Is it still possible to achieve financial independence?

As originally appeared in The Jerusalem Post on January 31, 2025.

“The rich invest their money and spend what is left; the poor spend their money and invest what is left.” -Jim Rohn

We have finished the emotional roller coaster of the week between Holocaust Remembrance Day, Yom Hazikaron- Israel’s Memorial Day, and Yom Haatzmaut-Israel’s Independence Day. We are in the midst of a multi-front war, still praying for the return of the hostages, mourning fallen soldiers and those killed on October 7th, and still split as a nation with a political discourse suitable for the sewer. As Rav Yehuda Amital z”l wrote, “The State of Israel is a haven for Jews, a kiddush Hashem and a gift from God; if we want it to survive, all Jews have to treat each other as brothers: “The State of Israel is not going to endure if cordial relations do not prevail between all sectors of the nation…. Otherwise, we live under a threat of destruction.”

Don’t get depressed. I think we need to stop and be thankful about just how far Israel has come in 77 short years, especially economically. Sure, it’s not perfect but with a thriving economy and a global center of innovation that’s second to none, Israel has truly become economically independent. Remember when Israel trying to secure a few billion dollars of US loan guarantees was the leading news story for weeks? Well when is the last time you even heard the words “loan guarantees?”

While the nation has largely become independent economically, what has become of our own personal economic freedom? While it’s certainly better than it was in 1948, vast improvement is still needed. How is economic freedom defined? According to the Fraser Institute’s Economic Freedom of the World, “The cornerstones of economic freedom are (1) personal choice, (2) voluntary exchange coordinated by markets, (3) freedom to enter and compete in markets, and (4) protections of persons and their property.”

Israel has a long way to go on these areas. The size of the government keeps expanding as it enters areas that it has no business to be involved with in the first place. Regulation continues to handcuff economic entrepreneurship and growth. The thirst of our tax-happy politicians to spend more and more of our hard-earned money is not good for economic progress today and is a big obstacle to individual wealth creation over the long-term.

It’s incumbent on each and every one of us to take care of our own future. As the government continues its prohibitive tax policies and attempts to redistribute wealth, for example through programs that allow young couples to purchase apartments that are 200-500,000 NIS below market value, it’s clear that you can’t rely on the government for your financial independence. You need to take care of your own financial future. It may feel like you are swimming against the tide, but you have no choice. No one else will do it for you.

It’s tough but you can do it. Here are 3 tips that can help you become financially independent.

Set goals

I am a firm believer that people need to set goals to achieve sought after milestones. If you want to effectively lose weight, you set a goal of how much you want to lose. If you say to yourself that you want to ‘just lose weight’ without any goal of how much, you will end up gaining weight! Set a realistic date for when you’d like to be financially independent. As a guide for how much money you will need in the future, I tell clients that they need about 20 years worth of this year’s expenses to make it. For example, if you spend $40,000 a year, you will need $800,000. Now keep in mind that any pension, bituach leumi, or social security income that you will receive will lower the overall amount that you need. If you receive $30,000 a year in various pension income, then you will need another $10,000 as supplemental income, which means you would only need around $250,000 in savings in order to be independent.

Not going to happen overnight

You need to make investing a priority. Make a habit of ‘paying yourself first’ every month. Whether you invest in real estate (where you get a monthly rent check) or invest in the stock market, focus on a slow and steady approach to building wealth. While it’s quite tempting to try and find a ‘home-run’ stock that will make you an instant fortune, more often than not, investors end up striking out. When it comes to building assets, slow and steady rules the day.

Don’t Wait

Individuals often wait to begin investing because they think that their accounts are too small. They think that if they don’t have hundreds of thousands of dollars, there is no point investing. Nonsense. There are plenty of platforms that allow you to start investing with almost any amount. The sooner you start the sooner you will become financially secure, it’s that simple.

With both patience and discipline, you can achieve financial independence.

The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.

Aaron Katsman is the author of Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, SIFMA, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.