One of the best-known exponents of the FIRE movement in the United States, which advocates achieving financial independence to retire at an early age, he achieved his goal at age 30.
“I can live off the rent for the rest of my life,” says Grant Sabatier. In just five years he raised US $ 1.25 million after saving and investing about 80% of his income.
As it did? He took some online digital marketing courses, got a job, started his own business, saved and invested his money in the stock market and bought some properties.
“I lived in a miserable apartment, had a miserable car, and spent most of my time working and saving money,” says the author of “Financial Freedom” and founder of the BankBonus website.
“From the beginning my goal was to raise money to buy my freedom”, says in dialogue with BBC Mundo.
“I was never interested in money for money. My idea was to achieve it precisely to have financial independence ”, he says now that he is 36 years old.
And while he was able to raise the funds he needed to retire in no time, he also made mistakes along the way. Based on that experience, Sabatier talks about the four questions that he considers essential to live without having to work.
1. How will money help me reach my goals?
“Many people think that money will allow them to get what they want. But the important thing is that you ask yourself first what it is you really want in life and if money can help you achieve it ”, says the entrepreneur.
The question is fundamental, he explains, because some go after money and use it as an excuse not to live the life they want to live.
They turn money into the goal, when it is the tool, he explains.
Grant SabatierSabatier is part of the FIRE (financial independence, retire early) movement that advocates for financial independence at an early age.
Others leave their aspirations for later, thinking that they will do what they like when they are older at some indeterminate point in the future.
Sabatier recommends starting earlier. For that, he suggests doing a simple exercise: write down the five or ten things that make you happy. The list can include simple things like playing soccer with your friends, watching movies, walking the dog …
“Many of these things are free or cost very little,” he says.
“Sometimes we tend to think that we need US $ 1 million or US $ 10 million to be happy, when what makes you happy is in front of you.”
Made the list, it’s time to calculate how much money you will need to do those things that you like or that you think will be important in the coming years.
At this point Sabatier recommends not setting the bar too high.
“If you have nothing, start with US $ 1,000 or US $ 5,000, instead of thinking about the final goal and then progress through stages little by little.”
At each new level that you achieve, he says, it is good to ask yourself how the effort to get that amount of money is affecting your life and how much freedom it allows you to have.
2. What am I willing to sacrifice?
“Everything in life is an exchange in the sense of sacrificing one thing to get another,” argues Sabatier.
“You can always have more and more money, but you can’t get your time back.” Seen from that perspective, he adds, “Time is the most valuable resource we have.”
Getty Images “Time is the most valuable resource we have,” says the retired entrepreneur at 36.
The essential question, he says, is how much of your time are you willing to sacrifice for money and how much energy are you willing to invest.
In short, the key is to know how much money is worth an hour of your life.
The other part of the story has to do with saving. In this case, the question is how much you are willing to reduce your expenses in order to save.
“It is important to be clear that every time you have the opportunity to save and do not do it, you are sacrificing a future amount of your freedom,” he says.
But since it is a balance, you can also ask the question in the opposite direction.
Getty Images The trade-off between saving and spending is one of the most important decisions in the early years of working life.
You are willing to sacrifice happiness of Present for potential future wealth by depriving yourself of the things that bring you joy?
Clearly there is no correct answer. The dilemma between present freedom and future money is something that often revolves around those who choose the path of sacrificing things to get a reward later.
If the goal is to save, Sabatier adds, it’s not worth sacrificing little things like cutting out a coffee, beer, or monthly subscription to watch movies.
Better to cut back on big expenses like housing, he says.
3. How can I increase my investments?
“Most of your money should be invested in a stock index,” recommends Sabatier.
“It is true that many people prefer to invest in shares of companies chosen by themselves,” he says. “I have seen investors who put half of their money in a single company.”
“But when you do that, even if the company is successful, it is very risky because there is always a chance that it will fail or become less competitive,” he explains.
