We’ve looked at goals and actions and reviews, but the journey to financial independence is a long one, and, just like on a long drive when you come to an open road, and it feels good to put your foot down, it feels good to accelerate your financial plans too.
Plodding our way to financial success doesn’t sound very appealing. Running the numbers and working out the timeline to your goals might have been a little bit depressing. But fear not, because there are ways that you can accelerate your progress so that the end goal moves closer more quickly than you might hope.
Everything You Need to KNOW
Acceleration is Adding More Fuel into the Mix
I have only a passing familiarity with the internal combustion engine, but I’m pretty sure that when you depress the accelerator in your car, what’s happening is more fuel (and air) is being added to the cylinders.
You put your foot down, the engine pushes you down the road more quickly. What kind of fuel are we talking about in this case? A few things:
The first is free money. Essentially this is a kind of leverage in that you’re using other people’s money to drive forward more quickly, but unlike traditional leverage, it doesn’t usually need to be paid back – we’re talking tax relief and employer matches primarily.
Next, we have some basic financial disciplines which can make a massive difference as time goes on. Increasing savings rate, even only by small amounts can catapult you forward, as you’ll see.
Finally, we have risk. There is no disputing the link between risk and reward. A higher equity-content portfolio will make you more money over time, but it’ll also be more volatile than a multi-asset portfolio, so you pays your money and you takes your choice. We’ll look at how portfolio construction can make a difference to your timeline.
Did you miss the end of the series on reviewing? Find it here, or click for part two in accelerating your progress.
Leave a Reply