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

to be able to

live

completely off their

investments

. And I know the title of this video may sound crazy about retiring at 30, and there are a lot of people out there selling the pipe dream that you can

retire

at 30 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 a course or offer you any kind of product like that. What we're simply going to talk about here is how much money you need to have invested in order to be able to

live

off

your

investments

and essentially not have to work to earn

your

money.

And believe it or not, there are actually countless people who have actually

retire

d at age 30, following exactly this strategy I'm going to describe. So if this idea of ​​retiring early and not having to work for your money is something that interests you. What I want to ask you to do is go ahead and leave a like on this video to show your support. I really appreciate it as it helps with the algorithm and allows this video to be shared with more people. But what we're going to look at in particular in this video is something called the 4% rule, and it essentially shows you how much money you need to save in order to live off your investments.

In fact, now you can live off different types of investments like real estate or the stock market, for example, or a business that provides you income. But what we're going to use in this video as an example is a passive investment in the stock market, and we're going to show you exactly how much money you need to have invested to be able to live off 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 the interest income or the growth of that money without touching the principle.

And as I'm sure you can imagine, if you don't touch the principle or your initial investment, your money will likely last forever. Now, the sooner you can retire depends on how much money you can save and how little money you spend each month, and there's actually a whole movement of people who are following exactly this strategy. , and there is something called FIRE, and FIRE stands for financial independence and early retirement. And there are a lot of people who are making blogs and videos and all kinds of things about this concept, and there are countless examples of people who have retired at age 30 or even younger.

Following these strategies. Alright guys, there are basically three steps you need to take to do this and as I'm sure you can imagine, step number one is to be frugal or spend as little money as possible because ultimately what you're looking for. What you need to do is save and invest enough money so that the interest or dividends, or whatever the growth is, will pay your monthly living expenses. And as I'm sure you can guess, if your monthly expenses are $6,000 versus $3,000, you'll need to invest a lot more money to cover those expenses. Therefore, being frugal and saving as much money as possible will actually serve two different purposes.

Well, number one, the less you live on, the more of your salary you can save, and the more of your salary you can save, the more you can contribute to that. freedom fund, which will eventually pay all of your living expenses. And then secondly, by spending as little money as possible each month, you don't actually need to save that much money to potentially live off the interest or growth of your money. And let's go over those exact numbers right now. Alright guys, step number two that you need to take here is going to be tough, but it's going to be saving 50-70% of your net income and again, if you want to retire in your 30s.

Let's say you want to work 20-30 and then not work for the rest of your life, you'll have to take some drastic measures here. And that is why it is necessary to live on a microscopic amount of money. And that is why step number one is so important: reduce those monthly expenses as much as possible. So the people who are trying to do this, you won't see them driving new cars, you won't see them going on vacation, they'll probably be, you know, eating canned beans and making backyard bonfires as summer entertainment. Not that there's anything wrong with that, but they're literally spending the least amount of money possible, because they're focusing on the long-term picture of what they're trying to do.

So people who follow this FIRE movement often aim to save 30 times their annual expenses, and that will allow them to withdraw about 4% annually without basically touching that principle and that's where the 4% rule comes into play. And that's basically where you can withdraw from an account about 4% annually, and over a long period of time based on the growth of that account and those investments, it shouldn't undermine the principle that it should in theory give you unlimited money. So what you aim to do here is reduce your monthly expenses as much as possible. Calculate how much it costs you to live each year, multiply it by 30, and then save that amount of money by saving 50 to 70 percent of your paycheck each week or month, or however often you get paid.

Very good, now the question you have been waiting for, how much money do you need to have saved and invested to live off 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, or $600,000. If your annual expenses were $35,000, that number becomes 1.05 million. If you are someone who spends $50,000 a year on your living expenses, you would need to have $1.5 million saved and invested, and for the final figure here, if you were spending $100,000 a year on cars, housing, food and all that, you would need to have of about 3 million dollars to successfully pursue this strategy.

So I'm sure it goes without saying guys, the best way to stick to the strategy and reach that retirement as quickly as possible will be to keep your monthly expenses as low as possible. And just to put it in perspective, every extra $100 that you spend per month, if you follow this, that's an extra $36,000 that you should have set aside in that freedom fund to support that $100 of monthly spending. So if you're serious about this and want to retire at age 30, or even sooner, you're literally spending the least amount of money humanly possible. Alright, the last step in following this strategy will be to passively invest in the stock market.

