You know the saying if you love what you do you’ll never work a day in your life. Well, that’s all great. But sometimes even if you love what you do you’d rather still do nothing, right? At least not have to do anything. For those of us that love sipping mojitos poolside in an exotic location, in this article, I’m gonna teach you how to achieve financial independence and retire early.
So be sure to read until the end ’cause I’m gonna give you some awesome tips, ’cause the last one, you’re gonna love.
1. Ignore The Other 20’s And Get Advice From Those Who’ve Done It
The first thing you wanna do if you wanna be financially independent and retire early is ignore the advice of anybody else that’s your age who hasn’t done it themselves. My mantra is this. If I want somebody to mentor me or give me advice, I want those that have been there, done that, and most importantly, still doing it today.
I mean, there’s always those people that have been there done that, the has-beens, but I want people that have actually been there done that and still doing it. I don’t want the people that said, “Hey, I got rich off of Bitcoin that one year, but not so much this year.”
Or I got rich off of this one thing, but I haven’t been able to keep it. I’m broke now. Those people’s advice, you don’t want the flash and the pan people. You don’t want the people that just got lucky once. Heck, I mean, I’ve failed so much. I had to become financially independent twice by the time I was 39, just to make sure I did it right the second time, okay?
You wanna make sure you take advice from people that actually have gotten it right. So if you’ve got that person that’s your coworker, your neighbor, your cousin, that brother-in-law that took that economics or finance class at one time said he got an A, and as a result makes him somehow a financial authority or even worse, a financial advisor who is actually just paid salespeople in suits.
They are not financial experts and never will be, never have been. Take advice from people that have actually done it. By the way, as a side note of financial advisors, because I used to be one myself, and now I’m the anti-financial advisor.
Financial advisors aren’t taught how to become financially independent or retire early. I remember my goal when I was a financial advisor in my 20s, I thought, “Wouldn’t it be awesome if I can just be cheap, make sure I turned down that thermostat,” so that the summertime, it gets ridiculously hot, and the winter times it’s cold, you just bundle up, ’cause I wanna save money on the energy so I can take those $2 that I saved and go use it to invest in some crappy mutual fund.
I may or may not make money in, because the market may or may not go up or down. But I thought if I just save enough in there, when I’m 40, I’ll have $60,000 a year to live on. $5,000 a month. And I thought that would be living the dream. If I could do that by the time I was 40, which is about 15 years later. Guys, guess what? First off, we already know, I’m almost 45 right now, 5,000 months is nothing anymore, right? That was not living the dream.
Secondly, I mean I would have to scrap and save millions of dollars. I would have to save $2 million to do that. But I’ll tell you when I looked around at other financial advisors, guess what? Even though guys who have been working in the financial advising industry since the late 1970s, guess what they were still doing? Working their tails off, working a job as a financial advisor. That’s what they were doing.
When I looked around, none of them were in my office, and there were literally dozens, if not even over a hundred people in my office, none of them were financially free off of those investments.
So if you’re gonna listen to people’s advice, listen to those that have actually done it. And in fact, if you have a financial advisor telling you how to become financially free or independent and be able to retire early, ask them, how’s your retirement doing? And don’t have the whole thing they say like, “Oh, well, I’m gonna retire by the time I’m 60,” and they’re 25 years old. That’s bull crap.
Ask ’em like, “Hey listen, if you were to stop working today and you weren’t earning commissions anymore from all the business you’ve already done in the past, would you be able to retire off the investments, just the investments that you have?” I guarantee 100% of the time, it’s gonna be a big fat, no, absolutely not.
Don’t take advice from people that haven’t done it themselves, do that. So if you wanna retire early get advice from people that have actually done it. Hey, even guy that’s screwed up and did it twice, I might be a good guy to listen to too.
2. Fire Your 401K
All right, that’s number one. Number two is to fire your 401k. Get rid of it. Here’s a thing. If you wanna get where you wanna go, like if you wanna go to Europe, and this is assuming you’re not in Europe, okay? This is assuming you’re in the US, and you wanna get to Europe, you’re not gonna take a car, are you?
I mean, maybe you’ve got some cool little secret spy car that you’ve got, but most likely, if you even get a lot of acceleration, like, and you go, off that ramp, right off the dock and you go, you skip a few times, you go, you sink, right? You’re not gonna get to Europe that way. You need the right vehicle to get you to the right place.
If you’re gonna go to Europe, you can take a boat and that’s okay. But it might take a while to get there. Or you can take an airplane and get there. Heck, maybe take a Tesla jet. I don’t know. You get there much better if you’re taking an airplane than taking a car.
