Recently, Hurun released the "China's multi-millionaires brand tendency report", which mentioned the threshold of financial freedom - high net worth individuals in first-tier cities believe that 130 million can achieve financial freedom, 80 million in second-tier cities, and 60 million in third-tier cities. The report also shows that 42% of respondents said they would like to travel around the world after wealth freedom, with the purchase of property, dividing it among family members and charitable donations coming in second.
Hurun's report said that in China's first-tier cities, a minimum of $130 million is needed to be wealth free. The money contains two parts, one is two sets of houses, one is their own villa, a set of parents to live in a 120 flat house, adding up to 80 million, the second is investment, 50 million of capital, about 7% annual return on investment, so that can guarantee the annual 2 million upward investment income as living expenses. See this figure and analysis, I think many people must be shocked off the jaw, is the freedom of wealth for ordinary people, is the unattainable dream?
Financial freedom is the state in which a person does not have to work hard for money to make ends meet. Simply put, a person's assets must produce a passive income that is at least equal to or greater than his daily expenses, and if he enters this state, he can be called financially free.
Financial Freedom
In my opinion, the actual threshold for achieving financial freedom in the north is not as high as the Hurun report mentions, as long as three conditions are met: social security payments for 30 years, and owning a home with completed repayments plus 10 million in cash (half RMB and half USD, i.e. 5 million RMB and $700,000 USD).
Having social security and housing guarantees that there will be no major problems with medical care and housing.
10 million in cash guarantees that daily life will not be a major problem, and holding the US dollar and the RMB separately is to prevent currency devaluation, mainly to prevent the total assets from depreciating significantly in the event of a sudden and significant inflation in the country, for example.
Of this 10 million cash, the RMB portion can be invested in sound financial management (bonds, trusts, high quality stocks or high quality funds, etc.), and the USD portion can be purchased in high quality US stocks (Apple, Amazon, Google, Microsoft, Facebook, etc.) or index funds (S&P 500 index fund or NASDAQ 100 index fund, etc.), assuming a 7% yield and 2% inflation rate, and annual living expenses Keep it under $500,000 and it will last forever. The formula is: cash spent per year รท (7% - 2%) = the minimum amount of cash needed to achieve financial freedom.
If a person is well fed, clothed, sheltered, and doesn't have to work every year, and keeps their spending under $500,000 per year, that's about the threshold for entering financial freedom.