a new place you've always wanted to live but haven't had quite enough money to live there up till now or whatever the case may be for you like I said it's different for everybody. Level 9 – Is financial abundance and this is quite simply just that the cash flow from your Investments is more than you will ever need.


You could spend it if you really wanted to but it would actually take some effort. And the stuff from level 8 doesn't really cut into it much at all. So you could up those goals even more and still have more cash flow left over at the end of the year. This also probably has a slightly different definition for each person depending on who you ask, but I like to think of it as roughly 3x your financial freedom number because this would allow you to experience a horrible bear market where your investments go down by 50% and still has 1.5x the amount that you would need to maintain the lifestyle you lead when you reach level 8.


To me, that means that it is likely more than you will ever need, but again that one is strictly my own opinion on the matter. So those are the 10 levels of financial Independence, now let's walk through a hypothetical example of how someone could go from Level 0 to being financially independent in a single lifetime. John and Jane are recently married couple each making $20 an hour at age 23 or $83,200 a year between them assuming no overtime. They manage this because they are not only good hard-working people but got great grades in school and we're selective about the job that they decided to pursue. Obviously just like everyone else they would have started off as Financial dependents and as they were going through college they would have been building up student loans that they would not have had the money to pay off (assuming of course that they didn't earn enough money while in school to keep up with the rising debt).


In all they have credit card debt, two car payments and the student loans which have balances of $5,000, $35,000, and $60,000 respectively, but since they got their jobs they are no longer financially dependent and their incomes have allowed them to become current on all their debt payments without the help of others. In addition to the regular monthly debt payments, their annual expenses are $48,000 a year. So they are currently in level one Financial solvency and trying to figure out a way to move to level 2 Financial stability. In order to do that they need to figure out a way to build up an emergency fund.


Now if they're following the 10 levels system to a T then they would look to build a 3 to 6-month emergency fund of their survival expenses. However, this is not the only way to approach it say if you were to follow Dave Ramsey 7 baby steps you would start off with just a $1,000 starter emergency fund and then get right onto attacking your debts. And other Financial systems and plans may have you approached it an entirely different way.


Either way is perfectly fine because the 10 levels system is not meant to be a financial formula per say it's more there to give us some sort of guidepost so that we can better track our progress towards achieving Financial Independence. But for the purposes of this video, I am going to assume that they follow the 10 levels in order so we are going to be building up a full emergency fund. In order to find how much of an emergency fund they will need we will need to know how much money they need to survive not necessarily on their current level of expenses while they have jobs but purely on Survival expenses which are basically your four walls of your financial house or in other words food shelter including utilities Basic clothing and some form of transportation as well as the insurances that are related to that assuming there are any.


In this case, I'm going to assume that their survival expenses are right around $3,000 a month. Which means that in order to get a 3-month emergency fund they would need $9,000 in order to get a six-month emergency fund they would need to save $18,000. Both John and Jane feel that their jobs are pretty darn secure and the market is doing fairly well so it's not likely at least in the near-term that they would get laid off because the company has to downsize so they decide together that they are comfortable with having just a 3-month emergency fund of $9,000. So with $83,200 a year in income, $48,000 a year and expenses, plus minimum monthly payments of $100 on the credit card which is 2% of the balance, $550.78 on the car loans, and $621.83 on the student loans they will have approximately $1,660.72 a month left over to start building their emergency fund.


However, both John and Jane have been looking into their finances and researching a lot lately and they become fired up at the possibility of becoming financially independent while they're still young. So they want to see if there's a way that they can speed this whole process up. And as it turns out thankfully there are many. After taking a look at the options they decide that they're going to work as much overtime as they possibly can (for the sake of Simplicity I'm going to assume that they manage to work on average 5 hours per week of overtime which will increase their monthly income by about $1,300 a month, meaning that instead of $1,660 a month they will have $2,960 a month left over) and they're going to sell both of their cars and buy some nice used cars with cash to help knock down some of that initial debt. After putting out a couple of ads online they managed to find buyers for each of their cars that is willing to give them $15,000.


So they take that $30,000 and use $5,000 of it to pay off the credit card balance and another $10,000 to buy a couple of used cars from someone that they know takes good care of their Vehicles whether that be a family friend or just a mechanic that they Trust. The remaining $15,000 is thrown at their car loans. This means that the credit card loan is fully paid off and therefore the hundred-dollar minimum payment is no longer needed. So John and Jane start throwing $3,060 per month into their emergency fund and get it fully funded in 3 months with a little bit left over at the end of the third month to throw out their car loan. Over the course of those first three months, they managed to bring the car loans balances down to $18,423 thanks in large part to the $15,000 that they threw at it in the first month after selling the cars and also making the minimum payments in the first three months. Now that their emergency fund is fully funded however they're able to throw that $3,060 a month in addition to the $550 a month minimum payment at the car loan and get it paid off in 6 months flat.


