Do I need a Financial Advisor to Achieve Financial Freedom? (2024)

Lakisha L. Simmons is not a financial advisor and does not give advice.

Dr. Kisha is an educator.

You may be asking yourself, "how soon can I retire?" I Started Investing in My 30s and still retired at 41. Many people do. You first need to create a financial plan. Many certified financial planners and advisors make these plans for you. However, you can create your plan and take control of your financial future, even if you choose to work with a planner. When you turn it all over to someone else and don't know exactly what is happening with your money, you can become complacent. So if you do work with a financial planner or financial advisor, make sure they educate you on how to invest; otherwise, how will you teach your heirs?

My financial freedom story began with the sale of my house after my divorce. I had a financial planner, and he wanted me to send him the proceeds and invest it for me. But I felt completely left out of the process.

My journey to financial freedom was a very unlikely one, considering my childhood upbringing. I'm the daughter of teen parents and a first-generation college graduate. I achieved bachelor's, master's, and doctorate degrees. But guess what? I never learned about personal investing until my late 30s, when I taught myself the stock market.

I wasn't introduced to the concept of financial independence until I was 37 years old. After years of living what I thought was the American dream (family, degrees, job, house, car, etc.), after my divorce in 2017, I found the strength to pursue financial independence. I reconfigured my budget and doubled down on saving and investing. I had no excuses. I took complete control of my finances.

Financial independence, Retire Early (FIRE) is the concept of changing your spending habits to focus on investing to become financially free. You are financially free to pay your living expenses from gains and passive income. I saved and invested in the stock market until my nest egg reached 25 times my necessary annual expenditures. I now can withdraw 4% annually to live off and spend my days as I wish. To determine how much I needed to invest each month, I referred to my savings rate (financial planners use different calculations that are not as easy to compute).

The savings rate is the percent of your income that you save and invest. The more you save and invest, the faster you'll build your nest egg due to the compounding effect of investing. The time to reach financial independence is heavily dependent on your savings rate. Your savings rate is the percentage of your gross income you save and invest each year.

Depending on your savings rate and how much risk you are willing to take, you will reach your number faster or slower. It's not complicated. It just takes time. How much time? Remember, it depends on how much you invest each year. The important thing is to start today.

If you are spending 100% of your income, you won't have any money saved for retirement. As soon as you start saving and investing, you can potentially begin seeing your money earn its own money that you can eventually live off in retirement. Let's say you are starting at zero dollars in investments and will start investing with earnings around 6% a year.

You can use the Personal Capital retirement planner to do the math for you to determine when you can retire comfortably.

When I started investing, a savings rate of 15% would have retired me in about 43 years; 35% savings a year would have retired me in nearly 20 years, and 60% in about 10 years. That's at a 6% average growth rate. During my accumulation years, the United States was experiencing a bull market with annual returns much higher than 6%, so I retired in much less time than I had estimated.

I know this may sound scary if you’ve never invested before. You may be thinking, “I can’t afford to lose any money” or “I don’t know where to start.” You can reach your goals with education, positive money affirmations, and experienced people by your side! You have to get started!

Is it even possible to become financially free? Is it possible to have all your expenses covered from capital gains (real estate, business, stock, bond, or equity investments)? It’s possible to live on less than you make and invest the rest. Not everyone can do it, but many of us who make average salaries or more can do it.

You won’t get there overnight. Start by doubling what you currently contribute to your workplace retirement accounts (e.g., 401k or 403b). That’s what I did. Then I found more ways to cut my spending. It’s easy to cut expenses if you start by determining what you value and what you don’t. Do you value expensive bags, shoes, and clothes over saving half your income? How much do you value things that won’t pay you 6% annual dividends? Think about these things long term. What are the things you can do to reduce your expenses and invest more? What are ways you can create more income to invest more?

Don’t look down upon yourself if you don’t yet feel prepared for retirement. Many people begin investing in their 30s and 40s and retire comfortably. A 2021 survey conducted by Personal Capital reports that 42.4% of first-time investors were between 31 and 45 years old (800 respondents). You can start today. Every dollar has a chance to grow compound interest, so never think a small amount doesn’t count, but it does. Just start!

Let me help you achieve financial freedom!

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