Be Conservative

The most successful investors advocate living below your means. I heartily agree.  If you can afford an $1,800 per month payment, instead of going out and finding a place that will cost you $1,800 per month, spend some time thinking about what you’re needs really are.  If you can find a place that fits your needs for the next five to seven years that costs you only $950 per month then you can save and invest the difference.  When you talk to a lender and they pre-qualify you for a loan they will tell you that you are qualified for $zz,zzz amount of loan with $zzz payments.  Don’t take this as your budget for housing!  You will get much further in your financial life if you put as little as possible into your own housing expense. Then you will have funds readily available for savings and other investments.

A Home Is An Investment, But Not Your Only One!  Diversify.

One of the misconceptions that people have is the belief that their home is their “greatest investment”.  Sure, owning your own home is the “American Dream,” but it shouldn’t be your only investment.

While people often enter into retirement and look at their financial situation, their house may indeed be their greatest asset, but hopefully not their entire ‘nest egg.”  This is a gamble at best, because when it is time to retire, they will still need to live somewhere, and as they age, they will most likely require more services. Many financial planners will incorrectly tell you that the cost of living is far less during retirement than the working years, but this is very unlikely. It costs a lot to be old, especially if a person is in poor health.  Also, it is important to take into account the increasing rate of inflation and to acknowledge that we need to prepare for future “unknowns.”

When Social Security and Medicare were enacted, there were many people in the workforce paying into the system to support a few people.  Now with the massive baby boomer generation just beginning to collect social security benefits, and the much smaller generation working and paying into the program, the government will not be able to sustain the same level of benefits going forward with the same rate of taxation.

Clearly, it makes sense for us all to save and invest responsibly for the future, for ourselves and for our families.  If you can keep your payments way below what you think you can afford and invest the difference in sound investments, you can build an asset base that you can draw from in your “golden” years

Financial Freedom

People with a wealth mindset will acquire assets that work for them as they also earn income.  At some point, the investments (assets) you own or control will pay more than the income from your job or business, and that’s when you can be financially free!  If you would like to learn more about financial freedom, please contact us at BridgeSource Capital or learn more at www.flatheadinvestmentclub.com.

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