So a mere nine months into their Journey John and Jane not only have a fully funded emergency fund but they also have paid off both of their car loans. Now there are just the student loans to tackle. And thanks to the fact that they've been making minimum payments on them for 9 months and the fact that they had a little over $3,000 at the end of the ninth month after paying off their car loans their student loans now have a balance of $53,263. John and Jane follow the same pattern that they did with the car loans throwing the $3,600+ which is what they now have left over at the end of every month because they no longer had a $550 car payment to make and they managed to get their student loans paid off in full in 13 months. So John and Jane have managed to become debt free and have a fully funded emergency fund in 22 months.


They have now reached level three and because of that they now have over $4,200 a month left over to start investing. This brings us to level four coasting Financial Independence. Let's assume that John and Jane want to retire by the age of 65. That means that whatever they put in now needs to be enough to grow to a point where it can support their lifestyle in retirement by the time they're 65. If we assume a rate of return on an average in the market of about 10% before inflation and an inflation rate of about 3% per year on average then we can get a rough estimate of how much John and Jane need to put away in order to achieve a state of coasting Financial Independence. In this case, since they're 24 about to be 25 they will have somewhere in the neighborhood of 39 or 40 years to let the money grow before needing to take any of it out. If their expenses were $48,000 a year at age 23 then 42 years later if we assume a 3% rate of inflation they would need a tad bit over $166,000 each year to live on.


Again assuming we follow the 4% rule to figure out how much they need once they fully retire to be financially independent that means that they would have to have at least $4.15 million invested in the market by the time they turn 65. In their case, they would need about $110,000 saved up give or take in order to achieve coasting Financial Independence and because they're able to save about $4,233 a month now that they’re debt free, they’re able to hit that goal in 2 years flat.


Meaning that in theory, they would be able to step down from their jobs to a more rewarding less stressful but probably lower-paying job just 3 years and 10 months into their financial Journey. That is incredible! But like I said coasting Financial Independence wasn't their end goal. They wanted to be fully Financial Independent so they keep working and investing for now. The next level is level 5 Financial Security which is achieved when your cash flow from your Investments is greater than your annual survival expenses which remember is $3,000 a month or $36,000 a year in John and James case. Because they are debt-free, are making good money at their jobs, and being intentional with their finances they Achieve Financial Security in a little over 4 years with over $367,000 in their portfolio.


It is been a mere 87 months or 7 years and 3 months since they began their financial Journey. John and Jane are 30 years old and they are able to get by on their Investments alone. In theory, they could retire now, it wouldn't be the most glamorous retirement and it wasn't their goal but it is an option they have. They don't have to worry about losing their jobs anymore because even if both of them lost their jobs today they would be able to make it long enough to either find a new job or some other source of income. This is really the first level where you start to get that piece of mind when it comes to money at least in my opinion. Next is financial flexibility which as I mentioned earlier in the video has many definitions depending on who you ask but for the purposes of this video, I'm assuming that it is roughly 12.5x your current annual expenses which for John and Jane would be roughly $600,000 or about $855,000 if you account for inflation. This means that they would Achieve Financial flexibility 9 years and 8 months into their Journey not accounting for inflation or about 11 years and 9 months if we do account for inflation.


John and Jane continue investing through all the highs and lows of the markets until they reach Financial Independence exactly 14 years into their financial Journey assuming we don't account for inflation or 18 years and 3 months if we do. So you might be wondering why did I split up the accounting for inflation time frames and the not accounting for inflation time frames should we always be accounting for inflation? Well technically yes but the reason I split them up is because in my experience taking this journey myself as well as seeing others take it, this journey changes how you view a lot of things and more often than not those changes lead to you valuing things such as freedom of mobility and location and freedom of time to be able to spend with the people you love more and valuing more material things that cost possibly a lot of money less and less. That's not to say that everybody becomes minimalist going through this journey, I'm not saying that at all but I have seen a lot of people who have gone through this journey become closer to minimalist than they were when they started the journey as they find out more and more things that they used to buy just don’t provide enough value or happiness for them to be worth the purchase.


