Why are you
To be financially independent
The main reason for investing should be to achieve some form of financial independence and to prepare for every eventuality.
Having lived a life dedicated to studying, the search for a safe and well-paid job begins and before you know it, you are a part of the rat race.
You are now on the property ladder and have all kinds of expenses; bills, mortgage(s), cars, maybe raising children, in the end you find yourself in a situation in which if your salary was missing, things would be over. A situation that becomes a constant source of stress.
You find yourself running on a wheel that never stops and regardless of the goals achieved you cannot stop your race otherwise the risk is to lose everything.
Some people live for the day and choose not to plan ahead, but why risk your financial future when it is possible, and much less stressful, to choose informed, long-term approaches?
Approaches that can build, gradually and over time, a financial lifebuoy, a buffer, that will ensure your financial needs are met without having to depend on fixed employment. Approaches, that would allow you to break free from the rat race and have peace of mind that you have created a tangible source of income to draw on as and when required.
“Do not let making a living prevent you from making a life”
Financial independence does not mean sipping cocktails by the sea 365 days a year, but being able to devote time to your favourite activities without necessarily having to be economically sustainable. Financial independence means knowing that you are able to dedicate yourself to your passions and can spend time with whoever you want, whenever you want.
Financial independence as a guarantee of the fundamental asset: freedom of choice
Of course, it is an ambitious goal, so you need to have a precise and well executed plan. You do not want to be working full time managing the assets, which in theory, should have freed you from the “prison” of the fixed employment you escaped from.
The strategic plan proposed will depend on the available assets and the specific needs of the investor. If resources are sufficient, the strategy will be aimed at maximising cash flows. If this is not the case, the alternative plan would be to pursue capital growth with progression to an annuity portfolio when suitable.