Taking Flight: Compound Growth

Your "investment ratio" and "annual return on investment" are the most important numbers in your financial life. Investment ratio means the portion of your income you are able to purchase assets with (invest). 

Those two numbers determine when you will achieve "financial freedom".  Financial freedom means your assets grow faster than you use them to support your lifestyle.

In this simplified framework, income pays for one of two things: lifestyle or assets. As you can see below, a person that achieves a 50% investment ratio (regardless of income) can become financially free within 10-20 years of consistent income and investment. A 25% investment rate works well to achieve freedom within 15 years with average or better asset portfolios.

Assumed Annual Rate of Return

5% -- Safe, consistant (fixed income type products)

10% -- Average market return for average portfolio of stocks, futures contracts, commodities, real estate investment products, peer-to-peer lending

15% -- Incredible investor picking winning sectors of stock and commodities markets