They find better uses for their money and time and as a result, they generally tend to spend less. Which means that even though inflation is technically increasing your expenses by making every dollar less and less valuable over time, if you're also decreasing your expenses because what you value is changing it may even out or in some cases, you may even see your regular expenses going down year-over-year as you continue through this journey. So that's why I split them up. And, before I go, I do want to mention that based on what I've seen on various articles and forums some people really like to have even more goals to chase as they go through this journey than what I've laid out today in this video so if that's something that would help you feel free to break down these levels even further then I have today this is obviously just the list that I used and what worked for me, but you could take it even further.


For example, Debt Freedom could be broken down into three separate stages: One where you are free from all high-interest debt, a second where you are free from all debts except for the house (if you have one), and a third where you are totally debt-free. You could tackle the coasting Financial Independence level in a similar way breaking it down into two stages: One where are you have invested enough to survive in retirement and a second where you have invested enough in order to maintain your current lifestyle, adjusting for inflation of course, in retirement.


And the financial independence level could also be broken down into three stages: Stage one would be where you are at a survivable level of financial Independence, stage 2 would be where you have achieved leanfire status, and stage 3 would be where you have achieved full Financial Independence on your current lifestyle assuming that it is above the leanfire level. So what do you guys think of this 10 levels system of tracking our progress to financial Independence? Do any of you use a similar system to track your progress? If so, what is it and what level, step, or stage are you guys currently on? Let me know in the comments section below. But that'll do it for me today once again if you enjoyed this video be sure to subscribe and hit that Bell next to my name so that you'll be notified of all my future uploads.


I generally upload every single Monday, and if you have a friend that would be interested in this kind of content be sure to share it with them and let's really get this information out there and start our own Financial revolution..



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Retirement Planning for Singles


Retirement is a big deal for anybody, and that's especially true for single people who may be retiring with just one income and who may have built up a nest egg solely off their own savings. So, we know that single people can and do retire comfortably. In fact, one quarter of people over age 60 are living alone in their household, and that number is slightly higher for women, and that's, of course, due to women's longevity. So what we're going to talk about here is retirement for single people. First, we'll go over some averages to give you a rough idea of what the landscape looks like for single people, then we'll get into how much money you might need as you go into retirement, then we'll talk about some tips that can help improve the chances of retiring comfortably.


Let's start with the average retirement income for single people. So it's $42,000 on average for an individual in retirement, and that comes from the US Census Bureau. The median is a little bit lower at $27,000. So a friendly reminder of how this works: The median is the middle, so if you line up all of the survey results, people telling you what their income is, for example, that arrow points at the middle observation, which would give us the median down at the bottom.


But if we go to the average, that is going to get skewed by, in this case, wealthy people, for example, they have a very high income. When it comes to Social Security, the average is about $1,500 a month or $18,000 per year.Your level depends, of course on your earnings, if you had higher earnings during your working years, then you tend to potentially have a bigger benefit than that, and it could be lower, and then of course, your claiming age is also an important thing. If you claim early at age 62, you get a reduced benefit. That's likely to bring down the amount you get. Next, we have pensions, some people get an income from a job they worked at. That might be in the public sector as a teacher, a firefighter, that sort of thing, or even in the private sector, you could have a pension from your job, and those incomes just are all over the board, it could be high, it could be low, but these are different sources of income that people might have in retirement.


This is just a friendly reminder that this is just one video and it may cover some interesting information, but it's not specific to you so I hope you'll do a lot more research, hopefully check with some professionals and get some individualized advice, and that way you can improve the chances of things going well for you. So now let's talk about how much you might need as you go into retirement. Unfortunately, there's no single answer on what you need because it depends.


So the first step is to figure out what sort of income you're going to need, and I've got other videos on that, I'll put links in the description to get you some more information, but you can look at replacing a portion of your income, or you can just say, I want X amount of dollars per year, or you can go with other approaches, but first we need to know how much income you are hoping for. Next, we tally up your income sources, so that might be some guaranteed income that comes in from Social Security, for example, or from your pension at your workplace, but that forms a base of income and that might or might not cover what you need. But it gives us a base and then if we need to fill that in, we can supplement withdrawals from your retirement savings, so that might be out of your IRA, your 401, 403, these accounts that you have built up over time can provide supplemental income to help fill the gap between that guaranteed income you get and the amount you actually want to spend. There are a number of ways to figure out how much to withdraw and to set up different strategies, there might be bucking strategies, there might be withdrawal strategies like the 4% rule.


