The document provides an overview of financial independence, highlighting its benefits such as employment freedom, reduced stress, and the ability to pursue retirement on one's terms. It discusses two primary methods for achieving financial independence: asset accumulation and expense reduction, along with the importance of understanding active versus passive income. Additionally, it emphasizes the significance of low expense ratios for maximizing savings through the power of compounding.

1. Financial Independence
A Brief Introduction to Financial Independence and Ways You
Can Achieve It!

2. Financial Independence
• Why Become Financially Independent?
• Financial Freedom: more choice on how to spend your money
• Employment Freedom and Job Freedom
• Reduction of Stress and Healthier Lifestyle
• More Time To Pursue What You Love
• Become a Humanitarian!
• Retire!

3. Employment Independence
• Financial Independence leads to Employment Independence
• You can choose the job that you want!
• You can choose a more fulfilling job!
• You can work more on solving humanity’s problems!
• You can quit!

4. Retirement
• Financial Independence contributes to your ability to pursue retirement how
and when you want it
• Retirement as state of mind; financial independence as state of being
• During retirement you can still work or choose whatever you wish to do.
• Financial independence grants you that ability to ease your mind to pursue what you
want

5. Two (Combinable) Ways For Financial
Independence
Asset Accumulation Expense Reduction
• Gather revenue generating assets until the
generated revenue surpasses living/liability
expenses.
• Gather enough liquid assets to then sustain all
future living/liability expenses
• Combining passive + active incomes to be able
to generate your threshold for living a financially
independent life
• Another approach to financial independence is
to reduce regular expenses while accumulating
assets, to reduce the amount of assets required
for financial independence.
• Reducing expenses, combined with asset
accumulation, allows you to achieve financial
independence faster

6. Difference between ‘active’ income and
‘passive’ income
• Active income/Earned Income
• Generated from active work/labor
• Eg Paycheck or Salary
• Active income is extremely useful if:
• You use it to purchase assets that
help generate passive income
• Using paychecks to help purchase a
rental property, for example.
• Passive income assets
• Is generated even when you are not
actively managing your assets
• EG collection of rent, stock
dividends, bonds, pensions, etc.
• Greater tax benefits
• Designed by govt to encourage
investing

7. Compounding
• Why save? Because of compounding!
• Save early, live below your means,
• 401K/Roth IRA/Other Tax Deferred
Accounts: Good Candidates for
Compounding

8. Active Management
• For people who like to actively trade or pick
stocks
• For people who have a lot of wealth and has
the desire/ability to make more money.
• For people whom understand risk and are
better risk takers.
• For people who believe they (or another money
manager) can beat current indexes of returns

9. Passive Management
• For people with busy lives
• Raising children
• Working hard jobs
• For people who aren’t good with picking
stocks or analyzing the market
• For those whom are hyper-emotional and
swing too far with the market

10. A Theory I Like Right Now: Asset Allocation

11. Lazy Portfolios:
Good Examples of Passively Managed Portfolios
4-Core Funds 3 Fund Portfolio David Swinson’s Yale Portfolio

12. My Personal Bias Against Picking Stocks: I’m
NOT GOOD AT IT!

13. Benefits of Low Expenses Ratio
Important to remember: keeping your
expense ratio low will allow you to save
a greater amount of money for
retirement.
This is due to the nature of compound
interest: the less money taken from
you, the more yield you receive.