Are You Concerned About Financial Freedom?

financial freedom

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Financial freedom is personal choice because everyone’s definition is different. And even though financial freedom is personal most concerns about fit into 4 broad categories: taxes, inflation, portfolio management and having enough money. Are these your concerns?

#1 – Taxes

You have limited control over taxes but you can take steps to offset the impact of them on your income and investments. Take advantage of investments that shelter you from taxes; tax exempt or tax deferred investments will both help in that regard. If your employer offers a 401k plan, invest as much as you possibly can to defer paying taxes on that money until you withdraw it at retirement.

#2 – Inflation

Inflation continually erodes the value of your investments but unfortunately you have no control over it. It may sound trivial but the only way to offset it is to save more so that your savings keeps up with the cost of living increases.

#3 – Portfolio Management

If you expect to achieve financial freedom, managing your portfolio is a big job that needs your time and attention. It involves investment selection, cost analysis and asset allocation. Does the risk of your investments keep you up at night? Are you paying too much in fees? Is your investment mix the right mix for your financial goals? Do you have any duplicate investments, are they balanced? In other words does your portfolio include stocks, bonds and cash? Is your portfolio too heavily weighed in one type of stock? Are your investments producing income?

#4 – Outliving Your Income

Some people will spend 25 or more years in retirement; that’s a long time. Financial preparation for that length of time can take an entire career or the right types of investments. Young people still have time to save and invest. Many people close to retirement use annuities to help fill in any gaps they may have between their retirement income and their retirement expenses. Some people work part-time. Again, financial freedom is a personal choice.