Shao Chun, 38, built a seven-figure investment portfolio using four basic money principles.
The idea of financial freedom may seem like a far-fetched dream – something only a few can experience after a lucky break or during retirement after working for decades, but Shao Chun says otherwise.
During his eight years at Google, Chun lived below his means and consistently put up to 50% of his salary into investments. That allowed him to build a substantial portfolio worth $2 million, according to documents seen by CNBC Make It.
“You can actually achieve financial freedom while working a nine-to-five job,” Chun said.
But when he was laid off in February, Chun realized he no longer needed to rely on a salary to support himself.
Using the 4% rule as a guideline, Chun saw that he could comfortably and safely live off his investments by withdrawing 4% of his portfolio in the first year and the same amount, adjusted for inflation, each year thereafter. In theory, that amount would likely be small enough for his portfolio to support him for at least 30 years.
“When you’re financially free … then you can have that flexibility or that headroom to really do what you want,” he said.
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In addition to the amount withdrawn from his portfolio, Chun also earns money teaching as a part-time professor at the National University of Singapore, creating educational content for his YouTube channel “9 to 5 Millionaire Mindset” and through his coaching career.
Here are the four basic principles he lives by that have allowed him to achieve financial freedom:
1. Recognize that your ultimate goal is to be free
The first step to becoming financially free is to be intentional about pursuing that freedom.
“What we valued was stability, [but] Given where the economy is going right now, stability is no longer a privilege that … companies can give us,” he said. “The current generation [feels] stuck, [like] they must be dedicated to a certain path, but… your goal is to be free. Your goal is not to be faithful.”
“The beautiful thing about our lives right now is that… while jobs no longer provide security… we do [many] resources that are also available online,” he said: From learning how to invest to opening your own brokerage account, the Internet offers free information on how to build your wealth.
2. Work actively to increase your income
So you want to be financially free. How will you get there? “Short story… it’s about getting rich,” Chun said.
“You have to find ways to increase your active income,” Chun said. One way is to know when to Job hop when “you’re not learning or earning,” says Chun.
“The other way is to be too busy,” he said. “So you have people who are working multiple jobs, have side hustles or even two remote jobs. That’s a one-way street, but burnout is high.”
When it comes to side hustles, Chun suggests choosing something that’s “low lift” or something that complements your skill sets. ideally, the side hustle will bring in passive income so you don’t have to trade your time for money, he suggests.
3. Cut back on how much you spend
Managing your “burn rate,” or how much you spend, is just as important as growing your income, Chun said.
“If you want freedom, you really have to be disciplined,” he said. “It’s actually a very popular concept espoused by US Navy SEALs: ‘discipline equals freedom’.”
Although many want to financial freedommany times our actions do not align with that goal. Behaviors such as seeking instant gratification, living beyond our means, and “keeping up with the Joneses” can hinder our goal of being free.
4. Stop trading time for money
Because inflation erodes the value of money over time, it’s important to learn how to invest properly so your nest egg can keep up with or ideally beat the market.
“THE [last] pillar to achieving financial freedom is not trading time for money, and that’s when you should start investing,” Chun said.
Respect the “time value of money,” he said, pointing to a basic rule of thumb in economics that says the value of a dollar today is worth more than the value of a dollar in the future because of interest, inflation and its potential for earnings.
Since 1957, the S&P 500 has provided an average investment return of 10.26% each year, according to Investopedia. If you invested $1,000 in the S&P 500 in 2013, by April 2023, your investment would have tripled to about $3,217, CNBC reports.
“Invest for the long term, not the short term,” Chun said, advising people to avoid the “shiny thing syndrome” and try to invest in your skill circle or what you understand. “If you can’t explain investing to a 6-year-old, that investment might not be for you.”
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