If you want to be achieve financial freedom at a younger age, you will need to think and act differently to the herd. If you adopt the same approach as most people (striving for a high-paying job, two nice cars and the most expensive house you can afford), it stands to reason that you will probably achieve the same results as most people.
For our generation, this is likely to mean working until at least 65 – and possibly far beyond, as retirement ages look set to increase to 70 – and taking a substantial cut in earnings upon retirement. You will need to think differently and be prepared to take another course of action.
Why not consider shunning buying your own home to live in and renting instead? Part of the problem with buying a hugely expensive house to live in is that you never seem to have enough left over at the end of the month for anything, let alone building a sizeable portfolio of investments.
Renting is often significantly cheaper than buying a property, partly because interest rates tend to be higher than rental yields, and partly because the landlord retains responsibility for repair costs, strata fees and insurance. Renting can afford you the luxury of investing heavily instead of being tied to a huge monthly mortgage repayment.
If you were to rent instead of buying a property to live in, there are limitless choices as to where you can allocate your assets.
The traditional growth assets are shares and property, so a more moderate approach would be to consider some fixed interest investments (e.g. bonds) and some diversified funds. The most aggressive approach would be to shun diversification and invest exclusively in property and/or shares.
The neat thing about this approach is that because you have not lumbered yourself with a huge mortgage, you can instead take out multiple mortgages and have tenants pay them off for you.