Time is the most valuable item money can buy
Time is the only item you can never buy more of, as a result that makes time the most valuable item money can possibly buy.
Your goal is to generate enough Passive Cash Flow to sustain a desired lifestyle. Once you do, you put yourself in a position where you never have to trade time for money again.
- $1,000,000 locked in a 401K
- $10,000 monthly deposit into your checking account whether you get out of bed in the morning or not
We choose option 2.
Comparing Passive Cash Flow and Active Cash Flow
Cash flow comes in 2 forms:
Active Cash Flow is obtained by trading time, energy and cognitive resources in exchange for it.
Passive Cash Flow is obtained by owning assets that generate cash flow, without having to exchange time or energy for it.
Cash flow gives you freedom
The ability to walk away from a paycheck consequence free allows you to make much bolder choices about how you spend your time. If your lifestyle costs you $2500/month, but you have $5000/month in passive cash flow from assets built / bought / or acquired, you never have to work again to support yourself.
This opens a world of opportunities in terms of how you are allowed to spend your limited time on this earth.
A popular name for the point at which the Financial Freedom Equation is satisfied.
Your objective should be to get your Savings Rate to the highest amount that is sustainable across time, and then Invest Capital aggresively, but not irresponsibly, into Assets which generate Passive Cash Flow, to eventually satisfy the Financial Freedom Equation, so you don't have to trade time for money any longer than absolutely necessary.
Increase your Savings Rate