An investing guide for every life stage
A decade-by-decade guide to achieving financial freedom.
Everyone has a different definition of financial freedom. And the notion of financial freedom is likely to evolve as we age and our financial priorities change. The unifying foundation of financial freedom is to use financial assets to enable more choice in life.
For some people this freedom is conceptual. Just the knowledge that you can tell your boss off and walk away is enough. Some people want the freedom to work part-time. Others want to follow a passion in a lower paying profession. And some want to walk away from work completely.
It is also worth acknowledging that achieving financial independence is really challenging. Most people don’t have the aspiration or means to even consider this goal. Having the ability to save meaningful amounts of money beyond compulsory super contributions requires a high salary.
But there are lessons in this series that are applicable to anyone trying to establish a more secure financial position. The importance of an emergency fund, the tax benefits of saving for retirement as early as possible and the benefit of paying off a mortgage are all lessons that apply to everyone.
This series of articles is a blueprint for achieving financial freedom. It starts in your 20s but most people will likely read this later in life. Decisions have been made and while course corrections are possible it is unlikely that it can be followed step by step. But that isn’t really the point. My hope is that the lessons and perspectives will help any investor. More than anything I hope you can create the life you want from an investing.
Setting yourself up for success in your 20s
Conventional wisdom and instincts may be guiding new investors in the wrong direction. Being young is hard. There is a lot of pressure to “make-it” as fast as possible. But financial freedom takes time. And using your 20s to set yourself up for success is an opportunity that won’t present itself again. Focus on savings and getting money into the market where long-term returns provide the most benefit while taking advantage of the tax advantages of super.
Setting yourself up for financial freedom in your 30s
The oft repeated maxim is that your ‘30s are the new 20s.’ This does contain an element of truth. Many people are delaying settling into long-term relationships and starting a family until their 30s. The high costs of property also delay the purchase of a house compared to previous generations. In my roadmap to financial independence this is a decade of transition.
Setting yourself up for financial freedom in your 40s
Regardless of the definition of financial independence there is a need to be able to convert net worth into liquidity at some point prior to retirement. And this fact will inform the decisions made as investors move from the theoretical notion of independence to actually achieving it.
Our financial and life priorities change over time. Once you’ve reached your 40s things should start to get clearer. If your 20s and 30s were all about establishing a foundation for flexibility later in life this is the decade to come up with a more concrete plan.
Setting yourself up for financial freedom in your 50s
This is the decade that most people can realistically achieve financial freedom regardless of what it entails. For many people this decade of life is also the time when earnings reach their peak. The ability to use higher salaries to enable freedom is somewhat blunted by the shorter time frame to compound returns.
Foundational concepts
No matter the life stage there are some foundational concepts that can help any investor with planning. Learn more about these key concepts:
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