Financial freedom is all about knowing what’s enough
Financial freedom can be a moving target and an elusive dream unless one defines his or her ultimate goal.
This was stressed in a recent investment briefing organized by IFE (Investment for Everyone) Management for people, particularly professionals, wanting to invest wisely and secure their financial future.
The latest IFE investment session revolved around the theme, “How Much is Enough? The Path to Financial Freedom.”
IFE says financial freedom “is not just about having money, but having control over your time and decisions.”
Enrique Fausto, the company’s chief financial architect and the seminar’s main speaker, fully supports the need for financial security and stability. But, he says, in pursuing financial freedom, people have to “set a goalpost at some point and stop moving, or you’ll never end [the chase].”
“You have to define what is enough to know if you are going in the right direction or are reaching your destination,” he declares. “At some point … you have to stop moving, or you’ll never reach the end.”
He points out that many people are at the point in their lives when they are getting active income—salaries as employees or earnings from other means of livelihood.
Active and passive income
Fausto encourages everyone to convert active income into passive income that they can fall back on when they retire. Instead of just saving part of their income, people can invest in stocks, bonds, real estate or start their own enterprises.
He encourages them to master their active incomes until they become “financially unbreakable” by expanding their passive income sources.
Constantly investing and reinvesting can compound income and even bring in exponential returns.
Fausto suggests that people should not sweat over things they cannot control, like inflation rates, when deciding where they will put their extra cash. Instead, he says people should focus on factors that can be controlled, or are more predictable like savings rates and asset location, like real estate in a booming community.
In terms of investments, in particular, he recommends diversification. Global stocks may earn more but they are more volatile, while local investments may produce modest returns but have greater stability. “Keep both—local and global investments—in your portfolio,” he says.
He notes that this may be a good time to invest locally as foreign investors are leaving the country. Returns, however, may be slow, so the impatient should look elsewhere.
Save, save, save
Savings are important, he stresses. People can pursue other financial ventures but should make sure their savings are all right.
Marvin Fausto, IFE chair, echoes this sentiment. “Saving is the most important thing to remember.”
Fausto always returns to his message that financial freedom is not simply about making money. It is about having enough to control one’s time and be able to do and enjoy things people really want to do.
“Financial freedom is the ability to do what you want, when you want and with whom you want for as long as you want,” he stresses. Fausto adds, “You will never be truly wealthy if you do not have the time to enjoy the wealth you already have.”
IFE is a financial planning and investments firm that wants to make “Investing for Everyone.”
