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HOW TO RETIRE AT AGE 30 (& Live Off Your Investments)

HOW TO RETIRE AT AGE 30 (& Live Off Your Investments)
so in this video today we are going to be talking about how much money you need to have set aside in order to

live

off of

your

investments

completely and I know that the title of this video may sound crazy about retiring by thirty and there are a lot of people out there selling a pipe dream of you can

retire

by thirty as long as you invest in this course or go buy real estate and while that may work for some people I'm not here to sell you guys a course or to pitch you on any kind of product
how to retire at age 30 live off your investments
like that what we're going to simply talk about here is how much money you need to have invested in order to

live

off of

your

investments

and essentially not have to work to earn

your

money and believe it or not there's actually countless people out there who have in fact

retire

d as early as thirty years old by following this exact strategy that I'm going to outline so if this idea of retiring early and not having to work for

your

money is something that interest you what I want to
ask you guys to do is go ahead and drop a like on this video just to show

your

support I really do appreciate that as it helps out with the algorithm and allows this video to get shared with more people but what we're going to look at in particular in this video is something called the 4% rule and that essentially shows you just how much money you need to have set aside in order to label off of

your

investments

now you can in fact

live

off of different types of

investments

like real estate
or the stock market for example or a business that's providing income for you but what we're going to use in this video as an example is a passive stock market investment and we'll show you exactly how much money you need to have invested in order to

live

off of that income so the goal here with this strategy is to simply invest

your

money and have a large amount of money invested and then you would essentially be living off of the interest income or the growth of that money without
touching the principle and as I'm sure you guys can imagine if you're not touching the principle or

your

initial investment then

your

money could foreseeably last forever now the sooner you're able to

retire

is all based on how much money you're able to save up and how little money you are spending each and every month and there's actually a whole movement of people that are following this exact strategy and it's something out there called fire and fire stands for
financial independence

retire

early and there's a lot of people who are doing blogs and videos and all kinds of stuff about this concept and there are countless examples out there of people who have

retire

d as early as 30 or even less by following these strategies alright guys so there's basically three steps you have to follow in order to do this and as I'm sure you can imagine step number one is to be frugal or to spend as little money as possible because ultimately what you're
looking to do is save and invest enough money that the interest or the dividends or whatever the growth is pays for

your

monthly living expenses and as I'm sure you guys can guess if

your

monthly expenses are six thousand dollars versus three thousand dollars you're going to need a lot more money invested to cover those expenses so being frugal and saving as much money as possible is actually going to serve two different purposes here well number one the less that you're living on
the more of

your

paycheck you're able to save up and the more of

your

paycheck you're able to save up the more you're able to contribute to that freedom fund which will eventually be paying for all of

your

living expenses and then second of all by spending as little money as possible every single month you actually don't need to save up as much money to potentially

live

off of the interest or the growth of

your

money and we're gonna go over those exact numbers right now
alright guys so step number two that you have to follow here is going to be a tough one but that is going to be saving fifty to seventy percent of

your

take-home income and again if you're looking to

retire

by thirty years old let's say you want to work from twenty to thirty and then not work for the rest of

your

life you're going to have to take some drastic actions here and that is why you need to

live

off of a microscopic amount of money and that's why step number one is so
how to retire at age 30 live off your investments
important by cutting down as much as possible on those monthly expenses so people who are trying to do this you're not gonna see them driving brand new cars you're not going to see them going on vacations they're probably going to be you know eating canned beans and doing campfires in the backyard as summer entertainment not that there's anything wrong with that but they are literally spending as little money as possible because they're focusing on the long-term picture of
what they are trying to do so people who are following this fire movement are often aiming to save 30 times their annual expenses and that will allow them to withdraw about 4% per year without basically touching that principle and that is where that 4% rule comes into play and that is basically where you're able to draw from an account about 4% per year and over a long period of time based on the growth of that account and those

investments

it shouldn't be chipping away at the principle
which should in theory give you unlimited money so what you're aiming to do here is to lower

your

monthly expenses as much as possible figure out what it costs you to

live

per year multiply that by 30 and then save up that amount of money by saving 50 to 70 percent of

your

paycheck every single week or month or however often you are getting paid all right so now the question you guys have been waiting for just how much money do you need to have saved up and invested to

live

off of that money
following the 4% rule well if

your

annual expenses are $20,000 per year they would recommend having 30 times that amount of money saved and invested so $600,000 if

your

annual expenses were $35,000 that number becomes one point zero five million if you're somebody spending $50,000 per year on

your

living expenses you would need to have 1.5 million dollars saved and invested and for the final figure here if you spent a hundred thousand dollars per year on cars and housing and food and all of
that you would need to have about three million dollars to successfully follow this strategy so I'm sure this goes without saying guys the best way to follow this strategy and to reach that

retire

ment as quickly as possible is going to be to keep

your

monthly expenses as low as possible and just to put it in perspective for you guys every additional $100 that you spend per month if you follow this is an additional $36,000 you need to have set aside in that freedom fund to support that $100
of monthly spending so if you're serious about this and you want to