Or if you don't like that, make it the 3% rule to be safer, or take out more if you think that's not enough and you're selling yourself short. Ultimately, there are a number of ways to approach this, so you just pick one that works well for you, and again, I can point you to some resources on figuring that out. And finally, you will want to look at taxes and inflation, so during your retirement years, it's reasonable to assume that prices may increase on many of the things you buy, so we want your income to be able to increase as well, Social Security typically does rise, but maybe not at the same rate as the things you're buying, so your withdrawals may need to account for that. Plus we've got taxes. You typically will owe taxes if you're taking distributions or you're taking withdrawals from pre tax retirement accounts. If you have a pension that might be taxable as well. We just want to look at all of these things and figure out what your ultimate money left over to spend each month is going to be.


For an over simplified example, let's just look at Jane Doe. She's 60 years old, she's single, she wants to retire in about five years, she makes about 80,000 a year and has 700,000. A lot of people retire with less than that, a lot of people retire with more. I'm going to bring up my financial planning software that I use with clients, and we'll just go over kind of why there's no single answer on how much you need. Now, if you can tell me exactly how long you'll live and what the markets will do and what inflation will look like, we can tell you exactly what you'll need. But there are a lot of unknowns, so a lot of times we start with a probability of success and I'll go over what that means, and then we look at little tweaks and how different changes might affect that probability of success, so working an extra year might bring her from…


Let's say 75% to 84% likely to succeed. Now, success and failure are pretty complicated. They don't necessarily mean that you go completely broke, but you may need to make some adjustments, so let's talk about what does the success mean? We, again, cannot predict the future, so we say, Let's look back and say, You get dealt 1,000 hands. You're playing a game of cards and you get 1,000 hands. Some of those are good and some of those are bad, so the very good ones tend to be up here, near the top. And you actually end up with a lot of money left over. Some of them are not as good and you end up running out of money early. The median is, again, that one that's right in the middle when we line them up in order for best to worst. And so you might say, you're probably not going to get the best, you're probably not going to get the worst, although anything is possible.


So that's how we go with this likelihood of success. Now, maybe she doesn't want to work an extra year, so we can look at different ways of accomplishing things here. By the way, we've built in some long term care in case she does get sick and needs that at the end of life. She's looking to spend about 4,000 a month, that's after some health care costs that are going to inflate each year, and she's saving a decent amount in some 401K and taxable accounts.


Let's say she goes ahead and maxes out that Roth, is it going to make a big difference? Not really, 'cause she only has five years left. So what we do here is we start looking at all of these different variables and playing with the pieces and figuring out what does it take to make her successful at her retirement, or at least successful enough that she's comfortable making that transition. So here are some tips to improve your chances.


The first is to plan for long term care. If you're living on your own, you don't have somebody in the house who can help you do things, and it's arguable if even a couple is capable of managing this on their own… I mean, if you think about a couple, is one of the people physically able to move the other person around and do they have the skills to provide health care, and the time and the energy, frankly, to provide all that type of care? So it's important for everybody, but it's especially important for single people to plan for this care.


So you can look at getting insurance, you can look at budgeting for some costs, like we showed you in the software, you might want to budget for a much bigger number if you go into memory care or something like that with 24 hour supervision, it can get really expensive quickly. And you can explore different living arrangements, maybe doing things with friends or certain communities that might be a good fit for you. Next is to avoid leaving money on the table so if you were previously married and your spouse passed away or you've been divorced, you may be eligible for benefits. That's maybe from Social Security, you can potentially get a survivor's benefit, or if you were married for at least 10 years and you've been divorced, you can potentially get spousal benefits on your ex spouse's work record.


It's just important to explore all of these to see if there are any resources available for you. Next is to make a plan, and I am of course biased as a financial planner, but I think it is really helpful to go through the process, and the main goal isn't to get a big document that tells you what your financial plan is. Instead, really, the benefit is going through that process and learning a lot about your finances as you do it, and in that process, you get an idea of what the risks are, how you're doing, you might get confidence and clarity on whether or not you can go ahead and retire, if you should do certain things or not.


It's just a very valuable process for a lot of people, but I'll leave that for you to decide. If you found this video helpful, please leave a quick thumbs up. That gives me feedback that this is something you might enjoy more of, so thanks for watching and take care..



