How to Retire in 7 Years Starting with $0

hi guys it's mark i believe the biggest reason most people don't achieve early retirement is that they were never given a step-by-step guide the only path that seems to be pushed in schools is to get a 9 to 5 job save your money work until you're 65 and finally retire when you're too old to enjoy it luckily one of the businessmen i looked up to explained it in a slightly different way he said the word retirement should be replaced with the word freedom because once you reach a tipping point when you have enough money to stop working you have true freedom every day you can do exactly what you want no questions asked maybe that's relaxing on a beach sipping a pina colada or building businesses that change the world like elon musk when you have the ability to retire it's entirely up to you how you spend your time so on that note today we're going to discuss the plan i use to reach my retirement goal in my late 20s starting from zero dollars this may be a little extreme for some people but that's just me i'm either 100 in or i'm not in at all obviously you can take this plan at your own pace and who knows maybe you'll even beat me we'll get into all of this right after you hit that like button for the l2 buga rhythm as it really helps push this video to more people also make sure to subscribe if you want to grow your wealth phase one is all about your freedom figure this is the target you have to reach in order to have full control of your life this is something you should know even if you've got zero dollars in the bank if you don't know your freedom figure then it's a bit like being blindfolded in a running race you can't see where you're going so you may end up putting all your efforts in going in the wrong direction or even tripping up and falling flat on your face the reality is there are three types of people in this world there are doers dreamers and drifters otherwise known as the 3ds actually thinking about it when i was at school they gave me a cap with d on it they must have known i was a doer so let's start off with drifters they go through life living paycheck to paycheck without any financial aims they don't really see the point of saving or investing money as retirement feels like it's not something a young person needs to be thinking about dreamers do have financial goals but they don't have any plans in place to actually achieve them so they will forever just stay dreams and finally doers they have financial goals but most importantly have a plan to reach them and that's where your freedom figure comes in this is a very individual thing and it all depends on how much you want to pay yourself each year when you retire it's actually a great way to figure this out and it's called the times 25 rule so let's firstly assume you want to make fifty thousand dollars per year without working secondly we would need to multiply 50 000 by 25 which gives us 1.25 million dollars the idea is that you're able to withdraw four percent of this per year without ever running out of money and you guessed it four percent of 1.25 million dollars is 50 000 1.25 million dollars how am i ever going to get that in seven years this video's a lie i know this may sound tough especially if you're starting from zero dollars but it is possible no one said it's going to be easy but with the right approach it can be done i mean if i can do it then so can you in the early stages of your retirement plan the way you think about money is crucial it's all about getting the right mindset in place the key is to prioritize building wealth over cash flow this is because building wealth is about locking your money away in assets that increase in value whereas cash flow gives you more money flowing into your pocket now this may sound great but it can lead to a variety of problems such as lifestyle inflation and sky high taxes cash flow is extremely important but more so later in life once you start to unwind this is why whenever i made some extra cash when i was younger i made sure to reinvest the majority of it of course i get it sometimes it can feel really nice to secure some profit and lock it away in your bank account it can give you a full sense of security knowing you've got all your money sat in your account for whenever you need it but the reality is you often don't need as much money as you think forming a habit of reinvesting your cash flow is absolutely essential when it comes to building wealth as fast as possible and hitting your freedom figure phase two is laying the foundations this is kind of like building a house you need to lay a solid foundation to ensure your house doesn't crumble the first sign of an earthquake unfortunately seventy percent of millennials now live paycheck to paycheck which means they're building their lives on an unstable base just like building a house on quicksand if you find that unbelievable then this is even more shocking forty percent of americans with an income greater than a hundred thousand dollars a year are still living paycheck to paycheck this just goes to show how important laying the foundations are and even though it may seem simple many people are failing at this phase there are four stages i considered when i was in this phase during my early 20s the first stage is paying off high interest debt it's crucial to pay this off before you even consider investing your money as high interest debt is holding you back but saying this it is very important to understand the difference between good debt and bad debt good debt is anything low interest that makes you money