A Goal of Freedom

With all of the work I’ve put in to learn about investing and the stock market I’ve allowed one important piece to fall to the wayside. I need a concrete long-term goal to focus on in order to not only have a measuring stick of my progress but to inspire me during the dark hours.

I woke up this morning with that question burning in my mind. Just what do I intend to accomplish here? It’s not that I want to become rich, though to my current mindset it certainly feels that way. Studying the financial markets, investing in the stock market–those are actions that rich people take when viewed from the eyes of the poor.

And let’s face it: I’ve been poor my entire life. While there have been times of both feast and famine, overall I’ve spent my existence hanging out at the bottom of the food chain. There’s no sin in that but it does color my perceptions.

With the question of my goal in mind I sat down with a cup of coffee this morning. I turned my lucky coin over in my hands as I considered what I want to achieve here. I think I’ve finally figured it out.

I want to achieve financial freedom. I want to get to the point financially where I can work if I want to but I no longer need to in order to make ends meet with some money to spare. The taste of freedom I experienced for those years I lived on my book royalties was beautiful and I want to recapture that. More importantly, I want to do it in a way that can be duplicated by others who want to achieve freedom as well.

The next question is: how do I measure my goal? I can’t just say I want to achieve financial freedom and leave it at that. I need something concrete to work towards and in this case I need a number with dollar signs in front of it to aim for.

I know for a fact that I can live on $500 a month but to be honest I want to aim higher than that. To be truly comfortable living on my own I would really like to have $1,000 a month in passive income but that’s where I run into a problem with my mindset. Every time I run the numbers for the amount I have to invest to achieve that return I choke. It is simply too much money for me to comprehend having personally at this point in my life.

I need a number that I can actually visualize myself being able to achieve within the next twenty years–the time I would like to completely retire. A low number, one that I can actually conceive of to use as a starting point. I can always aim higher later.

If I am able to receive a 10% return in the stock market (which is doable if I’m careful with my investments), it would take a minimum of $60,000 invested to receive a $6,000 annual return.

That’s a number I can work with. Sixty thousand dollars is the price of a nice house. I can conceive of $60,000. I can’t conceive of how I’ll come up with $60,000 at the moment but that’s okay. I know I’ll reach that number eventually if I just keep doing what I’m currently doing–invest my book royalties and any extra money I can afford to invest. I have a workable plan with simple steps to focus on as I move forward.

I’ve currently managed to invest $1,500 into the stock market so far this year. Due to my mis-step with the one stock I’m not up to my 10% return yet but that’s okay. There will be times that I hit, times that I miss, and times that I stumble upon a stock that doesn’t currently issue dividends that is too beautiful to pass up. It won’t be an exact science, especially as I’m learning and I’m comfortable with that. I have no doubts that I’ll work out the kinks as I focus on acquiring that initial $60,000.

I’ve got $58,500 to go. Not bad when you consider the fact that I’m bringing in around $600 a month from my minimum-wage job and under $100 a month (average) in book royalties. It looks even better when I point out to myself that I only started this project in May of this year and I’m not even factoring in the dividends I’ve reinvested so far. While not a huge amount, it’s still a start.

Now that I have a concrete goal it is time to work out the details. How in heaven’s name am I going to come up with $58,500 more to invest in the next few years?

I’ll let you know when I figure it out.

9 thoughts on “A Goal of Freedom

  1. Carla

    I want to mention another bee to put in your bonnet. Although not all investors are comfortable with an “options play” ….there is one type of option which is called a “covered call”. It is a simple low-risk strategy that investors can use to increase cash flow…..if they are willing to accept the following:
    1/the possibility of being forced to sell your shares at a predetermined price set by you.
    2/The fees/commissions for these covered calls can be hefty, and even heftier if the covered call is exercised..( somewhere between $75-$120)
    3/The possibility of missing out on greater gain if the price of your shares on the open market rises high above the “strike price” of your covered call before the expiry date.

    However, the good part is this…. a covered call on a juicy dividend paying stock can bring in a hefty premium that you will collect upfront and are able to do with what you please.Some covered calls can bring in $200 in premium and others can bring in a good $1200.

    Many investors use covered calls on only a certain portion of their portfolio…..just to generate more cash flow. That way they still hold on to the stocks they “love” and only write covered calls on the stocks that they are willing to sell.
    peace,
    Carla

    1. sam

      I have sold “covered calls” for years and my fees with e-trade are reasonable. $4.94 + $.75 per contract and $17 for assignment.

    2. Annie Post author

      Hi Carla!

      I’ve heard about options trading but I’m not very familiar with it. One of my goals in the future is to learn more about that aspect of trading in order to determine whether or not it will benefit me. It will take a bit, however. Thanks to the gifts of knowledge (in the form of books) from my friends and readers, I’ve got a few more books to devour before I can justify ordering a book on that particular subject. Thanks for letting me know that it might benefit me!

  2. sam

    Your MOST important goal has been reached, you have set a reachable goal and have started your journey. I am very proud of you Annie!

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