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How to Invest With a Gold IRA | Madison Trust


Are you looking to invest in something tangible,  like Gold, Silver, or other precious metals?   Madison Trust's Self Directed Gold IRA  gives you the freedom to do just that!  Madison Trust works with FideliTrade to  ensure that you're investing at a fair price.   You can have peace of mind knowing your  metals purchased through FideliTrade are   securely stored in Delaware Depository's vault. You can get started investing in the precious   metals of your choice in 6 simple steps: 1. Open a Self Directed Gold IRA Account   with Madison Trust by filling out our easy  online application and fund your account.  2. Next, you'll open an account online with  FideliTrade, a Delaware Depository Company.  3. Then, you'll visit FideliTrade's  Products & Prices page   to pick what you'd like to invest  in and call to lock in your price. 4. After locking in your price, you'll fill  out the Trade Confirmation from FideliTrade   and Investment Authorization  form from Madison Trust.  5. Once all of your paperwork is received,  Madison Trust Wires your funds to FideliTrade.  6. Last, but most certainly not least, Delaware  Depository will securely store your metals.


It s that easy! Are you new to self-direction? We re here for you!  Our dedicated Self Directed IRA Specialists will  provide step-by-step guidance from account set up   all the way to placing your investment. It s time to give your retirement funds   the golden opportunity to grow with  a Madison Self Directed Gold IRA..



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How The Dutch Economy Shows We Can’t Reduce Wealth Inequality With Taxes | Economics Explained