Getty ImagesSabatier recommends taking the least risky route in the stock market: investing in stock indices, rather than putting money in specific companies.
“Even in companies like Amazon, where I have invested, there is risk. Amazon is one of the largest and most profitable companies in the world and you cannot imagine that something could happen to it, worse it could be affected by new regulations or lose competitiveness ”.
Sabatier argues that it is not advisable to trust a company, no matter how successful it may be.
“When you look at which stocks have the best stock performance today, many of them didn’t even exist 20 years ago. And vice versa, there are companies that were the most profitable 20 or 30 years ago and they don’t even exist anymore ”, he points out.
The safest thing, he says, is to invest in a fund that follows a Stock index like the S&P 500 or others.
If a company does poorly, it leaves the index, and those that are doing better enter the index.
As it is a safer investment than the others, the profitability is not that great, but Sabatier maintains that it is a good alternative anyway.
“In the last 100 years, after discounting the payment of dividends and inflation, the investment in one of these stock indices, such as the S&P 500, generates a return 7% average per year“.
Grant SabatierThe American says that he saved up to 82% of his income.
“One year it can be 20% and the next one goes down 10%, but the important thing is to invest in the long term because in the end what matters is the average,” he explains.
“That 7% of profitability is reinvested and that is how the interests generate more interest. That’s the power of compound interest. It is when money makes more money and that increases exponentially with the passage of time ”.
Although the stock market is not the only way. Another alternative is to invest in real estate.
In fact, Sabatier says, “the most popular way to achieve financial independence is have a property“.
“The vast majority of younger investors who have achieved financial independence have done so through the real estate sector,” he adds.
Recommend studying the idea of House hacking, which is a relatively new expression used for a very old practice: renting one or more rooms in your house to pay the mortgage sooner.
Getty Images “House hacking” is a concept in English that refers to renting the rooms in your house to cut costs.
Since the cost of housing is so high, saving on that can take you a big step, Sabatier says.
And the third way to increase your wealth, according to the entrepreneur, is found your own business.
“If you own a business, you control your own time. And if it goes well, you can sell it and make another one, ”he says.
Along the way you can fail and lose all your money, he acknowledges, but “that’s part of learning.”
In short, Sabatier recommends investing your savings in stocks, property, and business start-ups.
4. How am I developing my skills?
“Your skills are your currency of the future. The more skills you develop, the more opportunities you will have to earn money, ”he says.
“The skills you have are the best way to predict how much money you can make in the future.”
Getty Images There are many skills that can be developed through free online courses.
Now, there are skills more in demand than others and those are the ones that must be developed, points out Sabatier. “Those are the ones that will allow you to earn more money.”
Developing new skills, he adds, is not about going back to college for more degrees.
“We live in an incredible time where many of the most profitable skills can be learned online for free,” he says.
“You can learn everything on YouTube”. There are certain basic knowledge that can be useful in different work areas, he adds, such as creating a website, running a Google ad campaign, developing a brand or learning design.
3 strategies to organize your personal finances and a common mistake you should avoid
Another way to improve skills is to get side jobs to supplement your main job or start a business.
“Starting your own business is a great way to learn new skills. Many of the richest people in the world have one thing in common: they are all entrepreneurs. ”
Every time they have failed in a business, he explains, they have learned from their mistakes.
“I failed a lot in the beginning. I made a lot of mistakes. I started two companies before founding one that was successful.
The first was an application for cell phones. I spent money on things and people that weren’t really important.
Getty Images Successful entrepreneurs have often had financial failures.
I also tried to buy and sell company stocks when I started investing and the first stock I put a lot of money in ended up losing about 80% of its value in just three months.
He was in his early 20s and I tried to get rich quick and i failed. I had about $ 5,000 to invest and I put $ 3,000 in that stock. I remember that I couldn’t even sleep… I learned a lot from that experience.
That obsessed me with the idea of trying to understand how you can make money. And since then I have followed a financial journey where every day I learn something new ”.
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