What are you saving for? I was sitting around the other day catching up on the other blogs I like to read when it hit me. I had never answered that question for myself!
I had made it a point to save, I’d consistently funded my 401(k) and my Roth IRA. I’ve even built up a nice emergency fund. But I had never stopped to really plan what the hell I was doing it all for.
Then the other day at work, during a particularly boring conference call, it dawned on me. I want to stop doing this as soon as possible! I have never been a big fan of the corporate 9-5 life. Even in job’s I’ve enjoyed, it always just seemed like I was trading my time for money. That’s why I’ve decided to start a freedom fund (or a f**k you fund for my french speaking readers).
A freedom fund is essentially savings, or investments that are built up with the purpose of being used for whatever you want it to be used for. For some, it’s how they take their family on vacation every year. For others, it’s a way to find financial independence and retire by 40. My freedom fund is something of a hybrid between those two ends of the spectrum. While I have no illusions of being able to retire in the near future, I would like to have a sum of money that would take a layoff from being a major event to a minor bump in the road (and maybe take a few vacations along the way).
With interest rates on savings and money market accounts at laughably low rates for the foreseeable future, I won’t be keeping much of my freedom fund in cash. At the start, my plan is to invest my freedom fund in a combination of ETF’s, dividend paying stocks and P2P lending loans. A little further down the line I may branch out into some other alternative investments, but for now I plan to keep things fairly basic.
The overall goal of my investments in this account will be to build up a stream of income that could hopefully one day replicate or replace the income from my paycheck. While I won’t stop contributing to my retirement accounts, I think it’s important to have investments outside of retirement accounts. Investing outside of our 401(k)’s and IRA’s allows us the flexibility and the opportunity to build a better life for ourselves today instead of solely planning for the years where we’re old and gray.
I’ll be making regular monthly contributions to my freedom fund, and any extra or unexpected income that may come my way will go directly towards this fund as well.
Do you have a freedom fund? What goals are you saving towards and how close are you to reaching them?
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