this is the netherlands a picturesque nation filled with windmills tulip fields and coffee shops the nation is looked to by many as an extremely forward-thinking place that practices some pretty progressive policies the nation has an incredibly strong social security system with universal health care robust retirement pensions as well as allowances for maternity leave and these kinds of policies are mirrored in other areas as well the nation is home to some relatively high tax rates and the predictions for employees are very strong almost to the point that people joke it's impossible to be fired in the netherlands so this kind of looks like a liberal paradise right well it would be if it were not hiding a dirty little secret this postcard perfect little nation is according to the world bank the most unequal place on earth and the extent of the inequality is simply staggering we have explored south africa on the channel before which normally gets this less than desirable title and if you would oppose this question to google it's what you would walk away thinking but it isn't the whole story in terms of wealth inequality in recent years south africa has been pretty tame the netherlands by contrast is the only country on earth that is more unequal than the world itself so what is going on here similar policies to the ones that have been commonplace in the netherlands for decades are being proposed by politicians in places like the united states as a way to curb the issue of wealth inequality but if we look at the results it doesn't look like they'll do that at all so to really understand what is going on here as always we have to look at a few key issues how did the netherlands of all place become the land of inequality what does this teach us about the nature of wealth in the modern world and how can this help us create more robust economic policies that will work to benefit everyone oh and of course while we're here we will call this a country video and put the netherlands on the economics explained leaderboard this episode of economics explained was made possible by our fans on patreon if you would like to gain early access to these videos before they're uploaded to youtube as well as participate in exclusive q a sessions which are now held every saturday at 9 30 eastern standard time please consider supporting our channel at patreon.com economics explained now inequality is a strange thing there are many different ways to quantify it and metrics that we use to make sense of it but outside of the figures there is no getting around the fact that it is a controversial issue the last time we explored wealth inequality on this channel we attempted to objectively explore if it was something that had negative impacts on long-term growth in the economy our conclusion was yes maybe depending on a set list of factors and conditions so basically the most fenced city answer we could have possibly given based on existing research and it is still the most disliked video on the channel by a fair margin to say people take this topic seriously is a bit of an understatement but fair enough it is a real issue that deserves proper attention by government all around the world but the key to getting that attention is to understand what these decision makers will be looking at the equality of countries is measured with something called the genie coefficient now people might have heard this term before or seen graphs like these ones but still not truly understand what it actually shows so to keep it simple let's imagine an economy with three people and three dollars to be gained in income each year a perfectly even system would have each of those participants earn one dollar each year and if we looked at that cumulative total for each person we would have a perfect y equals x line the income of person one is one dollar the second person plus the first person is two dollars and the income of the third person plus the second person plus the first person is three dollars mind-blowing stuff i know this perfect world of equality would have a genie coefficient of zero meaning that everybody earns exactly the same amount cool but now let's look at the opposite where all three dollars go to just one of the three people well this hypothetical economy would have a genie coefficient of one meaning the system could not get more unequal because one person controls all of the income now in reality real economies have a lot more people and a lot more dollars to go around so the actual figure normally has a lot more decimal places but will always be somewhere within this range of zero to one cool so that's the genie coefficient and for most people watching i'm sure there were no huge surprises there but this figure can be used to measure two things income equality and wealth inequality naturally income inequality tends to get a lot of the attention people riling over how a ceo has earned 300 times more than their average worker or whatever but if anything income inequality is just the driver of wealth inequality people who earn more can naturally save more and their savings compound over time if well invested but if incomes were more even then this should stop the process at the beginning it should cut off the flow of money building this wealth divide right well maybe but that theory may need to hold up to the lessons of the dutch the netherlands is very similar to nations like sweden denmark finland and yes of course norway in the sense that social policies are quite strong and are funded by taxes that are quite high that is why if we look at the world bank's records on income inequality all of these nations rank very low yet despite the obvious connections between income and wealth all of these nations have very high wealth inequality of course none quite to the extent of the netherlands but even a nation like sweden the poster child of democratic socialism has a higher level of wealth inequality than the united states brazil or india so how is this possible how are rich people hoarding such a huge share of the nation's wealth despite sharing in a comparatively modest portion of the nation's total income well to answer that question we actually have to look at the side that normally gets the least attention the poorest households unlike income where the least you can earn in a given year after taxes is zero dollars your net worth can be negative for example someone with huge student loan debts that doesn't own a house or a car or has minimal savings might have a negative net worth now in the netherlands this isn't so much of an issue schooling is heavily subsidised but that doesn't mean that people don't take on other types of debt in fact they seek out debt on an even larger scale through a home loan now to viewers in most countries getting a home loan requires saving up a deposit so that you own a portion of the property most banks around the world would like you to put at least 20 or at a bare minimum 5 down so that you have skin in the game and will be more likely to pay back that mortgage this means that if you own a home even if you have a big mortgage on it you still probably have a positive net worth because your house is an asset and it is worth more than the liability of the home loan so as long as you don't have any other debts or the value of the property hasn't depreciated you should be in the green this is not the case in the netherlands though where borrowers can and in fact are encouraged to borrow over 100 of the value of their home as a mortgage the national mortgage guarantee is a government program that ensures bank loans on homes so if the borrower doesn't repay the bank and the bank can't make all of the money it needs back from repossessing the home oh well it can just get a check from the government for the difference essentially making home loans completely risk-free this is actually accelerated by the fact that mortgage repayments in the netherlands are tax-deductible