retire

at 30 or even younger you are spending literally as little money as humanly possible all right so the final step to following this strategy is going to be passively investing in the stock market so most people following this strategy are actually following the Warren Buffett style of passively investing in index funds and if you're not familiar index funds are basically a way for you to have diversified exposure
to the stock market where you're not essentially picking what stocks are going to outperform you're just passively owning the entire market so people following this strategy are not out there trying to beat the market they are not stock traders or stock pickers they simply passively invest in these low fee index funds one of the most popular ones being the o o or the Vanguard 500 fund and essentially what you are doing is buying a small piece of the 500 largest publicly traded companies
out there and all the different dividends those companies pay are all collectively put together and then you earn a quarterly dividend from that ETF and over the last hundred years or so the stock market on average has returned about eight to ten percent per year so if you are only drawing 4% from that account based on historical data you should never be touching that principal over a long period of time and that is how you would be able to

live

off of 30 times

your

annual income if you save
how to retire at age 30 live off your investments
that money and invest it now that being said that is the perfect segue into the sponsor for this video which is Weeble so if you guys are interested in getting started with investing in the stock market this is a totally Commission free broker out there meaning you're not paying any fees to place trades with them and you can purchase the Vanguard 500 ETF that we're talking about in this video right on that we bowl platform and not only that they're willing to give you up to two
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to be down in the description below so finally the last thing I want to do here is to put all of this together and go through a real example of how you could in fact follow this strategy and even

retire

by 30 now again this is going to require some very drastic saving because essentially you're trying to work for about 10 years of

your

life and then not have to work for the rest of

your

life so most people will never be able to accomplish this because of the amount of sacrifice that is
required but that being said let's go ahead and run through the numbers now so let's say you're earning a salary of 75 thousand dollars per year from

your

job and ideally you don't have any you know school loan student loans medical bills or anything like that so you haven't gotten sucked into the consumerism and you don't have like a brand new car so

your

expenses are as low as possible and I know this sounds like you know theoretical situation but this was actually
about the same situation I was in when I graduated college I was 20 years old now I was making about sixty eight thousand dollars so a little bit less but I had no debts I had no car payment and so I was somebody who could have potentially followed this strategy so after you pay

your

taxes

your

take-home pay is going to be around fifty six thousand two hundred fifty dollars now we know already in order to pull this off you need to save 50 to 70% of that take-home pay in order to actually build
up enough money to

live

off of that income so we're going to assume you are saving 70% of that take-home pay so you would need to

live

off of 30% of that post tax income which amounts to just over $16,000 or around $1400 per month now is that possible it absolutely is is it easy absolutely not you're certainly not going to be going out to the bar and buying beers or going out to dinner you're probably going to be living in a tiny apartment driving an old car in eating at home for
breakfast lunch and dinner but at that type of sacrifice is worth it to you for the long-term picture it is something you may be willing to do

your

self so each year you would be saving and investing a staggering amount of money which is 70% of

your

take-home pay or just over thirty nine thousand dollars and that is how you would be able to pull this off and assuming you kept that cost of living the same at around sixteen thousand dollars just over 16 thousand

your

freedom number or 30 times

your

annual expenses would be just over five hundred six thousand dollars so how long would it take you to save up that money let's go ahead and answer that now well if you took that thirty-nine thousand three hundred seventy-five dollars per year of money that you are saving and invested it in the stock market earning eight percent return and as we said historically it's an eight to ten percent so we're gonna go on the conservative side well in ten years at a eight percent return per
year you would have five hundred seventy thousand four hundred eight dollars and forty cents meaning you could then if you kept those living expenses the same following that four percent rule not have to work for

your

money past that point and just to circle back guys what this really comes down to is the level of sacrifice involved are you really willing to

live

off of about fourteen hundred dollars per month or do you wanna have vacations and going out to get dinner and things like that so
it's not people who are doing this that are out there traveling and dining it's people that are living as frugal as possible and finding enjoyment in other areas of life other than just you know spending money on dining and things like that now is this a strategy I would personally follow probably not because I am one of those people that enjoys traveling I enjoy dining and I do spend a little bit more than the average person so my freedom number would be multiple millions of dollars but
instead I follow the strategy of earning as much as possible and saving a lot of that earned money and then eventually allowing that to supplement my income by having that interest or the growth of my money paying for a lot of those things that I want and believe it or not guys there are honestly countless people out there that have followed this exact strategy and

retire

d at 30 or less one of the most well known people being mister money mustache he has a whole blog where he documented this
whole journey of becoming financially independent and retiring early with both him and his wife so I'm gonna link up his blog down in the description below as well as a couple of other stories about people who have followed this exact strategy and

retire

d at 30 or less so that's gonna wrap up this video guys thanks so much for watching if you're new to this channel make sure you subscribe and hit that Bell for notification so you don't miss future videos and I hope to see you in
the next one