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  • Hi, my name is Phil. I’m a video creator and online instructor. I’m also a personal

  • finance nerd.

  • Because of that, I want to create a series of videos that breaks down some of the most

  • mystifying topics that plague our society.

  • In a world where people’s finances are typically locked away and not-talked about, I believe

  • opening up the gates of financial conversation will help everyone live a better and smarter

  • life.

  • In this first video, I want to explain the shockingly simple math behind early retirement

  • - thanks to one of my biggest heroes, Mr Money Mustache.

  • While the ability to retire may seem like a distant and unreachable goal for many, the

  • premise comes down to one thing. You need to invest money so that it earns more money.

  • This could be investing in stocks or bonds, real estate, or any other of investment vehicles.

  • As soon as your investments earn enough money for you to live on each year, you are able

  • to retire.

  • Let’s break it down further to know when you can retire.

  • The most important concept is knowing your savings rate, basically how much you make

  • minus your expenses.

  • If you spend 100% of your income, you will never retirebecause you will never be

  • able to invest any money that earns money for retirement.

  • If you spend 0% of your income, you can retire right nowbecause somehow you are living

  • without needing to make any more money.

  • Between 0% and 100% are a number of savings rates that correlate with the years it will

  • take to retire.

  • For this, let’s assume your annual investment return is 5% (which is conservatively low)

  • and your withdrawal rate is 4%… meaning you spend 4% of your net worth each year.

  • For example, if you have a $1,000,000 net worth, and you live on $40,000.

  • If your savings rate is 10%, you will be able to safely retire after 51.4 years. Safely,

  • meaning you will never run out of money.

  • If your savings rate is 25%, you can retire in 31.9 years.

  • 50%, you can retire in 16.6 years.

  • And if you can somehow save 75% of your income, you can retire in 7.1 years.

  • Now getting to that savings rate might not be easy in our world of societal pressures,

  • keeping up with the Joneses, and bad habits. But you can get closer by making smart decisions,

  • avoiding debt, and living simply.

  • The key take away isCutting your spending rate is way more powerful

  • than increasing your income because no matter how much money you make, decreasing your spending

  • will speed up the process.

  • A note, The math behind early retirement works if you are working a minimum wage job or a

  • 7-figure CEO salary. It’s all about the savings rate.

  • So if you want to retire in 10 years, the math tells us that you need to save 66% of

  • your income.

  • Now there is a lot that I didn’t talk about - like how to invest, and how to cut expenses

  • to get to a high savings rate. Those will come in a future video.

  • For now, get excited about the honest truth about retirement (and early retirement at

  • that!)!

  • Let me know what you think in the comments below? Is this exciting or bogus?

  • Until next timestart being money smart.

Hi, my name is Phil. I’m a video creator and online instructor. I’m also a personal

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早くリタイアする方法。驚くほど簡単な数学 (How to Retire Early: The Shockingly Simple Math)

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    Jim に公開 2021 年 01 月 14 日
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