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How to Create Financial Freedom

If you want financial freedom, start by setting up a budget, getting out of debt, and investing in dividend stocks to build lasting wealth.

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If you don't make or have a lot of money available for investing, the first thing you will need to do is set up a budget and then get out of debt. The biggest enemy to anybody's financial freedom is debt. In addition, you should have an emergency fund. Please read our Tricks and Tips to Create An Emergency Fund page.

The idea is to get companies to pay you money, not for you to pay companies money, like paying interest on a loan. You might be asking yourself, how do I get companies to pay me money? The easiest way to get companies to pay you money is to own stock in companies that pay what is called a dividend. Dividends come in all ranges and sizes. The higher the dividend, the higher the risk that stock will be. If you're young and have plenty of time before retiring, you can risk more than somebody that is ready for retirement.

There are several types of investments you can make. Not all investment types pay a dividend. When you are looking at an investment, you need to make sure it's paying a dividend if that's what you desire. I personally love stocks that pay dividends. The list below contains some types of investments that can be found on the stock market.

Investment Types

Investment types include stocks (company ownership), bonds (lending to issuers), cash equivalents (safe, liquid accounts), real estate (via REITS), and mutual funds/ETFs (diversified pools). Key options also include cryptocurrencies, commodities, and derivatives. Risk and return potential range from low-risk, low-return cash accounts to high-risk, high-return stocks.

Major Asset Classes

Stocks (Equities): Buying shares in a company, representing ownership. Stocks offer high growth potential but come with high risk if prices drop.
Bonds (Fixed Income): Lending money to a corporation or government for a set period, receiving regular interest payments, and getting the principal back upon maturity.
Bond ETFs (Fixed Income): Bond ETFs are a bond that can be bought on the stock exchange, it is like a regular bond, but you're not locked in for a period of time and can be bought and sold anytime where regular bonds can only be bought and sold on a specific date.
Cash and Equivalents: Low-risk, highly liquid assets such as savings accounts, certificates of deposit (CDs), and money market accounts.
Real Estate: Purchasing property directly or through Real Estate Investment Trusts (REITs), which allow investors to buy into commercial or residential properties on stock exchanges.

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Investment Funds (Pooled Investments)

Mutual Funds: Professional managers pool money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities.
Exchange-Traded Funds (ETFs): Similar to mutual funds, but trade throughout the day on stock exchanges like individual stocks.
Index Funds: A type of mutual fund or ETF designed to track a specific market index (e.g., the S&P 500).

Alternative and Other Investments

Cryptocurrency: Digital or virtual currencies, often known for high volatility and high risk.
Derivatives: Financial contracts (such as options and futures) whose value is linked to an underlying asset.
Commodities: Physical goods like gold, oil, or agricultural products.
Foreign Currency (Forex): Trading currencies to profit from fluctuations in exchange rates.

Investment Vehicles (Accounts)

Brokerage Accounts: Taxable accounts used to buy various investments.
Retirement Accounts: Tax-advantaged accounts like IRAs (Traditional, Roth, SEP, SIMPLE) designed for long-term saving.

Before investing, consider your risk tolerance, financial goals, and the potential for loss.

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Example Investments for Financial Freedom

Risk Disclosure: All investments discussed on this site are speculative and carry risk, including the potential loss of principal. Past performance is not indicative of future results. Consult a licensed financial advisor before making any investment decisions.

Now that you know that there's a multitude of ways of investing, investing is one of the few ways to gain financial freedom. As you know, I love dividend stocks, but there are other ways to gain assets. You can also buy other types of investments that don't pay a dividend.

Examples of investments that do pay a dividend.

BNDI (Neos Enhanced Income Aggregate Bond ETF) The investment seeks to generate monthly income in a tax efficient manner. The fund is an actively-managed ETF that seeks to achieve its investment objective by (i) investing 80% or more of its assets in bonds or ETFs that invest 80% or more of their assets in bonds and forwards, options or futures contracts related to bonds and seek to obtain exposure to the performance of the U.S.

On the last ex-dividend date (04/15/2026) this bond ETF was paying about a 5.48% yield.

GOVZ (Ishares 25+ Year Treasury Strips Bond ETF) The investment seeks to track the investment results of the ICE BofA Long US Treasury Principal STRIPS Index composed of the principal payments of U.S. Treasury bonds (specifically principal STRIPS, also known as Separate Trading of Registered Interest and Principal of Securities) with remaining maturities of at least 25 years. The fund will invest at least 80% of its assets in the component securities of the index, and the fund will invest at least 90% of its assets in U.S.

On the last ex-dividend date (04/01/2026) this bond ETF was paying about a 5.04% yield.

DX (Dynex Capital, Inc.) is a financial services company. The Company is an internally managed mortgage real estate investment trust (REIT), which invests in mortgage-backed securities (MBS). It finances its investments principally with repurchase agreements. Its objective is to provide attractive risk-adjusted returns to its shareholders over the long term that are reflective of a leveraged, high-quality fixed income portfolio with a focus on capital preservation.

On the last ex-dividend date (04/23/2026) this bond ETF was paying about a 14.85% yield.

Ex-Dividend Date and Yield Definitions

What is an Ex-Dividend Date? When you buy shares of a fund that is said to be "ex-dividend," you are not eligible to receive a particular dividend the fund has declared. Instead, the investor selling the shares will receive this dividend.
What is a Yield? A yield is the amount of income a fund produces every year (usually in the form of dividends or interest), expressed as a percentage of its share price. For example, if a fund starts with a net asset value of $10 and pays out $1 in dividends over the course of a year, its yield would be 10%.

Examples of investments that do not pay a dividend but are expected to rise in value.

GLTR (Abrdn Physical Precious Metals Basket Shares ETF) The investment seeks to reflect the performance of the price of physical gold, silver, platinum, and palladium in the proportions held by the Trust, less the Trust's expenses.
PLUG (Plug Power Inc.) is engaged in providing an end-to-end hydrogen ecosystem, from production, storage, and delivery to energy generation.

Disclaimer, Due Diligence Required: Financial markets, tax laws, and economic regulations change frequently and vary by jurisdiction. You should always perform your own independent research, complete thorough due diligence, and consult with a licensed financial advisor, certified public accountant (CPA), or legal professional before making any financial decisions or putting capital at risk. The owners and publishers of this website assume no liability for any financial losses or damages resulting from the use of this information.

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