for example the mortgage on a rental property or low interest finance on a laptop to build an online business bad debt is high interest debt that doesn't make you any money for example shopping for clothes on buy it now pay later credit card debt or even a typical bank loan all of this debt needs paying off as soon as possible i was in quite a lot of debt when i was 18 and in order to get out of it i used the debt avalanche method which involved making the minimum payments on all my high interest debt then i used any extra money to pay off the debt with the highest interest rate first which was my store credit card at 32 crazy i know signing up for that was a huge mistake which i've talked about in some of my past videos i then worked my way through the bad debt with the lowest interest rate which was my car loan at around 15 of the time within a year i'd managed to get everything paid off the big lesson here is you can't invest to build wealth when being weighed down by bad debt stage two is putting aside an emergency fund this is essential for your foundations as if you start investing without an emergency fund you might find a few months down the line you get into a spot of bother with an unexpected expense and no cash to pay for it you will then have to pull your investments out to cover the expense and then you'll miss out on the potential profits stage three is building a great credit score a credit score is a bit like your resume it follows you around in life is regularly updated and it helps lenders decide whether you're a worthy borrower having a good credit score is especially important if you ever want to get a loan in the future for example to buy your dream house you just never know when you're going to need it i should have actually started building my credit score a lot sooner than i did because it's so easy to get started all you need to do as soon as you turn 18 is get yourself a credit card start putting a few little expenses on it like gas and pay that baby off in full at the end of each and every month this way you pay no interest and prove to the lenders that you're a reliable borrower stage four is reducing your tax liability every dollar you earn has hidden costs of all the expenses however taxes can sting the most and take the biggest bite out of your money noah likes the tax man the good news is that tax efficient accounts can minimize how much tax you have to pay and maximize your savings in my early twenties my income was really starting to get eaten up by taxes so i started looking for the best ways to save as much as possible i then discovered if i opened up a retirement account then i could save money i hadn't paid tax on this is known as a 401k in the usa and a sip in the uk of course i will eventually have to pay tax on this but as i'll be older i'll be in a much lower tax bracket because i'll be earning less so hence i should save quite a lot of money but i didn't stop there i opened another account that allowed me to save money that i'd paid tax on but in the future i wouldn't have to pay tax on my capital gains or in other words all the money that the money generated this is called a roth ira in the usa and an isa in the uk i firmly believe that everyone should set up both of these accounts as soon as possible as i know it really reduced my tax burden so once you've built up these solid foundations it's time to start expanding phase three is building multiple income streams i like to think about it like this imagine spider-man is you the platform is your life and the skittle is your everyday job if you get fired guess what's happening now imagine this spider-man is you the platform's your life but now you have multiple income streams the stock market could crash you could lose your job or your side hustle could fail but your life is supported by your other income streams this makes it very hard for someone or something to come along and strike you out a secure job is nowhere near as common as it once was with the average person now working 12 jobs in a lifetime there isn't one perfect solution for everyone but something that has worked for me over the years is to pick side hustles that take advantage of my existing skills as i don't have to learn something completely new this will often end up being something you're passionate about as you develop the skills without even knowing it sometimes we can lean towards what will pay the most but when looking to build long-term wealth sustainability is important so when waking up every morning being passionate about your line of work is a great idea as richard branson once told me over lunch there is no greater thing you can do with your life and your work than follow your passions in a way that serves the world and you well that's actually one of his most famous quotes but he did say something along those lines it was about 20 years ago but one thing i do remember all the details about was the fantastic spaghetti bolognese he made for me there are many different side hustles you can start such as affiliate marketing e-commerce becoming an influencer drop shipping and even good old-fashioned window cleaning bin cleaning driveway cleaning photography the list goes on the main takeaway here is the higher perceived value you have according to society the more you will get paid if you do the bare minimum or your service doesn't really help people you'll be paid the bare minimum it's important to go above and beyond and provide value as best you can to maximize your profits which can then be invested to reach the end goal of your luxury retirement phase four