what that means is that if you earn 100 000 euros in a year but you are paying 40 000 euros in interest to the bank on your home loan you would only pay tax as if you were earning 60 000 euros this does two things to our wealth inequality metric for starters it skews the influence of those high taxes if people can claim significant deductions on high incomes by having large mortgages then it doesn't really matter what the tax rate is because it can just be redirected into building up a real estate portfolio the other thing it does is encourage people to take on debt up until recently people were able to borrow as much as 110 of the value of their house as a mortgage that means if a young couple was just starting out with a brand new 300 000 euro family home they could borrow an extra 30 000 euros on top of it and suddenly find themselves with a negative net worth of 30 000 euros this means that a good chunk of the population is under water on their homes and that's perfectly fine this is one of the failings of the genie coefficient as a simple metric dutch people even the dutch people who might find themselves with a negative net worth all live very comfortable lives and yet the figures by themselves would suggest that this is some kind of tyrannical dystopia with a population of peasants struggling to get by with a class of billionaire overlords watching over them but of course simply isn't the case credit and access to it for responsible purposes can actually be one of the greatest determinants of social mobility in an economy but it can at the same time be something that accelerates wealth inequality metrics beyond the control of regular government intervention like we see here for an extreme example donald trump once joked that a homeless man on the street was 900 million richer than he was because at the time he was in crippling debt despite this his lifestyle was obviously far more comfortable than the homeless man's and no rational economist would call him the poorest man in america although i'm sure the comments section will and i already regret using this example but anyway the takeaway here is that negative net worth does not necessarily mean poor but it does make figures look that way cool so does that solve the riddle of dutch inequality well no it's certainly a contributing factor but it's not the whole story in fact this extreme wealth inequality might actually be the outcome of matured capitalism the netherlands was the first nation in history that economists could really point to and say this is capitalism as we know it in the modern day and yes there were systems of trade that stretched back thousands of years throughout human history but most of those societies still had productive potential decided on by rulers rather than consumers in our video on the dutch east india company we found that the netherlands pioneered incredibly modern ideas like stock markets limited liability companies and speculative assets as far back as the 1600s beyond this the netherlands has not really experienced much in the way of a shake-up of this system in the past 400 years that's not to say that there wasn't wars and coups and all of that good stuff this is modern history europe we're talking about i mean come on but it's more so that if you were wealthy in the nation you could continue to pass this money down and down generations without the same fear of it being guillotined somewhere in the family tree that's why the money in the netherlands is old money the people that are rich are to be honest not that rich not compared to american chinese or russian billionaires anyway but if we were to look at the nation's wealthiest person charlene de cavallo heineken we can learn a lot about the nature of wealth in the country this lady is 66 years old and his surprise surprise in the beer business although she didn't found the company neither did her father or his father and in fact even her great-grandfather didn't actually found the heineken brand as we know it today he simply convinced his already wealthy parents to buy a brewery with a family fortune that he just slapped his name on that family fortune dated back to the dutch east india company what this means is that income taxes will do absolutely nothing to control this wealth income this family hasn't earned an income since napoleon was in diapers wealth begets wealth and the most powerful variable in compounding money is time normally this is controlled by having to split wealth between multiple heirs who will inevitably squander the family fortune but european elites tend to do things a little bit differently this is a massive generalization of course but a majority of the family fortune will be left to a selected child who will be trained in keeping the family's assets as protected and low-key as possible the other children will still live a very comfortable lifestyle but the fortune does not get split up equally like it did with the waltons let's say this family structure combined with a massive time frame can generate some pretty funky results consider this would you rather get 100 returns on your portfolio that is doubling it every year for 10 straight years or just 10 returns which is closer to the market rate of return over the last century for 100 years let's assume that these are all compounded annually and both examples are starting with 10 000 for simplicity's sake well our investor with a 10 year outlook turned that 10 000 into 10 million 240 000 those are some serious attendees but our more conservative investor with a 100 year outlook will be walking away with 137 million eight hundred and six thousand one hundred and twenty three dollars and forty cents which even accounting for inflation is significantly better than that first portfolio who had an unrealistic return expectation anyway time in the markets beats timing the market and when you have had 400 years in the market well it's going to create some serious wealth concentrations so does this mean that capitalism is inevitably going to grow more and more unequal as time passes well yeah probably this effect will be less severe in countries that don't quite have the same dynastic inheritance scheme and things like the giving pledge amongst big ticket billionaires will certainly make a difference but as we've seen with the netherlands it's not the top 10 on the forbes list that is going to change these figures it's the hundreds of other families that intentionally slip below the radar that will now is this a problem well maybe but maybe not i would much rather be in the bottom 10 of the netherlands than the bottom 10 of ethiopia which is comparatively a far more equal country by genie coefficient metrics in fact i would rather be in the bottom 10 of the netherlands than the top 10 of ethiopia but that goes to show that inequality doesn't always cause issues so long as there are equitable systems in place to make sure that everyone genuinely has the ability to rise up and that comfort safety and the well-being of average people is not sacrificed in the name of the profits for a few i think i somehow managed to make everybody on the left and right angry with that sentence please like the video i feel like i'm gonna need it to balance out the dislikes okay the fun stuff time to put the netherlands on our economics explained national leader board but before that i'm going to take california off here because american states are getting their own list also our video on texas was one of the worst performing videos we have ever released this year so don't go recommending your home state for a video until that one reaches 200 000 views i gotta follow market demand here okay self-pity aside the netherlands has a large advanced economy with a gdp of 914 billion us dollars it gets a seven out of ten falling just short of the trillion dollar club gdp per capita is very impressive at just under sixty thousand dollars per person as of 2019.