So most people who follow this strategy are actually following Warren Buffett's style of investing passively in index funds. And if you're unfamiliar, index funds are basically a way to have diversified exposure to the stock market. Where you're essentially not picking which stocks are going to perform the best, you're just passively owning the entire market. So people who follow this strategy are not trying to beat the market, they are not stock traders or stock pickers, they are just passively investing in these low fee index funds, one of the most popular is VOO or the vanguard 500 fund. And Essentially what you're doing is buying a small portion of the 500 largest publicly traded companies out there, and all the different dividends that those companies pay are pooled together collectively, and then you get a quarterly dividend from that ETF.

And over the last hundred years, the stock market, on average, has returned between eight and 10% annually. So if you were only withdrawing 4% from that account, based on historical data, you should never touch that principle for a long period of time. And that's how you could live on 30 times your annual income, if you save that money and invest it. That being said, this is the perfect segue into the sponsor of this video, which is Webull. So if you are interested in starting to invest in the stock market, this is a completely commission-free broker, which means that you will not pay any fees to trade with them and you can purchase the Vanguard 500 ETF that we offer.

We are talking in this video directly on that Webull platform, and not only that, they are willing to give you up to two stocks completely free just for opening an account with them. Number one, if you open the account you will get free shares worth up to $250, and then when you fund the account you will get one additional share worth up to 1000. So if you do the math there, i.e. two completely free shares worth up to $1,250. I am now affiliated with Webull, so I earn a commission in the process if you use my link, but if you are interested in getting two stocks completely free, that will be in the description below.

Finally, the last thing I want to do here is put all of this together and look at a real example of how you could follow this strategy and even retire at 30. Now, this is going to require some very drastic time savings because you're essentially trying to work for about 10 years of your life and then not having to work for the rest of your life. So most people will never be able to achieve this, due to the amount of sacrifice that is required. That being said, let's go ahead and review the numbers now. So, let's say you make a salary of $75,000 a year at your job and ideally you don't have any, you know, school loans, student loans, medical bills or anything like that.

So you haven't gotten caught up in consumerism and you don't have a new car to keep your expenses as low as possible. And I know this sounds like a theoretical situation, but in reality it was more or less the same situation that I was in, when I graduated from college I was 20 years old, now I was making about $68,000, so a little less, but I had no debt, no car payment, so I was someone who could have potentially pursued this strategy. So, after paying your taxes, your take-home pay will be around $56,250. Now we know that, to achieve this, it is necessary to save between 50 and 70% of that net salary to be able to accumulate enough money to live off that income.

So let's assume that you are saving 70% of that take-home pay. Therefore, you would need to live off 30% of that after-tax income, which works out to just over $16,000, or about $1,400 a month. Now, is that possible? Absolutely it is. It is easy? Of course not, you're certainly not going to go out to the bar to buy beers or go out to dinner, you're probably going to live in a tiny apartment driving an old car and eating at home for breakfast, lunch, and dinner. But if that kind of sacrifice is worth it to you in the long run, it's something you might be willing to make yourself.

Therefore, each year you would be saving and investing a staggering amount of money, which is 70% of your take-home pay or just over $39,000. And here's how you could do it, and assuming you keep your cost of living the same at around $16,000, just over 16,000. Your freedom number, or 30 times your annual expenses, would be just over $506,000. So how long would it take you to save that money? Let's go ahead and answer that now. Well, if you take that $39,375 a year of money that you're saving and invest it in the stock market, you get an 8% return, and like we said, historically it's about eight to 10%, so we're going to go to the conservative side.

Well, in 10 years with an 8% career return, you would have $570,408.40, which means that then, if you kept those living expenses the same, following that 4% rule, you wouldn't have to work to earn your money beyond that point . And to back up, guys, this really comes down to the level of sacrifice involved. Are you really willing to live on like $1,400 a month, or do you want to have vacations and go out to dinner and things like that? So it's not the people who do this who travel and dine, but rather the people who live as frugally as possible and enjoy themselves in other areas of life besides spending money on meals and things like that.

Now, is this a strategy you would personally follow? Probably not because I'm one of those people who likes to travel, like to dine out, and spend a little more than the average person, so my freedom number would be several million dollars, but instead I follow the strategy to earn as much money as possible. as much as possible and save a lot of that earned money, and then eventually allow that to supplement my income by having that interest or growth on my money pay for a lot of the things I want. And believe it or not, guys, there are honestly countless people who followed this exact strategy and retired at age 30 or younger.

One of the most well-known people is Mr. Money Mustache, who has an entire blog where he documented this entire journey to becoming financially independent and retiring early with both himself and his wife. So I'm going to link his blog in the description below, as well as a couple of other stories about people who followed this exact strategy and retired at age 30 or younger. So that's it guys, thank you so much for watching. If you're new to this channel, be sure to subscribe and hit the bell for notifications so you don't miss future videos, and I hope to see you in the next one.