financialtreat – will explain about the 7 Stages of Financial Freedom and Achieving Them Over 5 Years that you will get in the following article. let’s look at this article carefully!
We often hear the term financial freedom. This means we have enough money to pay for living expenses and finance our life goals. For that, know how to achieve financial freedom in 5 years, examine the explanation of this article carefully.
Having financial freedom means we are in control of our finances and life choices. This can be proven that there are at least 7 stages or levels of financial freedom. Here’s how to achieve financial freedom in 5 years .
7 Stages of Financial Freedom and Achieving Them Over 5 Years
1 . Clarity
The first step is to check our financial condition, how much money we have, how much we owe, and what goals we want to achieve. “We can’t get to where we want to be without knowing where to start.
2 . independence
In the end, we want to be financially independent. When up to this level, a person has enough income to finance the necessities of life without outside gifts, such as help from parents. We live from paycheck to paycheck or take out loans to meet needs.
3. Financial Slack
People at Level 3 still had money left over after paying the living expenses. They can use this residual money to achieve other financial goals, such as raising an emergency fund and investing for retirement.
When we’re at this level we have some financial leeway, but according to Sabatier this doesn’t mean someone makes a much bigger salary. “Just because we make a lot of money doesn’t mean we actually save money that most people in this country live off of debt.”
4 . Stability
Those who reach Level 4 have paid off debt with high interest rates, such as credit card debt, and have an emergency fund worth six months of living expenses. When we have secured our emergency funds, we already have a safety net in case unexpected conditions, such as termination of work interactions (PHK), occur. “At this level, we are not worried if we lose our jobs or have to move to another city.
5 . Flexibility
People at Level 5 had enough emergency funds to cover two years of living expenses. With that much savings, we don’t have to keep everything in cash. “As long as we can unlock the money quickly when needed, we have the flexibility to free ourselves, at least while working.
6 . Financial Independence
People who have achieved financial independence can live solely on the income generated from their investments. The investment can be in the form of rental property or an investment portfolio that generates interest.
To get to this level, we have to invest our income in high levels. Pursuing financial independence requires a change of mind. “People are taught to save 5 percent, 10 percent, 15 percent of their income, and maybe we can retire when we’re 65,” he said.
“Thankfully, more young people are starting to realize that if I militantly save and invest, I can work less and have more control over my future and my destiny,” Sabatier added.
7. Myriad Wealth (Financial Freedom)
While those at Level 6 need to monitor changes in their investment portfolio to ensure retirement plans continue to occur as planned, those at Level 7 have no such worries anymore. “Level 7 is abundant wealth, they have more money than they need. We don’t have to worry about money.
Five Steps to Financial Freedom
1. Set Goals
Financial goals are goals that we want to achieve in an exclusive timeframe. This goal must be value specific so that we can plan how to achieve it. For example, we want to have IDR 100 million in the next five years.
2. Know the Risk Profile
As investors, the risk profile is something that we must know before investing because it determines how much risk we can bear. The higher the potential return on investment, the higher the risk. There are at least 3 types of risk profiles, namely orthodox (risk averse), moderate and militant (risk takers).
3. Choose the Right Investment (Financial Freedom)
If we are a novice investor, money market mutual funds are suitable to choose. Because, the risk is low and the value of our investment tends to be stable. Money market mutual funds consist of time deposits and bonds with maturities of less than a year.
Not only money market mutual funds, Government Securities (Sbn Ritel are also worthy of consideration. On May 25, 2022, the government is connected to the era of offering Retail SBN Model Savings Bond Retail (Sbr) series Sbr 011 with a tenor of 2 years and the yield is floating with a minimum limit (Floating with floor) . In the midst of the potential increase in the current benchmark interest rate, Sbr011 is very attractive and the returns are usually far above those of deposits.
When we are already proficient in investing, other investment instruments with higher risks can be tried. For example, fixed income mutual funds, mixed mutual funds, and equity funds. These three types of mutual funds are suitable for investors with a moderate risk profile – militant with an investment period of 3-5 years.
Not only that, investors can also consider investing in gold bars or precious metals. Both mutual funds, retail government securities and gold are similarly investment instruments that are worthy of consideration to beat inflation.
4. Choose a Trusted Investment System
Apart from knowing the investment and the risks, we also need to choose a system or application that is trusted and supervised by regulators. One of them is the Bareksa investment super app system, which provides hundreds of mutual fund products of various types and is managed by top investment managers.
Then at Bareksa there is also Retail SBN. PT Bareksa Portal Investasi or Bareksa.Com is the first integrated e-investment system in Indonesia, which was appointed as the official distribution partner (Midis) of the Ministry of Finance for online retail SBN sales.
Bareksa has also received an award as the best SBN midis for three consecutive years from the Ministry of Finance of the Republic of Indonesia. The latest awards received were the Midis SUN with the Best Performance 2020 and Midis SBSN with the Best Performance in the 2021 Fintech Category.
Bareksa also provides the Bareksa Emas feature which is managed by PT Bareksa Discovery Digital, in collaboration with licensed gold friends. We can invest in physical gold starting from IDR 50,000 online and are safe with this feature.
Then Bareksa also provides a Robo Advisor feature that will help us choose the best mutual fund product. Robo Advisor Bareksa is the first robo advisor in Indonesia to be licensed as an investment advisor from the Indonesian Financial Services Authority (OJK). This permit is stated in the OJK Board of Commissioners Rule No. Kep-17/D.04/2021 concerning Investment Advisory Business License Assistance to PT Bareksa Investment Portal.
The specialty of the robo advisor developed by Bareksa is that it provides automated investment planning services, supported by modern portfolio theory algorithms and human supervision.
With this human supervision makes Robo
Finally, there is also the Bareksa Umrah feature. Which provides mutual fund investment planning services for the purpose of Umrah embarkation. There are some of the best Islamic money market mutual fund products and Umrah travel packages from various trusted and licensed Umrah travel agents from the Ministry of Religion. .
5. Routine Investment Discipline (Financial Freedom)
The most important thing in investing is discipline. When we have set goals, we have to routinely set aside money according to planning at the beginning. Mutual fund investment has a risk content. Investors must read and be aware of the prospectus and fund fact sheet when investing in mutual funds. The Bareksa Emas feature is managed by PT Bareksa Discovery Digital, in collaboration with licensed Kawan Emas.
PT Bareksa Portal Investasi or Bareksa.Com is the first integrated e-investment system in Indonesia. Appointed to be the official distribution partner (Midis) of the Ministry of Finance for online sales of Retail Government Securities (Sbn) or Retail SBN. Not only is the registration and transaction process very fast and easy, you can also monitor your investments from anywhere and anytime.
Those are some reviews about how to achieve financial freedom in 5 years, hopefully the explanation of this article is useful, thank you so much.