How To Retire by 30 Years Old | Starting with $0
Here is your step by step guide to learning how to retire by 30 years old - Enjoy! Sign up to Morning Brew for free today: cen.yt/morningbrewgraham Thanks! Add me on Instagram: GPStephanAdd me on Instagram: GPStephan
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First thing to know: The FIRE Movement
This stands for Financially Independent Retired Early, and it’s a community of people who dive into the analytics of EXACTLY what you’ll need to be able to retire at any age.
All you need to know for retirement comes down to a few things:
How much money do you NEED to spend every year, how much do you CURRENTLY have saved, and lastly - how much money do you currently make? If you know the answers to those 3, it’s going to tell you EVERYTHING you need to know to be able to retire by 30.
To start, how much money you SPEND is going to be the most important variable of this entire calculation.
Generally speaking, if you’re under 30 years old and you want your your money to last you INDEFINITELY without ever running out - you’ll need to only spend 3% of what you have invested, each year.
Now, how much you spend is going to GREATLY influence how much you’ll need to retire…because, for every $100 per month the spend, you’ll need $40,000 invested in order for that $100 per month to last you forever.
NEXT - HOW MUCH MONEY DO HAVE SAVED UP AND INVESTED?
Whatever that amount is…divide that by 33, and that’s how much income your investments will be able to replace. From there, you’ll need to do the super easy math to figure out how much more you’ll need in order to retire…all you need to do is take how much money you spend every year, multiply it by 33…and however much that is, is how much money you’ll need before you can call yourself “Retired.”
This is based on what’s known as the Trinity Study, which analyzed the investment portfolios of stocks and bonds throughout every year in history, and calculated how much you could spend from your investment throughout a 30 year retirement - and that study found that you can spend 4% of your portfolio every year, and still have that money last you 30 years.
However, a 30 year retirement isn’t going to be long enough if you plan to start that retirement at 30 years old...so, in order to preserve more capital so you can retire for a longer period of time…a 3% withdrawal rate was recommended.
And finally - the last factor in the equation - how much money do you currently make?
This is going to determine how long it’s going to take you to hit your target retirement number, and whether or not you’ll have to earn more money to get there sooner.
HOW TO GET THERE: SAVING MONEY.
The Blogger MrMoneyMustache did the calculation for us, and found out how many years you’ll need to work in order to retire compared to how much money you save. Using the 4% rule, he determined that - if you save and invest 70-90% of your income, you would be able to effectively retire within 10 years of working.
Practically, if you want to do this by 30 years old - you’ll either have to MAKE A LOT OF MONEY, or you’ll need to SPEND VERY LITTLE MONEY - but, assuming you guys just want to make a whole bunch of money as fast as possible to be able to retire, I’ll give you the honest run down on MAKING AS MUCH AS POSSIBLE:
Your BEST SHOT at being able to retire by 30, and make a LOT of money, is to work a job that pays you based on YOUR RESULTS, not how much TIME you put in. And at the end of the day - if you want to make a LOT of money just to be able to retire quickly - de-couple the idea that the more time you work, the more money you make - because that’s very much NOT true, at all.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.
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