what's more is that the income is actually spread very evenly it's within the top 15 countries in the world for income equality which makes the wealth inequality all the more interesting either way it gets an 8 out of 10. in the weekend category stability and confidence well that's a no-brainer 10 out of 10 any economy that has harbored wealth for over 400 years is obviously doing something right growth is a bit meh like most european nations it has not really made much progress since 2008 and the eurozone crisis i can't imagine the fallout of the coronavirus is going to do the many failures either so it gets a two out of ten because at least it hasn't gone backwards finally industry well the nation is quite impressive here it has always been on the cutting edge of capitalism and even today it's the center of advanced financial services that are used all over the world it gets a 9 out of 10.



altogether it gets an average score of 7.2 out of 10 only really been bought down by lackluster growth even still very impressive and it claims a solid spot on the economics explained leaderboard hi guys i hope you enjoyed the latest video if you did please consider liking and subscribing this video is made possible by our patrons over on patreon so if you enjoy this video please consider supporting the channel like these awesome people did thanks guys bye.



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How We Retired Early With $540K At 40 In Colorado


I started getting diagnosed with some fairly serious medical ailments. I just began to realize that I had been working for a retirement that I may never enjoy. We just knew we wanted the freedom to make our own choices with our time. And that's where financial independence came in. Then it turned into how fast can we do this? Let's get it done as fast as we can. We started to accumulate real estate in the vein of let's have an additional source of income besides my job. We accumulated 19 units over the span of just from 2016 to 2019. I'm Debbie and I'm Chris. We are 43 and live in Colorado and retired by the age of 40. I never wanted to be a millionaire. That was never a goal, even, you know, now in my forties, I just wanted to have enough money to be able to pay my bills. When I was 21, 22, somewhere in there, I remember reading The Millionaire Next Door. It was eye opening to me because the stories they highlighted in that book were very similar to what we do. Once it became in that realm of reality that I could maybe be a millionaire, then I did become fascinated with the idea of being a millionaire in both healthy and unhealthy ways.


Once Debbie left her job, we're now completely dependent on my job. Honestly, like, I'm sure there was more than this, but I tell the story that basically I just stopped going to Subway. Obviously, that's not the whole case, but that's all it really felt like. Once we started tracking our spending a little bit better with budgeting, I was the guy that was always trying to turn the knob down on our spending. Chris used to think it was fun to like try to spend $100 a month on groceries and just eat what came out of the pantry.


So we both kind of had this thought, what if you want to leave your job someday? That thought easily turned into how can we use our money to buy us more time? I was mainly hearing a lot of stories about rental real estate. Some people were were building mega empires with rental real estate. I wasn't looking to do that. I just wanted to have additional income. And in the in the process of going from we don't know anything about being landlords and real estate owners to let's buy our first property, I scoured the Internet and spent a lot of time listening to podcasts, watching YouTube videos, reading blogs and forums.


And we got this like eight and a half by eleven vision board type of thing. So it was just something that we could write on with chalk that we had in our kitchen that would remind us of our goals. And, and as I was writing those goals down, I believe we had like by the end of 2016, we were going to have two properties and by the end of 2017 we were going to have four properties. We were getting properties that other people didn't want. There was something that was a bit of an ugly duckling about them. For me, a very difficult part of this was a lot of elbow grease, fixing up the ugly things, working on the houses, getting smoke, smells out, painting everything, tearing a bunch of flooring out. I'm spending full days over there. Chris is getting off work. He's spending nights and weekends over at these rental properties to get them ready for tenants and make them nice places to live.


And as we were doing that, I'm still saving 50 to 60% of our income through my paycheck. All the extra money we weren't spending out of your paycheck was going toward buying more rental homes. All of the cash flow we were getting from rentals was going toward buying more rental homes. We accumulated 19 units over the span of just from 2016 to 2019.



So it was a pretty pretty fast and furious four years. We actually ended up reaching fire at least three years earlier than we had projected. So gross income from our rental properties can vary based on vacancy, capital expenditure, rehab, repairs, those kinds of things. But it is between 8 to 10000 per month and our net income from our rental properties is between 4 to 6000 a month. So the money we live off of comes purely from our real estate investments. We do have mortgages on all of our rental properties that we consider business debt. Our tenants pay those mortgages for us essentially, and rents continue to rise as they do so as the mortgage goes down. Right now, our investments look like we have about $350,000 in a combination of traditional IRAs and Roth IRAs and a brokerage account, $35,000 set aside in a 529 account for our girls and another $20,000 in bonds.


The insurance that she sells for one month a year provides that extra cushion of safety or comfort, as well as some other discretionary spending. Our budget now in FIRE, it looks very similar to what it was pre FIRE in that none of our categories really went any different direction except for travel. We usually have about $10,000 in our travel budget over the course of any time, and it's more than we spend. Instead of having a job where I would work 48 weeks a year and have four weeks off, I would say now that I work probably four weeks a year and have 48 weeks off.


And we found in our lives that meaning and purpose are important to our emotional and physical health. And part of that is around work. We are really enjoying having this freedom of time to make connections, to travel and explore. Our daughters are getting older whether we like it or not. They'll be graduating and I'm excited to be a part of of their lives as they move forward into their next chapters and have the abundance of time to be able to be in their lives as much as they will allow us or as much as as feels comfortable.


I think when we were searching for financial independence, what we wanted was freedom and independence from having to go to a place and do with things someone else told us to do. And we still want that and we value that. But I think what we found through it is a much deeper, fuller, richer life..



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