Financial independence is entirely realistic

Financial Independence.

Over the next few weeks, we’re going to be serialising the new edition of ANDREW CRAIG’s book How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely.

Andrew has worked in the City of London for more than 20 years. In 2011, he founded a personal website, plainenglishfinance.co.uk, to help people improve their finances.

In the first part in this series, Andrew explains how fortunate we are in the western world to be able to share in the profits of global capitalism. Even for those on relatively modest incomes, he says, it’s entirely realistic to become financially independent.

Why you should invest your money

Mark Shipman, a UK hedge fund manager and the author of Big Money, Little Effort, retired at the age of 35. What I mean by “retired” in this context is that by this age he was making enough money from his money that he was free to do whatever he wanted to do. He could spend his days playing golf and going on cruises, and be comfortable for the rest of his life or do something considerably more meaningful. Either way, the key message is that it is entirely realistic for you to control your wealth, make a lot of money doing so, and become financially free as a result.

As you read on, I will present a framework for transforming your wealth based on eight fundamental truths of finance.

How to own the world’s fundamental truths

No one is better placed than you to make the most out of your money.
You have significant and inherent advantages over many finance professionals.
Making money from your money (investing) is far easier than you’ve always thought. If you managed to learn how to drive, you can look after your money. It is no harder.
You can make far more from your money than you ever thought possible.
It is realistic for you to target making more from your money than from your job. This is the money secret understood by virtually every rich person in history.
Achieving the above is possible almost no matter how much you currently earn.
The good news: doing this today is easier than ever before. The tools available to you are the most powerful and the cheapest they have ever been.
The bad news: it has never been more important to take charge of your financial affairs. If you are under the age of about 50, there is no chance that you will receive a government-funded pension you can actually live on after retirement.

Perhaps the best definition of a truly wealthy person is that they are able to live on the money they make from their money, rather than the money they make from working. If you are contributing to a pension, you are already planning to do this — it’s just that you are aiming to get to this point in your fifties or sixties rather than any sooner.

There are two problems with this traditional approach to money. As we shall see, the first is that the vast majority of people in the UK are not making nearly enough of their pension and other investments in order to end up with a decent income once they retire. Unless you are in the small minority, it is extremely likely that you will have a very low income in retirement — not the most enticing of prospects, and something we will address later in this book.

Secondly: wouldn’t it be preferable to get to the point of making a meaningful amount of money from your money a decade or two before traditional retirement age? Can you imagine the quality of life you could enjoy if you were able to create true financial freedom a great deal sooner than your fifties or sixties?

The best news is that this is actually possible. You just need to decide right now that you are willing to put a little time in, understand a bit more about investment, and take the steps required to optimise your financial affairs. If you do, you have a far better chance than you ever realised of enjoying genuine financial freedom and doing so in less time than you think.

I think it is worth noting that this is true even if you are already at or near retirement age. It is never too late to implement the ideas that follow.

The fundamental truths stated above might seem far-fetched to many people. Nevertheless, I am confident that you will find sufficient evidence in the pages that follow to back them up. As you read on, your common sense alone will be enough for you to see the inherent truth in the book’s message.

The information in this book and the accompanying website (plainenglishfinance.co.uk) will:

Make you confident in your ability to get your financial house in order
Help you learn how to make serious money from your money – no matter what your financial background or what happens in the future
Ensure that you take the steps required to make the changes you need to make
Do all of the above in language everybody can understand: plain English.