Income vs net worth goals - why income is more important

I used to be the one who wanted to have a net worth of millions and then RETIRE.

The problem with $10M or $20M or $1M net worth is what happens after you achieve it

The traditional finance method teaches you that you can withdraw 4% safely putting it into bonds and mutual funds "without any thinking, strategy or risk"

However, this also leads to a very high net worth goal which means you need to save and work till you're 65 or 70.

The better approach is to focus on income ($100K a year, $10K a month or $20K a month)

This puts control back into your life.

You can improve your investing strategy to generate 3% a month with $300K ($10K a month)

You can buy a e-commerce business with a few products

You can buy ATMs in your local region

You can do Airbnb rental

When you focus on income, you have control, flexibility and you have a faster way to improve

If you only focus on net worth, then reaching $10M - you would switch to a "safer" vehicle and retire. Then you will end up working a lot more than you need to.

In other words, $10M net worth* 4% = $400K a year

There are more creative ways to generate $400K a year without $10M.

Cheers,

Eric

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Eric Seto

Chartered Professional Accountant (CPA)

Chartered Investment Manager (CIM)

Founder of 5MinInvesting.com

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