is creating passive income once you have your side hustles and income in check it's time to start looking into passive income streams side hustle money doesn't last forever that's why you want passive income streams so your money can make more money while you sleep this is why the rich get richer this phase is all about multiplying your cash and not chasing high returns this is why i always talk about the importance of consistent long-term investing the end goal is to be on the beach sipping a nice drink not worrying about anything money related now i do always say that no income is truly passive everything requires a bit of work here and there but the idea is to get your money working for you instead of selling your time there is only so many jobs you can fit into one week and that's why trading time for money has its limits i was working a nine to five job plus all the overtime flipping cars on the weekday evenings working in a shop on saturdays and tutoring people on sundays i actually had no more time to sell so that's when i started looking into ways to generate passive income through the markets i'm talking stocks real estate and cryptocurrencies well maybe not crypto back then it wasn't around but i'm certainly interested in it now the stock market is probably the easiest to get involved in especially nowadays maybe not when i was younger as you had to call up your broker on the phone and do all your trades that way now it's all done on investing apps these apps also have great sign up bonuses public.com are currently giving you a free stock worth all the way up to a thousand dollars if you live in the usa and free trade are giving away a free stock worth up to 200 pounds if you live in the uk i'll leave the links down below if you want to pick those up both these apps also offer fractional investing which means you can invest with as little as two dollars this has made it much easier for the everyday investor to get involved in the stock market it's always a good idea to max out your tax advantaged accounts before investing elsewhere i personally like to put the majority of my money into simple low-cost index funds which are essentially baskets of stocks and like i said earlier i like to minimize cash flow so i always turn on automatic dividend reinvesting cryptocurrency is the second error i would focus on as it also has quite a low barrier to entry with apps like coinbase making it easier than ever to purchase crypto coins however it's definitely riskier by the way coinbase are giving you ten dollars a free bitcoin i'll leave the link below if you're interested in that i personally only have five percent of my money in well-known crypto coins such as bitcoin ethereum and cardano i believe that these are the coins that will stand to test the time and i'm not prepared to take the risk of betting on a random coin that might hit it big like i said before my strategy is to get modest passive income from the markets and make fast money from my businesses real estate is the last on the list and this is honestly the holy grail of wealth building however it is a little harder to get into if you're able to save enough for a deposit on a rental property then you can really start unlocking the power of leverage this is because you can get a tenant to rent out the house which should cover the mortgage or while hopefully the house increases in value you're basically getting your house paid for by someone else obviously the earlier you can do this the sooner the debt will be paid and the house will be yours leverage is an amazing tactic used by lots of rich people but it can be very dangerous if not done correctly this is because you can become over leverage which means if things go bad and you can't meet payments your property could be repossessed most people won't tell you this but i'm going to be honest this step-by-step strategy will be hard to achieve if you don't take your own initiative and start a profit generating side hustle it's still possible with a nine-to-five job but maybe not in seven years unless you have an extremely highly paid job that is also secure a nine-to-five isn't at all bad it's just most people need a side hustle to kick-start that wealth building also just a warning for me this is not gonna be easy anyone that tells you otherwise is lying to you you're gonna have to knuckle down like i did and work hard for a few years to have a lifetime of freedom after all if it was easy then everyone will be doing it when you hit your first roadblock and i'm certain you will just think of it as a challenge to overcome and not as a complete disaster this plan will only work if you stay consistent and disciplined i'm confident that after you reach phase 4 you should be in a pretty good place to achieve financial independence and retire early so i'm going to leave the next video right up there but don't click on it just yet make sure to subscribe if you want to grow your wealth and don't forget to pick up your free stocks and bitcoin with the links below okay i'll see you over there

Channel: Mark Tilbury

Views: 3,159,685

Keywords: how to retire early, retire early, financial independence, early retirement, real estate, passive income, real estate investing, stock market investing, how to retire, stock market, retire in 10 years, how to be a millionaire, investing for beginners, personal finance, how to invest in stocks, retirement planning, fire retire early, fire community, financial freedom, how to retire early dave ramsey, mark tilbury

Id: 6RdXGUparU0

Length: 15min 16sec (916 seconds)

Published: Wed Sep 01 2021