Have you ever wondered how most people live their lives? They usually work for money. However, that's not the only option. Imagine living a life where you can truly enjoy your passion, spend time with your family, or travel the world, without the constant stress of not having enough money.

To achieve this, one must seek financial freedom through smart investments. Curious about what financial freedom is? In this article from Hapi, you'll learn what financial freedom means and how to achieve it.

What is Financial Freedom?

Simply put, financial freedom is about having multiple income streams that provide you with a steady cash flow, independent of your job. You’ll be financially free when these streams cover your monthly expenses and support your desired lifestyle. These additional income sources are called passive income.

The key idea is that your money works for you, not the other way around. The long-term goal is to focus on what truly matters to you without constantly worrying about debts or your bank balance.

What are Sources of Passive Income?

Passive income is the primary means for someone to achieve financial freedom because once the initial investment is made, it generates consistent returns without requiring much additional effort.

These income streams don’t depend on your active work time but on the returns that your assets generate over the years.

Why Seek Financial Freedom?

Financial freedom, as its name suggests, offers more peace of mind and time in your life, both personally and financially. Generally, people who achieve financial freedom opt to retire early.

This allows you to spend more time on what matters most to you: spending quality time with loved ones, enjoying a hobby, or accepting a job you're passionate about regardless of its pay.

While it may seem riskier than living on a steady paycheck, in reality, it provides security by promoting diversified income streams. For instance, if your only source of income comes from your job, then when you get sick or are laid off, your ability to cover your monthly expenses is severely affected. However, those with financial freedom enjoy a steady stream of income regardless of their health or the job market.

Main Examples of Passive Income Sources

• Dividends from Stocks: When you purchase a stock, meaning a portion of a company, you have the right to receive a share of the company’s profits periodically. To determine how much you'll receive in dividends, check the dividend per share and multiply it by the number of shares you hold. Not all companies offer dividends.
• Rental Income from Real Estate: Instead of buying real estate as a residence, you can purchase it as an investment. In this case, the passive income would be the rental payments. Another more accessible way to invest in real estate is through Real Estate Investment Trusts (REITs). REITs own, operate, or finance income-generating real estate.
• Peer-to-Peer Lending: These are loans made between individuals without the involvement of a bank. Various lending platforms connect borrowers directly with investors.
• Crypto Staking: Similar to a fixed-term deposit, staking involves locking in a portion of your cryptocurrency for a certain period to help maintain the blockchain, in return for rewards.
• Royalties from Books and Patents: These are recurring payments from the sale of books you've written or from the use of patents in your name.
• Other Forms of Passive Income: Payments for online content consumption (blogs, YouTube channels, online courses) that remain popular over time. Also, affiliate marketing where you're paid for referring a customer to another company.

Steps to Achieve Financial Freedom

1. Start Early:Learning about financial freedom and passive income from a young age gives you a head start. Thanks to compound interest, your returns grow over time.
2. Develop a Saving Habit:It's crucial to be mindful of your income and expenses and set aside a portion for future investments.
3. Set Goals for Generating Income:To invest, you need an initial capital. Jobs or businesses can be sources of income, but the goal is to view them as learning opportunities.
4. Learn to Invest:Educate yourself about investing through blogs, books, and online courses. Experience is the best teacher.
5. Invest Diversely:Diversify your portfolio with various assets: stocks, ETFs, bonds, real estate, etc.

Ready to Achieve Financial Freedom?

Financial freedom is achieved when your passive income covers or exceeds your monthly expenses. Start by investing in the US stock market with Hapi. There’s no minimum amount and no commissions! Start building your future by opening your Hapi account now!