What Is The Price Of Your Freedom? Here Is How To Calculate It
A really big percentage of people wake up every day and what do they do? They go to spend the rest of the day at work. And they find this completely normal for themselves. But have you ever thought about that how much of your life you spend working for the others? Every day, day after dayday, the same thing happens – you go to work, spend there a lot of your time and then you come back home to rest for a while, because you have to work on the next day, too. But have you ever imagined what exactly part of your life you sell to work for the others and actually actually to chase their dreams? The average person works around 35-40 years in a lifetime and the average person sells (for a salary) one half of his/her life to his/her employee. This might be OK, if you love your job, but this also can be awful, if you hate it. So if you fall in the second case, you should know what the price of your freedom would be, if you decided to stop selling your life to chase other people’s dreams.
The Price of Freedom
According to United Nations’ International Labor Organization (ILO), the average yearly salary in the US in 2012 was around $40 000 ($39 156 exactly). So, the question here is what you should do to have this amount at the end of each year without having a job. Well, in fact there are many ways for this and one of them is by an investment. Let’s say that you can invest your money at the rate of return of 12% per year. You put your money there and you get 12% more at the end of each year. So to get $40 000 yearly, we need to invest 40 000 / 0.12 = $333 333 . So if you had 334 000 dollars you could invest them and have the average salary in the US without even moving your finger. But the best thing would be that you would stop selling your limited time, because everybody’s time is limited and everybody should spend it the best way he/she can.
In this example, $334 000 can buy you freedom. If you need more money every year, you can obtain it by investing more, or at a higher interest rate. For example, $500 000 invested at the same yield could give you $60 000 yearly, or $5000 per month. And there are many places, where you could reach such a return on investment. You could buy bonds, you could invest in common stocks or dividend paying stocks. Of course, higher yield = higher risk but this is how all things in life work. There is an investment strategy called Dogs of the Dow (see www.dogsofthedow.com), which yielded %17.7 on average for the last 45 years. There were ups and there were downs, but the average return on investment was 17.7%, which is far more than 12%. $334 000 invested in that rate of return would give $59 144 per year and one could withdraw $40 000 and reinvest the other $19 144 to compensate inflation and risk.