Financial Independence (FI) means not needing to work for money. The core concept is to increase your savings rate and buy assets that provide a stream of passive income.
@LeashedDoggie I would stay away from any business ownership investment that isn't a publicly traded company (i.e. a stock on the NYSE). When I invest, I look for a few things - a track record of consistent revenue and profit, adequate cash flow, low or no debt load (that's more of a personal preference but the rule of thumb is debt repayment should be less than 1/3 of profit), good ratings on their bonds, adequate liquidity and a balance sheet history that matches the reported earnings. I also look at the competitive landscape and if they have any factors that serve to protect their business from competition. I check the history through 2008/2009 and see how the business fares during a recession. From there I work from the earnings per share to a price I'd be willing to pay and compare to the market price.
If you don't have the skills to do the above, not to worry. Investing is like a class where the professor offers you a deal - pick this option, get a B, don't come back. That option is buy and hold an index fund - you'll always get market performance which beats about 80% of investors. An example would be VTSAX, but there are other index funds that work just as well. Be sure to look at the expense ratio, it should be under 0.1% More than that and you are getting overcharged.Read More
@flyingpandaz That's a good point about risk not necessarily equaling volatility. The more undervalued an asset is when you purchase it, the less risky it is over time, despite short term fluctuations. A good primer for those unfamiliar with investing and who are interested in value investing is "The Little Book That Beats the Market" by Joel Greenblatt. He also runs a free website, magicformulainvesting.com, which screens stocks using earnings yield (inverse of PE) and return on invested capital, and lists the most attractive ones at varying market caps. I don't recommend individual stocks for most investors, but those who want to give it a shot and don't have a background in it should find the screen to be useful. What helps is to think of a stock as a business. Estimate the value of the business, assume there is no stock market and your returns will be based on free cash flows, and compare to the market price. If there is a big discount, buy it. And diversify.Read More
@Redreformedbro Looks to me to have all the hallmarks of someone getting fleeced. I won't say it's a scam, since you no doubt get some sort of training program. It fails the obvious test of - if it's so easy and anyone can do it, why don't you just sit at home and do it 1000 times over instead of making a training program? If you had a free money button, wouldn't you be chilling on the beach somewhere instead of running a website? I see vague promises of wealth with no effort. Wouldn't we all like to sit at home, make a few clicks and then watch the money come rolling in?
You'll know a legit investment program when its boring as all hell and takes years. It will also mention things like "risk tolerance" and picking an appropriate amount of bonds.Read More