The 401k is the car. If you want to go to Europe, you don’t take the car. You use something else. The reason why we don’t use the 401k to retire early is that if you’re trying to retire before the age of 60, the 401k is not your answer or an IRA or a Roth IRA. No’s is the answer because, why? Because you get slapped at a 10% penalty if you pull it out too early.
Not to mention you pay taxes on that money. Now I know there’s gonna be somebody that will say, “Yeah, but Chris, actually, you can actually take your 401k. You can take what’s called a 72(t) distribution. And then you won’t have to worry about those penalties and, well, you pay taxes, but you won’t have to worry about the penalties.” I don’t care, that’s a lot of extra hoops to jump through and usually too complex for people to figure out or make sure they do it right.
Then they feel like they’re having to be babysat along the way, doing it. You shouldn’t have to feel like you have to babysit your own money. You need the right vehicle to get you there. Actually, I’ll give you a call to action right now. One thing you should really be looking into is infinite banking.
Now here’s the thing. If you look at infinite banking on these other videos and articles of these other guys out there, they’re not gonna teach you how to do it right. It’s all about retirement still after age 60.
Infinite banking, so you know, is using a whole life insurance policy, using that to save your money into, because it’s got a tax-free supercharged savings account when it’s designed correctly. And I would say 99 plus percent of the time it’s designed incorrectly. So if you have one, you might not have a very good one.
And that’s something we should probably take a look at too, but you wanna make sure you have the lowest cost, highest returning type of infinite banking policy so that you do not just have a place to save money besides your 401k, but you get to do something that your 401k can never let you do.
You get to double dip on your investment returns. You can borrow from this policy. Yes, you can borrow from a 401k, but it doesn’t do the same thing. You get a line of credit. It gets the policy where the money doesn’t come out of the policy, that cash that’s in your life insurance, it doesn’t come out.
You actually just get a line of credit from an insurance company or a bank, and then you use that money to invest. And what happens, ’cause they charge you such a low-interest rate, while you’re also earning tax-free compounding interest, what ends up happening is you make at least short-term 1 or 2% more on top of the returns you had made on your investments.
So many people that teach infinite banking it’s either I do infinite banking or invest. You can do both at the same time. You can have your cake and eat it too because you can actually double-dip on your investment returns by getting your money to work for you in two places at the same time.
That is leverage, my friends. That is how you make massive money and get it to make your money to pay you twice. So that’s key.
3. Build Your Cash To Invest
And then the third point is you build that cash, as I just mentioned, to invest outside. Now you can try to invest in the stock market, but the truth is the stock market for the last 30 years is only averaged about 7.5%, a real rate return. That’s if you invest in the index. 7.5% is never gonna get you there.
And by the way, the whole financially independent retire early movement, that FIRE movement, where people say you can live on 4%, that is the oldest equation ever. Just last year, 2021, even the Wall Street Journal finally cut up to what I’ve been saying for 15 years and said you shouldn’t be pulling out any more than 3%. And I would add this.
From my own personal experience, if you’re trying to retire in your 30s or 40s, maybe you’re your 50s, you shouldn’t be pulling out more than 2%. So if you get a million bucks in those mutual funds you save your butt off, yay, you pull out 20,000, 30,000 a year. That’s nothing. Uh-uh, don’t do that. We got a better place you can invest and not have to worry about whether the market smiles on you or not that day because it decided to go up or down or even worse.
Those who are younger, know that the stock market actually does go down, right? It does lose money. So you can invest in other places, like real estate investing, in other places that are alternative investments, which we have all kinds of articles on as well that you learn about that can make double-digit returns not 7.5 if the market does it just right. Double-digit returns, plus even get to keep more of your money by paying less in taxes.
All right, so let me recap my three pieces of advice for you guys if you wanna retire financially dependent and early and legitimately do it.
Number one, ignore the advice of all the other people, especially those that have never done it before in their life. Get advice from those that have been there, done that, and still doing it today.
Number two, fire that 401k. It is not the vehicle to get you there. You will just sink and work until you’re at least in your 60s. And really, 401k’s not that special anyways. Instead, look at infinite banking, as I talked about before.
And then number three is to build your cash to invest in other things that generate real passive consistent income that you can do. Whether it be in real estate investing, it could be oil and gas. It could be in land. It could be in self-storage units. It could be in apartment buildings. Other things where you can create passive income now while making great returns and paying less in taxes.