Financial Freedom means having enough money coming in regularly even if you don't work all the time to get there you need assets that make money for you enough to cover your living expenses but what assets can provide us not only with cash flow to pay our life's expenses but protection against market downturns and inflation in today's video let's go over five assets to quit your job before we begin please like the video and subscribe for more great content like this let's get started number one dividend stocks owning stocks in strong companies can be a way
to make regular money without having to work for it these companies share some of their profits with their shareholders through dividends which are like cash payouts different companies give out different amounts in dividends this is called the dividend yield for example Apple has less than 1% dividend yield while Exxon Mobile has more than 3% dividend yield it's a percentage of the stock price for instance a company with a 3% dividend yield on a $100 stock would pay you $3 each year for every share you own just remember dividend yield is just one thing to consider
when buying a stock you also want to invest in companies that are doing well financially and are expected to keep doing well in the future making dividends part of our consistent cash flow is a long-term plan unless you have large Capital to invest for example let's say that you have an average dividend yield of 3% in your Investment Portfolio so in order to make $1,000 per month in dividends we need a portfolio of $400,000 this is why for most people dividend investment is a long-term plan lots of investors make use of compound interest and reinvest
their dividends to make their investment grow bigger over time until until they start making a good amount of money regularly although this is a long-term plan it is a great addition to our cash flow since this type of income is very passive and is taxed at a lower level than regular income number two cash flowing real estate people say real estate is one of the best ways to get rich and they have good reasons for it for one real estate tends to go up in value over time back in the early 199 90s houses in
the US typically cost around $997,000 today the median home value is over $400,000 the value of the market more than tripled in the last 30 years second a person can own this type of asset without actually having the money to purchase it for instance let's say we buy a house for $2,000 we put down $40,000 and borrow $160,000 at a 2.5% interest rate over 30 years our expenses including mortgage payments interest insurance and taxes come out to be $830 per month this means that with $40,000 or in many cases much less we can own a
$200,000 asset but let's say renting this house would cost $1,200 each month after paying the rent and all the bills we'd still have three $370 left each month that means we'd come out ahead by $4,440 every year the great thing about real estate is that your asset is being paid off by someone else allowing you to build equity on your property the value of your property is increasing year after year and you are receiving positive cash flow month after month not to mention the financial strategies that one can use to expand their wealth with real
estate some investors bought borrow money from the value their properties have gained to buy even more properties this lets them grow their Investments faster for example let's say that your $200,000 property grew in value and is now worth $250,000 so you decide to refinance this house and take those $50,000 out of the property in cash then you use those $50,000 to buy another $200,000 property so your $40 ,000 investment lets you buy $450,000 worth of real estate this doubles your cash flow because now you have two properties bringing in money each month number three bonds
bonds nowadays aren't seen as great Investments because they don't give good returns and sometimes they don't even keep up with inflation but there are strategies where bonds can be used as a layer of protection against Market downturns especially when someone is in or approaching retirement Warren Buffett a famous investor said if he died before his wife he'd tell his manager to leave his wife's money in a very specific but simple portfolio Buffett instructed to have 90% of the money in simple index funds like the S&P 500 and another 10% in bonds to see how effective
this strategy was Finance Professor Javier Estrada tested this strategy with historical Market data and to the surprise of many this simple strategy outperformed many experts advice on retirement investing but a strata added an additional twist to this strategy to take full advantage of the protections bonds can offer in an Investment Portfolio you see no one can predict when the market will crash we just know that it'll happen at some point so we must have a strategy in place especially if we are already financially free and living off of our investments Estrada says that once someone
is retired and withdrawing money from their Investment Portfolio keep an eye on how the market is doing if the market is doing great take the money from the equity side since it is the one producing the most returns but if the market is not doing great and is losing money take your money from the bond side since bonds tend to go up in value during bare markets this will allow the equities time to recover in value instead of selling them when they are down number four cash flowing businesses there are lots of businesses that make
a lot of money that aren't listed on the New York Stock Exchange these can be physical businesses like a restaurant a coffee shop a franchise or an ATM machine chain they can also be online like an application or a software business the goal here is to own the business but not operate it not everyone can operate a business it takes a very specific set of skills to successfully run a business but there are many people out there that own businesses but instead of running the business put people in place who can operate the business for
them in exchange for a good salary or equity in the company now this type of asset tends to have a higher level of difficulty than other forms of investing this might mean starting a business from nothing and working until it can run by itself or it could mean finding businesses that need investors or partners ERS you could also buy a business or a franchise that's already up and running although this asset has a higher level of difficulty it can provide a lot of benefits like control over cash flow when you own the business you have
control of how much of the business's profits you can take home also as a business owner you have many tax advantages like taking advantage of the dividend distribution tax which is typically lower than normal income tax by owning a business business you can spend some of the business's money before paying taxes as long as it helps the business for instance if you own a business with many stores you can buy a nice car using the business's money you can use it to visit all your stores since it's a business car you can buy it or
lease it with pre-tax money of course always seek professional advice to know what you can and can't do with your pre-tax money and number five startups and growth companies how how many of you ever wondered what if I invested in Amazon 20 years ago how much money would I have now what if I got in early with Uber or Netflix we can't go back in time and invest in those big companies but the good news is new companies are started all the time that could become just as big these kinds of Investments can make you
a lot of money but they also have a lot of risks those who invest in these companies normally allocate only a small portion of their portfolio into these Investments and understand that it is likely that these investments will go to zero but on the other hand if they invested in the right company their wealth can Skyrocket and take them to completely new levels of wealth all of those are good Investments but the best investment you can make is in your own education real estate can be a great investment for those who are educated but for
those who are not it could be a disaster Stock Investing can be a great way to build long-term we but without financial literacy we might miss out on great opportunities investing in our own education is the foundation of investing and developing the life we want thanks for watching if you like this video give it a thumbs up let me know what you think in the comments below hit that subscribe button and turn on notifications to catch all my future videos see you next time
