Here are my four key principles for achieving financial freedom

Shao Chun, 38, built a seven-figure investment portfolio using four key funding principles.

The idea of financial freedom may feel like an unattainable dream—a feeling only a few can experience after a lucky break or when they retire after decades of work, but Shao Chun says otherwise.

During his eight years at Google, Chun lived beyond his means and consistently invested up to 50% of his salary. This allowed him to build a massive investment portfolio worth $2 million, according to documents seen by CNBC Make It.

“You can actually achieve financial freedom while working a 9-to-5 job,” Chun said.

But when he was laid off in February, he realized he no longer had to rely on a paycheck to make ends meet.

Using the 4% rule as a guideline, Chun found that by withdrawing 4% of his portfolio in the first year and withdrawing the same amount (adjusted for inflation) in each subsequent year, he could comfortably and safely invest live. In theory, that amount could be small enough to support his portfolio for at least 30 years.

“When you achieve financial freedom … you can have this flexibility or space to really do what you want to do,” he said.

In addition to the money he withdraws from his investment portfolio, Chun also makes money by working as an adjunct professor at the National University of Singapore and by producing educational content for his YouTube channel The “9-to-5 millionaire mentality” runs through his career coaching business.

Here are four key principles he followed that enabled him to achieve financial freedom:

1. Acknowledge that your ultimate goal is freedom

The first step to achieving financial freedom is to consciously pursue that freedom.

“We used to value stability, but given the current state of the economy, stability is no longer … a benefit that companies can provide us,” he said. “The current generation (feels) trapped, (like) they need to be committed to a particular path, but … your goal is freedom. Your goal is not loyalty.”

“The beauty of our lives now is that… even though jobs no longer provide security… we also have a lot (a lot) of resources available online,” he said. From learning how to invest to opening your own brokerage account, he explains that the Internet can provide free information on how to build wealth.

2. Work actively to increase income

So, we want financial freedom. How do we get there? “Short stories…are about getting rich,” Chun said.

“You have to find ways to increase active income,” Chun said. One way is to know when Job-hopping happens when “you’re not learning or making money,” Chun said.

“The alternative is overemployment,” he said. “So you have people working multiple jobs, having side hustles, even working two remote jobs. That’s one way to do it, but the level of burnout is high.”

When it comes to side hustles, Chun recommends picking something that’s “low appreciation” or complements your skills. Ideally, he suggests, a side hustle will generate passive income so you don’t have to trade your time for money.

3. Reduce expenses

Chun says managing your “burn rate,” or how much money you spend, is just as important as growing your revenue.

“If you want freedom, you actually need discipline,” he said. “That’s actually a very popular concept promoted by the U.S. Navy SEALs: ‘Discipline equals freedom.'”

Although many of us want financial freedom, our actions are often inconsistent with this goal. Behaviors such as seeking instant gratification, living beyond our means, and “comparison” can get in the way of our goals of freedom.

4. Stop trading time for money

Since inflation erodes the value of money over time, it is crucial to learn how to invest properly so that our savings can keep up with, or ideally win, the market.

“The last pillar of financial freedom is… don’t trade time for money, and that’s when you need to start investing,” Chun said.

Respect the “time value of money,” he said, pointing to the basic rule of economics that a dollar today is worth more than a dollar in the future because of interest, inflation and its earning potential.

According to statistics, since 1957, the S&P 500 Index has averaged an annual return of 10.26%. Investment Encyclopedia. According to CNBC, if you invested $1,000 in the S&P 500 in 2013, your investment would have tripled to approximately $3,217 by April 2023.

“Invest for the long term, not the short term,” says Chun, who advises people to avoid “shiny thing syndrome” and try to invest in areas that are within your capabilities or that you understand. “If you can’t explain this investment to a 6-year-old, then it’s probably not the investment for you.”

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