Financial freedom is when a person is financially free. This means that we are free to do whatever we like in a financial context. Working is just something that is done out of passion because basic needs have been met.
Technically, financial freedom is a condition where passive income and investment income can cover expenses. If you want to be even more secure, passive income and investment income must equal double your expenses.
That’s why we need the right strategy to generate those numbers with passive income and investment. Check out the steps that must be taken to build the best investment strategy.
Investment Strategies in Several Stages of Life
Best Investment Strategies With Set financial goals
The first step in investing is to determine financial goals. After that, design the appropriate investment to achieve that goal. It’s like if you want to go. After that, just determine what vehicle is appropriate to arrive at that destination. Make sure we know what we want to achieve, set targets for each financial goal. In this case, our goal is to gain financial freedom.
However, everyone has a different number to declare their financial freedom. So we need to know how much money we must have to reach the stage of financial freedom.
Create an investment portfolio
An investment portfolio is a combination of several investments with a certain portion. Building an investment portfolio is a crucial step in investing. What for? Minimize investment risk and earn big profits.
If you make the wrong investment portfolio, the risk can be too high. When facing the market in unfavorable conditions, investments can also be destroyed.
This is the key to the effectiveness of an investment. The most important strategy in building an effective investment lies in creating a good investment portfolio. Cash flow and capital gains must be considered.
Capital gains are used to achieve long-term financial goals. But if you are just starting to invest, you should focus on getting cash flow income first. After having sufficient cash flow income, then start focusing on capital gains.
The proceeds from capital gains can later be used to purchase assets that will generate passive income. That way it will be easier to achieve financial freedom.
If you have never had experience in creating an investment portfolio, you should consult a financial planner. Make sure we consult with a competent financial planner so that the portfolio created is effective.
After you are sure of the investment portfolio made, immediately take the implementation steps. Never delay investing, because we could miss a great opportunity. Adhere to the investment portfolio that has been made. If you want to increase investment capital in one investment product, add capital to other products according to the portion. That way the proportion of each investment instrument in our portfolio will not change. Do not continue to change the investment portfolio because later the investment returns may not be optimal.
Sometimes an investor is influenced by the latest news or certain issues regarding investment. As a result, investors feel they have to change their investment portfolio according to these issues without considering the risks that will arise. Even though the issues regarding the investment world are not always true.
Investment implementation is not a ‘one-off’ step. In the process, we will learn a lot, especially if we are beginners in the investment world. Therefore, periodic reviews are very important.
Learn everything about investing, from portfolios, investment practices, to investment returns. Make sure everything goes according to plan, if something doesn’t work, make a new plan. Remember, do not be hasty in making changes, review the new plan until we are sure that change is the right decision.
With periodic reviews, we can find mistakes or things that can be developed even better in investment.
Investment is the only way to achieve financial freedom. There are many investment strategies that can be used, but the best strategies are the result of a long process.
Investing is not a ‘one-off’ activity. There are many learning processes that need to be passed to reach the most effective investment strategy for each of us. It is important to continue to adapt to the market so that our investment is more optimal. Happy investing!