Contents
- Contents; Introduction
- Investing Fundamentals
- Preliminary issues and observations
- What is living on equity?
- Summary
Introduction
According to an ancient Hindu proverb “there are many paths to the top of the mountain”. The same is true of generating wealth. There are many ways to achieve financial independence. However, just like mountain paths, some of those methods take longer, whilst others are more direct. Some paths meander gently sideways for awhile and some paths require specialised training, or involve dangerous and rapid ascents. Now while the “journey” may be the important thing in climbing a mountain, the goal in wealth creation is to quickly but safely reach your goal of financial independence. You can then enjoy the lifestyle and freedom of choice that a substantial passive income provides. One strategy which provides a safe and efficient (and thus generally more rapid) path to financial independence is “living on equity”.
For some people, living on equity is regarded as a controversial strategy. There seems to be a degree of confusion and misapprehension about using and living off capital pre-retirement. In particular, much concern is expressed about the increasing debt levels which form an integral part of the living on equity strategy. In this five part article, we’ll explore the living on equity strategy in detail and attempt to dispel the confusion and misunderstanding which surrounds this efficient investment methodology. In this part we’ll set the scene for detailed discussion in the articles to follow by: - outlining some key investment principles which underpin the living on equity strategy (and indeed investment more generally);
- considering some of the issues which people often raise as potential reasons why one cannot live on equity; and
- describing the three stages involved in implementing the living on equity strategy and briefly touch upon exactly when you’re able to live on equity.
This series of articles is admittedly quite long – but I make no apology for that. To fully describe living on equity, it is necessary to lay out all the components which comprise the strategy and the concepts and principles which support it. I hope that by providing a detailed explanation together with examples, this article will banish any lingering ill-informed criticisms of the strategy and conclusively demonstrate to you that living on equity is both a safe and efficient way to achieve financial independence and one which you can realistically put into practice.
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