Thread by @FinPlanKaluAja1

Separate your income sources

1. Active: income earned by being at work/working e.g. salary

2. Passive: income you earn but are not physically at work or involved in that work e.g. rental, dividends,

Your goal is to pay your expenses with passive income alone

#passiveincome

Once your passive income can pay your expenses, you can retire

Retirement is not a chronological number but a passive income number

You can't retire on salary.
You retire on what your salary has generated from you saving income to invest.

Your enemy is inflation.

If you earn N1m a month, but spend only N100k, you can save N900k

But inflation of 17% steals from you. Thus you need to save then invest your surplus to "grow faster" than inflation can steal.

Problem is you can't "grow faster" as you get older

Hence the solution is to start to save early and invest early in an asset that generates income to fight inflation but also appreciates in value as well

The secret is the early start NOT the interest earned

Saving N2,000 from age 20 to 30, generates N20,000. If you save nothing for 20 more years until you are 50, you have more than a saver who started saving from yr 30 & saved for 20 years.

Money grows with time, not interest.

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